Exhibit 10.1
EXECUTION COPY
 
HONEYWELL INTERNATIONAL INC.
LONG TERM CONTRACT
 
Contract No. ________________
 
This Long Term Contract (hereinafter, the “Contract”) is made and entered into
as of July 28, 2008 (“Effective Date”) by and between BE Aerospace, Inc., a
Delaware corporation (“Seller”) and Honeywell International Inc., a Delaware
corporation, acting through its Aerospace business unit (“Honeywell” or
“Buyer”).
 
WHEREAS, pursuant to the terms and conditions set forth in this Contract, Seller
wishes to sell Products (as hereinafter defined) and provide inventory and
inventory management services to Buyer and Buyer wishes to buy Products (as
hereinafter defined) and secure and retain inventory and inventory management
services from Seller; and
 
WHEREAS, the parties to this Contract, simultaneously herewith, are entering
into a License Agreement (the “License Agreement”), pursuant to which Seller
will manufacture and sell Licensed Products (as defined therein) to Buyer using
such technical information, know-how, business data and intellectual property
rights as more particularly described therein.
 
NOW THEREFORE, for good and valid consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as set forth herein:
 
1.      COMMUNICATIONS
 
All communications and notices in association with this Contract, when required
to be in writing, shall be forwarded to the following address:
 
 
(to Seller)

 
              
M & M Aerospace Hardware, Inc.

              
10000 NW 15th Terrace

              
Miami, FL 33172

              
Attention:  Director of Contracts

              
Telecopy No.  (305) 629-2779

 
 
with a copy to:

 
              
M & M Aerospace Hardware, Inc.

              
10000 NW 15th Terrace

              
Miami, FL 33172

              
Attention:  John Cuomo

              
Telecopy No.  (305) 629-2779

 
 
 
_____Buyer          _____Seller
1

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(to Buyer)

 
             
Honeywell International Inc

             
1300 W. Warner Rd.

             
1230-CC

             
Tempe, AZ, 85284

             
Attention:  Brian Simons

             
Fax:  (480) 592-5328

 
 
with a copy to:

 
             
General Counsel, Sourcing

              
Honeywell Aerospace

              
1944 E. Sky Harbor Circle

              
Mail Stop 2102-406

              
Phoenix,  AZ  85034

              
Fax:  (602)365.2490

 
2.      TERM AND PRODUCTS
 
(a)           The terms of this Contract will cover, with respect only to the
Honeywell business identified in the preamble hereto, those products set forth
in Attachment 1-A (“Standard Products”) and Attachment 1-B (“Proprietary
Products”) (collectively, “Products”) ordered through the expiration of this
Contract according to the stated lead-time in Attachment 1-A or 1-B, as
applicable.  New Products  will be automatically added to Attachments 1-A and
1-B as set forth in Section 4(b), and in accordance with the terms and upon the
conditions set forth in this Contract.
 
(b)           The term of this Contract shall commence on the Effective Date,
and shall run for the period of twenty (20) years (the “Initial Term”).  […***…]
 
For purposes of the foregoing, the “Renewal Metric” is as follows:
 
[…***…]
 
 
 
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
 
_____Buyer          _____Seller
2

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[…***…]
 
On or before September 1 of the calendar year prior to the First Renewal Term or
the Second Renewal Term, Buyer may, at its option, conduct a market test of the
entire portfolio of Products to determine whether Seller’s then-current prices
(on an aggregated basis over the entire portfolio of Products at the forecasted
volumes for the succeeding year) are within […***…] based on bona fide quotes
obtained by Buyer from alternate distributors and provide written notice to
Seller of the results thereof.  […***…]
 
(i)            […***…] and the prices as so adjusted will be the baseline for
future annual adjustments for the applicable Renewal Term pursuant to
Section 5(a) of this Contract; or
 
(ii)           decline to enter into the First or Second Renewal Term, as the
case may be, unless Buyer waives such price adjustment by written notice to
Seller within fifteen (15) days after receipt from Seller of its notice of
election of clause (ii); provided that, if Buyer does not waive such price
adjustment as set forth above, the Contract will be deemed to expire as of the
end of the following calendar year, and the parties will follow the transition
procedures set forth in Section 3(a)(iii) and (iv) below, and for purposes of
the application of such procedures to this Section 2(b), […***…]
 
(c)           Releases for the Products will be issued on individual purchase
orders or bin scans by the applicable business within Honeywell.
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
3

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3.      TERMINATION
 
This Contract may be terminated prior to the expiration of its Term (x) upon
mutual agreement of the parties at any time, or (y) by either party immediately
upon written notice, if the other party is dissolved.  In addition to the
foregoing,
 
(a)           (i) […***…] Buyer may terminate this Contract if Seller is then in
Substantial Non-Compliance, pursuant to the notice provisions set forth in
clause (ii) below.
 
“Substantial Non-Compliance” means […***…]
 
(ii)           Buyer may (but is not required to) give Seller written notice
(the “Anticipation Notice”) in September of any year in which Buyer anticipates
that it will provide notice of actual termination of this Contract at the
beginning of the succeeding calendar year, which Anticipation Notice shall be
advisory only and shall not obligate Buyer to terminate this Contract.  Whether
or not Buyer has provided an Anticipation Notice, in the event it elects to
terminate this Contract as set forth in clause (i), Buyer shall provide written
notice of termination (the “Actual Termination Notice”) in January of the
calendar year in which it then has the right to terminate this Contract pursuant
to clause (i), and such termination will be effective at the end of the
Transition Period as defined below.  In the event Buyer provides an Actual
Termination Notice, clauses (iii) and (iv) below will apply.  If Buyer gives an
Anticipation Notice and subsequently gives an Actual Termination Notice, […***…]
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
4

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(iii)           Except to the extent Seller needs to purchase additional
Products, beyond Products then on hand or on order, to support Buyer’s needs
during the  Transition Period in accordance with forecasts supplied by Buyer on
or after Seller’s receipt of the Actual Termination Notice, Seller shall not
purchase additional inventory after receipt of the Actual Termination
Notice.  Seller shall continue to supply Product to Buyer, and Buyer shall
continue to purchase Product from Seller, during the Transition Period.  In the
event that Buyer does not purchase all of the Product that Seller buys after
receipt of the Actual Termination Notice in accordance with the first sentence
of this clause […***…]  In the event that Buyer does not purchase during the
Transition Period any remaining inventory purchased by Seller prior to receipt
of the Actual Termination Notice in order to meet Buyer’s then-applicable Annual
Baseline Forecast at the time of such purchase, […***…].
 
(iv)           […***…] of the Actual Termination Notice, for avoidance of doubt,
the provisions of Sections 8, 9 and 13 shall continue to apply, except to the
extent that compliance therewith is commercially impracticable primarily because
of the limitations on Seller’s ability to purchase inventory set forth in
clause (iii) above.
 
(b)           Buyer may terminate this Contract at any time following a
Qualifying Change Of Control of Seller as defined below upon sixty (60) days’
prior written notice for any material default or breach of any of the terms and
conditions of this Contract by Seller, unless Seller has cured such default or
breach within such sixty (60)-day period after notification of the default or
breach. A “Qualifying Change Of Control” shall be deemed to occur when (i) with
respect to Seller, any transaction or series of related transactions occurs in
which any entity listed in Attachment 4 hereto or any of such entity’s
successors or affiliates (a “Listed Party”) would acquire, directly or
indirectly, including pursuant to a sale of assets, tender offer, exchange
offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, more than fifty percent (50%)
of the outstanding voting securities of Seller or all or substantially all of
the assets of Seller, or (ii) assignment or transfer is made by Seller pursuant
to Article 32 of the GPOP to a Listed Party.  Seller will provide Buyer with
written notice of any Qualifying Change Of Control no later than five (5) days
after the date that any binding agreement is executed in respect of any such
Qualifying Change Of Control.  Such termination right shall be in addition to
Buyer’s suspension rights under Section 4(c) to the extent applicable.
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
5

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4.      FORECAST AND SCOPE
 
(a)           Buyer will issue good faith (but non-binding except as
specifically set forth in this Contract) forecasts by July 31 of each year
containing its projected annual and monthly needs for each Product for the
succeeding calendar year (such July 31 forecast, without regard to subsequent
monthly updates thereto, the “Annual Baseline Forecast”), and may update such
forecasts on a monthly basis.  Seller agrees to work to such forecasts and
manage its build schedule to accommodate fluctuations in the forecast.  Buyer
will specify, and Seller will use its reasonable best efforts to perform to, the
delivery schedule associated with the most recent forecast provided by
Buyer.  Seller shall have the systems in place to meet Buyer’s forecast
requirements.  Any amount forecasted by Buyer beyond the current lead-time is
not a firm delivery quantity and Buyer shall have no liability or financial
exposure with respect thereto, except as otherwise provided in Sections 3 and
4(d).
 
(b)           Subject to the terms and conditions of this Contract, including
without limitation Section 4(c), Seller agrees to sell and supply to Buyer, and
Buyer agrees to purchase and take delivery of one hundred percent (100%) of the
requirements of
 
(i)           the Products listed in Attachments 1-A and 1-B as of the Effective
Date (the “Initial Products”);
 
(ii)           any Fastener Products (as defined below) (but not any Products
other than Fastener Products) (x) that have been sold by Buyer’s “Consumables
Solutions” division (“CS”) during the twelve (12) months prior to the Effective
Date or are being currently sold by CS as of the Effective Date, and
(y) replacements for any such products (including future revisions or
replacements for such replacement products), which in each case shall be
automatically added to Attachment 1-A or 1-B after the Effective Date;
 
(iii)           all replacements for Proprietary Products (including future
revisions or replacements for such replacement products), which shall be
automatically added to Attachment 1-B after the Effective Date; and
 
(iv)           all seals, wiring, spacers and other non-Fastener products
(including future revisions or replacements for such products) of the type
historically sold by CS, other than bearings, and historically purchased by
Honeywell’s Aerospace business from commodity distributors in the ordinary
course as of the Effective Date,
 
in each case only as required by Honeywell’s Aerospace business, and that are
not covered by its pre-existing purchase commitments […***…] (but only for such
minimum amount of time, without extension, renewal or modification thereof
(unless such extension, renewal or modification is requested by Seller), that
such pre-existing commitments require Buyer to purchase products); provided,
however, that notwithstanding the foregoing, commencing twelve (12) months prior
to the expiration or termination of this Contract, Buyer may identify an
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
6

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alternate vendor for any of the Products and may communicate with, provide
information to, contract with and engage in ramp-up activities with such
alternate vendor to permit Buyer to commence using Products purchased from such
alternate vendor immediately upon the expiration or termination of this
Contract.  “Fastener Products” shall mean any Products falling within any of the
following commodity groupings, as determined for each Product by the
nomenclature on the applicable drawing for the Product (or, if the nomenclature
is silent, by the reasonable discretion of Buyer):  Bolts, Collars, Fittings,
Grommets, Inserts, Nuts, Pin Systems, Pins, Plugs, Rings, Rivets, Screws, Studs,
Washers or Gaskets.  Notwithstanding anything herein to the contrary, it shall
not be deemed a breach of the exclusivity obligations in this Section 4(b) for
Buyer to purchase Products from third parties in connection with the exercise of
its rights under (and solely in accordance with) Sections 13.3 or 13.6(e) of the
License Agreement.
 
(c)           […***…]  Upon subsequent cure (as set forth below) of the
breach(es) or default(s) giving rise to Buyer’s suspension right under the
preceding sentence, the exclusivity obligations set forth in Section 4(b) shall
be reinstated; provided, however, that such reinstated exclusivity obligations
shall not apply to purchases made by Buyer from another supplier pursuant to a
supply agreement made during the pendency of such suspension, the term of such
supply agreement not to exceed one year (except that as to Products for which
the lead-time is greater than one year the term of such supply agreement may
extend to the entirety of such lead-time).  […***…], Seller’s breach of this
Contract for purposes of Section 4(c)(i) shall be deemed cured.  For the failure
to meet the standards set forth in Section 13, upon Seller providing reasonable
evidence to […***…] Seller’s breach of this Contract for purposes of
Section 4(c)(ii) shall be deemed cured.  For  the failure to meet the standards
set forth in Section 8, upon Seller providing reasonable evidence to
[…***…]  For the failure to meet the standards set forth in Section 9, upon
Seller providing reasonable evidence to […***…]
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
7

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[…***…] Seller’s breach of this Contract for purposes of Section 4(c)(iv) shall
be deemed cured.
 
(d)           In the event that, for any Product, during any period of three
consecutive calendar years during the Term (“Measurement Period”), Buyer does
not purchase such Product in an […***…] Period, then the parties will determine
the amount of unused inventory of such Product that was purchased or set aside
by Seller at the commencement of the Measurement Period for the purposes of
meeting such one-year forecasted quantity (the “Unused Products”).  […***…]  As
to any of the Unused Products which Buyer elects not to purchase from Seller,
Seller shall use commercially reasonable efforts to sell such Unused Products to
a third party (which may include for scrap purposes) and to maximize the
proceeds therefrom.  […***…]
 
5.      PRICING AND PAYMENT
 
(a)           The unit prices for Initial Products shall be the prices shown in
Attachments 1-A and 1-B, including without limitation for spares.  […***…] of
each year thereafter during the Term, Seller will provide to Buyer an updated
list of prices for each of the Products to be applicable during the succeeding
calendar year, which will be determined by applying to the prior year’s prices
the percentage increase in or decrease in Seller’s costs of Products from the
prior year (excluding any gap buys) based upon Buyer’s then-applicable Annual
Baseline Forecast, and which Seller will certify complies with the […***…] set
forth in Section 6.  In the event that the price for any Product set forth in
the updated list exceeds the price for that Product for the previous year by a
percentage which is greater than […***…]
 
(i)           Provide to Buyer documentation of Seller’s actual cost from the
manufacturer of such Product of purchasing an amount equal to Buyer’s then-
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
8

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forecasted annual requirement based upon Buyer’s then-applicable Annual Baseline
Forecast (more than one quote, where applicable);
 
(ii)           If applicable, suggest to Buyer the purchase of an alternate
Product with same form, fit, and function at lower cost and, if Buyer so elects,
sell such Product to Buyer on such basis;
 
(iii)           Find an alternate supplier for the Product, in which event
Seller must use reasonable best efforts to do so.  In doing so, Seller will
negotiate with any alternate supplier or manufacturer identified by Buyer for
any Product through market test or otherwise, provided that any such alternate
supplier or manufacturer shall have a supplier assessment score of 3 or higher
under Buyer’s assessment system. Buyer and Seller will each use their respective
reasonable best efforts in connection with the approval process of any such
alternate supplier or manufacturer under this paragraph (iii).  For Standard
Parts, such market test mechanism will be applied by taking the best price quote
from such a manufacturer obtained by Buyer (or at Buyer’s request by Seller) for
such Product in a quantity equal to the Buyer’s then-forecasted annual
requirement for such Product, with delivery, lead-time and quality standards
that are reasonably equivalent to those set forth in this Contract; and
 
(iv)           […***…]
 
For purposes of the foregoing, the “AAFPPI” shall mean the Aircraft-Aerospace
Fastener Producer Price Index (Series ID WPU108105) issued by the Bureau of
Labor Statistics of the United States Department of Labor or successor agency;
provided that in the event the Bureau of Labor statistics or such successor
agency ceases to issue such index, then the “AAFPPI” shall mean the most nearly
equivalent index issued by such agency.
 
(b)           In addition to the annual pricing adjustments set forth in
Section 5(a), Buyer may, at its option, at any time (subject to the limitations
set forth in this clause (b)), require the application of the […***…].
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
9

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(c)           When a new Product is added to this Contract, the initial price
for such Product will be determined as follows, subject in each case to the most
favored customer requirement set forth in Section 6: […***…]
 
(d)           Except for amounts subject to a bona fide written dispute, payment
by Buyer shall be made net to […***…].
 
