6-5668-DAS/97-019 Rev. 1
----------
PURCHASE AND SALE AGREEMENT
(for titanium products)
----------
THE BOEING COMPANY, acting through its division,
BOEING COMMERCIAL AIRPLANES
and
TITANIUM METALS CORPORATION
----------
November 5, 1997
Amended and Restated Effective April 19, 2001
----------
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
THIS PURCHASE AND SALE AGREEMENT, originally dated as of November 5, 1997,
and amended and restated effective April 19, 2001, is by and between THE BOEING
COMPANY, a Delaware corporation with its principal office in Seattle,
Washington, acting by and through its division, BOEING COMMERCIAL AIRPLANES
f/k/a Boeing Commercial Airplane Group ("Boeing"), and TITANIUM METALS
CORPORATION, a Delaware corporation with its principal office in Denver,
Colorado ("TIMET").
The parties hereto agree as follows:
1. DEFINITIONS. Except as otherwise expressly provided in this Agreement, the
following defined terms shall have the meanings set forth below when used
herein:
1.1 "Annual Payment" has the meaning given such term in Section 3.6.
1.2 "Boeing" means The Boeing Company, a Delaware corporation, acting by and
through its division, Boeing Commercial Airplanes (f/k/a Boeing Commercial
Airplane Group). For purposes of this Agreement, the term "Boeing" includes
only Boeing Commercial Airplanes and does not include any other division,
subsidiary or affiliate of The Boeing Company.
1.3 "Boeing On-Time Delivery Rate" means, [ * ]
1.4 "Boeing Recognized Subcontractor" means any subsidiary or affiliate of
Boeing and any supplier to Boeing (whether direct or indirect) of forged,
cast, extruded, fabricated, or any other titanium parts or assemblies for
use in fixed wing, commercial aircraft manufactured by Boeing which
satisfies the requirements contained in Article 22 hereof. Boeing
Recognized Subcontractors will be entitled to purchase Boeing Titanium
Products under the terms and subject to the conditions of this Agreement
either directly from TIMET or through Boeing's Agent.
1.5 "Boeing Titanium Product" means a titanium product of the type enumerated
on Schedule 1 (as amended, revised or supplemented from time to time) that
is ordered or purchased by a Purchaser from TIMET pursuant to this
Agreement for use in manufacturing parts or assemblies for fixed wing,
commercial aircraft manufactured by Boeing.
1.6 "Boeing's Agent" means an entity that has been designated by Boeing from
time to time to manage the purchasing of Boeing Titanium Products on behalf
of Boeing.
1.7 "Calendar Quarter" means each of the three-month periods ending March 31,
June 30, September 30, and December 31.
1.8 "Confidential Information" means confidential or proprietary information of
the Disclosing Party furnished to the Receiving Party in connection with
this Agreement, including without limitation, technical information in the
form of designs, concepts, requirements, specifications, software,
interfaces, components, processes, or the like, and which, if in visual,
written or graphic form, is clearly and conspicuously identified thereon as
"confidential" or "proprietary" or, if in oral form, is confirmed promptly
thereafter in writing as "confidential" or "proprietary." The provisions of
this Section 1.8 and Article 11 shall not apply to, and the Receiving Party
shall not be obligated to hold in confidence pursuant to Article 11,
information which:
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
(a) was in the lawful possession of the Receiving Party without
confidentiality restrictions prior to its receipt thereof from the
Disclosing Party;
(b) is or becomes public knowledge without the fault of the Receiving
Party;
(c) is or becomes available to the Receiving Party on an unrestricted
basis from a source having a right to make such disclosure;
(d) is made available on an unrestricted basis to a third party by the
Disclosing Party; or
(e) is developed by the Receiving Party independent of Confidential
Information received under Article 11.
1.9 "Disclosing Party" means Boeing or TIMET, as the case may be, communicating
Confidential Information to the other party in connection with this
Agreement.
1.10 "Equivalent Government Authority" means those government agencies so
designated by the FAA or those agencies of governments other than the
United States that have responsibility for assuring aircraft airworthiness.
1.11 "FAA" means the Federal Aviation Administration or any successor government
agency.
1.12 "Lead Time Schedule" has the meaning given such term in Section 4.3.
1.13 "Material Default in Performance" has the meaning given such term in
Section 6.3.
1.14 "Order" means a purchase order for Boeing Titanium Products placed by a
Purchaser with TIMET for use in manufacturing parts or assemblies on behalf
of Boeing (directly or indirectly), to the limited extent such purchase
order has been accepted in writing by TIMET or is deemed to have been
accepted by TIMET pursuant to the Terms & Conditions.
1.15 "Purchaser" means the person, either Boeing, Boeing's Agent or a Boeing
Recognized Subcontractor, that is the purchasing party pursuant to a given
Order.
1.16 "Quarterly Volume Forecast" has the meaning given such term in Section 4.3.
1.17 "Receiving Party" means Boeing or TIMET, as the case may be, to whom
Confidential Information is communicated by the other party in connection
with this Agreement.
1.18 "Representatives" of a given party means its directors, its officers, and
employees.
1.19 "Terms & Conditions" means the Terms and Conditions of Purchase and Sale of
Boeing Titanium Products attached hereto as Exhibit A.
1.20 "TIMET" means Titanium Metals Corporation, a Delaware corporation.
-2-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
2. PURCHASE AND SALE OF BOEING TITANIUM PRODUCTS.
2.1 On the terms and subject to the conditions of this Agreement, including the
Terms & Conditions, Boeing shall have the right, but not the obligation, to
purchase Boeing Titanium Products, either directly, or indirectly through
Boeing's Agent or through Boeing Recognized Subcontractors, and TIMET
agrees to sell Boeing Titanium Products to Boeing, either directly, or
indirectly to Boeing's Agent or to Boeing Recognized Subcontractors, in the
volumes and at the prices set forth herein.
2.2 Such purchases and sales of Boeing Titanium Products shall be made by the
placement of an Order by Boeing, Boeing's Agent or a Boeing Recognized
Subcontractor directly with TIMET, as provided in the Terms & Conditions.
TIMET shall not be obligated to accept any Order that (a) contains any
terms inconsistent with the Terms & Conditions or (b) as provided in
Section 4.5 below; TIMET shall be obligated to accept all other Orders.
2.3 Boeing Titanium Products purchased hereunder are intended for use in the
manufacture of parts or assemblies for fixed wing, commercial aircraft
produced by Boeing, and may not be used by any Purchaser for any purpose,
other than for the manufacture of parts or assemblies for fixed wing,
commercial aircraft produced by Boeing or resold to any other person or
entity except for the purpose of manufacturing parts or assemblies for
fixed wing, commercial aircraft produced by Boeing.
3. PRICING.
3.1 The prices for Boeing Titanium Products delivered through [ * ] are set
forth on Schedule 1. Pricing for Boeing Titanium Products not specifically
identified in Schedule 1 will be established by the mutual agreement of
Boeing and TIMET applying the ingot price per pound and margins used in
developing Schedule 1. Any such additional prices will be evidenced by an
amended Schedule 1 agreed to in writing by both Boeing and TIMET, which
shall thereupon become the new Schedule 1 to this Agreement and be
substituted for the existing Schedule 1 in the Terms & Conditions with
respect to any Order placed after such date.
3.2 Except as identified in Section 3.5 below, for Boeing Titanium Products
ordered for delivery on or after [ * ], pricing is subject to annual
adjustment, up or down, based upon the following formula:
[ * ]
where:
[ * ]
3.3 No later than [ * ] of each year, commencing in 2002, TIMET will provide
Boeing, Boeing's Agent and each Boeing Recognized Subcontractor with
TIMET's determination of the change in pricing for Boeing Titanium Products
resulting from the application of the formula set forth in Section 3.2. The
resulting pricing change will become effective for Boeing Titanium
-3-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
Products delivered on and after January 1 and on or prior to December 31 of
the following year. To memorialize this adjustment, TIMET shall prepare a
revised Schedule 1 reflecting such adjustments, which revised Schedule 1
shall thereupon become the new Schedule 1 to this Agreement and will be
provided to Boeing, Boeing's Agent and each Boeing Recognized Subcontractor
(as applicable to a given Boeing Recognized Subcontractor).
3.4 The parties recognize that pricing for a given year with respect to a
particular Boeing Titanium Product may also be subject to reduction,
independent of any adjustment resulting from the application of Section
3.2, based upon the results of Lean Manufacturing initiatives undertaken by
the parties in accordance with Article 5 of this Agreement, as any such
reductions are agreed upon by Boeing and TIMET in writing.
3.5 [ * ]
3.6 For each year of this Agreement, beginning on January 1, 2002, Boeing shall
pay TIMET $28,500,000.00 (the "Annual Payment") for the right, but not the
obligation, to purchase up to 7.5 million pounds of Boeing Titanium Product
annually from TIMET at the pricing set forth in Sections 3.1 though 3.5
MINUS $3.80 per pound. Such $3.80 per pound reduction in the pricing shall
be calculated and credited as set forth in Section 3.7 or 3.8 below, as
applicable. For the year 2002, the Annual Payment shall be made to TIMET on
or prior to [ * ]. For the years 2003 through 2007, the Annual Payment
shall be made to TIMET on or prior to the [ * ]of each such year.
3.7 For each pound of titanium purchased by Boeing or Boeing's Agent (but not
by a Boeing Recognized Subcontractor) pursuant to this Agreement after
January 1, 2002, TIMET shall invoice Boeing pursuant to Sections 3.1
through 3.5, reflecting the total price calculated as set forth in Sections
3.1 through 3.5, less the $3.80 per pound credit described in Section 3.6.
