SPECIAL BUSINESS PROVISIONS
SPECIAL BUSINESS PROVISIONS
between
THE BOEING COMPANY
and
KAYNAR TECHNOLOGIES INCORPORATED
Number STD-65751-025
-------------
** Filed under an application for confidential treatment.
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SPECIAL BUSINESS PROVISIONS
TABLE OF CONTENTS
Section Item
------- ----
1.0 DEFINITIONS
2.0 PURCHASE ORDER NOTE
3.0 PRICES
3.1 Product Pricing
3.2 Manufacturing Configuration Baseline
3.3 Packaging
4.0 GOVERNING QUALITY ASSURANCE REQUIREMENT
5.0 APPLICABLE LAW JURISDICTION
6.0 PRODUCT ASSURANCE
6.1 Governing Document
7.0 PAYMENT
7.1 Recurring Price
7.2 Non-Recurring Price/Special Charges
8.0 ACCELERATION/DECELERATION AT NO COST
9.0 NOTICES
9.1 Addresses
10.0 OBLIGATION TO PURCHASE AND SELL
11.0 COST AND FINANCIAL PERFORMANCE VISIBILITY
12.0 CHANGES
12.1 Changes to the Statement of Work
12.2 Computation of Equitable Adjustment
12.3 Obsolescence
12.4 Change Absorption
12.5 Planning Schedule
12.6 Value Engineering
12.7 Reduction in Quantity to be Delivered
13.0 SPARES AND OTHER PRICING
13.1 Spares
13.2 Short Flow Production Requirements
13.3 Tooling
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SPECIAL BUSINESS PROVISIONS
TABLE OF CONTENTS
Section Item
------- ----
13.4 Pricing of Boeing's Supporting Requirements
13.5 Pricing of Requirements for Modification or Retrofit
13.6 Similar Pricing
14.0 STATUS REPORTS/REVIEWS
15.0 PROVISIONS FOR OFFSET/BUSINESS STRATEGIES FOREIGN
PROCUREMENT REPORT
16.0 BOEING FURNISHED MATERIAL
17.0 ASSIGNMENT
Attachment 1, 1A Work Statement and Pricing
Attachment 2 Foreign Procurement Report
Attachment 3 Rates and Factors
Attachment 4 Boeing AOG Coverage
Attachment 5 Boeing AOG/Critical
Shipping Notification
Attachment 6 Economic Price Adjustment for Titanium
Seal Nuts
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SPECIAL BUSINESS PROVISIONS
AMENDMENTS
AMEND
NUMBER DESCRIPTION DATE APPROVAL
------ ----------- ---- --------
1 Add BACN10JS part family to 12/3/96 see original
Attachment 1, page 1 and 2.
2 Correct pricing to reflect 4 12/9/96 see original
decimal places.
3 Add exhibit 1A and 6 for TN 1/17/97
pricing.
Add escalation for Attachment
1A to section 3.1.
Modify section 10.0 to denote
percent of requirements
purchased for Attachment 1A.
Modify sections: 3.1, 3.2, 3.3,
7.2, 10.0, 12.6.3, 13.1.3,
13.1.3.1, 13.1.3.2, 13.4, 13.5,
and 17.0 to include Attachment 1A.
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SPECIAL BUSINESS PROVISIONS
SPECIAL BUSINESS PROVISIONS
THESE SPECIAL BUSINESS PROVISIONS are entered into as of September 20, 1996 by
and between Kaynar Technologies Incorporated, a California corporation with its
principal office in Fullerton, California ("Seller"), and The Boeing Company, a
Delaware corporation with an office in Seattle, Washington acting by and through
its division the Boeing Commercial Airplane Group ("Boeing").
RECITALS
--------
A. Boeing and Seller entered into a General Terms Agreement GTA #
BCA-65751-029 dated September 20, 1996, (the "Agreement") which is
incorporated herein and made a part hereof by this reference, for the sale
by Seller and purchase by Boeing of Products.
B. Boeing and Seller desire to include these special business provisions
("SBP") relating to the sale by Seller and purchase by Boeing of Products.
Now, therefore, in consideration of the mutual covenants set forth herein, the
parties agree as follows:
PROVISIONS
1.0 DEFINITIONS
The definitions used herein shall be the same as used in the Agreement.