(e)           […***…].
 
(f)           If, in connection with a government procurement and despite the
exercise of its reasonable efforts, Honeywell is not able to obtain the
agreement of the United States
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
10

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Government, or the prime contractor or the higher tier subcontractor to
Honeywell on a government procurement, (the “Decisionmaker”) that the pricing
for any of the Products subject to such procurement is fair and reasonable under
the price reasonableness test outlined in the Federal Acquisition Regulations
Part 15.4 and otherwise complies with applicable US government regulations,
Seller agrees (A) to use commercially reasonable efforts to develop with
Honeywell pricing for such Products that satisfies the concerns of the
Decisionmaker, or to allow Honeywell to procure that part through an open tender
and be excused, for that procurement only, from the exclusivity obligation to
Seller hereunder, and (B) to provide supporting documentation required by the
Decisionmaker, if any, including data other than cost or pricing data.
 
6.      […***…]
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
11

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[…***…]
 
7.      PERFORMANCE DATA
 
It is Seller’s responsibility to verify the accuracy of its performance data,
which is updated monthly and posted on the Honeywell Supplier
Portal.  […***…]  Seller must submit any objection to the accuracy of the
performance data (the “Data Dispute Notice”) in writing to its assigned
contact.  If no Data Dispute Notice is received by Buyer prior to the end of the
Data Review Period, Seller shall be deemed to have accepted and agreed to the
accuracy of the performance data for that month.
 
8.      DELIVERY
 
(a)           […***…]
 
(b)           If the agreed OTD performance is not attained in any calendar
quarter (based on the average OTD for the 3 months in that quarter),
[…***…]  After the end of the Data Review Period for each calendar quarter,
Buyer will calculate the amount of the rebate, if any, and send a demand for
payment of rebate (the “Rebate Notice”) to Seller, provided, however, that in
any calendar year, the aggregate amount of the rebate under this Section 8(b)
together with any rebates issued under […***…]  The Rebate Notice may be
e-mailed or faxed to Seller.  Seller shall have thirty (30) days after the
receipt of the Rebate Notice to pay the rebate to Buyer.
 
9.      PARTS PER MILLION (PPM Requirements)
 
(a)           […***…] on Buyer’s calculations as shown on Seller’s supplier
scorecard and posted on the Honeywell Supplier Portal.  […***…]
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
12

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[…***…]
 
(b)           If the agreed PPM performance is not attained in any calendar
quarter (based on the average PPM for the 3 months in that quarter) […***…]
applicable PPM standard, provided, however, that in any calendar year, the
aggregate amount of the rebate under this Section 9(b) together with any rebates
issued under […***…].  After the end of the final Data Review Period for each
quarter, Buyer will calculate the amount of the rebate, if any, and send a
Rebate Notice to Seller. The Rebate Notice may be e-mailed or faxed to Seller.
Seller shall have thirty (30) days after the receipt of the Rebate Notice to pay
the rebate to Buyer.
 
10.                 SERVICES
 
[…***…] Seller will provide to Buyer the services more fully described in the
Statement of Work attached hereto as Attachment 3.
 
11.                 QUALITY
 
(a)           The current minimum OEM Aerospace Basic Quality System Standard is
compliance to AS9100.  Third party registration is not required, but should be
the goal.
 
(b)           In addition Seller shall, and shall cause its suppliers to:
 
(i)           Conduct reviews to ensure business systems are compliant with the
most recent Honeywell quality flow-down documents. Honeywell site purchase
orders or websites should be used to validate current flow-down document
revisions.
 
(ii)           Attain/maintain certification/compliance to AS9100, AS9120 and/or
other Basic Quality System standards as dictated by Purchase Order flow-down.
Failure to attain/maintain certification may result in Quality Management System
audits to assure Seller compliance. Audit costs will be the responsibility of
Seller if performed by Honeywell site or authorized audit providers.
 
(iii)           Attain/maintain a process control system that utilizes the six
sigma ‘define, measure, analyze, improve and control’ methodology and
tools.  This process control system will address waste reduction, variability
reduction, statistical process control (SPC) for key characteristics, control
plans for key characteristics/features that exhibit control of product or
processes, error proofing and updates to or creation of First Article Inspection
Report (FAIR) for new parts or changes to parts or processes (other than with
respect to Seller’s inventory acquired from Buyer as of the Effective Date).  It
will also manage Key Characteristics per AS9103 as required by Buyer Purchase
Order and/or flowdown requirements.
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
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(iv)           To the extent required by one or more purchase orders, implement
and sustain Manufacturing Process Control (MPC) to establish process-based
controls and reduce process variability. The MPC process approval shall be
initiated within six months after signing this Contract.
 
(v)           Effective as of the earlier of (i) January 1, 2010 or (ii) the
date upon which the Buyer’s Quality System is transferred to Seller,
attain/maintain Honeywell Source Delegation (SD) or Self-Release (SR) status as
required by Honeywell site flow-down requirements. If unable to achieve, Seller
will be responsible for all costs associated with contracting a Honeywell
approved provider for source inspection.  Source inspection will continue until
specified quality levels are achieved for SD or SR status.
 
(vi)           Participate in e-commerce initiatives such as maintaining a
Seller profile, and Seller quality profiles; obtaining quality flow-down
requirements, and Seller Score Cards via identified Honeywell Internet Portal(s)
or websites.
 
(c)           Cost for First Article will be Seller’s responsibility when
imposed by the Honeywell Purchase Order and/or flow down requirements.
 
(d)           If required by the Honeywell Purchase Order and/or flow down
requirements, Cost of Poor Quality, when substantiated, will be charged back to
Seller if caused by defective material furnished by Seller.
 
(e)           Implement new quality e-business initiatives with Buyer as they
are developed. Maintain good standing (no delinquencies) relative to timely
responsiveness to corrective actions, containment and preventative action.
 
12.                 LEAD-TIME
 
As of the Effective Date, lead-times will be as set forth in Attachment 1-A and
1-B (and to the extent not specified therein Buyer and Seller will establish a
baseline lead-time in writing) and adjusted annually on October 1 of each year
for each of the Products.  During the Term, Buyer and Seller will continuously
monitor lead-time performance, use reasonable best efforts to improve lead-times
and amend the lead-times set forth in Attachments 1-A and 1-B to reflect such
improvements.  Seller will notify Buyer as soon as identified by Seller any
anticipated inability to meet the agreed upon individual part lead-time.  Seller
will be liable for actual and substantiated costs, including but not limited to
gap buys, caused by or resulting from lead-times greater than the lead-times
established as set forth above, other than to the extent that such longer
lead-times are due to changes specified by Buyer in Products or approved
manufacturers, Products revisions or any other Buyer changes.
 
13.                 FILL RATE
 
(a)           Seller shall use its reasonable best efforts to maintain
inventories of the Products in sufficient quantities to fill the orders of Buyer
without delay.  […***…]
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
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[…***…] to ramp up to full performance under this Section 13, but shall use its
reasonable best efforts to ramp up as soon as possible within such period of
time.  During the Term, Seller will continue to operate the existing forward
stocking locations.  Seller will establish additional forward stocking locations
from time to time at Seller’s reasonable discretion to support Buyer’s
requirements on the above terms and conditions.
 
(b)           […***…] Fill Rate performance will be measured in any calendar
quarter based on the following metric:  Buyer will measure the stockout
percentage every week by taking the number of stockout bins as a percentage of
total bins.  Buyer will then […***…].
 
(c)           […***…]  Seller will use reasonable best efforts to conduct such
root cause analyses and to implement such improvement plans.  […***…] Seller
will use reasonable best efforts to avoid gap buys but in the event that gap
buys cannot be avoided notwithstanding such efforts […***…].
 
14.                 SHIPMENTS
 
Mode of transportation and carrier are to be in accordance with business unit
purchase order instructions.  In the absence of shipping instructions for a
specific purchase order or for clarification Seller is to contact Transportation
Department at the appropriate business unit of Buyer.
 
15.                 SPECIFIC PERFORMANCE
 
Each of Seller and Buyer acknowledges that in the event it alleges a breach of
the terms of the Contract by the other party or in the event of a dispute
hereunder, it will continue
 
 
 
 
*** CONFIDENTIAL TREATMENT REQUESTED
 
_____Buyer          _____Seller
15

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performance under this Contract until such allegation or dispute is resolved and
that non-performance of its  obligations hereunder would cause irreparable harm
to the other party, and accordingly, in such event Seller or Buyer, as
applicable, shall be entitled to a temporary, preliminary and/or permanent
injunction or injunctions to enforce specifically the continuing performance of
this Contract and the terms and provisions hereof without the need to prove a
lack of an adequate remedy at law; and in such case, no bond or other security
shall be required in connection therewith.
 
16.                 [INTENTIONALLY OMITTED]
 
17.                 CHANGE IN PRODUCT, MANUFACTURING PROCESS, SITE, SOURCE OR
MATERIAL
 
(a)           Seller shall not deliver, ship, or substitute a Proprietary
Product that has been changed or a Proprietary Product that has had a process
change in its manufacture until Buyer has approved the change.
 
(b)           In order to secure this approval, Seller will provide Buyer with a
plan to change the supplier of, or subcontracting of processes required to
manufacture, the Proprietary Product and will obtain Buyer’s written approval of
such plan prior to implementing such change in the supplier of or subcontracting
of processes required for the Proprietary Product.
 
(c)           Seller shall notify Buyer of any potential program, Proprietary
Product, or schedule changes promptly as it becomes aware of them.
 
(d)           Seller will flow down this requirement in all its subcontracts and
purchase orders for purchased goods or process related services required for the
Proprietary Product, whether such goods are supplied to Seller as an end item, a
component part of an end item, or an individual piece part.
 
(e)           Buyer will not unreasonably withhold consent to Seller’s use of
alternate sub-tier supplier arrangements, provided that it shall not be deemed
unreasonable for Buyer to withhold consent if (i) such use of an alternate
sub-tier supplier does not result in a reduction in the prices charged by Seller
to Buyer for Proprietary Products or in more reliable availability; or
(ii) Seller has not demonstrated to Buyer’s reasonable satisfaction that it
taken all necessary actions to avoid negative impacts to Buyer, including, but
not limited to, maintaining additional inventory, overlapping production
schedules, and similar measures.
 
18.                 INSUFFICIENT QUANTITIES OR LATE PRODUCTS
 
Seller agrees that in the event Products are delinquent to Buyer’s purchase
orders, Seller will grant Buyer first priority for Product allocation and
shipments.
 
19.                 AUDIT
 
Seller shall keep and maintain proper records and books relating to Seller’s
obligations under Sections 5, 6, 11(b)(ii) and 13 of this Contract, or to claims
made by Seller under Section 10.A or 10.B of the GPOP, throughout the Term and
for one (1) year thereafter
 
_____Buyer          _____Seller
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and shall keep them at Seller’s relevant facility.  Buyer shall have the right,
during normal business hours, to the extent provided in the relevant sections of
this Contract, to inspect such books and records to verify compliance with the
applicable provisions of this Contract upon reasonable written notice for so
long as such records are required to be maintained (“Audit”).  Any Audit will be
conducted at the offices of Seller in a manner that does not unreasonably
interfere with the business activities of Seller.  Any Audit shall be at the
cost and expense of Buyer unless the Audit determines that Seller has materially
violated its obligations under this Contract, in which case Seller shall pay the
reasonable cost of the Audit.  If any Audit reveals a failure of Seller’s
performance of any of its obligations under the specified Sections of this
Contract, then, upon receiving written notice of such failure in performance,
Seller shall promptly (but in any event within fourteen (14) days of receiving
such notice) (i) make any payments (for rebates or otherwise) to Buyer that it
would have made had such failure not existed; and (ii) develop a corrective
action plan in cooperation with Buyer to prevent like failures in the future,
such plan to be subject to Buyer’s approval, and promptly thereafter implement
such plan at Seller’s sole cost and expense.
 
20.                 [INTENTIONALLY OMITTED]
 
21.                 ADDITIONAL TERMS AND ORDER OF PRECEDENCE
 
(a)           The terms and conditions set forth in the GPOP, and all other
attachments hereto, are incorporated by this reference into this Contract and
any purchase order issued under this Contract.
 
(b)           If individual purchase orders issued under this Contract are
subject to any provision or regulation applicable to United States Government
Contracts (and successor provisions or regulations thereto) then, in such a
case, the terms and conditions set forth in Buyer’s Supplemental Purchase Order
for U.S. Government Contract (v. 07/05), are incorporated by this reference into
this Contract and any purchase order issued under this Contract.
 
(c)           If individual purchase orders issued under this Contract reference
Buyer Supplemental Purchase Order Provisions Under Foreign Military Financed
(FMF) Contracts, DSCA/FFP (v. 08/00), then the terms and conditions thereof are
incorporated by this reference into this Contract and any purchase order issued
under this Contract.
 
(d)           Except as provided otherwise in a written document executed by
authorized representatives of Buyer and Seller, in the event of any conflict
among the provisions of each order, the following descending order of precedence
shall apply in interpreting each order:
 
(i)           The main body of the Contract.
 
(ii)           Attachments to the Contract (including any appendices thereto),
including the GPOP.
 
(iii)           Any special or supplemental Terms and Conditions incorporated by
reference in the Contract or order.
 
_____Buyer          _____Seller
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(iv)           The text of the order.
 
(v)           Other order documents.
 
(e)           Seller may access the terms and conditions referenced above in
this Section 21(b) and (c) at the following web
site:  https://www.supplier.honeywell.com.  Seller must first register to access
this site.  Instructions for registering are given at the web site.
 
(f)           Seller will work with Buyer to adopt PULL systems to maximize
service levels, such as VMI, FPOT or KANBAN.
 
22.                 OTHER CONDITIONS
 
This Contract, including those additional terms or conditions incorporated
herein by reference and made a part hereof, constitutes the entire Contract
between the Parties with respect to the matters contained herein.  No
modification of the Contract or waiver or addition to any of its terms and
conditions shall be binding upon either party unless made in writing and signed
by the parties’ authorized representatives.  The failure or delay by Buyer to
exercise any rights or remedies hereunder shall not operate as a general waiver
thereof.
 
23.                 CONFIDENTIAL INFORMATION
 
(a)           As used in this Contract, “Confidential Information” shall mean
(i) the terms and conditions of this Contract, excluding the existence of this
Contract, and (ii) all information, data and materials that either party (the
“Receiving Party”) obtains from the other (the “Disclosing Party”) under this
Contract (x) which is marked as confidential, or (y) which the Receiving Party
should reasonably know, by its nature or the manner of its disclosure, to be
confidential that the Receiving Party may receive or have access to in
connection with this Contract. The Receiving Party acknowledges and agrees that
(A) Confidential Information constitutes valuable trade secrets of the
Disclosing Party, and is not within the public domain, (B) the Disclosing Party
has and shall retain exclusive (except as expressly provided herein) valuable
property rights in and to Confidential Information, (C) Confidential Information
shall remain valuable trade secrets proprietary to the Disclosing Party unless
and until the Disclosing Party places Confidential Information in the public
domain or authorizes placement of the Confidential Information in the public
domain, and (D) but for this Contract, the Receiving Party would have no rights
in or access to the Confidential Information.
 
(b)           Notwithstanding Section 23(a), Confidential Information does not
include, or shall cease to include as appropriate, information that (i) is
lawfully received free of restriction from another source that, to the Receiving
Party’s knowledge or knowledge it should have, has the right to furnish such
information; (ii) has become generally available to the public by acts not
attributable to the Receiving Party or its employees, subcontractors,
consultants or advisors; or (iii) at the time of disclosure to the Receiving
Party, was known to the Receiving Party free of restriction. Only the specific
information that meets such exclusions will be excluded, and not any other
information that happens to appear in proximity to such excluded portions (for
example, a portion of a document may be excluded without affecting the
confidential nature of those portions that do not themselves qualify for
exclusion).
 