3.8 For each pound of titanium purchased by a Boeing Recognized Subcontractor
pursuant to this Agreement after January 1, 2002, and invoiced directly
from TIMET to that Boeing Recognized Subcontractor, TIMET shall invoice
such Boeing Recognized Subcontractor the price calculated as set forth in
Sections 3.1 through 3.5 above. TIMET shall account to Boeing for all such
invoices, and Boeing shall deduct from the next Annual Payment an amount
equal to the product of all such pounds purchased by Boeing Recognized
Subcontractors in such calendar year and $3.80 per pound. (For all such
invoices for which TIMET's accounting has not been completed by December 31
of a calendar year, TIMET shall complete the accounting for such calendar
year and reimburse Boeing, no later than [ * ] of the next year, an amount
equal to the product of all pounds purchased by Boeing Recognized
Subcontractors reflected on those unaccounted for invoices, and $3.80 per
pound.) For the year [ * ], TIMET shall repay to Boeing, no later than
March 15, 2008, an amount equal to the product of all such pounds purchased
by Boeing Recognized Subcontractors in [ * ] and $3.80 per pound. Repayment
for any pounds purchased by Boeing Recognized Subcontractors in [ * ] but
invoiced after [ * ] shall be made to Boeing within [ * ] of TIMET's
invoicing of the Boeing Recognized Subcontractor.
3.9 Sections 3.7 and 3.8 taken together shall not apply to more than 7.5
million pounds per calendar year or the number of pounds for any Calendar
Quarter identified as the maximum volume for such Calendar Quarter on
Exhibit B hereto (except as TIMET may otherwise agree pursuant to
-4-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
Section 3.12). The amounts to be credited, deducted or repaid under
Sections 3.7 and 3.8 taken together shall not exceed the total of
$28,500,000.00 allocable to any calendar year.
3.10 (a) A Boeing Titanium Product shall be deemed to have been purchased in
the Calendar Quarter in which it was scheduled for delivery, as last
mutually agreed upon by TIMET and Purchaser (regardless of whether
shipped by TIMET during such Calendar Quarter); provided, that, if
payment for any Boeing Titanium Product ordered by Boeing or Boeing's
Agent (but not a Boeing Recognized Subcontractor) is not subsequently
made by Boeing or Boeing's Agent, the volume (in pounds) of such
Boeing Titanium Product will be deducted from the volumes for the
Calendar Quarter in which it was originally credited; and provided
further, that if such Boeing Titanium Product is returned by any
Purchaser to TIMET with TIMET's permission (other than Boeing Titanium
Product that is rightfully rejected for product deficiencies), the
volume (in pounds) representing such Boeing Titanium Product will be
deducted from the purchased volume for the Calendar Quarter in which
it was originally credited and, if replaced, be included in whatever
subsequent Calendar Quarter such replacement material is delivered;
(b) Boeing Titanium Products with respect to which an Order is terminated
in accordance with Section 11.3 of the Terms & Conditions shall be
counted only in an amount equal to the relevant volume (in pounds)
times the percentage of applicable price actually paid as a
termination charge in accordance with Section 11.3 of the Terms &
Conditions; and
(c) Any substitute titanium product purchased by a Purchaser pursuant to
Section 12.2(b) of the Terms & Conditions upon the occurrence of a
TIMET Event of Default (as defined in Section 12.1 of the Terms &
Conditions) shall be counted as though such volume (in pounds) had
actually been purchased by that Purchaser from TIMET pursuant to this
Agreement in the Calendar Quarter in which Purchaser takes delivery
thereof provided TIMET has been furnished with written notice of such
event.
3.11 For any Boeing Titanium Products for which the originally agreed upon
delivery date is in calendar year [ * ] and with respect to which Purchaser
and TIMET mutually agree upon a new delivery date in calendar year [ * ],
the provisions of Sections 3.7 and 3.8 shall nonetheless apply.
3.12 With respect to any given calendar year, TIMET shall be entitled to
withdraw from the Annual Payment an amount equal to $3.80 per pound times
the difference between 7.5 million pounds and the volume (in pounds) of
Boeing Titanium Products purchased under the Agreement during such calendar
year, as such volume is actually determined and certified to Boeing
pursuant to Section 3.13. In addition, if, as of the end of any Calendar
Quarter during such calendar year, it would be mathematically impossible
for Boeing, Boeing's Agent and Boeing Recognized Subcontractors to purchase
(in the aggregate) the full 7.5 million pounds of Boeing Titanium Products
in the remaining part of such calendar year (based upon what they would
then be entitled to purchase under this Agreement taking into account the
quarterly limits for the remaining Calendar Quarters in such calendar year
as set forth in Exhibit B plus any amounts that TIMET may permit to be
purchased over such limits, in its sole discretion), TIMET shall at such
time be entitled to withdraw from the Annual Payment an amount equal to
-5-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
$3.80 per pound times the difference between 7.5 million pounds and the
maximum volume (in pounds) that Boeing and other Purchasers are then
entitled to purchase during the remainder of the calendar year under the
Agreement based upon such quarterly limits, plus any amounts that TIMET may
permit to be purchased over such limits, in its sole discretion. Once
withdrawn by TIMET under this provision, such funds shall not be subject to
future crediting to Boeing under Sections 3.6 through 3.8 hereof, provided
no errors have been made in accounting for the crediting due Boeing under
this Section 3.
3.13 No later than March 1 of each year from 2002 through [ * ], TIMET shall
certify to Boeing the volume of Boeing Titanium Products purchased by all
Purchasers under this Agreement in the preceding calendar year. Such
certification shall be subject to audit by or on behalf of Boeing, through
examination of the relevant records of TIMET, upon reasonable notice during
normal business hours. Any such audit shall be conducted at Boeing's sole
cost and expense.
4. VOLUMES.
4.1 Based upon making the Annual Payment, Boeing has the right, but not the
obligation to purchase, either directly or indirectly through Boeing's
Agent or through Boeing Recognized Subcontractors, up to a maximum of 7.5
million pounds of Boeing Titanium Products per calendar year.
4.2 The matrix attached hereto as Exhibit B sets forth the maximum volumes of
Boeing Titanium Products that Boeing, Boeing's Agent and all Boeing
Recognized Subcontractors may purchase hereunder in a given Calendar
Quarter and in any calendar year, as well as limitations on the percentage
of such Boeing Titanium Products that may be represented by ingot.
4.3 By the last day of each Calendar Quarter, Boeing will provide TIMET with a
rolling forecast by quarter (the "Quarterly Volume Forecast") representing
Boeing's best estimate of the needs for Boeing Titanium Products (by
product and grade) for [ * ] TIMET will from time to time prepare and
distribute to Boeing and each Boeing Recognized Subcontractor a chart (the
"Lead Time Schedule") listing by product and grade the lead times for
Boeing Titanium Products then applicable to Orders (as applicable to a
given Boeing Recognized Subcontractor).
4.4 Upon completion of a Proprietary Information Agreement in a form reasonably
acceptable to Boeing, Boeing shall from time to time provide TIMET with
Boeing's aircraft delivery rate forecast ("skyline chart"), including
periodic revisions thereto, as and when published.
4.5 Unless otherwise agreed by TIMET in writing, TIMET shall not be obligated
to accept any Order which:
(a) would represent a volume in excess of the limitations set forth in
Note (b) or (c) to the matrix attached as Exhibit B;
(b) contains a proposed delivery date that represents a lead time less
than the lead time reflected for such Boeing Titanium Product in the
Lead Time Schedule applicable at the time the Order is being placed.
TIMET will consult with Boeing in the event it receives such an Order
and is unable to resolve the delivery date to the satisfaction of
-6-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions. Boeing's Agent or the
Boeing Recognized Subcontractor so that Boeing may consider its
scheduling requirements and, if appropriate, request adjustment in the
scheduling of other outstanding Orders to accommodate this particular
Order requiring expedited delivery. Any such request by Boeing to
delay another Order to meet its requirements shall conclusively be
deemed to represent the agreement to such delay by Boeing's Agent or
the Boeing Recognized Subcontractor that is a party to such delayed
Order. TIMET will use all commercially reasonable efforts to
accommodate any such rescheduling requested by Boeing;
(c) is placed by an entity other than Boeing, Boeing's Agent or a Boeing
Recognized Subcontractor;
(d) is for a use other than manufacturing parts or assemblies for fixed
wing, commercial aircraft produced by Boeing; or
(e) is for [ * ]
5. LEAN MANUFACTURING PROCESS IMPROVEMENT.
5.1 Boeing and TIMET agree to work together to identify areas of improvement
which affect the manufacturing and assembly process at TIMET's facility
and/or TIMET's subcontractor's facilities. Where Boeing and TIMET can
identify areas of improvement, the parties will determine the amount of
savings which will result from the improvements and share the benefits. Any
such agreement regarding the sharing of savings or cost benefits will be in
writing and executed on behalf of both Boeing and TIMET.
6. TERM; TERMINATION.
6.1 Unless otherwise terminated in accordance with another provision of this
Article 6, this Agreement shall expire on [ * ].
6.2 This Agreement may be terminated prior to [ * ] as follows:
(a) by Boeing upon not less than sixty (60) days prior written notice to
TIMET in the event [ * ]
(b) by Boeing by written notice to TIMET in the event of any other breach
by TIMET of this Agreement in any material respect, which breach
continues unremedied for more than [ * ] following written notice of
such breach by Boeing to TIMET;
(c) by TIMET by written notice to Boeing in the event of any breach by
Boeing of this Agreement in any material respect, which breach
continues unremedied for more than [ * ] following written notice of
such breach by TIMET to Boeing; or
(d) by either party by written notice to the other party in the event of
the suspension, dissolution or winding-up of the other party's
business, the other party's admission in writing of its insolvency or
inability to pay its debts as they become due, the institution of
reorganization, bankruptcy, liquidation, or other such proceedings by
the other party,
-7-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
the institution of reorganization, bankruptcy, liquidation, or other
such proceedings against the other party which remain undismissed for
more than [ * ], the appointment of a custodian, trustee, receiver, or
similar person for the other party's properties or business, or an
assignment by the other party for the benefit of its creditors.
6.3 [ * ]
6.4 The provisions of Sections 3.7, 3.8 and 3.11 shall survive the expiration
of this Agreement for the purpose of making determinations and, if
applicable, payment thereunder with respect to calendar year [ * ]. The
provisions of Article 11 shall survive the expiration or termination of
this Agreement for the duration of the confidentiality period set forth in
Section 11.2.
6.5 The termination of this Agreement shall not affect the rights and
responsibilities of the parties with respect to any breach that may have
occurred prior to such termination. Further, the termination of this
Agreement shall not affect the rights and obligations of the parties with
respect to any uncompleted Order outstanding as of the date of such
termination.