2.0 PURCHASE ORDER NOTE
The following note shall be contained in any Order to which these SBP are
applicable:
This Order is subject to and incorporates by this reference SBP
STD-65751-025 between The Boeing Company and Kaynar Technologies
Incorporated dated September 20, 1996.
Each Order bearing such note shall be governed by and be deemed to include
the provisions of these SBP.
3.0 PRICES
3.1 PRODUCT PRICING
The prices and applicable period of performance of Products scheduled for
delivery under this SBP are set forth in Attachment 1 and 1A. Prices are
in United States dollars, F.O.B. Fullerton, California. Prices for
Products in Attachment 1A shall be subject to escalation as set forth in
Attachment 6.
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SPECIAL BUSINESS PROVISIONS
3.2 MANUFACTURING CONFIGURATION BASELINE
Unit pricing for each Product or part number shown in Attachment 1 and 1A
are based on the latest revisions of the engineering drawings or
specifications at the time of the signing of this SBP.
3.3 PACKAGING
The prices shown in Attachment 1 and 1A include packaging costs and all
materials and labor required to package Products identified in Attachment 1
and 1A. Packaging shall be furnished by the Seller in accordance with
Document M6-1025, Volume II, "Supplier Part Protection Guide", Document
D200-10038-2 "Supplier Packaging Requirements", or in accordance with
instructions specified on individual Order as applicable. In the case of
Products to be shipped directly to Customers, A.T.A. Specification 300
"Specification for Packaging of Airline Supplies" shall apply unless
otherwise directed by Boeing. Bulk packaging is acceptable for Products
shown on Attachment 1A.
4.0 GOVERNING QUALITY ASSURANCE REQUIREMENT
All work performed under this SBP shall be in accordance with the following
document which is incorporated herein and made a part hereof by this
reference:
Document D1-9000, "Advanced Quality System for Boeing Suppliers," as
amended from time to time.
5.0 APPLICABLE LAW JURISDICTION
Each Order, including all matters of construction, validity and
performance, shall in all respects be governed by, and construed and
enforced in accordance 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. Seller hereby irrevocably consents to and
submits itself exclusively to the jurisdiction of the applicable courts of
the State and the federal courts therein for the purpose of any suit,
action or other judicial proceeding arising out of or connected with any
Order or the performance or subject matter thereof. Seller hereby waives
and agrees not to assert by way of motion, as a defense, or otherwise, in
any such suit, action or proceeding, any claim that (a) Seller is not
personally subject to the jurisdiction of the above-named courts, (b) the
suit, action or proceeding is brought in an inconvenient forum or (c) the
venue of the suit, action or proceeding is improper.
6.0 PRODUCT ASSURANCE
6.1 GOVERNING DOCUMENT
Seller acknowledges that Boeing and Customers must be able to rely on each
Product performing as specified and that Seller will provide all required
support. Accordingly, the following provisions and document(s) are
incorporated herein and made a part hereof:
Seller warrants to Boeing and Customers that Products shall: (a) conform
in all respects to all the requirements of the Order; (b) be free from all
defects in materials and workmanship; and (c) to the extent not
manufactured pursuant to detailed designs furnished by Boeing, be free from
all defects in design and be fit for the intended purposes.
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SPECIAL BUSINESS PROVISIONS
7.0 PAYMENT
7.1 RECURRING PRICE
Unless otherwise provided in the applicable Order, payment of the recurring
price shall be made in accordance with Form X-27981 "Pay From Receipt -
Additional Terms and Conditions Regarding Invoicing and Payment". Payment
terms shall be net thirty (30) days except as otherwise agreed to by the
parties. All payments are subject to adjustment for shortages, credits and
rejections.
7.2 NON-RECURRING PRICE/SPECIAL CHARGES
Unless otherwise provided in the applicable Order, any non-recurring price
payable by Boeing under Attachment 1 or 1A shall be paid within the term
discount period or thirty (30) calendar days (whichever is later) after
receipt by Boeing of both acceptable Products and a correct invoice.
8.0 ACCELERATION/DECELERATION AT NO COST
Notwithstanding GTA Section 10.0, Boeing may make changes in the delivery
schedule without additional cost or change to the unit price stated in the
applicable Order if (a) the delivery date of the Product under such Order
is on or before the last date of contract, if applicable, and (b) Boeing
provides Seller with written notice of such changes.