_____Buyer          _____Seller
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(c)           The Receiving Party shall not use the Confidential Information for
any purpose except in performance of its obligations hereunder or to exercise
the rights granted to it hereunder.  The Receiving Party shall keep all
Confidential Information in strict confidence.  The Receiving Party shall not,
without the prior written consent of the Disclosing Party, disclose, in any
manner or via any media whatsoever, any Confidential Information, other than to
its employees, manufacturing agents, resellers, consultants and
contractors  (“Representatives”) (i) who have a specific need to know such
Confidential Information in order to exercise the  Receiving Party’s rights
hereunder, and (ii) who are informed of the confidential nature of the
Confidential Information, and (iii) who agree in writing to act in accordance
with and be bound by terms and conditions at least as restrictive as the terms
and conditions herein regarding the safeguarding and disclosure of Confidential
Information.
 
(d)           Notwithstanding the foregoing, in the event disclosure of
Confidential Information by the Receiving Party is mandated by applicable law,
rule or regulation, or by an order of a court or governmental or law enforcement
agency or other authority, each of competent jurisdiction, then (i) the
Receiving Party will promptly notify the Disclosing Party of such requirement,
provided that such notice is not prohibited by a regulatory, law enforcement
other governmental authority or an order of court of competent jurisdiction, and
(ii) the Receiving Party shall use good faith efforts, in consultation with the
Disclosing Party, to challenge such disclosure or, failing in such challenge,
secure a protective order or other appropriate confidential treatment of the
Confidential Information so disclosed. Any such required disclosure shall not
alter the nature of the information so disclosed as Confidential Information for
purposes of this Contract.
 
(e)           The Receiving Party will be responsible for any breach of this
Section 23 by any of its Representatives.  The Receiving Party shall notify the
Disclosing Party immediately upon discovery of any unauthorized disclosure
(inadvertent or otherwise), and shall, within thirty (30) days of such notice
(i) use reasonable best efforts to cure such unauthorized disclosure of
Confidential Information; (ii) take all reasonable precautions to prevent any
such unauthorized disclosure in the future; and (iii) cooperate in good faith
with the Disclosing Party to assist the Disclosing Party to regain possession of
its Confidential Information and/or to prevent further unauthorized use or
disclosure.
 
(f)           The Receiving Party acknowledges and agrees that the violation of
its obligations under this Section 23 would cause irreparable harm to the
Disclosing Party, which harm may not be compensable solely by monetary damages,
and that, therefore, in the event of an actual or threatened breach by the
Receiving Party of this Section 23, the Disclosing Party shall be entitled to
injunctive and other equitable relief, without the necessity of proving monetary
damages or posting bond or other security.  Any such equitable relief granted
shall be without limitation of or prejudice to any other rights and remedies as
the Disclosing Party may have under this Contract.
 

_____Buyer          _____Seller
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IN WITNESS WHEREOF, the Parties have caused this Contract to be signed by their
duly authorized representatives on the day and year as shown below.
 

 
SELLER
         
 
By:
/s/ THOMAS P. MCCAFFREY       Name: Thomas P. McCaffrey       Title:       Date:
 

 
 

 

  HONEYWELL INTERNATIONAL INC.     
On behalf of its Aerospace division
         
 
By:
/s/ THOMAS F. LARKINS       Name: Thomas F. Larkins       Title: Vice President,
Corporate  Secretary and      
Deputy General Counsel
      Date:  

 
 
_____Buyer          _____Seller
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ATTACHMENT 1-A
 
STANDARD PRODUCTS
 
[…***…]
 
 
 
 
 
***CONFIDENTIAL TREATMENT REQUESTED ON 183 PAGES

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ATTACHMENT 1-B
 
PROPRIETARY PRODUCTS
 
[…***…]
 
 
 
 
 
***CONFIDENTIAL TREATMENT REQUESTED ON 262 PAGES

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EXECUTION COPY

ATTACHMENT 2
 
GENERAL PURCHASE ORDER PROVISIONS
 
1.           ACCEPTANCE ENTIRE AGREEMENT MODIFICATION.  These General Purchase
Order Provisions apply to all orders for the purchase and sale of goods and
services made under this Contract (the goods and services described in such
orders, hereinafter, “Items”).  All capitalized terms not defined in these
General Purchase Order Provisions shall have the meaning assigned to them
elsewhere in this Contract.  Acceptance of each order shall be limited to the
terms and conditions contained herein and incorporated herein by
reference.  Each order shall be deemed accepted upon the return of the
acknowledgment copy of such order or the commencement of performance by
Seller.  Buyer rejects any additional or inconsistent terms and conditions
offered by Seller at any time, whether or not such terms or conditions
materially alter the order and irrespective of Buyer’s acceptance of or payment
for Items.  These terms and conditions constitute the entire agreement between
the parties and no change to or modification of any order shall be binding upon
Buyer unless in writing and signed by an authorized representative of Buyer’s
procurement or purchasing office at Buyer’s place of business issuing such
order.
 
2.           PROTECTION OF PROPERTY AND INFORMATION.
 
A.           PROPERTY.
 
(1)           For the purpose of these General Purchase Order Provisions,
“Property” shall mean all materials, equipment, tools, and facilities, if any,
furnished to Seller by Buyer, or paid for by Buyer under any order, as well as
any replacements thereof.
 
(2)           Title to all Property shall be vested in Buyer with the right to
demand possession at any time.  Seller may use Property only in the performance
of work for Buyer.  Buyer does not warrant any aspect of the Property.
 
(3)           Seller bears the risk of loss of all Property that is in the
custody or control of Seller or any supplier or subcontractor to whom Seller
delivers Property as permitted under Article 2.A.(6), below.
 
(4)           Seller will establish and maintain a system to control, protect,
preserve, and maintain all Property in good condition and repair.  All Property
is subject to removal and return at Buyer’s written request, in which event
Seller, at Buyer’s expense, will prepare such Property for shipment and deliver
it to Buyer in the same condition as originally received by Seller, reasonable
wear and tear excepted.
 
(5)           Upon completion or termination of each order, Seller will retain,
or cause the third party to which Seller is permitted to deliver custody
pursuant to Section 2.A(6) to retain, all Property at its expense until
disposition directions are received from Buyer.
 
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(6)           Seller may not deliver custody of any Property to any person or
entity other than Buyer without Buyer’s prior written permission not to be
unreasonably withheld or delayed.  If with Buyer’s prior written permission
Seller furnishes Property to any supplier or subcontractor of Seller for use in
performance of Buyer’s orders, Seller shall (i) insert the substance of this
Section 2.A in all orders to such supplier or subcontractor; and (ii) remain
responsible hereunder for any breach by such supplier or subcontractor of this
Section 2.A.
 
B.           [INTENTIONALLY OMITTED]
 
C.           AFTERMARKET ACTIVITY.
 
(1)           For the purpose of these General Purchase Order
Provisions:  (i) “Controlled Product” shall mean anything designed, developed,
or created using Buyer’s Confidential Information (“Information”); (ii) “Buyer
Part” shall mean any component, part, or detail of any component or part,
designed, manufactured and/or sold by Buyer; and (iii) “Aftermarket Activity”
shall mean transactions (including sales to third parties, including the U.S.
Government) for products or services by Seller related to or based on the
following:  (a) creating a repair for a Buyer part; (b) designing a new part
that is similar or identical to a Buyer Part; (c) comparing a Buyer Part design
with another part design; (d) obtaining Parts Manufacturer Approval (PMA) from
the Federal Aviation Administration (FAA) pursuant to Part 21.303 of the Federal
Aviation Regulations; (e) obtaining approval from a Designated Engineering
Representative (DER) under FAA Order 8110.4 to repair a Buyer Part; or
(f) obtaining any other governmental approval to manufacture or repair a Buyer
Part.
 
(2)           Except pursuant to Buyer’s prior written permission, Seller shall
not use (or assist others in using) Information to engage in Aftermarket
Activity.
 
(3)           Except to the extent permitted by the License Agreement, Seller
must obtain Buyer’s written permission before selling any Controlled Product or
Proprietary Product to any third party purporting to purchase Products under
authority of Buyer.
 
D.           TRAINING OF EMPLOYEES.  Seller will maintain adequate processes to
protect Buyer’s Property and Information from improper use and/or disclosure,
and will train its employees appropriately to follow such processes.
 
E.           [INTENTIONALLY OMITTED]
 
3.           DELIVERIES AND SHIPMENTS.  Delivery of Items in accordance with the
schedule are a material requirement of each order.  TIME IS OF THE
ESSENCE.  Seller will, at its expense, ship by express or air shipment or by the
most expeditious way if the delivery schedule is endangered for any reason other
than Buyer’s fault.  Buyer reserves the right to reject all or any part of any
delivery that varies from the quantity authorized by Buyer for shipment.  All
Items shall be packaged in accordance with Buyer’s instructions or, if none are
specified, in accordance with good commercial practice in a manner sufficient to
ensure arrival in an undamaged condition.  Items shipped in advance of Buyer’s
delivery schedule and outside the applicable interval set forth in the last
sentence of Section 8(a) of the Contract may be returned at Seller’s
expense.  If requested by Buyer, Seller shall give notice of shipment to Buyer
at the time of delivery of any shipment of Items to a carrier for
transportation.
 
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4.           PERFORMANCE ASSURANCE PLAN.  At Buyer’s direction, Seller will
provide Buyer with a Performance Assurance Plan prepared in accordance with
procedures established by Buyer showing Seller’s work in process and yield
factors for each major process step.  Buyer may impose this plan where, in
Buyer’s opinion, there is a significant risk in meeting performance or delivery
requirements.  The Performance Assurance Plan will demonstrate Seller’s work in
process and yield factors in Seller’s format.
 
5.           INSPECTION.  Notwithstanding (i) payment, (ii) passage of title, or
(iii) prior inspection or test, all Items are subject to final inspection and
acceptance or rejection by Buyer at Buyer’s facility.  At all reasonable times,
including the period of manufacture, Buyer, its customers, and/or
representatives of the FAA or other cognizant aviation regulatory bodies may
inspect and/or test the Items to be furnished hereunder at the places where the
work is being performed, including those of the Seller’s suppliers, and Seller
shall provide, without additional charge, reasonable facilities and assistance
for safe and convenient inspection and test.  Buyer may inspect 100% or a sample
of all Items or any lot of Items at Buyer’s option, and Buyer shall have the
right to reject all or any portion of the Items or lot of Items if any such
inspection reveals them to be, in Buyer’s sole opinion, defective or
nonconforming.  Seller shall provide and maintain a test and inspection system
acceptable to Buyer and its customers, if required.  Records of all inspection
work by Seller shall be kept complete and available to Buyer and its customers
during the performance hereof and for seven (7) years after final payment by
Buyer or for such longer period as may be specified elsewhere
 
6.           WARRANTY.
 
A.           Seller warrants to Buyer, its successors and customers that for a
period of twenty-four (24) months after acceptance of Items, that all Items
furnished to Buyer (i) will be free from defects in material and workmanship;
(ii) will conform to applicable drawings, designs, quality control plans,
specifications, and samples; (iii) will be merchantable; (iv) will be fit for
the particular purpose for which they are intended; (v) will comply with all
laws; and (vi) will be free from liens and other encumbrances, and, to the
extent an order calls for services to be performed, that such services will be
free from defects in workmanship, will meet all of the requirements of each
order and will be performed to the highest standards of workmanship in the
industry (all of which are hereinafter collectively called “Conforming Items”).
 
B.           In the event Conforming Items are not furnished, within twenty (20)
days after the non-Conforming Item is returned to Seller, Seller shall at its
cost repair, correct or replace (at Buyer’s election among these alternatives)
such non-Conforming Items.  The failure of Seller to repair or replace and
redeliver such non-Conforming Items within such twenty (20) day period shall
entitle Buyer, at its election and in addition to any other rights or remedies
it may have at law or in equity, to have such non-Conforming Items corrected at
Seller’s expense.  In addition to the costs of repairing or replacing such
non-Conforming Items Seller agrees that, notwithstanding the provisions of any
warranties, expressed or otherwise, negotiated with respect to Items purchased
from Seller by Buyer or Buyer’s customers, Seller shall reimburse Buyer for
labor and material cost, including overhead and general administrative (G&A)
expense reasonably incurred by Buyer in connection with:  (i) the unscheduled
removal and/or replacement of such Items or components thereof from a higher
level assembly due to failure of such Items to conform to requirements of the
applicable order or defective material, workmanship, or design; (ii) any such
removal of said Items at Seller’s request; or (iii) any such removal of said
Items required due to any previously required changes to said Items which Seller
has failed to incorporate.
 
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C.           The warranty period shall be suspended upon notice that
non-Conforming Items have been furnished until they have been repaired or
replaced and redelivered to Buyer postage or freight prepaid, or in the case of
nonconforming services, have been corrected.  The un-expired portion of the
warranty shall be applicable to the repaired, replaced or corrected Conforming
Items.
 
7.           CHANGES.
 
A.           Buyer may, at any time, by a written change order, without notice
to any sureties, make changes in any one or more of the
following:  (i) drawings, designs, specifications, where the Items to be
furnished are to be specially manufactured for the Buyer in accordance
therewith;  (ii) method of shipment or packing;  (iii) place or time of
inspection, delivery, or acceptance; (iv) the quantity and/or type of services
ordered, (v) the work or service schedules, or (vi) the amount of any Buyer
furnished property. No claim by Seller for adjustment hereunder shall be allowed
unless made in writing for a specified amount within twenty (20) days from the
date notice of any such change is received by Seller.  If Seller considers that
the conduct, statement or direction of any of Buyer’s employees constitutes a
change hereunder, Seller shall notify Buyer’s authorized representative and take
no action on the perceived change pending written approval of Buyer’s authorized
representative.  Only Buyer’s authorized representative has authority to approve
a change.  Any change made by Seller without such written approval shall be
deemed voluntary by Seller and not compensable in the cost of or time required
for performance.  Nothing in this Article shall excuse Seller from proceeding
with performance of the affected order as changed.
 
B.           Notwithstanding the above or any other provision of these General
Purchase Order Provisions, Seller hereby agrees that any changes that are made
to meet the specified performance requirements of any order shall not entitle
Seller to any adjustment in either price or delivery.
 
8.           DESIGN CHANGES.  During performance of any order, Seller shall not
make any changes in the design of Items to be furnished by Seller under such
order without advance written notification to and written approval of
Buyer.  The above requirement applies whether or not there is a cost impact
associated with the change and regardless of the type of change involved,
including product improvements.
 
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9.           STOP WORK ORDERS.  Buyer may, at any time by written order, require
Seller to stop all or any part of the work under any order for a period of up to
one hundred twenty (120) days after delivery of such stop work order, and for
any further period as the parties may agree.  Immediately upon receipt of such
stop work order, Seller shall comply with its terms and take all reasonable
steps to minimize the incurring of costs allocable to the work stoppage.  At any
time during such period, Buyer may, in whole or in part, either cancel the stop
work order or terminate the affected order in accordance with Article 10.A.,
Termination, of these General Purchase Order Provisions.  To the extent the stop
work order is canceled or expires, Seller shall resume work.  If a stop work
order is the sole and exclusive cause of a material change in cost or delivery,
an adjustment shall be made in the price (excluding profit) or the delivery
schedule, or both and the affected order modified accordingly; provided,
however, that no adjustment in price or delivery shall be made under this
Article If, (i) the work would have been otherwise interrupted or delayed, or
(ii) such adjustment is available or expressly excluded under any other
provision of such order or these General Purchase Order Provisions.  No claim
for adjustment shall be allowed unless submitted to Buyer in writing in a
specified amount within twenty (20) days after the work is terminated or the
stop work order expires or is canceled whichever first occurs.
 