6.6 IN NO EVENT SHALL BOEING OR TIMET BE LIABLE PURSUANT TO THIS AGREEMENT OR
ANY ORDER FOR INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE, OR INCIDENTAL
DAMAGES, WHETHER ARISING UNDER CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT
LIABILITY, OR OTHER THEORY OF LIABILITY, INCLUDING WITHOUT LIMITATION, ANY
DAMAGES FOR LOSS OF PROFITS OR LOSS OF USE.
7. INTEGRITY IN PROCUREMENT.
7.1 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, 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, TIMET 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. TIMET shall
conduct its own procurement practices, and require that its suppliers
conduct their procurement practices, consistently with these standards. If
TIMET has reasonable grounds to believe that this policy may have been
violated, TIMET shall promptly report such possible violation to the
appropriate Director of Materiel or Ethics Advisor of Boeing.
8. INFRINGEMENT.
8.1 Except as provided in Section 8.2 below, TIMET shall indemnify, defend, and
save Boeing and Boeing's customers harmless from all claims, suits,
actions, awards (including without limitation, awards based upon
intentional infringement of patents known to TIMET at the time of such
infringement, exceeding actual damages, and/or including attorneys' fees
and/or costs), liabilities, damages, attorneys' fees, and costs related to
the actual or alleged infringement of any United States or foreign
intellectual property right (including without limitation, any right in a
patent, copyright, industrial design or semiconductor mask work, or based
on
-8-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
misappropriation or wrongful use of information or documents) and arising
out of the manufacture, sale, or use of Boeing Titanium Products by Boeing
or Boeing's customer. Boeing shall promptly notify TIMET of any such claim,
suit, or action, and TIMET shall, at its own expense, fully defend such
claim, suit, or action on behalf of Boeing and/or Boeing's customer, as the
case may be. For purposes of this Section 8.1, the term "Boeing's customer"
shall not include the United States Government and the term "Boeing" shall
include The Boeing Company and all of its subsidiaries and the respective
officers, agents, and employees of each.
8.2 Section 8.1 shall not apply in the case of, and Boeing shall indemnify,
defend, and save TIMET harmless from all claims, suits, actions, awards
(including without limitation, awards based upon intentional infringement
of patents known to Boeing at the time of such infringement, exceeding
actual damages, and/or including attorneys' fees and/or costs),
liabilities, damages, attorneys' fees, and costs related to the actual or
alleged infringement of any United States or foreign intellectual property
right (including without limitation, any right in a patent, copyright,
industrial design or semiconductor mask work, or based on misappropriation
or wrongful use of information or documents) when such infringement arises
from:
(a) TIMET's compliance with formal specifications issued by Boeing when
infringement could not reasonably be avoided in complying with such
specifications; or
(b) the use or sale of Boeing Titanium Products in combination with other
items when such infringement would not have occurred from the use or
sale of those Boeing Titanium Products solely for the purpose for
which they were designed or sold by TIMET.
For purposes of this Section 8.2, the term "TIMET" shall include
Titanium Metals Corporation and all of its subsidiaries and the
respective officers, agents, and employees of each.
9. PUBLICITY.
9.1 This Agreement is confidential and shall not be disclosed by any party or
its agents or representatives to any person (excluding the parties'
directors and employees having a need to know) other than as disclosure is
required by applicable law, regulation or court order; provided, however,
that either party may make disclosure of this Agreement to (a) any of its
accountants, auditors or lawyers having a need to know such information
provided such person agrees not to disclose the information to any other
person or outside of such firm, except as disclosure is required by
applicable law, regulation or court order and (b) any of its bankers or
credit rating agencies having a need to know such information, provided
persons at such companies agree in writing not to disclose the information
to any other person or outside of such company, except as disclosure is
required by applicable law, regulation or court order. The foregoing shall
not apply to matters already public other than by reason of a breach of
this Section 9.1. Except as may be otherwise agreed in writing, without the
prior written approval of the other, neither Boeing nor TIMET will use, or
cause or permit to be used, the Boeing or TIMET name or any Boeing or TIMET
trademark in any form of promotion or publicity. Notwithstanding the
foregoing, Boeing agrees that TIMET may issue the press release (described
in that Settlement Agreement and Release of Claims dated April 19, 2001 by
and between the parties, in the form last provided by TIMET to Boeing) and
may discuss the
-9-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
matters contained therein in investor calls only as such matters are
specifically stated in the press release.
10. SCRAP RECYCLING PROGRAM.
10.1 The parties intend, by separate agreement, to enter into an arrangement for
the recycling of scrap by Boeing to TIMET; provided, however, that any
failure of the parties to reach such an agreement shall not affect the
validity or effect of this Agreement.
11. CONFIDENTIALITY.
11.1 The parties will not identify information as Confidential Information
unless the Disclosing Party believes that such information is proprietary
to, or constitutes a trade secret of, the Disclosing Party. The parties
will attempt to limit the exchange of Confidential Information to only that
Confidential Information necessary for the purposes of this Agreement.
11.2 The parties agree that, for a period of [ * ] from the date of receipt of
Confidential Information, without the prior written consent of the other
party hereto and except as may be required by law, the Receiving Party
shall hold in confidence and not disclose Confidential Information received
by it, except to (a) Representatives of the Receiving Party who require
such Confidential Information for purposes of this Agreement and who agree
to hold such Confidential Information in confidence in accordance with the
terms of this Agreement and (b) Purchasers of the Receiving Party whose
involvement is required by the Receiving Party for purposes of these Terms
& Conditions and who agree to hold such Confidential Information in
confidence in accordance with the terms of this Agreement.
11.3 Confidential Information shall not be used by the Receiving Party (or any
Representative to whom the Receiving Party discloses such Confidential
Information) except for the purposes contemplated in this Agreement.
11.4 The Receiving Party will be deemed to have satisfied its obligations of
confidentiality and non-use hereunder if it uses reasonable care to protect
against unauthorized disclosure or misuse of Confidential Information
received by it hereunder, which care shall not be less than the care taken
by the Receiving Party to protect its own confidential or proprietary
information from disclosure or use by others. Upon discovery of any
accidental disclosure or misuse, the Receiving Party shall take all
reasonable steps to recover or limit further misuse of such Confidential
Information.
11.5 The Receiving Party will copy Confidential Information received by it only
as reasonably necessary for the purposes contemplated in this Agreement.
11.6 The Receiving Party agrees to return to the Disclosing Party all copies of
written Confidential Information received pursuant to this Agreement, as
well as all copies made thereof or written materials prepared by the
Receiving Party containing Confidential Information, within thirty (30)
calendar days of the written demand of the Disclosing Party; provided,
however, that the Receiving Party may retain a single copy of all
Confidential Information received for purposes of establishing compliance
with the terms of this Agreement, which copy shall be segregated
-10-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
from the normal business records of the Receiving Party and held in strict
confidence in accordance with the terms of this Agreement.
11.7 If the Receiving Party or any of its Representatives becomes legally
compelled (by deposition, interrogatory, request for documents, subpoena,
civil investigative demand or similar process) to disclose any of the
Confidential Information, the Receiving Party will advise and consult with
the Disclosing Party prior to any such disclosure, so that the Disclosing
Party may seek a protective order or other appropriate remedy and/or waive
compliance with this Agreement. If such protective order or other remedy is
not obtained, or compliance with this Agreement is waived as above, the
Receiving Party will disclose only that portion of the Confidential
Information which the Receiving Party is advised by counsel is legally
required and the Receiving Party will exercise reasonable efforts to obtain
assurance that confidential treatment will be accorded such of the
Confidential Information as is disclosed. Any disclosure made in accordance
with the provisions of this Section 11.7 shall not be regarded as a breach
of the obligations of the Receiving Party pursuant to this Agreement.
11.8 Nothing in this Article 11 shall be construed as granting or conveying to
the Receiving Party any right or license to use Confidential Information of
the Disclosing Party except for the purposes contemplated in this Agreement
or to practice any inventions described and claimed in any pending patent
applications or issued patents which are owned or controlled by the
Disclosing Party relating to such Confidential Information.
11.9 Each of the parties hereto acknowledges and agrees that the other party
would be damaged irreparably in the event any of the provisions of this
Article 11 are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that the
other party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Article 11 and to enforce specifically
the terms of this Article 11 in any action instituted in any court of the
United States or any state thereof having jurisdiction over the matter and
the parties, in addition to any other remedy to which it may be entitled,
at law or in equity.
12. COMPLIANCE WITH LAWS; FAA INSPECTIONS.
12.1 TIMET and Boeing shall each be responsible for complying with all laws,
including without limitation, any statute, rule, regulation, judgment,
decree, order, or permit, applicable to its performance under this
Agreement. TIMET agrees to notify Boeing in the event (a) any of TIMET's
obligations under this Agreement becomes prohibited under any applicable
environmental law, with such notice to be made at the earliest practicable
opportunity so as to enable the identification of alternative methods of
performance or (b) TIMET becomes subject to additional environmental
regulation which could reasonably be expected to materially impair its
ability to perform under this Agreement or render its performance
materially more costly.
12.2 Representatives of the FAA and any Equivalent Government Agency may, upon
reasonable prior notice to TIMET and during normal business hours, inspect
and evaluate any of TIMET's or TIMET's subcontractor's plants, facilities,
systems, data, equipment, inventory holding areas, procedures, personnel,
testing, and all work-in-process and completed Boeing Titanium Products for
any purpose reasonably related to the production of Boeing Titanium
Products.
-11-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
13. NOTICES; APPROVALS AND CONSENTS.
13.1 All notices and other communications under this Agreement shall be in
writing and shall be addressed as provided in Section 13.3 below.
13.2 Such notices and communications (properly addressed) shall be deemed given
as follows:
(a) when personally delivered;
(b) three (3) business days after deposit in the mail, first class postage
prepaid;
(c) one (1) day after deposit with a recognized overnight business
delivery service; or
(d) when sent by verified facsimile to the facsimile number provided in
Section 13.3, with original forwarded by regular mail, first class
postage prepaid, or by recognized overnight business delivery service.