9.0 NOTICES
9.1 ADDRESSES
Notices and other communications shall be given in writing by personal
delivery, United States mail, telex, teletype, telegram, facsimile, cable
or electronic transmission addressed to the respective party as follows:
To Boeing: Attention: Buyer: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M/S 38-FW
BOEING COMMERCIAL AIRPLANE GROUP
MATERIEL DIVISION
P.O. Box 3707
Seattle, Washington 98124-2207
To Seller: Attention: ▇▇▇▇▇ ▇▇▇▇▇
KAYNAR TECHNOLOGIES INCORPORATED
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
Fullerton, CA 92634-3001
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SPECIAL BUSINESS PROVISIONS
10.0 OBLIGATION TO PURCHASE AND SELL
Boeing and Seller agree that in consideration of the prices set forth
under Attachment 1 and 1A, Boeing shall issue Orders for Products from
time to time to Seller for Boeing's requirements. For Product on
Attachment 1A of Boeing's requirements shall be purchased from Seller. If
Seller maintains performance for Product on Attachment 1a as measured by
Boeing. If Seller fails to maintain for Product on Attachment 1A. Boeing.
Such Products shall be shipped at any scheduled rate of delivery, as
determined by Boeing, and Seller shall see to Boeing Boeing's requirements
of such Products, provided that, without limitation on Boeing's right to
determine its requirements. Boeing shall not be obligated to issue any
Orders for any given Product if: *
A. *
B. Such Product is, in Boeing's reasonable judgment, not
technologically competitive at any time, for reasons including but
not limited to the *
C. Boeing gives reasonable notice to Seller of a change in any of
Boeing's aircraft which will result in Boeing no longer requiring
such Product for such aircraft: *
D. Seller has materially defaulted in any of its obligations under
any Order, whether or not Boeing has issued a notice of default to
Seller pursuant to GTA Section 13.0; or, *
E. Seller cannot support Boeing's requirements for Products in the
amounts and within the delivery schedules Boeing requires.*
11.0 COST AND FINANCIAL PERFORMANCE VISIBILITY
Seller shall provide all necessary cost support data, source documents
for direct and indirect costs, and assistance at the Seller's facility
for cost performance reviews performed by Boeing pursuant to any Order.
Furthermore, Seller shall provide financial data, on a quarterly basis,
or as requested, to Boeing's Credit Office and Materiel Representative
for credit and financial condition reviews. Said data shall include
but not be limited to balance sheets, schedule of accounts payable and
receivable, major lines of credit, creditors, income statements (profit
and loss), cash flow statements, firm backlog, and headcounts. Copies
of such data are to be made available within 72 hours of any written
request by Boeing. This data is required in addition to the cost data
provided pursuant to GTA Section 9.0. All such information shall be
treated as confidential in accordance with GTA Section 20.0.
* Confidential portions omitted and filed separately with the Commission.
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SPECIAL BUSINESS PROVISIONS
12.0 CHANGES
12.1 CHANGES TO THE STATEMENT OF WORK
Boeing may direct Seller within the scope of the applicable Order and
in accordance with the provisions of GTA Section 10.0, to increase or
decrease the work to be performed by the Seller in the manufacture of
any Product.
12.2 COMPUTATION OF EQUITABLE ADJUSTMENT
NOT APPLICABLE
12.3 OBSOLESCENCE
Claims for obsolete or surplus material and work-in-process created by
change orders issued pursuant to this Section shall be subject to the
procedures set forth in GTA Section 12.0, except that Seller may not
submit a claim for obsolete or surplus material resulting from an
individual change order that has a total claim value of Twenty-Five
Hundred Dollars ($2500.00) or less. Payment for obsolete or surplus
materials shall be made by check deposited as first class mail to the
address designated by Seller in SBP Section 9.1. Payment will be made
on the tenth (10th) day of the month following the month of the
obsolescence claim settlement.
12.4 CHANGE ABSORPTION
12.4.1 NON-RECURRING AND RECURRING CHANGE ABSORPTION
NOT APPLICABLE
12.5 PLANNING SCHEDULE
Any planning schedule or quantity estimate provided by Boeing shall
be used solely for production planning. Boeing may purchase Products
in different quantities and specify different delivery dates as
necessary to meet Boeing's requirements. Such planning schedule and
quantity estimate shall be subject to adjustment from time to time.
Any such adjustment is not a change under GTA Section 10.0.