10.           TERMINATION.
 
A.           By written notice, Buyer may terminate any order or any part
thereof, for its sole convenience.  In the event of such termination, Seller
shall immediately stop all work hereunder and shall immediately cause all of its
suppliers and subcontractors to cease work.  Subject to the terms of these
General Purchase Order Provisions, Seller shall be paid a portion of the order
price reflecting the actual costs incurred for the work performed prior to the
notice of termination, plus reasonable charges Seller can demonstrate to the
satisfaction of Buyer using its standard record keeping system, that have
resulted from the termination.  Seller shall submit its claim no later than six
(6) months after receipt of the termination notice.  Seller shall make
reasonably available to Buyer or Buyer’s representative, any books, records and
papers supporting its claim and such claims shall be subject to the audit
provisions of Section 19 of the Contract.  Seller shall not be paid for any work
performed or costs incurred which should have been avoided.  Upon Buyer’s
payment to Seller in accordance with this Section 10.A., title to all equipment,
materials, work-in-progress, special tooling, finished products, and anything
acquired for the affected order, and any plans, drawings, specifications,
Information, and other things that would have been required to be delivered to
Buyer, shall vest in Buyer.
 
B.           By written notice, Buyer may terminate any order in whole or in
part:  (i) if Seller fails or refuses to perform in accordance with any of the
requirements of such order or of the Contract with respect to such order, or to
make progress so as to endanger performance hereunder (a “Default”), (ii) if
Seller becomes insolvent or suspends any of its operations or if any petition is
filed or proceeding commenced by or against Seller (whether voluntary or
involuntary) under any federal or state law, or under any agreement, instrument,
security interest, or similar arrangement, relating to bankruptcy, arrangement
among debtor and creditors, reorganization, receivership or assignment for the
benefit of creditors, (iii) if Seller fails to provide Buyer, upon request, with
adequate assurances of future performance of the affected order within the time
period requested by Buyer, or (iv) if Seller engages in any use or disclosure of
Information that is not expressly permitted under the terms of these General
Purchase Order Provisions or Section 23 of the Contract.  Any such termination
will be without liability to Buyer except for completed Items delivered and
accepted by Buyer, payment for which can be set off against damages to
Buyer.  Buyer shall also have the right to remove any Product of the type
affected by such termination from the scope of the exclusivity obligations set
forth in Section 4(b) of the Contract.  Buyer may require Seller to transfer
title and deliver to Buyer any or all property produced or procured by Seller
for performance of the work completed as of the termination and Seller shall be
credited with the reasonable value thereof not to exceed Seller’s actual
incurred costs or the order price, whichever is less.  Seller will be liable for
actual and substantiated damages caused by or resulting from its material
default including but not limited to excess costs of re-procurement.  If, after
a termination of an order pursuant to clause (i), (iii), or (iv) of this
Section 10.B., it is determined that Seller was not in Default, that adequate
assurances had been provided, or that Seller had a legal right to use or
disclose Information, the termination shall be deemed a termination of such
order for convenience in accordance with Section 10.A.  Buyer or its designee
shall have the right to audit all elements of any termination claim pursuant to
Section 19 of the Contract and Seller shall make available to Buyer or Buyer’s
designee on request all books, records, and papers relating
thereto.  Termination of an order pursuant to this Section 10.B. shall be
without prejudice to any other rights and remedies of Buyer under the Contract,
other provisions of these General Purchase Order Provisions, law or equity.
 
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C.           To the extent an order is not terminated pursuant to Sections 10.A.
or 10.B., above, Seller shall continue performance.
 
11.           EXCUSABLE DELAYS.  Neither party shall be in default for any delay
or failure to perform hereunder due to causes beyond its control despite the
exercise of all commercially reasonable efforts, and without its fault or
negligence; provided, that any delay or failure to perform caused by the default
of a supplier of Seller at any lower-tier shall be excused only if (i) it is
beyond the control of both Seller and such supplier and without the fault or
negligence of either, (ii) the parts to be furnished are not obtainable from
other sources in sufficient time to permit Seller to meet the delivery schedule,
and (iii) Seller furnishes prompt written notice to Buyer of the occurrence of
any such cause that will or may delay Seller’s performance; and that no delay or
failure to perform shall be excused if it is caused by a labor strike, stoppage,
slow-down or other labor dispute.  If delivery of any Item is delayed by any
excusable delay for more than forty-five (45) days, Buyer may, without any
additional extension, cancel all or part of any order with respect to the
delayed Item without liability, and exercise any of its remedies in accordance
with Article 10.B.
 
12.           PRICES, TAXES AND NEW MATERIAL.  Seller warrants that none of the
items furnished under any order are surplus, used, remanufactured or
reconditioned or of such age or so deteriorated as to impair the usefulness or
safety thereof, unless otherwise specifically stated on the face of the
applicable order.  Unless otherwise provided on the face of the applicable
order, THE PRICES APPEARING THEREIN INCLUDE ALL PACKAGING, CRATING, AND FEDERAL,
STATE, AND LOCAL TAXES, IF APPLICABLE, AND ARE FIRM FOR THE DELIVERY PERIOD
SHOWN, AND IN THE EVENT OF ANY CONFLICT BETWEEN THE PRICES SET FORTH IN AN ORDER
AND THE PRICES SET FORTH IN THE CONTRACT, THE PRICES SET FORTH IN THE CONTRACT
SHALL CONTROL.
 
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13.           [INTENTIONALLY OMITTED]
 
14.           [INTENTIONALLY OMITTED]
 
15.           INJUNCTIVE RELIEF.  Nothing contained herein shall operate to
waive or limit Buyer’s right to seek injunctive relief with respect to any
breach or threatened breach by Seller of its obligations under these General
Purchase Order Provisions.
 
16.           PATENT, TRADEMARK AND COPYRIGHT INDEMNITY.  To the extent Seller
obtains or has such right or protection from a sub-tier supplier, Seller shall
do the following:  Seller shall indemnify and hold harmless Buyer from any and
all damages, costs, including legal fees, losses, and liabilities resulting from
a suit, claim, or proceeding of alleged infringement of any Intellectual
Property rights by reason of the sale or use of any Item sold to Buyer
hereunder, and from reasonable expenses incurred by Buyer in defense of such
suit, claim, or proceeding if Seller does not undertake the defense thereof;
provided, that Seller is notified of any such suit and, except for suits against
the U.S. Government, Buyer offers Seller full and exclusive control of the
defense of such suit, claim, or proceeding when Items of Seller only are
involved therein or the right to participate in the defense of such suit, claim,
or proceeding when products other than those of Seller are also involved
therein; except that, this indemnity shall not extend to infringement resulting
solely from Seller’s compliance with Buyer’s specific designs.  In the event of
an injunction or restraining order, Seller shall, at its own expense, either
procure for Buyer the right to continue to sell and use the Item, or replace or
modify the Item so that it becomes non-infringing.  Seller shall also indemnify
Buyer’s customers and agents for such infringement if and to the extent that
Buyer has agreed so to indemnify them, but to no greater extent than Seller has
indemnified Buyer herein and under the same conditions as set forth herein.
 
17.           INDEMNIFICATION.  Seller shall indemnify and hold harmless Buyer,
its directors, officers, employees, agents and invitees from and against all
liability, demands, claims, losses, costs, damages, and expenses, including but
not limited to attorneys’ fees, by reason or on account of property damage,
death, and personal injury of whatsoever nature or kind arising out of, as a
result of, or in connection with the performance of any order or the Contract
that is occasioned by the willful or negligent actions or omissions of, or
material breach of the Contract by, Seller or its suppliers or subcontractors at
any tier.
 
18.           INSURANCE.  Seller will maintain and carry liability insurance
which includes but is not limited to commercial general liability (including
product liability and for services to be performed, completed operations
liability) in a sum no less than $5 million, automobile liability in a sum no
less than $5 million, workmen’s compensation in an amount no less than the
applicable statutory minimum requirement and employer’s liability in an amount
of no less than $1 million, with insurance carriers acceptable to Buyer.  Seller
will, if requested by Buyer, furnish certificates of insurance from its
carrier(s) on the foregoing coverages, which shall provide that such coverage
shall not be changed without thirty (30) days advance written notification to
Buyer from the carrier(s).
 
19.           KEY PERSONNEL.  Seller’s personnel listed or identified as Key
Personnel in any order are considered by Buyer to be critical to the successful
performance of such order, and were a substantial factor in Buyer’s decision to
award such order to Seller.  Buyer may consider any change by Seller in its Key
Personnel as grounds for termination of any affected order under Section 10.B.
 
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20.           PERFORMANCE OF INDIVIDUALS.  Upon determination by Buyer, at any
time, that the performance of Seller’s employees assigned to the work under any
order  does not meet Buyer’s required standards, which shall be consistent with
the industry and reasonable and upon notification to Seller of such
determination, the failure of Seller to take appropriate corrective action
satisfactory to Buyer will be a cause for Buyer termination of such order under
Section 10.B.
 
21.           STANDARDS OF CONDUCT, INTEGRITY, AND COMPLIANCE.  Honeywell
conducts its business in strict compliance with applicable laws, rules, and
regulations with honesty and integrity and with a strong commitment to the
highest standards of business ethics.  In addition, it is the policy of
Honeywell to enter into representation or supplier agreements only with
companies which have a demonstrated record of, and commitment to, the highest
ethical standards.  Seller agrees that Seller will, at all times, adhere to the
standards set forth in Honeywell’s “Code of Business Conduct” (hereinafter
“Code”) and will fully comply and take all necessary steps to assist Buyer in
complying with the Code as well as any other customary standards of business
conduct prescribed by law or regulation.  A copy of the Code may be obtained at
http://www.honeywell.com/sites/honeywell/codeofconduct.htm.  Seller shall, at
all times, carefully comply with all rules, laws and regulations pertaining to
entertainment or providing gratuities.
 
22.           NOTICE TO BUYER OF LABOR DISPUTES.  Whenever Seller has knowledge
that any actual or potential labor dispute is delaying or threatens to delay the
timely performance of each order, Seller shall immediately give notice thereof,
including all relevant information with respect thereto, to Buyer.  Seller shall
include this paragraph in each lower-tier subcontract under any order.
 
23.           SELLER’S STATUS.  It is understood and agreed that Seller and/or
its employees engaged in the performance of the Contract and/or any order by
Seller, are not employees of Buyer and are not entitled to Buyer employee
benefits or privileges or any payment from Buyer  (other than as expressly
provided for in any order) and the Seller shall pay the salaries or expenses,
applicable taxes, including Social Security and unemployment of said
employees.  Seller shall also pay any expenses normally paid by an employer in
connection with its employees assigned to Buyer.  The Seller is and shall be
deemed to be an Independent Contractor at all times during its performance of
the work specified in each order.
 
24.           FOREIGN MANUFACTURE OF U.S. MUNITIONS LIST ARTICLES.
 
A.           If Seller has received technical data, manufacturing drawings,
specifications, software or similar type items from Buyer, it is the
responsibility of Seller to ensure compliance with all U.S. export laws and
regulations.  These laws include, but are not limited to, (i) Section 38 of the
Arms Export Control Act as enumerated in 22 CFR Parts 120-130, the International
Traffic in Arms Regulations (ITAR), and (ii) Export Administration Act of 1979,
as amended in 15 CFR Parts 730-774 of the Export Administration Regulations
(EAR).
 
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B.           No technical data, manufacturing drawings, specifications, software
or similar type items shall be transferred, disclosed or exported to “Foreign
Persons” without specifically obtaining approvals from the U.S. Department of
State’s Office of Defense Trade Controls or from the U.S. Department of
Commerce’s Bureau of Industry and Security, as required.
 
C.           In the event that Seller is unable to comply with the U.S. export
laws and regulations as listed above, prior written authorization of Buyer must
be obtained by Seller if Seller intends to transfer, disclose or export any
technical data, manufacturing drawings, specifications, software or similar type
items to any “Foreign Persons” as defined in the above stated laws and
regulations.  Seller agrees to abide by all limitations and provisos and/or
riders and conditions listed on any licenses or other approvals issued by the
U.S. Department of State or the U.S. Department of Commerce.
 
25.           COMPLIANCE WITH LAWS.
 
A.           Seller shall comply with all applicable federal, state and local
laws, Executive Orders, rules and regulations during performance of the Contract
and all orders, including but not limited to, the Occupational Safety and Health
Act of 1970 as amended (“OSHA”); Toxic Substances Control Act as amended
(“TSCA”); the Fair Labor Standards Act of 1938 as amended (“FLSA”); the Clean
Air Act as amended; the International Traffic in Arms Regulations (“ITAR”) as
amended; and the Anti Kickback Act of 1986 as amended.
 
B.           Seller agrees to furnish documentation, within seven (7) days of
Buyer’s request, regarding payment, offer, or agreement to pay “political
contributions” or “fees or commissions” (as those terms are defined at 22 CFR
130) with respect to any sale by the Buyer for which a license or approval is
required from the Office of Defense Trade Controls, Department of State or any
sale pursuant to a contract with the Department of Defense under Section 22 of
the Arms Export Control Act (22 U.S.C. § 2762).
 
C.           Seller warrants that all representations and certifications
furnished by Seller as required by law or regulation in connection with each
order are accurate, current and complete as of the effective date of such order,
and that to Seller’s knowledge no person has been paid a kickback or illegal
gratuity in connection with such order or the Contract.  Seller agrees to
indemnify and hold Buyer and its customers harmless for any loss, damage or
expenses sustained because any certification or representation herein or in any
order, or required by law or regulation, made by Seller was inaccurate,
non-current or incomplete or due to Seller’s non compliance with any applicable
law or regulation.
 
D.           To the extent it is applicable to Seller’s Items, Seller shall at
all times be in compliance with the Fastener Quality Act (Public Law 101-592 as
amended by Public Law 105-234) as amended from time to time (the “Act”).  Seller
shall defend (with counsel of Buyer’s choosing), indemnify and hold harmless
Buyer from any and all claims, demands and causes of action brought by Buyer or
by any third party against Buyer in any manner relating to Seller’s failure to
comply with the Act.  Seller’s indemnity shall include, but not be limited to,
reimbursement of any costs associated with any return, recall or retrofit of
parts sold under any order which are not in compliance with the Act.
 
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E.           To the extent applicable to Seller’s Items, Seller shall conform to
the requirements of European Union (EU) Directive 2003/11/EC relating to
restrictions on the marking and use of certain substances and preparations
containing the brominated fire retardant Pentabromodiphenyl ether (PentaBDE) and
Octabromodiphenyl ether (OctaBDE).  Seller shall defend (with counsel of Buyer’s
choosing), indemnify and hold harmless Buyer from any and all claims, demands
and causes of action brought by Buyer or by any third party against Buyer in any
manner relating to Seller’s failure to comply with this directive.  Seller’s
indemnity shall include, but not be limited to, reimbursement of any costs
associated with any return, recall or retrofit of parts sold under any order
which are not in compliance with the Directive.
 
F.           Seller will comply with all applicable national, EU,
state/provincial and local environmental, health and safety laws, regulations or
directives.
 
G.           Upon request, in form and substance satisfactory to enable Buyer to
meet its compliance obligations with regard to Regulation (EC) No 1907/2006
(“REACH”) or similar laws or regulations identified by Buyer, Seller will
provide Buyer with complete information regarding the chemical composition of
any Items (substances, preparations, mixtures, alloys or goods) supplied under
any order, including all safety information required under REACH and information
regarding the registration or pre-registration status of any Items pursuant to
REACH. Seller agrees that it will include any Buyer “Identified Use” in its
REACH registrations or applications for authorization pursuant to REACH unless
Seller notifies Buyer in writing that it rejects such “Identified Use” in order
to protect human health or the environment and specifies the reason for such
rejection.  In such case Buyer shall have the right to terminate any order
without incurring any costs or damages.
 