13.3 Notices and communications shall be addressed as follows:
If to Boeing:
Boeing Commercial Airplanes
Supplier Management & Procurement
▇.▇. ▇▇▇ ▇▇▇▇
M/S-_____________
Seattle, WA 98124-2207
Attn: Director of Raw Materials
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to TIMET:
Titanium Metals Corporation
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Titanium Metals Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
-12-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
Either party may change its address or facsimile number by giving notice to
the others in accordance with the provisions of this Article 13.
14. ASSIGNMENT.
14.1 This Agreement shall inure to the benefit of and be binding on each of
TIMET and Boeing and their respective successors and permitted assigns.
Neither party hereto may assign its rights and obligations hereunder
(except as otherwise provided in the Terms & Conditions with respect to a
given Order) without the written consent of the other; provided, however,
that either party may assign its rights and obligations hereunder to a
company succeeding to all or substantially all of such party's business
without the consent of the other party. A change in control of either party
shall not affect the respective rights and obligations of the parties
hereunder.
15. NON-WAIVER.
15.1 Boeing's or TIMET's failure at any time to enforce any provision of this
Agreement or any Order shall not constitute a waiver of such provision or
prejudice Boeing's or TIMET's right to enforce such provision at any
subsequent time.
16. INTERPRETATION.
16.1 Article and section headings used in this Agreement are for convenient
reference only and shall not affect the interpretation hereof
17. PARTIAL INVALIDITY.
17.1 If any provision of this Agreement is or becomes void or unenforceable,
whether by operation of law or otherwise, the other provisions shall
nevertheless remain valid and enforceable.
18. APPLICABLE LAW.
18.1 The parties have determined that it is reasonable that this Agreement,
including all matters of construction, validity, and performance, shall in
all respects be governed by, and construed and enforced in accordance only
with the law of the State of Washington as applicable to contracts entered
into and to be performed wholly within such state between citizens of such
State, without reference to any rules governing conflicts of law.
19. AMENDMENT.
19.1 No provision of this Agreement may be changed or modified except by a
writing signed on behalf of Boeing and TIMET which makes express reference
to this Agreement.
20. ENTIRE AGREEMENT; ORDER OF PRECEDENCE.
20.1 This Agreement (as herein amended and restated), together with the
schedules and exhibits hereto which are hereby incorporated into this
Agreement by reference, set forth the entire agreement between Boeing and
TIMET with respect to the subject matter hereof and supersede
-13-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
any and all other prior agreements and understandings between Boeing and
TIMET with respect to such matters.
21. AUTHORITY.
21.1 Each individual executing this Agreement below hereby certifies that this
Agreement has been duly approved and authorized by the party on behalf of
whom such individual is executing and that such individual has been duly
authorized by such party to execute this Agreement on behalf of such party.
-14-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
22. BOEING RECOGNIZED SUBCONTRACTORS.
22.1 Any current or potential supplier to Boeing (whether direct or indirect) of
forged, cast, extruded, or fabricated titanium parts or assemblies shall
become a Boeing Recognized Subcontractor upon satisfaction of each of the
following criteria:
(a) Boeing shall have notified TIMET in writing on or after April 19, 2001
of its desire to have such supplier become a Boeing Recognized
Subcontractor;
(b) such supplier shall have agreed to purchase Boeing Titanium Products
on the terms and conditions attached hereto as Exhibit A (Terms and
Conditions of Purchase and Sale of Boeing Titanium Products) or such
other terms and conditions as TIMET may agree in writing (in TIMET's
sole discretion);
(c) such supplier shall have provided to TIMET a written agreement, in
form and substance reasonably satisfactory to TIMET, to abide by the
limitations on use and resale of Boeing Titanium Products set forth in
Section 2.3 hereof; and
(d) TIMET shall have established credit arrangements for such prospective
Boeing Recognized Subcontractor on terms reasonably satisfactory to
TIMET or, in the absence thereof, such prospective Boeing Recognized
Subcontractor shall have agreed to pay TIMET on a cash in advance
(i.e., upon placement of order) basis.
Notwithstanding the foregoing provisions, any supplier to Boeing that is a
Boeing Recognized Subcontractor as of the date of this amended and restated
Purchase and Sale Agreement shall be regarded as a Boeing Recognized
Subcontractor pursuant to this Section 22 without the need for further
action under this Section 22.1.
22.2 Boeing suppliers who have not become Boeing Recognized Subcontractors shall
not be guaranteed the pricing or availability with respect to Boeing
Titanium Products afforded to Boeing, Boeing's Agent and Boeing Recognized
Subcontractors through this Agreement. Volumes of titanium products either
(a) purchased by any such supplier that is not a Boeing Recognized
Subcontractor or (b) by a Boeing Recognized Subcontractor that does not
reasonably identify to TIMET that it is purchasing under this Agreement
will not be counted as Boeing Titanium Products purchased under this
Agreement for any purpose.
22.3 If a Boeing supplier who desires to become a Boeing Recognized
Subcontractor does not have an established open account with TIMET, TIMET
will work in good faith with such supplier to establish credit arrangements
for such supplier reasonably satisfactory to TIMET. Boeing shall have no
obligation for any payment due from any Boeing Recognized Subcontractor
under any Order. 23. IDENTIFICATION BY BOEING AS HEDGING TRANSACTION.
23.1 Boeing hereby identifies the transactions contemplated by this Agreement as
hedging transactions pursuant to Treasury Regulations Section 1.1221-2(e).
The transactions being hedged by Boeing pursuant to this Agreement are
Boeing's purchases of titanium over the term of this Agreement, and the
risk being hedged is the risk of price movements in the market for
-15-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
titanium. The types or classes of inventory to which this transaction
relates are Boeing's raw materials inventory of titanium and Boeing's
titanium parts inventory. The expected purchase dates and the amounts to be
purchased are unknown as of the date of this Agreement.
IN WITNESS WHEREOF, this Agreement is executed on behalf of the parties
hereto as of the date first hereinabove set forth.
THE BOEING COMPANY, acting by and through
BOEING COMMERCIAL AIRPLANES
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
Procurement Agent
TITANIUM METALS CORPORATION
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman, President & Chief Executive Officer
-16-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
Schedule 1: Pricing
[*]
-17-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
EXHIBIT A
6-5668-DAS/97-019 Rev. 1
-------------
TERMS AND CONDITIONS OF PURCHASE AND SALE
OF BOEING TITANIUM PRODUCTS
------------
TITANIUM METALS CORPORATION
and
BOEING, BOEING'S AGENT
OR A BOEING RECOGNIZED SUBCONTRACTOR
------------
Applicable to all Boeing Titanium Products ordered pursuant to
Boeing/TIMET Basic Agreement (6-5668-DAS/97-019 Rev. 1)
These Terms and Conditions of Purchase and Sale relate to the purchase and
sale of Boeing Titanium Products by Purchaser from TIMET pursuant to that
certain Purchase and Sale Agreement (for titanium products), originally dated
November 5, 1997, as amended and restated effective April 19, 2001, between The
Boeing Company, acting by and through its division, Boeing Commercial Airplanes
(f/k/a Boeing Commercial Airplane Group), and Titanium Metals Corporation
(6-5668-DAS/97-019). Purchaser, if not Boeing itself, is Boeing's Agent or a
Boeing Recognized Subcontractor.
1. DEFINITIONS
Except as otherwise expressly provided in these Terms & Conditions, the
following defined terms shall have the meanings set forth below when used
herein:
1.1 "Basic Agreement" means that certain Amended and Restated Purchase and Sale
Agreement (for titanium products), originally dated November 5, 1997, as
amended and restated effective April 19, 2001, between The Boeing Company,
acting by and through its division, Boeing Commercial Airplanes (f/k/a
Boeing Commercial Airplane Group), and Titanium Metals Corporation
(6-5668-DAS/97-019 Rev. 1), as heretofore or hereafter amended, modified,
restated, or supplemented.
-18-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
1.2 "Boeing" means The Boeing Company, a Delaware corporation, acting by and
through its division, Boeing Commercial Airplanes (f/k/a/ Boeing Commercial
Airplane Group).
1.3 "Boeing Recognized Subcontractor" means a supplier to Boeing (whether
direct or indirect) of forged, cast, extruded or fabricated titanium parts
that has become a Boeing Recognized Subcontractor in accordance with
Section 22 of the Basic Agreement.
1.4 "Boeing Titanium Product" means a titanium product of the type enumerated
on Schedule 1 to the Basic Agreement (as amended, revised or supplemented
from time to time) that is ordered or purchased by a Purchaser from TIMET
pursuant to the Basic Agreement for use in manufacturing parts or
assemblies for fixed wing, commercial aircraft manufactured by Boeing.
1.5 "Boeing's Agent" means an entity that has been designated by Boeing from
time to time to manage the purchasing of Boeing Titanium Products on behalf
of it.
1.6 "Confidential Information" means confidential or proprietary information of
the Disclosing Party furnished to the Receiving Party in connection with
the Orders, including without limitation, technical information in the form
of designs, concepts, requirements, specifications, software, interfaces,
components, processes, or the like, and which, if in visual, written or
graphic form, is clearly and conspicuously identified thereon as
"confidential" or "proprietary" or, if in oral form, is confirmed promptly
thereafter in writing as "confidential" or "proprietary." The provisions of
this Section 1.5 and Article 15 shall not apply to, and the Receiving Party
shall not be obligated to hold in confidence pursuant to Article 15,
information which:
(a) was in the lawful possession of the Receiving Party without
confidentiality restrictions prior to its receipt thereof from the
Disclosing Party;
(b) is or becomes public knowledge without the fault of the Receiving
Party;
(c) s or becomes available to the Receiving Party on an unrestricted basis
from a source having a right to make such disclosure;
(d) is made available on an unrestricted basis to a third party by the
Disclosing Party; or
(e) is developed by the Receiving Party independent of Confidential
Information received under Article 15.