12.6 VALUE ENGINEERING
Seller may from time to time submit proposals to Boeing to change
drawings, designs, specifications or other requirements that:
a. decrease Seller's performance costs; or
b. produce a net reduction in the cost to Boeing of installation,
operation, maintenance or production of the Product.
Provided, that such change shall not impair any essential functions
or characteristics of the Products or Tooling.
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SPECIAL BUSINESS PROVISIONS
12.6.1 SUBMISSION OF PROPOSAL
Proposals shall be submitted to Boeing's Materiel Representative.
Boeing shall not be liable for any delay in acting upon a proposal.
Boeing's decision to accept or reject any proposal shall be final.
If there is a delay and the net result in savings no longer justifies
the investment, Seller will not be obligated to proceed with the
change. Seller has the right to withdraw, in whole or in part, any
proposal not accepted by Boeing within the time period specified in
the proposal. Seller shall submit, as a minimum, the following
information with the proposal:
a. description of the difference between the existing requirement
and the proposed change, and the comparative advantages and
disadvantages of each;
b. the specific requirements which must be changed if the proposal is
adopted;
c. the cost savings and Seller's implementation costs;
d. Each proposal shall include the need dates for engineering release
and the time by which a proposal must be approved so as to obtain
the maximum cost reduction.
12.6.2 ACCEPTANCE AND COST SHARING
Boeing may accept, in whole or in part, any proposal by issuing a
change order. Until such change has been issued, Seller shall remain
obligated to perform in accordance with the terms and requirements of
the original Order as written. Boeing and Seller shall share the
savings as follows:
* savings to Boeing;
* savings to Seller.
Seller shall include with each proposal verifiable cost records and
other data as required by Boeing for proposal review and analysis.
Each party shall be responsible for its own implementation costs,
including but not limited to non-recurring costs.
12.6.3 COST SAVINGS COMPUTATION
A change order shall be issued by Boeing and the unit price shall be
reduced in an amount equal to the savings portion attributable to
Boeing as set forth above. The applicable unit price as set forth in
Attachment 1 or 1A Statement of Work shall be amended to reflect such
change.
EXAMPLE:
Current Price: $600.00
Proposed Cost Savings: $100.00/unit
Boeing's Percentage: *
Seller's Percentage: *
* Confidential portions omitted and filed separately with the Commission.
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SPECIAL BUSINESS PROVISIONS
12.6.3 COST SAVINGS COMPUTATION (Continued)
STEP BY STEP COMPUTATION:
1. $100.00 unit savings x * Boeing's percentage of savings = *
Boeing savings.
2. $100.00 unit savings x * Seller's percentage of savings = *
Seller savings.
3. Net affect to the unit cost = *
New Unit Price For Units = *
12.6.4 WEIGHT REDUCTION PROPOSALS
Seller is encouraged to submit proposals to Boeing that reduce the
Product's weight without impairing any essential functions or
characteristics of the Product.
Seller shall submit such proposals in accordance with SBP Section
12.6.1 above. The amount of any costs or savings that result from a
weight reduction proposal shall be agreed by Boeing and Seller.
Seller shall include with each proposal verifiable cost records and
other data as required by Boeing for proposal review and analysis.
Boeing may accept in whole or in part, any such proposal by issuing a
change order to the applicable Order.
12.7 REDUCTION IN QUANTITY TO BE DELIVERED
NOT APPLICABLE
13.0 SPARES AND OTHER PRICING
13.1 SPARES
For purposes of this Section, the following definitions shall apply:
A. AIRCRAFT ON GROUND (AOG) - means the highest Spares priority.
Seller will expend best efforts to provide the earliest possible
delivery of any Spare designated AOG by Boeing. Such effort
includes but is not limited to working twenty-four (24) hours a
day, seven days a week and use of premium transportation. Seller
shall specify the delivery date and time of any such AOG Spare
within two (2) hours of receipt of an AOG Spare request.
B. CRITICAL - means an imminent AOG work stoppage. Seller will expend
best efforts to provide the earliest possible delivery of any
Spare designated Critical by Boeing. Such effort includes but is
not limited to working two (2) shifts a day, five (5) days a week
and use of premium transportation. Seller shall specify the
delivery date and time of any such Critical Spare within the same
working day of receipt of a Critical Spare request.
* Confidential portions omitted and filed separately with the Commission.