H.           Additionally, unless Seller provides Buyer with a written material
declaration showing such substances and obtains Buyer’s prior written consent or
Buyer clearly specifies such substances in each order, no Items will contain any
of the substances identified in Article 4.1 of the European Parliament Directive
2002/95/EC (RoHS Directive) as that Directive is updated from time to time, or
similar laws or regulations identified by Buyer, restricting the use of
hazardous materials in other jurisdictions.
 
I.           Items will comply with the restrictions set forth in the Montreal
Protocol on ozone-depleting substances.
 
J.           Seller will be responsible for all costs and liabilities for or
relating to the recycling of Items pursuant to the most current version of
European Parliament Directive 2002/96/EC (WEEE Directive) as such Directive is
implemented in each country, or similar laws or regulations identified by Buyer.
 
26.           [INTENTIONALLY OMITTED].
 
27.           [INTENTIONALLY OMITTED]
 
28.           DISPUTES.
 
A.           In the event of any dispute, controversy or claim in any way
arising out of the Contract or any order (a “Dispute”), upon the written notice
of either party hereto, the parties hereto shall attempt to negotiate a
resolution of the Dispute.  If the parties hereto are unable for any reason to
resolve a Dispute within 30 days after the receipt of such notice, the Dispute
shall be submitted to mediation in accordance with Section 28 B. hereof.
 
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B.           Any Dispute not resolved pursuant to Section 28 A. hereof shall, at
the request of either party hereto (a “Mediation Request”), be submitted to
non-binding mediation in accordance with the then current CPR Mediation
Procedure (the “Procedure”), except as modified herein.  The mediation shall be
held in New York, New York.  The parties shall have 20 days from receipt by a
party of a Mediation Request to agree on a mediator.  If no mediator has been
agreed upon by the parties within 20 days of receipt by a party of a Mediation
Request, then either party may request (on written notice to the other party),
that the CPR appoint a mediator in accordance with the Procedure.  All mediation
pursuant to this clause shall be confidential and shall be treated as compromise
and settlement negotiations, and no oral or documentary representations made by
the parties during such mediation shall be admissible for any purpose in any
subsequent proceedings.  No party hereto shall disclose or permit the disclosure
of any information about the evidence adduced or the documents produced by the
other party in the mediation proceedings or about the existence, contents or
results of the mediation without the prior written consent of the other party
except in the course of a judicial or regulatory proceeding or as may be
required by law or requested by any foreign or United States federal, state or
local governmental, regulatory or administrative agency or any court, tribunal,
or judicial or arbitral body or securities exchange.  Before making any
disclosure permitted by the preceding sentence, the party intending to make such
disclosure shall give the other party reasonable written notice of the intended
disclosure and afford the other party a reasonable opportunity to protect its
interests.  If the Dispute has not been resolved within 60 days of the
appointment of a Mediator, or within 90 days of receipt by a party of a
Mediation Request (whichever occurs sooner), or within such longer period as the
parties may agree to in writing, then any party may file an action on the
Dispute in any court having jurisdiction in accordance with Section 28 C.
 
C.           Each of the parties hereby irrevocably and unconditionally consents
to submit to the exclusive jurisdiction of the courts of the State of New York
sitting in New York County and the courts of the United States of America
located in New York County, New York for any litigation arising out of or
relating to this Contract or the transactions contemplated hereby or any of the
other transactions contemplated hereby (and agrees not to commence any
litigation relating hereto except in such courts), and further agrees that
service of any process, summons, notice or document by U.S. registered mail to
its respective address set forth in Section 1 of the Contract, shall be
effective service of process for any litigation brought against it in any such
court.  Each of the parties hereby irrevocably and unconditionally waives any
objection to the laying of venue of any litigation arising out of this Contract
or the transactions contemplated hereby or any of the other transactions
contemplated hereby in the courts of the State of New York sitting in New York
County or the courts of the United States of America located in New York County,
New York and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such litigation brought in any
such court has been brought in an inconvenient forum.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO
TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING IN
ANY WAY TO TRANSACTION MATTERS.
 
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29.           CHOICE OF LAW.  Any and all claims, disputes or controversies in
any way arising out of or relating to (a) this Contract, (b) any breach,
termination or validity of this Contract, (c) the transactions contemplated
hereby or (d) any discussions or communications relating in any way to this
Contract or transactions contemplated hereby (the “Transaction Matters”), and
the existence or validity of any and all defenses to such claims, disputes or
controversies, shall be governed and resolved exclusively by the laws of the
State of New York.  Each party irrevocably and unconditionally waives any right
to object to the application of New York law or argue against its applicability
to any of the matters referenced in the immediately preceding sentence.
 
30.           [INTENTIONALLY OMITTED]
 
31.           NON-WAIVER.  No failure by Buyer to assert its rights under any
provision of each order, or failure of Seller to perform any provision of the
Contract or any order, shall be effective as a waiver thereof unless consented
to in writing by Buyer; nor shall any such waiver constitute an advance waiver
of any other provision or failure to perform.
 
32.           ASSIGNMENT AND SUBCONTRACTING.  Each party may assign all of its
rights or obligations under this Contract without the consent of the other party
in connection with a merger, reorganization or sale of all or substantially all
of the assets or business to which this Contract relates.  Each party will
provide the other party with written notice of any such assignment or transfer
no later than ten (10) days after the effective date of such assignment or
transfer.  Buyer may assign this Contract to an entity Controlling, Controlled
by or under common Control with Buyer (“Affiliate”) without the prior written
consent of Seller; Buyer may assign any portion of its rights and obligations
hereunder to either or both of two Affiliates, one in Europe and one in Asia,
without the prior written consent of Seller; and Buyer may assign any portion of
its rights and obligations hereunder to any other Affiliate with the consent of
Seller, such consent not be unreasonably withheld.  Seller may subcontract or
delegate its rights and obligations under this Agreement to one or more
wholly-owned subsidiaries of Seller without the consent of Buyer but Seller
remains liable for the performance by such wholly-owned subsidiaries.  Any other
assignment or transfer of this Contract or the rights or obligations of a party
hereunder will require the consent of the other party. In the event of any
assignment permitted hereunder, the assignee shall agree in writing to be bound
by the terms and conditions of this Contract and to assume all of the
obligations of the assigning party.  Any other assignment or transfer of this
Contract, including a subcontract of the majority of Seller’s obligations under
this Contract, shall be void.  All terms and conditions of this Contract shall
be binding on and inure to the benefit of the legal representatives, successors
and permitted assigns of the parties.
 
33.           HEADINGS.  Headings set forth in the Contract or any  order are
for convenience of reference only and are not intended to, nor do they alter the
meaning, content, or enforceability of any Article hereof.
 
34.           SEVERABILITY.  In the event any provision of the Contract is held
to be unenforceable or invalid by any court of competent jurisdiction, the
validity and enforceability of the remaining provisions of the Contract will not
be affected and, in lieu of such invalid or unenforceable provision, there will
be added automatically as part of the Contract, as applicable, one or more
provisions as similar in terms as may be valid and enforceable under applicable
law.
 
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35.           SURVIVAL.  Articles 2, 6, 12, 16, 17, 25, 28 and 29 of these
General Purchase Order Provisions and Sections 19, 21, 22 and 23 of the Contract
will survive the termination or completion by Seller of performance of the
Contract, these General Purchase Order Provisions and/or any order.
 
36.           RESPONSIBILITY FOR SUBCONTRACTORS AND SUPPLIERS.  Seller will be
responsible for the performance of its subcontractors and suppliers and any
breach or default of any provision of this Contract or any order by any of them
shall be deemed a breach or default by Seller.
 
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EXECUTION COPY

ATTACHMENT 3
 
STATEMENT OF WORK
 
This Statement of Work defines the services (“Services”) Seller will provide to
Buyer under the Contract (of which this Statement of Work is a part).  All
capitalized terms not defined in this Statement of Work shall have the meaning
assigned to them elsewhere in the Contract. There shall be no additional charge
for any of these Services.
 
Seller shall have and maintain the capability to manage mechanical and
electrical hardware components having variable consumption
requirements.  Additionally, Seller shall have and maintain the capability to
offer value added services including kitting, packaging and electrostatic device
handling in accordance with commercial and governmental program requirements and
with the requirements of the Contract.
 
Seller will be responsible for the scheduling, procurement, testing, and
delivering of Products at  Buyer’s facilities located in the locations listed in
Appendix A and such other locations as Buyer may designate from time to time
(“Buyer Locations”), and shall be responsible for monitoring, management and bin
maintenance of Products in point of use areas at those Buyer locations that are
designated in Appendix A as being scanned by Seller (the “Seller-Scanned
Locations”).  Appendix A may be updated by Buyer from time to time upon five (5)
business days written notice to Seller.  Seller shall continuously manage and
rationalize its supply base with the objective of optimizing cost and
quality.  Furthermore, Seller shall have the technical expertise to assist Buyer
in part standardization.
 
Seller acknowledges that Seller’s location, facilities, quality control,
manpower availability and management personnel are part of the consideration of
the Contract.
 
1.           GENERAL
 
1.1           Seller will maintain the capability and willingness to expand
Services worldwide in order to better support Buyer.
 
1.2           Seller shall ensure continuous support to Buyer by providing
twenty-four (24) hour, seven (7) day availability of a Buyer-dedicated Program
Manager.  The Program Manager must have a high level of experience and
familiarity with all Services.  Seller shall notify Buyer thirty (30) days prior
to placement of a Program Manager (providing name and qualifications), and the
selection of the Program Manager will be subject to the reasonable disapproval
by Buyer, in which case Seller will promptly designate an alternate Program
Manager acceptable to Buyer.  Seller will also provide adequate additional
on-site personnel at each Buyer Location to provide the Services.  Buyer shall
reserve the right to approve (which approval shall not be unreasonably withheld)
the Seller’s personnel dedicated to the Services.  Furthermore, Seller shall
provide, upon Buyer’s request, information regarding the qualifications and
experience of specified personnel.
 
1.3           During implementation of the Services, transition activities shall
be co-developed and supported in a collaborative environment.  Seller shall
assist with implementation and training as required.  On-time delivery (OTD),
PPM, and Fill Rate standards for Products managed hereunder shall be as set
forth in the Contract.
 
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1.4           Until January 1, 2010, Seller shall conduct in-person quarterly
reviews (the “Reviews”) of the Services and Seller’s performance under the
Contract with Buyer personnel as specified by Buyer; thereafter, the Reviews
shall take place every six (6) months.  Seller shall make its Program Manager
and all dedicated and lead on-site personnel available for these Reviews.  The
Reviews will take place at a time and place specified by Buyer.  The Reviews
shall also address the following:
 
 
·
Identify any existing or potential risk to Seller’s performance;

 
·
Identify any problem areas or sources of dissatisfaction with Seller’s Products
as expressed by Buyer or Buyer’s customer;

 
·
Develop joint corrective action plans and schedules for the two preceding items.

 
·
Coordinate corrective action plans with delivery schedules.

 
·
Report progress of corrective action plans and schedules; and

 
·
Identify potential areas of growth for Seller and Buyer Products.

 
·
Identify productivity gains.

 
At the conclusion of each Review an action list, with assigned responsibilities,
will be prepared and signed by Buyer and Seller.  Any attendance at a Review
shall not relieve Seller of any obligations or transfer any obligations of
Seller to Buyer.
 
1.5           Seller shall provide a purchasing resource to perform purchasing
activities associated with the introduction of new Products to the Contract, as
well as any potential non-Contract requirements.  This resource shall be
available to Buyer to support such sourcing activities.  Such sourcing
activities shall include suggesting available industry alternates and
proposals/recommendations for adding new requirements to the current Contract.
 
1.6           Seller shall have available support staff to provide effective
liaison and coordination whenever problems arise with Services on both a routine
and emergency basis.  This assistance shall be available at no charge to Buyer,
24 hours per day/7 days per week.  Seller shall provide personnel at Buyer
Locations as described herein from 7:30 a.m.-5:00 p.m. local time on regular
Buyer work days.  Seller shall make on-call personnel available to Buyer
Locations outside these hours.
 
1.7           As of the Effective Date, Seller shall have developed and proposed
to Buyer a process to address normal operational support as well as emergency
situations and urgent requests by Buyer.  This process shall be subject to Buyer
approval and include, by way of example and not limitation, response time limits
as noted below:
 
 
·
AOG contract Products:  will ship within four (4) hours from notification.

 
·
Normal stockout line stoppage situations:  shall deliver within twenty-four (24)
hours from notification.

 
·
Standard replenishment:  Will be delivered within five (5) business days after
bin scan.

 
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1.8           Situations involving Engineering/Technical support will be handled
by Seller as follows:
 
 
·
Problem identification:  48 hours.  Seller will identify the problem requiring
Engineering/Technical support to Buyer in writing

 
·
Problem resolution plan:  1 week.  Seller will prepare and present to Buyer for
its approval a plan for resolution of the problem.  Upon approval by Buyer,
Seller will proceed to implement the plan in accordance with timetables set
forth therein.

 
1.9           Seller shall provide and maintain the information systems,
infrastructure, and equipment required to support all activities related to the
Services.  Additionally, Seller information systems shall have interface
capability with Buyer information systems as mutually agreed upon by Seller and
Buyer.  Seller warrants that its information system capabilities are suitable
for the scope and magnitude of the Services and flexible enough to adapt to
Buyer’s requirements under the Contract.  Buyer personnel shall have reasonable
access to Seller systems, as determined by Seller, to support various data needs
associated with the Services, including but not limited to on-line quality
records, component cross reference information, and reporting/metrics.
 
2.           INVENTORY, PACKAGING AND DELIVERY
 
2.1           Seller will maintain its warehouse facilities in locations to be
agreed upon such that at all times during the Term (i) they are adequate to
support the provision of the Services to Buyer and fulfill Seller’s obligations
under the Contract; and (ii) they are adequate to protect Products against
theft, casualty damage, degradation and environmental damage.  Seller will
maintain Forward Stocking Locations (“FSLs”) on a virtual basis for all Buyer
Locations.  Buyer reserves the right to request physical FSLs at any of the
Buyer Locations and shall provide Seller reasonable opportunity to establish
such FSLs and business justification for such FSLs. Seller shall use reasonable
best efforts to establish such FSLs within six (6) months of such request, but
to the extent that the establishment of such FSLs is impracticable
notwithstanding the exercise of such efforts, Seller may have additional time to
establish such FSLs, up to a total of nine (9) months from the date of such
request.  Seller will hire and dedicate a sufficient number of employees (which
may be FTEs as approved by Buyer) to operate the FSLs and support Buyer at the
Buyer Locations, at the cost and expense of Seller.  Seller employees will
deliver items to Buyer’s facility and, at Seller-Scanned Locations, scan and
fill Products into Buyer’s bins.  Seller will be responsible for tax liabilities
on inventory that it owns.
 
2.2           Seller shall bar code and package the Products and documents in
accordance with Buyer’s procedures as further detailed in Appendix D
hereto.  Seller shall package the Products in clear and resealable electronic
static discharge (ESD) bags, if applicable.  Seller shall provide adequate
protection for all Products to prevent damage, loss, corrosion, deterioration
and other injury or harmful conditions during shipment, handling and
storage.  Products will be shipped in disposable containers suitable for land or
air transport.
 
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2.3           The following documents will be available to Buyer for all
Products herein and must accompany all Products, and in the event that Products
are being shipped cross-borders one (1) copy thereof inside the shipping
container and one (1) outside the container:
 
1.           Copies of packing slips or certificates of compliance, or both;
 
2.           Copies of the bill of lading, express courier receipt or waybill
with the mention of the Purchase Order and the part number;
 
3.           Copies of the commercial invoices (in addition to the two (2)
invoices sent with the original to the Accounts Payable Department);
 
4.           Copies of the customs invoice, if and as applicable, with the
mention of the purchase order and the part numbers, the exact description of the
Products, harmonized system code for purposes of clearing customs, bill of
lading or waybill numbers and declared value.  The declared value must include
all costs required to be included by applicable customs laws.
 