-19-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
1.7 "Disclosing Party" means Purchaser or TIMET, as the case may be,
communicating Confidential Information to the other in connection with
these Terms & Conditions. 1.8 "Excusable Delay" means unforeseeable
circumstances beyond the reasonable control and without the fault or
negligence of TIMET. Excusable Delays include, without limitation, acts of
God, war, riot, acts of government, fires, floods, epidemics, quarantine
restrictions, freight embargoes, strikes, labor disputes, unusually severe
weather, but shall expressly not include TIMET's noncompliance with any
rule, regulation or order promulgated by any governmental agency for or
with respect to environmental protection. The foregoing notwithstanding,
the following shall not be regarded as Excusable Delays:
(a) delays of less than two (2) days duration unless such delay shall
occur within thirty (30) days preceding the scheduled date of delivery
of the Boeing Titanium Product in question; or
(b) the default of any of TIMET's subcontractors or suppliers in providing
supplies or services to TIMET if TIMET is able, on commercially
reasonable terms, to obtain such supplies or services from other
sources in sufficient time to permit TIMET to meet the applicable
delivery schedules.
1.9 "Order" means a purchase order for one or more Boeing Titanium Products
placed by Purchaser with TIMET, to the limited extent such purchase order
has been accepted in writing by TIMET or is deemed to have been accepted by
TIMET pursuant to these Terms & Conditions.
1.10 "Purchaser" means the person, either Boeing, Boeing's Agent, or a Boeing
Recognized Subcontractor, identified as the purchasing party pursuant to a
given Order.
1.11 "Receiving Party" means the party to whom Confidential Information is
communicated by the other party.
1.12 "Representatives" of a given party means its directors, officers, and
employees.
1.13 "Sales Taxes" means sales or use taxes imposed on the sale of Boeing
Titanium Product.
1.14 "Specifications" means the chemical, physical and other specifications
(including inspecting and testing criteria) for Boeing Titanium Products as
agreed to by Boeing and TIMET from time to time in writing. In the absence
of written agreement by Purchaser and TIMET on a different specification in
a given Order for Boeing Titanium Product, the applicable Specification for
such given Boeing Titanium Product shall be that represented by the most
recent revision agreed to in writing by Boeing and TIMET and no such
Specification for a Boeing Titanium Product may be altered or modified in
any Order without the express written consent of TIMET.
1.15 "Stop Work Order" means a written directive to TIMET by Purchaser to stop
work on a given Order in accordance with the provisions of Section 11.2
below.
-20-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
1.16 "Termination Notice" means a written notice to TIMET by Purchaser to
terminate part or all of a given Order in accordance with the provisions of
Section 11.2 below. Any such Termination Notice shall specify the extent
and effective date of such termination.
1.17 "Terms & Conditions" means these Terms and Conditions of Purchase and Sale
of Boeing Titanium Products.
1.18 "TIMET" means Titanium Metals Corporation, a Delaware corporation.
2. ISSUANCE OF ORDERS
2.1 Each Order placed by Purchaser pursuant to the Basic Agreement from time to
time shall contain a description of the Boeing Titanium Product(s) ordered,
a reference to the applicable Specifications for such Boeing Titanium
Product, the Boeing purchase order number, the applicable quantities
desired, the price (determined in accordance with the Basic Agreement), the
Boeing part number, the Boeing airframe for which such part is intended,
TIMET purchased weight per part and shipped weight per part, the desired
delivery schedule, and any other proposed terms different from those set
forth in these Terms & Conditions.
2.2 Each purchase order placed under the Basic Agreement shall conspicuously
reference "Boeing/TIMET LTA 6-5668-DAS/97-019 Rev. 1" (or similar reference
clearly identifying the Basic Agreement). Any purchase order placed with
TIMET by a Purchaser other than Boeing which does not include such legend
shall not be regarded as an Order under the Basic Agreement and shall not
be entitled to the benefits of the pricing or supply provisions of the
Basic Agreement; provided, however, that any inadvertent omission of such
reference may be corrected by Purchaser within [ * ] of TIMET's
acknowledgment of the Order (or such longer period to which TIMET
consents).
2.3 Each Order shall be deemed to incorporate these Terms & Conditions by
reference and to be governed by these Terms & Conditions, except as
otherwise expressly agreed in writing between Purchaser and TIMET. Each
such purchase order shall represent the offer of Purchaser to purchase
strictly on the terms set forth in these Terms & Conditions. To the extent
such purchase order contains terms inconsistent with these Terms &
Conditions, TIMET shall be deemed to have objected to such inconsistent
terms and they shall not become part of the Order, whether or not material,
unless TIMET shall expressly agree to such terms in writing. TIMET's
commencement of performance shall be deemed to represent TIMET's acceptance
of such Order, but only to the extent consistent with these Terms &
Conditions.
2.4 Pricing for each Boeing Titanium Product shall be as set forth on Schedule
1 attached hereto and incorporated herein by this reference.
2.5 Purchaser and TIMET shall agree in writing upon the scheduled delivery date
for any Boeing Titanium Product.
3. DELIVERY; TITLE AND RISK OF LOSS
3.1 Delivery of Boeing Titanium Product shall be [ * ]
-21-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
3.2 Deliveries shall be in accordance in all material respects with the
quantities, schedule and other requirements specified in the applicable
Order. TIMET may not make early or partial deliveries without the written
authorization of Purchaser.
3.3 Title to and risk of any loss of, or damage to, the Boeing Titanium
Products shall pass from TIMET to Purchaser upon delivery in accordance
with the Order, except for loss or damage thereto resulting from TIMET's
negligence or willful misconduct. Passage of title on delivery does not
constitute acceptance of such Boeing Titanium Product by Purchaser.
4. DELAYS
4.1 TIMET shall notify Purchaser promptly of any circumstances that could
reasonably be expected to cause a delay in delivery, stating the estimated
period of delay and the reasons therefor. If requested by Purchaser, TIMET
shall use all additional commercially reasonable efforts to avoid or
minimize delay to the maximum extent reasonably possible, including without
limitation, shipment via air or other expedited routing. Any additional
costs resulting from such efforts will be borne by TIMET, except to the
extent such delay is occasioned by Purchaser or Boeing. Nothing herein
shall prejudice any rights or remedies provided to Purchaser under law.
4.2 TIMET shall promptly notify Purchaser of any actual or threatened labor
dispute that could reasonably be expected to disrupt the timely performance
of the Order. TIMET shall require that any subcontractor to TIMET with
respect to a Boeing Titanium Product provide similar notice to TIMET.
4.3 In the event of any delay in the delivery of any Boeing Titanium Product,
TIMET agrees that it will, from time to time as reasonably requested by
Purchaser, and upon reasonable prior notice, provide Purchaser with an
updated status report regarding such Boeing Titanium Product, including its
expected delivery date, all actions taken or planned by TIMET with respect
to expediting such delivery, and such other relevant information as
Purchaser may reasonably request. Nothing herein shall be construed as a
waiver of Purchaser's rights to proceed against TIMET because of any
delinquency.
5. ON-SITE REVIEW
5.1 Authorized representatives of Purchaser and/or Boeing may enter TIMET's
facility at any reasonable time upon reasonable prior notice to conduct
preliminary inspections and tests of any finished or unfinished Boeing
Titanium Product. TIMET will include a like provision in its subcontracts
issued in conjunction with any Order giving Purchaser and Boeing the right
to enter the premises of TIMET's subcontractors. When reasonably requested
by Purchaser or Boeing, upon reasonable prior notice, representatives of
TIMET will accompany the representatives of Purchaser and/or Boeing to
TIMET's subcontractor's facility.
6. INVOICE AND PAYMENT
-22-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
6.1 TIMET shall issue its invoice to Purchaser and unless Purchaser has agreed
to partial delivery, only upon completion of the Order in its entirety.
Each invoice shall reference Purchaser's and Boeing's Order number.
6.2 Payment terms shall be [ * ], unless otherwise agreed to in writing by
TIMET and Purchaser.
6.3 Payments not received when due shall be subject, in TIMET's discretion, to
late charges of up to [ * ] on the amount outstanding from the date due.
7. PACKING AND SHIPPING
7.1 TIMET shall (a) prepare for shipment and suitably pack all Boeing Titanium
Products to prevent damage or deterioration, (b) when Purchaser has not
identified a carrier for shipment, use commercially reasonable efforts to
secure lowest transportation rates available, (c) comply with the
appropriate carrier tariff for the mode of transportation specified by
Purchaser, and (d) comply with any special instructions stated in the Order
or Specifications, as agreed to by TIMET. If no special instructions are
noted, materials and methods used in packaging shall be suitable to provide
reasonable protection against scratching, breaking and other damage.
7.2 Except as otherwise agreed to by TIMET in the Order, Purchaser shall pay
all charges for preparation, packing, crating, or cartage requested by
Purchaser that are beyond those expressly provided for in this Article 7.
Unless otherwise directed by Purchaser, all standard routing shipments
forwarded on one day to Purchaser must be consolidated. Each container must
be consecutively numbered and marked as set forth below. Container and
Order numbers must be indicated on the applicable ▇▇▇▇ of lading. Two
copies of packing sheets must be attached to the No. 1 container of each
shipment and one copy in each individual container. Each packing sheet must
include, at a minimum, the following information: (a) TIMET's name,
address, and phone number; (b) Order and item number; (c) ship date; (d)
total quantity shipped and quantity in each container, if applicable; (e)
legible packing slip number; (f) nomenclature; (g) unit of measure; (h)
"ship to" if other than Purchaser; and (i) certification, as applicable.
8. WARRANTY; INSPECTION; REJECTION & ACCEPTANCE
8.1 [ * ]
8.2 [ * ]
8.3 [ * ]
8.4 TIMET shall inspect or otherwise verify that all Boeing Titanium Products
under each applicable Order, including those procured from, or furnished by
Purchasers to TIMET, comply with the requirements of the Order in all
material respects. TIMET shall include each packing sheet a certification
that the Boeing Titanium Products shipped comply with the Specifications.
No pre-certification shall be required prior to shipment.
-23-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
8.5 TIMET will promptly notify Purchaser when discrepancies or upsets in
TIMET's processes or product are discovered or suspected for Boeing
Titanium Products already delivered by TIMET to Purchaser or Boeing that
might reasonably be expected call the integrity or safety of such Boeing
Titanium Products into question.