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SPECIAL BUSINESS PROVISIONS
13.1 SPARES (Continued)
C. EXPEDITE (CLASS I) - means a Spare required in less than Seller's
normal lead-time. Seller will expend best efforts to meet the
requested delivery date. Such effort includes but is not limited
to working overtime and use of premium transportation.
D. ROUTINE (CLASS III) - means a Spare required in Seller's normal
lead-time.
E. POA REQUIREMENT (POA) - means any detail component needed to
replace a component on an End Item Assembly currently in Boeing's
assembly line process. Seller shall expend best efforts feasible
to provide the earliest possible delivery of any Spare designated
as POA by Boeing. Such effort includes but is not limited to
working twenty-four (24) hours a day, seven days a week and use
of premium transportation. Seller shall specify the delivery date
and time of any such POA within two (2) hours of an AOG Spare
request.
F. IN-PRODUCTION - means any Spare with a designation of AOG, Critical,
Expedite, Routine, POA or End Item Assembly which is in the
current engineering configuration for the Product and is used on
a model aircraft currently being manufactured by Boeing.
G. NON-PRODUCTION REQUIREMENTS - means any Spare with a designation of
AOG, Critical, Expedite and Routine requirements which is used on
model aircraft no longer being manufactured by Boeing (Post
Production) or is in a non-current engineering configuration for
the Product (Out of Production).
H. BOEING PROPRIETARY SPARE - means any Spare which is manufactured
(i) by Boeing, or (ii) to Boeing's detailed designs with Boeing's
authorization or (iii) in whole or in part using Boeing's
Proprietary Materials.
13.1.1 SPARES SUPPORT
Seller shall provide Boeing with a written Spares support process
describing Seller's plan for supporting AOG and Critical commitments
and manufacturing support. The process must provide Boeing with the
name and number of a twenty-four (24) hour contact for coordination
of AOG and Critical requirements. Such contact shall be equivalent
to the coverage provided by Boeing to its Customers as outlined in
Attachment 4 "Boeing AOG Coverage" which is incorporated herein and
made a part hereof by this reference.
Seller shall notify Boeing as soon as possible via fax, telecon, or
as otherwise agreed to by the parties of each AOG and Critical
requirement shipment using the force identified in Attachment 5
"Boeing AOG and Critical Shipping Notification". Such notification
shall include time and date shipped, quantity shipped, Order,
pack slip, method of transportation and air bill if applicable.
Seller shall also notify Boeing immediately upon the discovery of
any delays in shipment of any requirement and identify the
earliest revised shipment possible.
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SPECIAL BUSINESS PROVISIONS
13.1.2 RECLASSIFICATION OR RE-EXERCISES
Boeing may on occasion, instruct Seller to re-prioritize or
reclassify an existing requirement in order to improve or otherwise
change the established shipping schedule. Seller shall expend the
effort required to meet the revised requirement as set forth above in
the definitions of the requirements. Seller's commitment of a
delivery schedule shall be given in accordance with that set forth
above for the applicable classification but in no case shall it
exceed twenty-four (24) hours from notification by Boeing.
13.1.3 SPARE PRICING
Except as set forth in subsections 13.1.3.1 and 13.1.3.2 below, the
price for Spare(s) shall *.
13.1.3.1 AIRCRAFT ON GROUND (AOG), CRITICAL SPARES AND POA REQUIREMENT
The price for AOG and Critical Spares and POA requirements shall be
the price for such Products listed on Attachment 1 or 1A.
13.1.3.2 EXPEDITE SPARE (CLASS 1)
The price for Expedite Spares shall be the price for such Products
listed on Attachment 1 and 1A.
13.1.4 SPECIAL HANDLING
The price for all effort associated with the handling and delivery of
Spare(s) is deemed to be included in the price for such Spare(s).
Provided, that if Boeing directs delivery of Spares to an F.O.B.
point other than Seller's plant, Boeing shall reimburse Seller for
shipping charges, including insurance, paid by Seller from the plant
to the designated F.O.B. point. Such charges shall be shown
separately on all invoices.
13.2 SHORT FLOW PRODUCTION REQUIREMENTS
Boeing shall pay no expedite charges for production requirements
released less than Seller's current ROLT. Seller agrees to support
Boeing's short flow requirements with its best effort.
* Confidential portions omitted and filed separately with the Commission.