2.4           Title and risk of loss shall pass to Buyer upon (i) placement of
the Products in the bins for Products to be delivered at Seller-Scanned
Locations, and (ii) delivery of the Products to Buyer’s dock for Products to be
delivered at other Buyer Locations.
 
3.           DIRECT SHIP AUTHORITY
 
3.1           Pursuant to the terms of this Contract, Seller shall be permitted
to sell, import and distribute the Products pursuant to Buyer’s Direct Ship
Authority.  In order to maintain and meet the requirements of Buyer’s Direct
Ship Authority, Seller agrees to use the Products in strict accordance with the
terms and conditions set forth in this Contract and the License Agreement, and
not to use the Products for any other purpose, including without limitation, to
design or manufacture products, compare a product or design of a product, or
obtain FAA PMA, Designated Engineering Representative approval, or other
governmental approval to manufacture or repair a product.  In the event that
Seller fails to comply with the provisions of Buyer’s Direct Ship Authority and
Seller’s obligations set forth in this Section 3, Buyer may, at its option,
rescind Seller’s rights to sell, import and distribute the Products pursuant to
Buyer’s Direct Ship Authority.
 
3.2           Seller will maintain or cause to be maintained its registration
and all underlying requirements with all applicable Regulatory Authorities,
including, without limitation, registration with the FAA to be in full
compliance with the Authorized Release Certificate, FAA Form 8130-3,
Airworthiness Approval Tag, as required by the Seller to fully satisfy its
obligations and conditions under this Contract.  Seller will (a) report to every
applicable Regulatory Authority within any relevant time periods all events that
are required to be reported (including any death or serious bodily injury caused
by any Products); and (b) deliver, within the permitted time periods, all annual
or other periodic reports required to be delivered to every applicable
Regulatory Authority.
 
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4.           WORK IN PROCESS
 
4.1           Seller shall observe and comply with Buyer’s existing floor
layouts and bin configurations and labeling.  Seller shall recommend
optimizations to floor layouts and bin container sizes and labeling systems for
the components in order to maximize the efficiency of the Services.  All such
recommendations shall be in accordance with Buyer’s plant engineering
requirements and are subject to Buyer approval.  Upon request by Buyer, Seller
shall be responsible for developing processes and procedures to add, remove,
identify, control, maintain, and replace (as needed) containers according to
Buyer’s various production requirements.
 
4.2           This Article 4.2 applies to Seller-Scanned Locations
only.  Seller’s bin replenishment processes shall support the various Buyer
requirements as set forth in the Contract.  Seller’s employees will visually
inspect and scan all bins routinely and at least once a day.  Seller shall
provide visual scan signals to indicate when scan for replenishment has
occurred.  Seller will take full responsibility for monitoring the Products in
the bins, ordering replenishment Products and restocking the Floor Bins with
Products as required.  Routine replenishment of Products will be accomplished by
Seller within an average of five (5) business days and stockouts will be
replenished within twenty-four (24) hours.  Seller will keep the bins and the
immediate area surrounding the bins neat and free from debris.  Products placed
in the bins will be kept in Seller’s packaging until Buyer purchases or uses the
Products so that lot traceability can be maintained.  Seller, with Buyer
support, must be able to assess the minimum and maximum stock level of each bin
container.
 
4.3           Seller replenishment processes must ensure component availability
and shall at a minimum comply with Appendix B hereto.  In the event of a
shortage, Seller information systems must provide capability for stock transfers
from station to station/bin to bin/Buyer Location to Buyer Location.  Seller
shall support bin replenishment lead times as provided in the
Contract.  Oversize requirements, spares, repairs and components associated with
engineering changes shall be addressed with a 24 hour time frame.  Seller shall
determine inventory availability, obtain Buyer approval, place purchase orders
and expedite Product delivery to Buyer.
 
4.4           Seller shall recommend process improvements regarding min/max
calculations and stocking levels to maximize efficiency.  Seller recommendations
shall be subject to Buyer approval and will be in accordance with the parties’
intent of maintaining supplies as set forth in the Contract.
 
5.           QUALITY
 
5.1           Seller will at all times comply with industry standard or better
quality requirements regarding process controls, design controls, document
controls, purchasing, sub-tier suppliers’ manufacturing methods, weight
controls, tool controls and documentation delivery.  As of the Effective Date
Seller shall have provided to Buyer for Buyer’s approval a written description
(the “Quality Plan”) of the process (“Quality Program”) it will use to meet
these quality requirements and to promote continuous improvements thereto, as
further detailed in Article 5.7.  For all Products delivered under the Contract,
Seller’s qualified quality personnel will inspect, test, accept or reject as
appropriate, and certify in writing prior to delivery that Products are
airworthy and meet contractual (and to the extent applicable purchase order)
requirements.  Upon Buyer approval, and throughout the Term, Seller will
maintain and comply with the Quality Program.  Seller’s performance under, and
possible improvements to, the Quality Program will be reviewed at the Quarterly
Reviews.
 
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5.2           Seller shall maintain all requirements under AC OO-56A Voluntary
Industry Distributor Accreditation Program, as may be amended from time to
time.  Seller’s quality system and/or inspection system shall comply with the
requirements of AS 9100 and 9120, and the following additional standards, as
applicable:
 
For non-U.S. Locations:
 
1.           ISO 9001; or
2.           ISO 9002; or
3.           SO 9003; or
4.           AQAP-1; or
5.           AQAP-4; or
6.           AQAP-9; or
7.           JAR Part 21; or
8.           Transport Canada (TC) Chapter 561
 
For U.S. Locations:
 
1.           ISO 9001; or
2.           ISO 9002; or
3.           ISO 9003; or
4.           FAR Part 21.
 
5.3           Seller shall comply with Buyer’s quality requirements as specified
in relevant Buyer purchase order clauses and required Buyer engineering control
standards or drawings.
 
5.4           Seller is fully responsible for all work subcontracted, and shall
ensure the flow-down of Buyer’s quality requirements to Seller’s
subcontractor(s) and suppliers.
 
5.5           Seller shall comply with Buyer’s Supplemental Purchase Order
Conditions Manual, Revision G, dated September 15, 2007 (“SPOC”), and any
subsequent revisions thereto.  Buyer shall supply Seller copy of the manual
prior to execution of this Contract.
 
5.6           For any Products affected by shelf life and/or service life,
Seller shall ensure that such Products are delivered no more than three (3)
months prior to expiration date.
 
5.7           The Quality Plan shall set forth in detail the procedures and
instructions that ensure thorough design, manufacture, inspection, test and
services, product conformity to Contract requirements specifically for the
Product(s).  At a minimum, the Quality Plan shall contain elements defining the
following:
 
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1.           purpose of the plan;
2.           management responsibilities;
3.           quality system;
4.           contract review;
5.           design and development, configuration management;
6.           documentation, record keeping and data control;
7.           purchasing;
8.           customer supplied Products;
9.           Products identification and traceability;
10.         process control;
11.         inspection and testing;
12.         inspection, measuring and test equipment;
13.         inspection and test status;
14.         control of non-conforming Products;
15.         corrective and preventative action;
16.         handling, storage, packaging and delivery;
17.         [Intentionally Omitted];
18.         internal quality review and audits;
19.         training and personnel certification;
20.         servicing - product support;
21.         statistical techniques;
22.         inspection stamp controls; and
23.         First Article Inspection on Buyer Engineering controlled parts, said
FAIs shall be acceptable from the manufacturer to the Buyer.
 
5.8         All or some of the elements stated below may be required by Buyer in
addition to the Quality Plan depending on the Product to be supplied:
 
1.           design control;
2.           document control;
3.           special class parts;
4.           weight controls;
5.           methods and manufacturing;
6.           tool controls;
7.           interchangeability and interface controls; and
8.           additional delivery documentation.
 
The parties understand that some of the above-mentioned elements may require
additional processing time and costs to implement.  Buyer will be liable for
these reasonable costs upon invoice from Seller.
 
5.9           For Products subject to Material Review Board (“MRB”) review,
Seller will abide by all Buyer’s MRB requirements.  Seller may not assume
delegation of MRB authority without the prior written consent of Buyer.
 
5.10           Seller shall supply Products in compliance with the technical and
contractual requirements specified in the Contract and applicable purchase
orders.  Products which become non-conforming due to hardware or software
developments or modifications, manufacturing discrepancies or defective material
shall not be shipped to Buyer without Buyer’s prior written approval.
 
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5.11           First article Inspection must be carried out by Seller against
both Buyer’s and Seller’s drawings, as and when applicable and in compliance
with the SPOC.  Each first article Inspection report, which Buyer shall accept
from manufacturer, shall cover, at a minimum, all related dimension and notes
found on the drawings of latest issue.  Seller shall identify key
characteristics whenever possible.
 
5.12           For all new Products, first article Inspection and functional
testing must be carried out on one (1) Product from the first production batch
and in accordance with the SPOC.  Any subsequent Product change, an interruption
to the production or manufacturing process in excess of eighteen (18) months or
any configuration change shall also require a first article Inspection report
and test from Seller.  For any new Products procured after the Contract date,
Seller shall flow this requirement to the manufacturer.  For all existing
inventory, this requirement is hereby waived.  In addition, for all Products,
even those which have been previously subjected to first article Inspection,
further first article Inspections shall be carried out from time to time as
specified in the SPOC.  A first article Inspection report must be included with
all first article shipments.
 
5.13           Buyer must supply appropriate drawings to Seller for inspection
purposes prior to initial shipment of the Products therein described.
 
5.14           Any Buyer source inspection carried out on the Product(s)
does  indicate final acceptance by Buyer, and does relieve Seller of the
responsibility for quality and delivering Product(s) conforming to the Contract.
 
5.15           For the period set forth in the audit provisions of the Contract,
Seller shall maintain on file records regarding the provision and quality of the
Services.  All such records shall be subject to Buyer’s audit rights set forth
therein.  All such records shall be reasonably available electronically for
access by Buyer at all times.
 
5.16           Seller shall coordinate with Buyer on a monthly basis to report
actions taken on identified non-conformances.  The reporting format will be
agreed upon by Buyer and Seller.
 
5.17           Notwithstanding any acceptance or inspection by Buyer, any
Products which are not delivered in conformity with the terms and conditions of
this Contract shall be held by Buyer, at Seller’s expense, pending
disposal.  Seller shall then remove, repair or replace, at Seller’s option, any
such non-conforming Products at no additional expense to Buyer.  In cases where
any Products have been returned to Seller’s facility, Buyer shall issue a
corresponding debit note (including transportation costs) on any payments
made.  Any rejected or defective Products which are not promptly corrected in
order to meet the delivery schedule may, at Buyer’s option, be corrected by
Buyer at Seller’s expense.
 
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5.18           For all Products delivered which are not part of bin program
service requirements, Seller shall submit one (1) set of certificates as
specified in the SPOC and/or applicable purchase order; otherwise, said
certificates will be available on-line.
 
5.19           Seller shall attach the necessary certification document(s) to
permit importing the Products, and installing the Products into a prototype or
production Aircraft in accordance with the latest revision of the airworthiness
regulations applicable for the importing country.  The certification document(s)
shall show the configuration/modification status of each Product.
 
5.20           Buyer shall be entitled to place and maintain a resident quality
representative at Seller’s principal place of business or warehouses and/or at
Seller’s subcontractor(s)/sub-tiers during the Term or such lesser periods as
Buyer may deem suitable, to witness acceptance test of the Product(s), and to
carry out source inspection acceptance of the Product(s) prior to shipment;
provided, however, that Seller will conduct source inspections regardless of
whether Buyer exercises its rights under the preceding clause.
 
5.21           During performance of this Contract, Seller’s quality system and
status, inspection system, software quality system, manufacturing and test
processes may be periodically reviewed and evaluated, on a planned basis, by
Buyer, governmental quality personnel or a customer’s representative, to the
degree and frequency determined necessary by Buyer or its government inspector.
 
6.           CHANGE MANAGEMENT
 
Seller shall provide to Buyer notice of industry standard changes that will
affect Products upon notification from suppliers.  Furthermore, such
notifications shall be made in advance of applicability by a period at least as
long as the applicable Product lead time to avoid potential disruption to Buyer
production operations.  Such notification will be communicated by Seller through
the Buyer change request process, or as otherwise requested by Buyer.  Buyer and
Seller information systems teams shall work together to ensure system interface
and training are conducted accordingly.  Seller shall submit a
change/obsolescence control management plan for review and approval by Buyer,
and include process for bin level re-identification as necessary.  Regardless of
industry driven changes to Buyer driven changes to the components, Seller’s
change management plan shall minimize inventory exposure to both Buyer and
Seller.
 
7.           SUPPLY BASE MANAGEMENT
 
Subject to the exclusivity provisions set forth in Section 4 of the Contract,
Buyer reserves the right to maintain its relationship with
manufacturers.  Seller shall continuously focus on opportunities to optimize its
supply base by providing periodic supplier rationalization updates.  Seller
shall proactively manage its supply base by monitoring areas such as delivery
and quality performance, lead-time reduction, cost reduction initiatives, and
service level.  Such efforts will be periodically communicated to Buyer as
requested.  Seller must access the Supplier Portal at least once in each month
and is responsible to maintain the integrity of the data therein. Seller’s
performance shall be measured in part by the Supplier Portal, but such
measurement shall not be limited to the Supplier Portal.
 
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8.           DATA AND REPORTING
 
8.1           Seller shall provide reports at the frequency specified below that
include, but are not limited to, the following:
 
 
·
12 Month Report (quarterly for rolling 12-month periods):

 
o
Calculate number of scan hits per bin

 
■
Any bins with >16 hits per year, review against forecast

 
■
Make recommendations on scan quantities based on this information

 
 
·
Auto-AMC (monthly):

 
o
Looks at historical demand to calculate monthly average to ensure Seller has
the  right amount of stock in the FSL to support Buyer’s demand

 
o
Seller can then fill out AMC Justification form when variances arise

 
 
·
Fill-Rate Report (monthly):

 
o
Used for the Voice of the Customer or equivalent reporting tool

 
 
·
Stockouts (monthly):

 
o
Chart the monthly stockouts per Buyer Location

 
o
Seller to proactively work report to catch problems before they come up

 
 
·
Aged Past Due (weekly):

 
o
Work past due parts

 
o
Prioritizes past dues

 
 
·
Weekly Open Order Reports:

 
o
Automated report from Sales Zone or equivalent reporting tool

 
 
·
Daily Scan Reports:

 
o
Occur once scan is successfully uploaded into BPCS

 
 
·
Daily Shipment Reports:

 
o
Show shipments that occurred the prior day

 
 
·
Monthly Bin Location Update:

 
o
Provides Buyer with current “bin map” for reference

 
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·
Phoenix R&O (Customer Specific):

 
o
Subject to Seller authorization and approval, Buyer is linked directly into Data
Warehouse to obtain:

 
■
Shipments

 
■
Open Orders

 
■
Shelf-life data

 
8.2           Throughout the Term, Seller agrees to communicate and transfer
data electronically with Buyer when and as required by Buyer.  In this respect,
Seller shall maintain software, software formats and versions, system
operations, security procedures, signature processes, transmission regulations
and any other required procedures which are consistent with Buyer’s systems,
formats and procedures.  Seller shall have the ability to perform web based
purchase order transactions.
 
9.           SELLER PERSONNEL
 
9.1           Seller will assign qualified personnel to perform the Services,
and will ensure that its personnel devote sufficient time and effort to
performing the Services as necessary to complete all Services in accordance with
this Statement of Work and to meet the performance standards set forth in this
Statement of Work and elsewhere in the Contract.  Seller will bear all liability
for the acts or omissions of the personnel assigned to perform the Services.  If
Buyer determines that any Seller personnel performing Services are unacceptable,
Buyer will notify Seller providing reasons in writing and Seller will take
prompt, appropriate corrective action, which may include, at Buyer’s request,
replacing the personnel, to be mutually agreed upon by the parties.  Seller will
pay all costs associated with replacing the personnel.
 