8.6 Unless otherwise agreed to by Purchaser, Boeing Titanium Products delivered
under an Order shall be subject to final inspection and acceptance by
Purchaser at destination, notwithstanding any payment or prior inspection.
If Purchaser performs an inspection or test on the premises of TIMET or its
subcontractor, TIMET shall furnish, and shall require its subcontractor to
furnish, without additional charge, reasonable facilities and assistance
for safe and convenient performance of these duties.
8.7 Purchaser may reject any Boeing Titanium Product which does not conform
with the warranties set forth in Section 8.1. Purchaser or Boeing shall, by
notice, rejection tag, or other written communication, notify TIMET of such
rejection. [ * ]
9. RECORDS; EXAMINATION OF RECORDS
9.1 Quality assurance records shall be maintained on file at TIMET's facility
and available to authorized representatives of Purchaser and Boeing. TIMET
shall retain such records for a period of not less than seven (7) years
from the date of final payment under the applicable Order.
9.2 All reports, drawings, and other technical information submitted to
Purchaser or Boeing for review or approval shall be in English and shall
employ the units of measure customarily used by Boeing in the United
States.
9.3 TIMET shall maintain complete and accurate records that show the sales
volume of all Boeing Titanium Products delivered to Purchaser.
9.4 Purchaser shall maintain a record of all titanium products purchased by
Purchaser from sources other than TIMET which are used for parts
manufactured by Purchaser for Boeing (whether directly or indirectly).
Purchaser will report such quantities to Boeing annually or as more
frequently requested by Boeing.
10. AMENDMENTS TO ORDER
10.1 Subject to Purchaser's right to terminate an Order in accordance with
Section 11.2, once an Order has been placed and accepted by TIMET, it may
not be modified in any respect (including without limitation, as to
delivery dates, quantities, size, or Specifications) without the written
approval of both Purchaser and TIMET. TIMET will use all commercially
reasonable efforts to accommodate any proposed change in an Order, subject
to agreement between TIMET and Purchaser as to any resulting pricing
adjustment.
-24-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
10.2 Any proposed modification to an Order shall be submitted in writing by
Purchaser to TIMET. TIMET shall use its best efforts to respond to any
requested change within [ * ]of receipt of such requested change, either by
(a) accepting such change without price adjustment, (b) accepting such
change subject to a proposed price adjustment set forth in its response, or
(c) rejecting the change with a specific indication as to why such change
is commercially impracticable and, if applicable, any proposed alternative
that is believed by TIMET to achieve or approximate the result intended by
the proposed change.
11. SUSPENSION OF WORK; TERMINATION OF ORDER
11.1 Subject to the provisions of Section 11.8 below, Purchaser may at any time,
by a Stop Work Order delivered to TIMET, require TIMET to stop all or any
part of the work called for by a given Order issued by Purchaser. Promptly
following receipt of a Stop Work Order, TIMET shall comply with its terms
and take all commercially reasonable steps to minimize the occurrence of
costs arising from the work covered by the Stop Work Order during the
period of work stoppage. Unless Purchaser has canceled the Stop Work Order
within [ * ] following its issuance, TIMET will be entitled to treat the
portion of the given Order subject to the Stop Work Order as having been
terminated in accordance with the provisions of Section 11.2 below. In the
event the Stop Work Order is canceled by Purchaser within such time period,
TIMET will promptly resume work in accordance with the terms of the
applicable Order. The applicable scheduled delivery date under such Order
shall be deemed to have been extended by the number of days elapsing from
the date of TIMET's receipt of the Stop Work Order until the date of its
receipt of notice of cancellation of the Stop Work Order, plus [ * ] to
allow for the material to be worked back into the existing production
schedule in an orderly fashion.
11.2 Subject to the provisions of Section 11.8 below, Purchaser may, from time
to time, in its discretion, terminate all or part of any Order issued by
Purchaser pursuant to a Termination Notice delivered to TIMET. Upon receipt
of a Termination Notice, TIMET shall, unless otherwise directed by
Purchaser:
(a) promptly stop work as specified in the Termination Notice;
(b) promptly terminate its subcontracts and purchase orders relating to
work terminated, to the extent legally possible and commercially
reasonable;
(c) settle any termination claims made by TIMET's subcontractors or
suppliers, provided Purchaser has approved the amount of such
termination claim prior to such settlement;
(d) preserve and protect in a commercially reasonable manner all finished
Boeing Titanium Products covered by such Termination Notice and
deliver the same to Purchaser upon its written direction;
(e) coordinate with Purchaser and Boeing to reapply any unfinished metal
to any other Order placed by Purchaser, Boeing or Boeing's Agent under
the Basic Agreement; and
-25-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
(f) take such other commercially reasonable steps as Purchaser may
request.
11.3 If Purchaser terminates an Order, in whole or in part, pursuant to Section
11.2 above, and TIMET is unable to reapply, within [ * ]of the date of such
termination, any Boeing Titanium Product covered by such Order (in its
then-current state) to another order (other than for its value as scrap
material), whether on behalf of Boeing, Boeing's Agent or a Boeing
Recognized Subcontractor or otherwise, TIMET shall have the right to submit
a written termination claim to Purchaser in accordance with the terms of
this Section 11.3. Such termination claim shall be submitted to Purchaser
no later than [ * ] after TIMET's receipt of the Termination Notice. Any
claim by TIMET for cancellation charges not made within such [ * ] period
shall be deemed waived by TIMET, and TIMET shall thereafter be barred from
submitting such claim and Purchaser shall have no obligation for payment to
TIMET of any such claim. Cancellation charges, if any, shall be determined
and payable as follows as to each Boeing Titanium Product as to which the
Order is terminated:
[ * ]
The cancellation charges reflect TIMET's retention of the metal for
its reapplication or scrap value; therefore, TIMET shall be entitled to
retain the metal unless it shall have been reapplied in accordance with the
provisions of Section 11.2(f). In addition, TIMET shall also be entitled to
recover any amounts paid by TIMET in accordance with Section 11.2(c).
11.4 Any partial termination of an Order shall not alter or affect the terms and
conditions of the Order with respect to any Boeing Titanium Products not
terminated or as to any other Order.
11.5 Termination shall not result in any change to unit prices for Boeing
Titanium Products not terminated.
11.6 Cancellation charges shall be payable by Purchaser to TIMET within [ * ]
following written claim therefor by TIMET. Purchaser may have made partial
cancellation payments and payments against costs incurred by TIMET for the
terminated portion of an Order, in which case should the total of such
payments exceed the amount to which TIMET is ultimately determined to be
entitled, TIMET shall repay the excess to Purchaser promptly following
demand.
11.7 TIMET shall maintain all records and documents relating to the terminated
portion of any Order for not less than three (3) years after final
settlement of TIMET's termination claim.
11.8 Notwithstanding the other provisions of this Article 11, without TIMET's
written approval, [ * ]
-26-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
12. TIMET EVENTS OF DEFAULT; PURCHASER'S REMEDIES
12.1 The occurrence of any one or more of the following events shall constitute
a "TIMET Event of Default" hereunder:
(a) any breach by TIMET of these Terms & Conditions or the other
provisions of the applicable Order in any material respect (other than
a breach of the warranty set forth in Section 8.1, for which the sole
and exclusive remedy is provided in Section 8.7), which breach
continues unremedied for more than [ * ] following written notice of
such breach by Purchaser to TIMET; or
(b) the suspension, dissolution or winding-up of TIMET's business, TIMET's
admission in writing of its insolvency or inability to pay its debts
as they become due, the institution of reorganization, bankruptcy,
liquidation, or other such proceedings by TIMET, the institution of
reorganization, bankruptcy, liquidation, or other such proceedings
against TIMET which remain undismissed for more than [ * ], the
appointment of a custodian, trustee, receiver, or similar person for
TIMET's properties or business, or an assignment by TIMET for the
benefit of its creditors.
12.2 If any TIMET Event of Default shall occur, Purchaser may pursue any or all
of the following remedies:
(a) Purchaser may, upon written notice to TIMET, cancel the Order to which
such breach relates, in whole or in part, in which case Purchaser
shall not thereafter be required to accept tender by TIMET of any
Boeing Titanium Products with respect to which Purchaser has elected
to cancel such Order; or
(b) Purchaser may manufacture, produce or provide, or may engage any other
person to manufacture, produce or provide, any Boeing Titanium Product
in substitution for the Boeing Titanium Products to be delivered or
provided by TIMET hereunder with respect to which any Order (or part
of an Order) has been canceled and Purchaser may recover from TIMET
the difference between the price for each such Boeing Titanium Product
and the aggregate expense reasonably incurred by Purchaser to
manufacture, produce or provide, or engage other persons to
manufacture, produce or provide, each such Boeing Titanium Product,
but not to exceed an amount equal to [ * ] of the applicable price for
such Boeing Titanium Product under such Order.
13. PURCHASER EVENTS OF DEFAULT; TIMET'S REMEDIES
13.1 The occurrence of any one or more of the following events shall constitute
a "Purchaser Event of Default" hereunder:
(a) any failure by Purchaser to make timely payment of an uncontested
invoice for Boeing Titanium Product previously delivered by TIMET to
Purchaser (or at Purchaser's
-27-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
direction to another), which non-payment remains outstanding for more
than [ * ] following written demand for payment by TIMET to Purchaser;
(b) any other breach by Purchaser of these Terms & Conditions or the other
provisions of the applicable Order in any material respect, which
breach continues unremedied for more than [ * ] following written
notice of such breach by TIMET to Purchaser;
(c) Purchaser's use of any Boeing Titanium Product purchased from TIMET
hereunder for purposes other than for use in manufacturing parts or
assemblies for fixed wing, commercial aircraft manufactured by Boeing;
or
(d) the suspension, dissolution or winding-up of Purchaser's business,
Purchaser's admission in writing of its insolvency or inability to pay
its debts as they become due, the institution of reorganization,
bankruptcy, liquidation, or other such proceedings by Purchaser, the
institution of reorganization, bankruptcy, liquidation, or other such
proceedings against Purchaser which remain undismissed for more than [
* ], the appointment of a custodian, trustee, receiver, or similar
person for Purchaser's properties or business, or an assignment by
Purchaser for the benefit of its creditors.