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SPECIAL BUSINESS PROVISIONS
13.3 TOOLING
13.3.1 RESPONSIBLE PARTY
Seller shall absorb all costs for Tooling manufactured and/or
purchased by Seller necessary for the manufacture and delivery of the
Products including but not limited to rework, repair and maintenance
of the Tooling.
13.3.2 BOEING FURNISHED TOOLING
In the event Boeing furnishes Tooling to Seller to support the
delivery of Product(s), Seller shall comply with the Terms and
Conditions applicable to the Blanket Tooling Purchase Control Order
established with Seller who possess or controls Tooling. No repair,
replacement or rework required shall be performed without Boeing's
prior written consent. Boeing shall notify Seller of, what if any,
action shall be required for all discrepant Tooling.
13.4 PRICING OF BOEING'S SUPPORTING REQUIREMENTS
Any Products required to assist Boeing's supporting requirements,
including but not limited to color and appearance samples, design
studies, product qualification, Boeing-owned simulators, test
requirements, factory support, flight test spares will be provided
for not more than the applicable price as set forth in Attachment 1
or 1A.
13.5 PRICING OF REQUIREMENTS FOR MODIFICATION OR RETROFIT
Any Products required by Boeing to support a modification or retrofit
program shall be provided for *.
13.6 SIMILAR PRICING
New Products ordered by Boeing that are similar to or within Product
families of Products currently being manufactured by Seller shall be
priced *.
14.0 STATUS REPORTS/REVIEWS
When requested by Boeing, Seller shall update and submit, as a
minimum, monthly status reports on data requested by Boeing using a
method mutually agreed upon by Boeing and Seller.
When requested by Boeing, Seller shall provide to Boeing a
manufacturing milestone chart identifying the major purchasing,
planning and manufacturing operations for the applicable Product(s).
Upon request by Boeing, a program review may be held between the
parties. The location of such review shall be mutually agreed to by
the parties. The purpose of the review is to improve communication
and understanding between the parties to ensure program success.
* Confidential portions omitted and filed separately with the Commission.
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SPECIAL BUSINESS PROVISIONS
15.0 PROVISIONS FOR OFFSET/BUSINESS STRATEGIES FOREIGN PROCUREMENT REPORT
Seller agrees to cooperate with Boeing in identifying possible
subcontractors for work under any Order that support Boeing's offset
or business strategies. Prior to releasing any request for proposal
to a subcontractor to support Boeing's offset or business strategy,
Seller shall coordinate with Boeing.
Seller shall document on Attachment 2 all offers to contract and
executed contracts with such subcontractors including the dollars
contracted. Seller shall provide to Boeing with an updated copy of
Attachment 2 for the six-month periods ending June 30 and December 31
of each year. The reports shall be submitted on the 1st of August
and the 1st of February respectively.
16.0 BOEING FURNISHED MATERIAL
NOT APPLICABLE
17.0 ASSIGNMENT
Boeing and Seller agree that Boeing may, in its discretion, assign,
in part or in whole, its purchasing obligations under the Agreement
or any Order, as applicable, at the prices set forth in Attachment 1
and 1A thereof. Boeing reserves the right to rescind its assignment
at anytime.
Boeing's assignment of purchasing obligation includes scheduling,
issuance of Order(s), receival and inspection of Products, acceptance
or rejection of Products, payment for accepted Products, and ensuring
conformance to the quality assurance system requirements.
Boeing shall retain all other rights and obligations pursuant to the
applicable terms and conditions. In addition, Boeing reserves the
right, where necessary, to coordinate with and mediate between Seller
and any assignee regarding such assignment.
EXECUTED in duplicate as of the date and year first set forth above by the duly
authorized representatives of the parties.
THE BOEING COMPANY KAYNAR TECHNOLOGIES
By and Through its Division INCORPORATED
Boeing Commercial Airplane Group
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Buyer Title: Vice President Sales and Marketing
Date: January 20, 1997 Date: January 23, 1997
---------------- ----------------
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SPECIAL BUSINESS PROVISIONS
ATTACHMENT 1A TO
SPECIAL BUSINESS PROVISIONS
WORK STATEMENT AND PRICING
All Items listed on attachment 1A are titanium seal nuts.
The Re-order lead time (ROLT) for all items is expressed in weeks.