9.2           Nothing in the Contract will be construed to place Seller and
Buyer in an agency, employment, franchise, joint venture or partnership
relationship.  Neither party has the authority to obligate nor to bind the other
in any manner; and nothing contained in the Contract will give rise to or is
intended to give rise to rights of any kind to any third parties.  Neither party
will make any representation to the contrary.  The parties agree that Seller
will perform its obligations under the Contract as an independent
contractor.  Seller retains the right and obligation to exercise full control
of, supervision over and responsibility for Seller’s performance hereunder,
including the employment, direction, compensation and discharge of Seller’s
personnel, as well as compliance with workers’ compensation, unemployment,
disability insurance, social security, withholding and all other laws, rules,
codes, taxes, regulations and ordinances governing such matters.
 
9.3           When performing Services at Buyer’s facility, Seller personnel
will observe and comply with Buyer’s security procedures (including with
limitation those set forth in Appendix C, Honeywell’s Security Provisions for
Employees of Honeywell Subcontractors/Sellers/Vendors or other procedures that
apply in lieu of or in addition to Appendix C at particular Buyer Locations to
the extent that pertinent Seller personnel are notified thereof in writing or by
posting at the relevant Buyer Location), rules, regulations, policies, working
hours and holiday schedules. Seller will comply with all applicable national,
state and local laws, regulations and ordinances and Buyer’s Code of Business
Conduct (“Code”) in performing this Agreement.  A copy of the Code may be
obtained at http://www.honeywell.com/sites/honeywell/codeofconduct.htm.  Seller
will maintain an integrity and compliance program acceptable to Buyer and
effective in preventing and correcting ethical violations and in maintaining
compliance with laws.
 
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9.4           Both parties agree to limit access to technology only to persons
who qualify for access under the governing export laws, and who have a specific
and legitimate business need for such information.  Both parties acknowledge and
understand that persons from nations embargoed by the United States (including
but not limited to Cuba, Iran, North Korea, Syria, and Sudan), and persons or
entities included in any of the U.S. Government’s restricted parties lists, are
prohibited from engaging in activities involving Buyer.
 
9.5           Seller’s personnel assigned to work at a Buyer location under this
agreement must be:  (a) 18 years of age or older; (b) legally qualified to
perform the work to which they are assigned; (c) competent to provide the
assigned services; and (d) trained as required for the assignment.  If any
potential Seller personnel is a foreign person (not a U.S. citizen, or permanent
resident as defined by 8 U.S.C. 1101(a)(20) or protected individual as defined
by 8 U.S.C. 1324b(a)(3)) and is in the U.S. under a visa or any other work
authorization, Seller must notify the Buyer Export Control Manager or designated
Buyer personnel for evaluation for potential export licensing requirement prior
to performing Services for Buyer.
 
10.           COMPLIANCE
 
In addition to and without limiting any other compliance requirements under the
Contract or the SPOC, Seller will comply with the following:
 
10.1           Upon Buyer’s request, Seller agrees to provide Buyer with
information necessary for Buyer to meet future re-export compliance
obligations.  Seller represents, warrants and covenants that, as of the date of
shipment, it will have obtained all necessary export and import licenses,
permits or exemptions relating to the Products exported by Seller outside of the
Untied States. Seller will act as the exporter of record for purposes of U.S.
Census Bureau, Automated Export System (AES) filings and comply with all U.S.
export laws and regulations including, but not limited to the International
Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR)
for all Products shipped outside of the United States, and will be responsible
for obtaining all necessary validated export licenses and permits necessary to
ship any Products to locations outside of the United States. Where applicable,
Seller may be permitted to utilize Buyer’s license authority for the shipment of
certain ITAR-restricted parts oversees. Seller will advise Buyer of any import
or export restrictions imposed by any governmental authority upon any of
Seller’s Products sold to Buyer.
 
10.2           All Products shall be in compliance with FAA and other applicable
airworthiness authorities’ certification requirements.  Seller shall, at its
expense, supply certification data to Buyer for analysis and, when required by
Buyer, shall submit such data to the appropriate government airworthiness
authorities.  Seller shall reimburse any direct costs incurred by Buyer
(including, without limitation, flight testing costs) as a result of any delay,
act, omission or failure to perform by Seller pursuant to this Article 10.2.
 
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10.3           Buyer shall assist Seller in obtaining direct shipping
authorization from the FAA to issue 8130-3 tags with regard to Products supplied
to the aftermarket.
 
11.           PART STANDARDIZATION
 
Seller shall submit to Buyer a plan for promoting component standardization and
rationalization.  Seller shall develop and maintain an electronic listing of all
Products along with cross reference part numbers per military and industry
standards.  This database should be regularly utilized by Buyer and Seller to
evaluate potential lower cost standard replacements for existing requirements
and new design applications.
 
12.           WARRANTIES
 
12.1           Seller warrants that:  (a) all Services will be performed in a
competent and professional manner, by qualified personnel under the direction
and control of Seller, in accordance with the highest standards in the industry
provided by reputable service providers performing services of a similar nature,
and (in the case of each of Seller’s personnel) with the same degree of care,
skill and diligence as is ordinarily possessed and exercised by a member of the
same profession, currently practicing, under similar circumstances; and (b) the
Services will comply with this Statement of Work.
 
12.2           If Buyer determines that the Services or any part thereof are
defective or otherwise not in conformity with the Contract, then Buyer may, by
written notice to Seller reject the defective or non-conforming Services, in
which case Seller will, at Buyer’s direction and at Seller’s expense, timely
re-perform, correct, repair or replace the defective or non-conforming Services
so that they conform to the requirements of the Contract.  If Seller is unable
or unwilling to fulfill this obligation within a reasonable time, then Buyer may
fulfill or have a third party fulfill Seller’s obligation at Seller’s
expense.  Seller is responsible for all related costs, expenses and damages
resulting from the non-conformance, including all customer charges and expenses;
and all other corrective action costs.  Unless set off by Buyer, Seller will
reimburse Buyer for all these costs upon receipt of Buyer’s invoice.
 
12.3           The warranties set forth in this Article 12 survive any delivery,
inspection, acceptance or payment by Buyer.  Claims for breach of warranty do
not accrue until discovery of noncompliance, even if the Services were
previously accepted.  The warranties provided are cumulative and in addition to
any warranty provided by law or in equity.  Any applicable statute of limitation
runs from the date of discovery.
 
13.           SAFETY
 
Seller will provide Buyer notice of the occurrence of a safety problem relating
to Buyer or its Customers not more than twenty-four (24) hours after Seller
first learns of the occurrence.  Seller shall provide to Buyer a proposed plan
to fix the problem no more than forty-eight (48) hours after notice of a safety
problem.  Seller shall keep Buyer advised regarding service occurrences that may
be of interest to Buyer, and provide such records that may assist Buyer in
ensuring that support of Products in service can be maintained.  Seller shall
assist Buyer, at no cost, in accident investigations when Buyer determines
Seller may be able to provide information, which would assist in determining the
cause of an accident.
 
13

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14.           TRANSITION
 
Upon termination or expiration of the Contract, Seller will provide all
assistance and cooperation reasonably requested by Buyer in transitioning to one
or more new suppliers of Products and Services.
 

14

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Appendix A
 
To
 
ATTACHMENT 3
 
LIST OF BUYER LOCATIONS
 

[…***…]
 
 
 
 
 
***CONFIDENTIAL TREATMENT REQUESTED
 

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Appendix B
 
To
 
ATTACHMENT 3
 

[…***…]
 
 
 
 
***CONFIDENTIAL TREATMENT REQUESTED ON 2 PAGES
 

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Appendix C
To ATTACHMENT 3
 
Security Provisions for Employees of
Honeywell Subcontractors/Sellers/Vendors
(Revised 6/00)
 
As a provider of services to Honeywell, Seller and its personnel must comply
with the Honeywell security provisions set forth in this Appendix C while on
Honeywell property.  A copy of these rules is to be given to each of Seller’s
personnel the first time they are sent to a Honeywell facility and at least
annually thereafter.  Honeywell, in its sole discretion, and without liability
to Honeywell under this Agreement, shall have the right to refuse to accept
services from any person that does not comply with these provisions.  While at a
Honeywell facility the following rules are applicable and shall be complied
with.
 
GENERAL PROVISIONS:
 
1.           Seller and any permitted subcontractors/suppliers/vendors (seller
and such permitted subcontractors/suppliers/vendors collectively herein referred
to as “Contractors”) will provide their employees assigned to Honeywell
facilities a company identification card, which includes a current picture of
the employee and signature.  Contractors who subcontract out part of their
Honeywell work will also provide a picture identification card, which includes a
current picture and signature. Contractors or their subcontractor employees not
having a picture on their company identification card will be required to show
another form of acceptable picture identification.
 
2.           Contractors will provide a monthly roster of employees on contract
to Honeywell Security Operations Badge Shop Supervisor, PO Box 52181, Phoenix,
AZ 85072-2181, mail stop 109.  Monthly rosters may also be faxed to
602-231-2379. The roster must be signed and dated by the responsible contract
manager. Included on the roster should be the contract managers, or designee,
phone number for employment verification purposes. Changes to a roster (e.g.,
employee terminates) will require a new roster to be generated, signed and dated
by the responsible contract manager and sent to Honeywell Security Operations
for distribution.
 
3.           Contractors will provide a means of contacting their employees at
all times while on Honeywell premises.  Notification will be by a pager,
cellular phone, or phone system.
 
4.           All Contractors and their subcontract employees that require
drive-on privileges will be required to ingress and egress Honeywell facilities
using one of the gates designated for their use depending on the location of the
work being performed.  [GATE DESIGNATIONS TO BE INCLUDED AT TIME OF ISSUANCE TO
PERSONNEL]
 
5.           Prior to driving or walking on-site, Contractor personnel must
exchange their company identification card for a Honeywell contractor badge.
 
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6.           All items, company and personal, brought into or out of Honeywell
facilities are subject to search.  Firearms, alcohol, illegal drugs, recording
devices, cameras, and similar items are prohibited on Honeywell premises unless
authorized by the Manager, Security Operations, or his/her designee. Contraband
will be immediately confiscated. Radios are prohibited except where approved by
management. Inspection of vehicles shall consist of, but not limited to, the
trunk, front and back seats and open areas in the event the vehicle is a pick-up
or van.
 
7.           Confiscated items will be issued a property tag.  Products not
claimed by the end of shift will be forwarded to building 109, Security
Operations Control Center (SOCC).
 
8.           Refusing Honeywell or a security officer’s request to search
parcels, packages, boxes, cartons, lunch containers, briefcases, handbags,
purses, vehicles, tool boxes, and similar items being carried into and out of
Honeywell facilities may result in termination of services from the person
refusing and breach by the employer of the person of the provisions of this
Contract.
 
9.           Honeywell will not tolerate any act of violence or physical
aggression including fighting, improper physical contact, sexual harassment or
threats of physical harm while on Honeywell premises.
 
10.           Under no circumstances is property (including documents and
software) belonging to or under the control of the U.S. Government, Honeywell,
or its employees to be removed from Honeywell facilities without express written
permission from an authorized Honeywell employee or manager.
 
11.           Climbing of fences enclosing Honeywell property, or entering or
leaving the facility by any method other than those authorized, i.e., electronic
turnstile, vehicle gate, or post, is strictly prohibited.
 
12.           Under no circumstances is an employee of a Contractor or
subcontractor to be on Honeywell premises when not scheduled to work.
 
13.           Roaming or wandering through Honeywell facilities without a
specific purpose is strictly prohibited.
 
14.           If fraud, waste, abuse, security violations, unethical or improper
business practices is suspected, immediately notify your manager, the Director
of Supply Chain, the Honeywell Business Conduct Leader at 602-365-4146 or email
the Honeywell hot line (known as “ACCESS”) at
Access.Integrity.Helpline@Honeywell.com.
 
BADGING & IDENTIFICATION:
 
1.           The Honeywell identification badge must be worn on the upper left
side of the outer garment with picture and name clearly visible at all
times.  The badge can also be worn around the neck on a rope type necklace if it
does not cause a safety hazard.
 
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2.           Under no circumstances shall an employee loan a Honeywell badge to
anyone else to use, deface it or change it in anyway.
 
3.           Always remove the Honeywell badge when you leave Honeywell
facilities, including leased facilities.
 
4.           If a Honeywell badge is lost or stolen, immediately report it to a
security officer or lobby receptionist.
 
5.           Never leave a badge in a vehicle.
 
6.           Contractor badges must be returned when exiting a facility.
 
7.           Badges are the property of Honeywell and must be
returned:  (a) When the contract expires or is terminated; (b) when your
employee leaves the contract due to termination of employment; (c) when your
employee transfers or are reassigned to a new contract, and, finally, or
(d) upon demand.
 
VEHICLE INGRESS:
 
1.           Contractor vehicles are not permitted inside the facility perimeter
fence, i.e., have drive-on privileges, unless it is absolutely necessary to meet
performance objectives and contractual requirements.  More specifically, vehicle
ingress may be authorized only when:
 
(a)           The vehicle is properly inspected and approved by security
operations.
 
(b)           The vehicle is absolutely necessary in the performance of the
contracted task, job, or service.
 
(c)           The vehicle has mounted equipment or is pulling a device that is
required for the job.
 
(d)           The vehicle contains multiple or heavy supplies or equipment
needed to perform the contracted task or job that prevents access by other
means.
 
(e)           The vehicle is being used for pick-up or delivery of materials or
supplies.
 
(f)           Tools, materials or other related items cannot be hand carried
into the facility through a post or gate due to size, weight or other factors.
 
2.           Nation-wide delivery services, i.e., U.S. Mail, Federal Express,
Airborne Express, and United Parcel Service, are exempt from this requirement if
they are in a company or Federal Government vehicle and possess a company or
Federal Government picture identification card.
 
VEHICLE OPERATION AND PARKING:
 
1.           When operating vehicles on Honeywell premises, general rules of the
road apply; therefore, always observe and comply with all traffic and parking
regulations.
 
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2.           Contractor vehicles will be maintained in a safe condition and will
be operated only by properly licensed and authorized contractor
personnel.  Security Operations reserves the right to ensure that contract
vehicle operators have a current and valid driver’s license.
 
3.           Always operate your vehicle in a safe manner and follow posted
speed signs, stop signs, and other traffic signs/markings.  Under no
circumstances are you to exceed 10 mph while on Honeywell property.
 
4.           Pedestrians have the right-of-way at all times.
 
5.           Do not drive or park in areas closed by barricades or signs; do not
park in such a manner as to obstruct traffic or block parked vehicles; do not
block entrance gates or fire lanes.
 
6.           Contractor vehicles shall not be operated between dusk and dawn
unless equipped with headlights, taillights and brake lights.
 
7.           Materials and equipment shall be secured during transport.  Any
material extending two (2) feet from a vehicle must have the extremities of the
load marked with a red flag no less than twelve (12) inches square.
 
8.           Do not park in designated spaces without authorization.  This
includes, but is not limited to, visitor, medically limited, handicap, and car
pool, or by curbs painted red.  Violations of parking rules will result in the
vehicle being towed away at the owner’s expense.
 
9.           Visitor parking is for visitors only.  Employees of contractors
must park in regular employee parking.
 
10.           Contractor vehicles must have their company identification logos
on both sides of the vehicle.
 
11.           Parking and traffic regulations apply at all times on all shifts;
all days, and are strictly enforced.
 
12.           Honeywell provides parking as a courtesy for all subcontractors at
no cost.  All personnel who park on these premises do so at their own risk.
Honeywell assumes no liability for any damage or loss to a vehicle or its
contents while parked in Honeywell parking areas. Honeywell reserves the right
and may inspect vehicles while parked on company property.
 