13.2 If any Purchaser Event of Default shall occur, TIMET may pursue any or all
of the following remedies:
(a) TIMET may, upon written notice to Purchaser and Boeing, cancel any and
all outstanding Orders by Purchaser, in whole or in part, in which
case TIMET
(i) shall not thereafter be required to continue manufacture of any
Boeing Titanium Products with respect to which TIMET has elected
to cancel such Order; and
(ii) shall be entitled to recover from Purchaser the charges that
would have applied under Section 11.2 with respect to each such
Boeing Titanium Product as to which an Order (or portion thereof)
is canceled as though Purchaser had terminated each such Order
(or portion thereof) in accordance with Section 11.2 as of such
date of cancellation; or
(b) TIMET may, upon written notice to Purchaser and Boeing, refuse to
further recognize Purchaser as such for purposes of the Basic
Agreement; or
(c) TIMET may, by written notice to such Purchaser and Boeing,
make any adjustment in the credit terms then applied to such
Purchaser (including without limitation, requiring Purchaser
to make full payment at time of Order placement).
-28-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
14. EXCUSABLE DELAY
14.1 If delivery of any Boeing Titanium Product is delayed by virtue of an
Excusable Delay, the delivery of such Boeing Titanium Product shall be
extended for the period that such Excusable Delay shall continue; provided,
however, that if an Excusable Delay shall delay delivery of a Boeing
Titanium Product for more than [ * ], Purchaser may, upon written notice to
TIMET, cancel all or part of the Order with respect to such delayed Boeing
Titanium Product.
14.2 TIMET shall use all commercially reasonable efforts to mitigate the effects
of any Excusable Delay, both during and after such Excusable Delay.
15. CONFIDENTIALITY
15.1 The parties will not identify information as Confidential Information
unless the Disclosing Party believes that such information is proprietary
to, or constitutes a trade secret of, the Disclosing Party. The parties
will attempt to limit the exchange of Confidential Information to only that
Confidential Information necessary for the purposes of these Terms &
Conditions.
15.2 The parties agree that, for a period of [ * ] from the date of receipt of
Confidential Information, without the prior written consent of the other
party hereto and except as may be required by law, the Receiving Party
shall hold in confidence and not disclose Confidential Information received
by it, except to (a) Representatives of the Receiving Party who require
such Confidential Information for purposes of these Terms & Conditions and
who agree to hold such Confidential Information in confidence in accordance
with the terms of these Terms & Conditions and (b) subcontractors of the
Receiving Party whose involvement is required by the Receiving Party for
purposes of these Terms & Conditions and who agree to hold such
Confidential Information in confidence in accordance with the terms of
these Terms & Conditions.
15.3 Confidential Information shall not be used by the Receiving Party (or any
Representative to whom the Receiving Party discloses such Confidential
Information) except for the purposes contemplated in these Terms &
Conditions.
15.4 The Receiving Party will be deemed to have satisfied its obligations of
confidentiality and non-use hereunder if it uses reasonable care to protect
against unauthorized disclosure or misuse of Confidential Information
received by it hereunder, which care shall not be less than the care taken
by the Receiving Party to protect its own confidential or proprietary
information from disclosure or use by others. Upon discovery of any
accidental disclosure or misuse, the Receiving Party shall take all
reasonable steps to recover or limit further misuse of such Confidential
Information.
15.5 The Receiving Party will copy Confidential Information received by it only
as reasonably necessary for the purposes contemplated in these Terms &
Conditions.
-29-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
15.6 The Receiving Party agrees to return to the Disclosing Party all copies of
written Confidential Information received pursuant to these Terms &
Conditions, as well as all copies made thereof or written materials
prepared by the Receiving Party containing Confidential Information, within
thirty (30) calendar days of the written demand of the Disclosing Party;
provided, however, that the Receiving Party may retain a single copy of all
Confidential Information received for purposes of establishing compliance
with the terms of these Terms & Conditions, which copy shall be segregated
from the normal business records of the Receiving Party and held in strict
confidence in accordance with the terms of these Terms & Conditions.
15.7 If the Receiving Party or any of its Representatives becomes legally
compelled (by deposition, interrogatory, request for documents, subpoena,
civil investigative demand or similar process) to disclose any of the
Confidential Information, the Receiving Party will advise and consult with
the Disclosing Party prior to any such disclosure, so that the Disclosing
Party may seek a protective order or other appropriate remedy and/or waive
compliance with these Terms & Conditions. If such protective order or other
remedy is not obtained, or compliance with these Terms & Conditions is
waived as above, the Receiving Party will disclose only that portion of the
Confidential Information which the Receiving Party is advised by counsel is
legally required and the Receiving Party will exercise reasonable efforts
to obtain assurance that confidential treatment will be accorded such of
the Confidential Information as is disclosed. Any disclosure made in
accordance with the provisions of this Section 15.7 shall not be regarded
as a breach of the obligations of the Receiving Party pursuant to these
Terms & Conditions.
15.8 Nothing in this Article 15 shall be construed as granting or conveying to
the Receiving Party any right or license to use Confidential Information of
the Disclosing Party except for the purposes contemplated in these Terms &
Conditions or to practice any inventions described and claimed in any
pending patent applications or issued patents which are owned or controlled
by the Disclosing Party relating to such Confidential Information.
15.9 Each of the parties hereto acknowledges and agrees that the other party
would be damaged irreparably in the event any of the provisions of this
Article 15 are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that the
other party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Article 15 and to enforce specifically
the terms of this Article 15 in any action instituted in any court of the
United States or any state thereof having jurisdiction over the matter and
the parties, in addition to any other remedy to which it may be entitled,
at law or in equity.
16. COMPLIANCE WITH LAWS
16.1 TIMET and Purchaser shall each be responsible for complying with all laws,
including without limitation, any statute, rule, regulation, judgment,
decree, order, or permit, applicable to its performance under these Terms &
Conditions. TIMET agrees to notify Purchaser and Boeing in the event (a)
any of TIMET's obligations under these Terms & Conditions becomes
prohibited under any applicable environmental law, with such notice to be
made at the earliest practicable opportunity so as to enable the
identification of alternative methods of performance
-30-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
or (b) TIMET becomes subject to additional environmental regulation which
could reasonably be expected to materially impair its ability to perform
under these Terms & Conditions.
16.2 TIMET shall, at least annually or as Purchaser may otherwise reasonably
request, via invoice or other form reasonably satisfactory to Purchaser,
certify that the Boeing Titanium Products covered by each 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,
to the extent flow-down of the following Federal Acquisition Regulations is
required by any Purchaser contract to which an Order relates, such
regulations are incorporated herein by reference to each such Order, except
that in such context the term "Contractor" shall mean TIMET:
(a) FAR 52.222-26 Equal Opportunity;
(b) FAR 52.222-35 Affirmative Action for Special Disabled and Vietnam Era
Veterans; and
(c) FAR 52.222-36 Affirmative Action for Handicapped Workers.
17. INFRINGEMENT
17.1 Except as provided in Section 17.2 below, TIMET shall indemnify, defend,
and save Purchaser harmless from all claims, suits, actions, awards
(including without limitation, awards based upon intentional infringement
of patents known to TIMET at the time of such infringement, exceeding
actual damages, and/or including attorneys' fees and/or costs),
liabilities, damages, attorneys' fees, and costs related to the actual or
alleged infringement of any United States or foreign intellectual property
right (including without limitation, 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 Boeing Titanium Products by TIMET or
Purchaser. Purchaser shall promptly notify TIMET of any such claim, suit,
or action, and TIMET shall, at its own expense, fully defend such claim,
suit, or action on behalf of Purchaser.
17.2 Section 17.1 shall not apply in the case of, and Purchaser shall indemnify,
defend, and save TIMET harmless from, any claim, suit, action, award
(including without limitation, award based upon intentional infringement of
patents known to Purchaser at the time of such infringement, exceeding
actual damages, and/or including attorneys' fees and/or costs), liability,
damage, attorneys' fees, and costs related to the actual or alleged
infringement of any United States or foreign intellectual property right
(including without limitation, any right in a patent, copyright, industrial
design or semiconductor mask work, or based on misappropriation or wrongful
use of information or documents) when such infringement arises from:
(a) TIMET's compliance with formal specifications issued by Purchaser when
infringement could not reasonably be avoided in complying with such
specifications; or
-31-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
(b) the use or sale of Boeing Titanium Products by Purchaser in
combination with other items when such infringement would not have
occurred from the use or sale of those Boeing Titanium Products solely
for the purpose for which they were designed or sold by TIMET.
For purposes of this Section 17.2, the term "TIMET" shall include
Titanium Metals Corporation and all of its subsidiaries and the respective
officers, agents, and employees of each.
18. NOTICES; APPROVALS AND CONSENTS
18.1 All notices and other communications under these Terms & Conditions shall
be in writing and shall be addressed as provided in Section 18.3 below.
18.2 Such notices and communications (properly addressed) shall be deemed given
as follows:
(a) when personally delivered;
(b) three (3) business days after deposit in the mail, first class postage
prepaid;
(c) one (1) day after deposit with a recognized overnight business
delivery service; or
(d) when sent by verified facsimile to the facsimile number provided in
Section 18.3, with original forwarded by regular mail, first class
postage prepaid, or by recognized overnight business delivery service.
18.3 Notices and communications shall be addressed as follows:
If to Boeing:
Boeing Commercial Airplanes
Supplier Management & Procurement
▇.▇. ▇▇▇ ▇▇▇▇ Mail Stop _______
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to TIMET:
Titanium Metals Corporation
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
-32-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
With a copy to:
Titanium Metals Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser: as set forth in the applicable Order (or
` as otherwise on record with TIMET)
Any party may change its address or facsimile number by giving
notice to the others in accordance with the provisions of this Article
18.
18.4 With respect to all matters subject to the approval or consent of Purchaser
or TIMET, such approval or consent shall be deemed given only when given in
writing in the manner provided in this Article 18 for notices.