Tolerances applicable to Orders placed under this contract are +1% -1% of the
total Order quantity.
The price for Products to be delivered on or before 12-31-2000, shall be as
follows:
Item # PART NUMBER UNIT PRICE LEAD TIME
-----------------------------------------------------------------------------
1
2 *
3
* Confidential portions omitted and filed separately with the Commission.
SPECIAL BUSINESS PROVISIONS
ATTACHMENT 6 TO
SPECIAL BUSINESS PROVISIONS
ECONOMIC PRICE ADJUSTMENT FOR TITANIUM SEAL NUTS
1997 THROUGH 2000
1. This clause sets forth the method for adjusting base prices as a result of
abnormal escalation for 1997 through 2000 provided that:
A. An abnormal price increase shall be made to the base unit price only
if the actual cumulative index exceeds the baseline cumulative
forecast as defined in paragraph 5.B below.
B. An abnormal price decrease shall be made to the base unit price only
if the actual cumulative index is less than baseline cumulative
forecast as defined in paragraph 5.C. below.
2. Adjustment will be determined by the following index:
A. MATERIAL - Producer Price Index (PPI) Titanium Mill Shapes, Code
P102505 as reported by the U.S. Bureau of Labor Statistics.
B. CONTENT - Material content shall be * of the Contract unit prices
listed in Attachment 1.
3. Baseline price is defined as the unit prices in Attachment 1A to the
Special Business Provisions.
4. SPECIAL NOTES:
In the event the U.S. Bureau of Labor Statistics discontinues or alters its
current method of calculating the index specified above, both parties shall
agree upon an appropriate substitution for or adjustment of the indices to
be employed herein.
* Confidential portions omitted and filed separately with the Commission.
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SPECIAL BUSINESS PROVISIONS
5. BASELINE FORECAST:
A. The cum baseline forecast is developed from the actual December 1996
index with an annual forecast through December 1999 as follows:
12/96 12/97 12/98 12/99
Code 102505 *
Composite Rate (+/-) *
Therefore, the cumulative baseline band is as follows:
B. ESCALATION INCREASE
12/96 12/97 12/98 12/99
Max *
C. ESCALATION DECREASE
12/96 12/97 12/98 12/99
Min *
6. CALCULATION OF ADJUSTMENT ABNORMAL ESCALATION
The general equation for the calculation of a price change for 1998 shall
be:
A = *
Where CA = *
A = Adjusted Price
B = Base Price
CA = Cum Actuals
CB = Cum Baseline for December for the year preceding the re-price year as
defined in 5B. & 5C.
M1 = PPI Code P102505 - Actual index for the month of December of the year
preceding the re-price year.
* Confidential portions omitted and filed separately with the Commission.
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SPECIAL BUSINESS PROVISIONS
7. ABNORMAL ESCALATION INCREASE EXAMPLE:
If the actual indices are as noted below, the calculation of the 1999 price
would be established by simply multiplying the base price by the ratio of
the 1998 actual cum rate to the corresponding 1998 cum baseline rate.
12/96 12/97 12/98 12/99
Code P102505
Percent Change *
Cum Actuals
Cum Baseline
Example:
1999 Price = *
If the base price = *
Then base material, = *
base non-material = *
= *
= *
= *
Then the 1999 Price = *
8. ABNORMAL ESCALATION DECREASE EXAMPLE
If the actual indices are as noted below, the calculation of the 1999 price
would be:
12/96 12/97 12/98 12/99
Code P102505
Percent Change *
Cum Actuals
Cum Baseline
Example:
1999 Price = *
If the base price = *
Then base material, = *
base non-material = *
= *
= *
= *
Then the 1999 Price = *
* Confidential portions omitted and filed separately with the Commission.
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SPECIAL BUSINESS PROVISIONS
9. Assuming a price adjustment occurs for either 1998 or 1999, and the
succeeding year's actual index line returns within the baseline parameters,
as described in paragraphs 5.B and 5.C. above, then the price will also
return to the base price level.
10. The unit prices listed in Attachment 1A to the Special Business Provisions
are firm fixed for quantities ordered in 1997. Therefore, the beginning
base for cumulative abnormal escalation is the actual index for December
1996 and any adjustment from the base prices will begin with the unit
prices for 1998 if the actual cumulative index falls outside the baseline
cumulative forecast band as defined in paragraphs 5.B and C. above.
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