19. ASSIGNMENT
19.1 Each Order shall inure to the benefit of and be binding on each of TIMET
and Purchaser and their respective successors and assigns; provided,
however, that no assignment of any rights or delegation of any duties under
any such Order shall be binding upon Purchaser unless Purchaser's written
consent has first been obtained, except that TIMET may assign claims for
monies due or to become due under any Order.
20. NON-WAIVER
20.1 No failure on the part of Purchaser or TIMET in exercising any right or
remedy hereunder, or as provided in 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 of 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
obligation hereunder shall constitute a waiver of any Event of Default or a
waiver or release of payment or performance in full of any such obligation.
Notwithstanding the foregoing, the rights and remedies of Purchaser and
TIMET set forth in Sections 8.7, 12.2 and 13.2, as applicable, shall be the
sole and exclusive remedies available to such parties for any breach of the
terms of any Order.
-33-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
21. INTERPRETATION
21.1 Article and section headings used in these Terms & Conditions are for
convenient reference only and shall not affect the interpretation hereof.
22. PARTIAL INVALIDITY
22.1 If any provision of any Order or of these Terms & Conditions is or becomes
void or unenforceable, whether by operation of law or otherwise, the other
provisions shall nevertheless remain valid and enforceable.
23. APPLICABLE LAW
23.1 Given the significant variety of Boeing Recognized Subcontractors that may
be participating in the Basic Agreement and the impracticability of
selecting a governing jurisdiction that necessarily bears a substantial
relationship to the location of operations of either TIMET or Purchaser in
each instance, the parties have determined that it is reasonable that each
Order, including all matters of construction, validity, and performance,
shall in all respects be governed by, and construed and enforced in
accordance only with the law of the State of Washington as applicable to
contracts entered into and to be performed wholly within such state between
citizens of such State, without reference to any rules governing conflicts
of law.
24. AMENDMENT
24.1 No Order and no provision of these Terms & Conditions may be changed or
modified except by a writing signed on behalf of TIMET and Purchaser which
makes express reference to such Order or these Terms & Conditions, as
applicable.
25. TAXES
25.1 All taxes, including without limitation, federal, state, local, and foreign
income taxes, value added taxes, gross receipt taxes, property taxes, and
custom duties or taxes are deemed to be included in the Order price unless
otherwise expressly provided therein; provided, however, that the foregoing
shall not apply to applicable Sales Taxes on sales to Purchaser for which
Purchaser has not supplied a valid exemption certificate.
-34-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
25.2 In the event that any taxing authority has claimed or does claim payment
for Sales Taxes, TIMET shall promptly notify Purchaser, and TIMET shall
take such action as Purchaser may reasonably request to pay or protest such
taxes or to defend against such claim. Purchaser shall indemnify and hold
TIMET harmless from any and all reasonable liabilities, damages, costs and
expenses (including without limitation, reasonable attorneys fees and costs
of litigation) incurred in connection with such defense, as well as the
amount of any taxes ultimately determined to be due and payable. If TIMET
is successful in defending such claim, the amount of such taxes recovered
by TIMET which had previously been paid by TIMET and reimbursed by
Purchaser or paid directly by Purchaser, less TIMET's reasonable expenses
incurred as provided in the foregoing sentence, shall be promptly returned
to Purchaser.
25.3 If any taxes paid by Purchaser are subject to rebate or reimbursement,
TIMET shall take all commercially reasonable actions to secure such rebates
or reimbursement and shall promptly refund to Purchaser any amount
recovered.
26. ENTIRE AGREEMENT; ORDER OF PRECEDENCE
26.1 The Basic Agreement, the Order and these Terms & Conditions set forth the
entire agreement between Purchaser and TIMET with respect to the subject
manner of such Order and supersede any and all other prior agreements and
understandings between Purchaser and TIMET with respect to such Order.
26.2 In the event of any conflict or inconsistency between any of the terms of
the following documents, the following order of precedence shall control:
(a) the Basic Agreement;
(b) the Order (excluding these Terms & Conditions) as agreed to in writing
between Purchaser and TIMET;
(c) these Terms & Conditions; and
(d) any other exhibits or documents that Purchaser and TIMET have agreed
in writing to be part of the agreement between them with respect to
the Order.
27. GOVERNING QUALITY ASSURANCE REQUIREMENTS
27.1 In addition to those general quality assurance requirements set forth in
the Basic Agreement or above, the work performed under these Terms &
Conditions shall be in accordance with the requirements set forth herein.
27.2 All work performed under these Terms & Conditions shall be in accordance
with either:
(a) Document D1-9000 Rev. A, "Advanced Quality System," Section 1 Basic
Quality System, which is incorporated herein and made a part hereof by
this reference, or
-35-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
(b) Alternatively, as and when TIMET becomes approved by Boeing to
Document D6-82479, "Boeing Quality Management System Requirements for
Suppliers - Appendix A - Quality Management System," then at such time
said document shall apply and will be incorporated herein, made a part
hereof by this reference, and supercede Document D1-9000 Rev. A.
Boeing will notify TIMET in writing of any proposed future amendments
thereto, and the parties will consult with respect to the timing of
TIMET's implementation of such amendment.
27.3 Supplemental Quality Requirements
In addition, TIMET shall also comply with the following Supplemental
Quality Requirements:
(a) At least annually, TIMET shall conduct internal audits at each of its
manufacturing and Service Center sites to ensure compliance to their
quality system and the controlling quality assurance document;
(b) TIMET shall promptly notify Boeing of any changes in the management
representative with assigned responsibility and authority for the
quality system;
(c) TIMET shall immediately notify Boeing in writing of any change to the
manufacturing facility location of the Boeing Titanium Product;
(d) TIMET shall maintain an English language translation of (1) its
quality manual, (2) the operating instructions that implement the
quality manual requirements (except with respect to TIMET ▇▇▇▇▇▇), and
(3) an index of all other TIMET procedures that contain quality
requirements. Boeing may require additional documentation to be
translated, including but not limited to: shop orders, technical
specifications, certificates, reports, nonconformance documents and,
with respect to TIMET ▇▇▇▇▇▇, the operating instructions that
implement the quality manual requirements;
(e) TIMET shall prepare and maintain a list of subcontractors for each
Boeing Titanium Product manufactured for use on Boeing aircraft. When
requested by Boeing, TIMET shall provide such list to Boeing. Boeing
may request such list for any reason it deems necessary including but
not limited to the following:
(1) TIMET makes a determination of Boeing Titanium Product
conformance by means other than source inspection;
(2) TIMET or their subcontractor(s) delegate inspection authority to
their subcontractors;
(3) A subcontractor delivers Products directly to Boeing;
(4) A subcontractor performs special processes as identified in
Boeing ▇▇-▇▇▇▇, ▇▇▇▇▇▇ Approved Process Sources; or
(5) A subcontractor performs other processes that require Boeing
approval identified in design data (e.g., DMS, DPS, BMS, BAC).
-36-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
Subcontractor data shall contain the subcontractor name,
address, and telephone number, QA manager name and special
processes.
27.4 Acceptance/Rejection of TIMET's Root Cause/Corrective Action
Boeing reserves the right to reject any root cause and/or corrective
action determination provided by TIMET, and may request subsequent
investigation and/or corrective action to either Boeing or
TIMET-initiated corrective action requests. If TIMET is late in
responding to corrective action requests by Boeing, or if Boeing
requires subsequent corrective action, Boeing reserves the right to
withhold acceptance of shipments of the affected Boeing Titanium
Product either at source or destination until TIMET corrective action
is submitted to Boeing's satisfaction.
27.5 Additional Puget Sound, Wichita, and Tulsa Quality Requirements
(a) TIMET's Inspection Options
(1) TIMET shall perform either 100% inspection or acceptance
sampling for receiving inspection. TIMET shall perform 100%
inspection, acceptance sampling or statistical process
control for in-process inspection or final inspection for
each characteristic of a Boeing Titanium Product.
(2) If TIMET performs acceptance sampling, TIMET 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.
(3) When statistical process control is used as an option for
either in-process or final inspection, TIMET must satisfy
the requirements of D6-82479, Addendum 1.
(4) 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.
(b) Change in Quality System Procedures
(1) TIMET shall immediately notify Boeing in writing of any
change to the quality control system that may affect the
inspection, conformity or airworthiness of the Boeing
Titanium Product. After the issue of initial Boeing quality
system approval, each change to the quality control system
that may reasonably be expected to affect any of the
foregoing aspects in any material respect is subject to
review by Boeing.
(2) TIMET shall include, as part of the aforementioned 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.
-37-
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.
EXHIBIT B
Category Notes Q1 Q2 Q3 Q4 Annual
---------------------- --------------- ---------- ----------- ----------- ----------- ----------
Volume Maximum (a)(b) 3.0 3.0 3.0 3.0 7.5
---------------------- --------------- ---------- ----------- ----------- ----------- ----------
[ * ] (c) [ * ] [ * ] [ * ] [ * ] [ * ]
---------------------- --------------- ---------- ----------- ----------- ----------- ----------
Lead Time (d) [ * ] [ * ] [ * ] [ * ] [ * ]
---------------------- --------------- ---------- ----------- ----------- ----------- ----------
NOTES
(a) Amounts (other than percentages) are in millions of pounds.
(b) TIMET is not required to accept Orders from Boeing, Boeing's Agent or
any Boeing Recognized Subcontractor for Boeing Titanium Products
aggregating more than 3.0 million pounds in any given Calendar Quarter
or more than 7.5 million pounds in any given calendar year (but may
elect to do so, if -- requested, in its sole discretion). TIMET will
provide written notice to Boeing in the event the aggregate purchases
by Boeing, Boeing's Agent and all Boeing Recognized Subcontractors
credited for any given Calendar Quarter reach [ * ]. In the event
TIMET shall have failed to give notice by the time the aggregate
purchases by Boeing, Boeing's Agent and all Boeing Recognized
Subcontractors exceeds [ * ], then the maximum volume limit for such
Calendar Quarter shall be increased by the difference between the
volume at the time notice is given and [ * ].
(c) [ * ]
(d) All Orders are subject to the limitations shown in the latest Lead
Time Schedule in accordance with Section 4.3. Lead times will be
comparable to those supplied to other customers for like product and
quantity.
* Certain information, indicated by [ * ] has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such omitted portions.