13.           For further information on parking, please reference the Honeywell
Parking Handbook.
 
EMERGENCY NOTIFICATION:
 
1.           Whenever there is, or there is a potential for, danger to human
health, the environment, or property, contractors must notify Security
Operations by calling the emergency___________________.  Security Operations, in
turn, will notify the appropriate emergency response personnel.
 
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2.           When a call is made, the Contractor should:
 
(a)           Remain calm; speak loud and clear.
 
(b)           Give your name and exact location.
 
(c)           Give short and exact details of the nature of the emergency.
 
(d)           Give the status of the situation.
 
(e)           Identify clearly if assistance is needed.
 
(f)           Provide the extension or phone number where you can be reached.
 
(g)           Stay on the line until instructed to hang up.
 
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Appendix D
To
ATTACHMENT 3
 
PACKAGING, PACKING, MARKING AND BAR CODING
 
1.           PURPOSE AND SCOPE.  These terms specify requirements for packaging,
packing, marking and bar coding of Products for delivery from Seller to
Buyer.  All Product deliveries must comply with the provisions set forth herein
below unless specific packaging, packing or marking requirements are contained
within applicable specifications, drawings, etc.  Seller must assure package
integrity throughout the shipping cycle.
 
2.           GENERAL REQUIREMENTS.  Products received without packaging,
packing, marking and/or bar coding as set forth herein may be rejected by Buyer
and returned to Seller at Seller’s expense.
 
A.           Packaging, packing, marking and labeling will conform to
instructions specified or provided by Buyer.
 
B.           When specified in an order under the General Purchase Order
Provisions, Seller shall submit packaging data to Buyer for approval prior to
shipment.
 
C.           Each package and pack shall provide physical, chemical and
cleanliness protection to prevent damage to or deterioration of the
Product.  All materials, fabrication techniques and workmanship shall conform to
the requirements specified below or, if not specified, otherwise meet or exceed
good commercial quality and practice.
 
D.           Seller must comply with all applicable carrier regulations,
including National Motor Freight Classification and Department of Transportation
Regulations.
 
E.           Products susceptible to Electrostatic Discharge (ESD) must be
properly packaged using electrostatic dissipating and shielding packaging
materials.
 
F.           Aluminum foil in packaging material shall not contact metals other
than cadmium, magnesium, aluminum or zinc in applications which may be exposed
to water, including water vapor and condensate.
 
3.           UNIT PACKAGING.
 
A.           Determine the quantity of Products to be included in a unit package
as follows:
 
(1)           For hardware (nuts, bolts, screws, etc.), package in accordance
with Exhibit “A”.
 
(2)           As specified in the Contract, an order under the General Purchase
Order Provisions, or specification.
 
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(3)           Based on consideration of the Products characteristics,
configuration, size, weight, value, criticality, packaging economics, and Seller
standards unless otherwise specified by Buyer.
 
B.           Any painted part, machined part or single Product weighing over one
(1) Pound shall be packaged individually to prevent metal to metal contact.
 
C.           Adequate separation, wrapping or cushioning shall be provided
between parts to preclude incurring of nicks, dents, scratches or abrasions upon
Products.
 
D.           Products with sharp points or protrusions shall be adequately
padded to prevent damage to containers or other Products.
 
E.           Accessory hardware shall be assembled to the Product when
practical, or separately secured within the unit package.
 
F.           Unit package closure shall prevent accidental opening during
shipment and storage.
 
4.           CLEANING.
 
A.           Any cleaning process may be used as long as no damage or harm
occurs to the Product.
 
B.           All Products must be free of:
 
(1)           Any foreign substance which may cause the Product to deteriorate.
 
(2)           Any material which may reduce the effectiveness of any
preservative compound used.
 
5.           PRESERVATION.
 
A.           Products susceptible to corrosion or deterioration shall be
protected through use of:  preservative coatings; volatile corrosion inhibitors;
desiccate packs; etc.
 
B.           The preservative used must:
 
(1)           Not damage the mechanism, structure or function of the Product by
either application, removal or use.
 
(2)           Not cause an adverse reaction with the Product.
 
(3)           Provide protection for the Product throughout shipment and for a
minimum of 90 days indoor storage following receipt.
 
6.           WRAPPING.  A sheet of flexible material shall be applied around the
Product or package to prevent contamination, protect critical surfaces and
barrier material from rupture, and preserve the Product.
 
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A.           Wrapping material may be opaque or transparent and may possess
other characteristics such as volatile corrosion inhibitor, grease-proof, heat
sealable, etc.
 
B.           All wrapping shall be non-toxic and shall not cause deterioration,
contamination or damage to the Product.  The wrapping must be of sufficient size
to completely enclose the Product(s) and must be secured in place.
 
C.           When required, wrapping material shall be of a type which will
provide protection against field forces, such as electrostatic and
electromagnetic fields.
 
D.           Use of static generating wrapping materials is prohibited when
packaging ESD sensitive Products.
 
7.           CUSHIONING, BLOCKING AND BRACING.  As required to protect the
Product from physical and mechanical damage during shipping and handling,
cushioning, blocking and/or bracing shall be used.
 
A.           Cushioning shall meet the following requirements:
 
(1)           Protect the Product from shock, vibration and abrasion.
 
(2)           Control the free movement of the Product within the container.
 
(3)           Convert irregular shaped Products to a configuration which may be
supported within a container.
 
(4)           Protect barriers and containers from ruptures by sharp edges or
projections.
 
B.           Loose-fill cushioning materials (i.e., Styrofoam peanuts, shredded
paper, popcorn, etc.) are prohibited.
 
C.           Newspaper and rags are unacceptable cushioning or dunnage
materials.
 
D.           Use of static generating cushioning materials is prohibited when
packaging ESD sensitive Products.
 
8.           CONTAINERS.
 
A.           Each container shall be of minimum weight and cube consistent with
standard economical designs, sizes and materials.
 
B.           Each unit, intermediate and shipping container shall be constructed
to permit safe removal of the Product.
 
C.           Seller shall select unit, intermediate and shipping containers
based primarily upon Product configuration and protection required during
handling, shipping and storage.
 
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D.           Special containers shall be used for Products which require
additional features to ensure adequate protection (e.g., critical Products in
which abrasion, shock, vibration or distortion on any surface may render the
Product unfit for use).
 
E.           Reusable containers shall be used for Products which are subject to
repair or overhaul.  Reusable containers shall retain usefulness with minimum
maintenance through the projected life span of the Product it
supports.  Containers must provide for easy removal of the Product without
damaging or degrading the reusable value of the container.
 
F.           Bags and envelopes may be used as interior containers to protect
Products from dust, water or water-vapor, as required.  Closure of bags and
envelopes (i.e., staples, tape, heat seal, etc.) shall be sufficient to ensure
adequate Product restraint.
 
G.           Folding and set-up boxes are only permitted as interior unit or
intermediate containers.  They shall not be used as shipping containers since
they will not withstand the rigors encountered during shipment.  Closure, by
means of tape, adhesive, stapling, etc., must be sufficient to ensure adequate
Product restraint.
 
H.           Fiberboard boxes (solid or corrugated) may be used for a wide
variety of products.  The size, weight and type of the Product shall determine
the proper style and type of fiberboard box used.  Structural strength of the
fiberboard box may be increased by varying the interior packing and a degree of
water resistance may be attained through use of weather resistant fiberboard and
tapes.  Closure, by means of taping; stitching; adhesive; strapping; or any
combination of these methods, must ensure adequate Product restraint.
 
I.           Wooden boxes and crates shall be used when warranted by shipping or
structural requirements based upon Product configuration, weight, or
size.  Closure, based upon the type of wooden box or crate used, must ensure
adequate Product restraint.
 
J.           All other containers (i.e., metal, plastic, fiberglass, etc.),
which are normally selected because of their long life and high use
applications, may be used when warranted.  Closure must ensure Product
restraint.
 
9.           INTERMEDIATE PACKING.
 
A.           Unit packages may be placed within intermediate packaging when
additional Product protection is required or to permit consolidation of Products
for ease in handling.
 
B.           Intermediate containers shall:
 
(1)           Include a maximum of 100 unit packs within any single intermediate
container.
 
(2)           Prevent scratches, surface abrasions or other damage to Products
by ensuring that each Item (excluding hardware) is wrapped, bagged, or
interleaved when more than one Item is placed in an intermediate container.
 
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(3)           Be used when multiple unit packages of two (2) pounds or 200 cubic
inches or less will be included in a single shipment.
 
10.           PACKING (EXTERIOR SHIPPING CONTAINERS).
 
A.           Packing shall provide adequate protection of Products during
handling, shipment and storage under anticipated environmental conditions.
 
B.           Packing must comply with minimum carrier requirements for design
and fabrication.
 
C.           Products shall be cushioned, blocked and/or braced within the
container to prevent damage during handling and shipment.
 
D.           Fork lift entries (skidding, pallets, etc.) shall be provided in
the base of containers:
 
(1)           Weighing over 50 pounds and with dimensions exceeding a length of
48 inches and a width of 24 inches.
 
(2)           Weighing in excess of 150 pounds.
 
E.           Container fabrication shall not present any hazard to persons
handling, loading or unloading them.  They shall be securely sealed, strapped,
banded, etc., to withstand anticipated transportation and storage conditions.
 
F.           Containers or Products shall not extend beyond any edge of the
pallet or skid.
 
G.           Steel strapping shall not directly contact material.  Corner
blocking, edge protection, etc. must be placed between the material and the
strapping for surface protection.
 
11.           KITS.  Products within a kit must be:
 
A.           Packaged for physical and mechanical protection.
 
B.           Identified either by part number, Item configuration, nomenclature,
or individually packaged and marked.
 
C.           Physically separated from each other within the kit if the Products
react to each other.
 
12.           HAZARDOUS MATERIALS.
 
A.           Hazardous materials shall be packaged, labeled, marked, and
certified in compliance with applicable government and international
regulations.
 
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B.           A Materials Safety Data Sheet (MSDS) shall be mailed separately to
Buyer (ATTN:  Safety Manager) as set forth elsewhere within the terms of an
order under the General Purchase Order Provisions.
 
C.           An MSDS shall also be included with the initial shipment of
material and any time the material composition changes.
 
D.           For explosives or other dangerous Products which require review and
approval by the Department of Transportation (DOT), Seller must submit two
copies of the classification to Buyer by mail (one to ATTN:  Safety Manager and
one to ATTN:  Packaging Development).
 
E.           When special permits or DOT exemptions are required, Seller shall
ensure Buyer is a party to the provision and a copy of the permit or exemption
is provided to Buyer by mail (ATTN:  Packaging Development).
 
13.           MARKING.
 
A.           General requirements:
 
(1)           Markings shall be non-fading, clear, legible, and durable (capable
of lasting throughout shipment and 90 days inside storage) marking in a color
which shall contrast with the color of the container.
 
(2)           Use labels, tags, stamping, printing, and/or stenciling compatible
with the type of container used.
 
(3)           All surfaces to be marked shall be clean and free of any marks not
applicable to the shipment.
 
(4)           When reusing containers, unnecessary or obsolete markings must be
entirely removed or covered.
 
(5)           Marking shall be located on one side of the container and must not
be disturbed by the opening or closing of the container.  Containers which are
too small for labeling on one side may extend label to an adjacent panel.
 
(6)           Precautionary, handling, and hazardous material markings and
labels shall be applied to assure proper handling and description of contents,
as required.
 
B.           Shipping containers must be marked per Section 14 below.
 
C.           Intermediate containers must be marked to show:
 
(1)           Quantity of Products and unit of measure;
 
(2)           Part No(s);
 
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(3)           Part name or description; and
 
(4)           Earliest cure or expiration date, etc., if applicable.
 
 
NOTE:
If different Products are shipped within a single intermediate container, comply
with Section 14, subparagraph M.(6).

 
D.           Unit containers must be marked to show:
 
(1)           Seller’s name;
 
(2)           Quantity of Products and unit of measure;
 
(3)           Part No(s);
 
(4)           Shelf-life, if applicable:
 
(a)           Manufacture or assembly date  (e.g., MFD DATE 11/98);
 
(b)           Cure date (e.g., CURE DATE 4Q 98); and/or
 
(c)           Expiration date (e.g., EXP DATE 11/98);
 
(5)           Serial no., when applicable (e.g., S/N 1234).
 
14.           BAR CODING - SHIPPING LABELS.
 
A.           Seller shall print and place bar coded shipping labels on all
packages as set forth in the requirements and instructions of this
Section.  Prior to first shipment, bar code must be approved by Buyer.
 
B.           All shipments must be bar coded when shipped to Buyer.
 
C.           Users may consult AIM BC1 “Uniform Symbology specification Code 39”
for bar code definitions and specifications.  Data Identifier standards are as
contained in American National Standards Institute (ANSI) MHl0.8.2-1995.
 
D.           Definitions.
 
(1)           Bar Code Symbol - An array of rectangular marks and spaces in a
predetermined pattern.  A bar code symbol contains a leading quiet zone, start
character, data characters, stop character, and a trailing quiet zone.
 
(2)           Element - A generic term used to refer to either a bar or a space.
 
(3)           Intercharacter Gap - The space between the last element of one
character and the first element of the adjacent character of a discrete bar
code.
 
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(4)           Label - A strip of paper, card, etc., marked and attached to an
object to indicate its contents, ownership, and destination.
 
(5)           Quiet Zone - The area immediately preceding the start character
and following the stop character and which contains no markings.
 
(6)           Shipment - An incremental delivery of one Part Number, Purchase
Order (PO) and item number.
 
(7)           Data Identifier - One or more standard characters preceding the
data in a bar code.
 
E.           Label Characteristics.
 
(1)           The label must contain a minimum of five (5) rows of bar coded
data.  The upper left quadrant will contain the Seller’s name and address who
shipped the package, total weight of the PO Item being shipped, and the address
where the package is to be delivered as referenced on the PO.  The entire label
with other associated Data Elements required is shown in Figure 1 attached.
 
(2)           Minimum label height must be 4.0 inches (102mm) with horizontal
lines (rows), spaced 0.5 inch (13mm) to 0.94 inches (24mm) apart, that extend
the full width of the label.  The actual height of the rows is determined by
Seller, or printer of the label, based on printer technology.
 
(3)           Minimum label width will be 6.0 inches (153mm).  Seller, or
printer of the label, determines the width based on the amount of data to be
encoded and the density capabilities of the equipment to be used for printing
the labels.
 
(4)           Labels must contain black lines and lettering with a white
background.
 
F.           Human Readable Characteristics.
 
(1)           The label’s top row will contain only full width human readable
print.  Vertical and horizontal lines separating information are optional.
 
(2)           Table 1, attached, describes the bar code human readable
characteristics and minimum height of the characters.
 
(3)           The data encoded in the bar code symbol must be defined in human
readable characters at a minimum height of 0.01 inch (0.25mm) above the bar code
symbol and left justified.  The human readable print will not include the data
identifier or the start/stop characters, and will start 0.0625 inches (1.588mm)
from the left edge.
 
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G.           Bar Code Characteristics.  All bar codes shall be left justified in
the lower half of the row and only one bar code is permitted per row. The height
of all bar codes shall be a minimum of 0.5 inch (12.75mm).
 
H.           Significant and Non-Significant Zeros.
 
(1)           Significant leading/trailing zeros are those which are part of a
PO number, part number, item number or shipping document number and must be
included when the bar code and/or human readable characters are printed.
 
(2)           Non-significant leading zeros in the data string must be
suppressed when the bar code and/or human readable characters are printed.
 
(3)           Trailing blanks on part numbers and shipping document numbers are
suppressed on the bar code and at no time shall spaces be included in the bar
coded data.
 
I.           Title.  A title will be left justified and printed in the upper
half of the row.  The title specifies the data type (e.g., Packing List Number).
 
J.           Data Identifiers.  Data identifiers correspond to a specific title
enumerated on the PO which is per ANSI MHl0.8.2 - 1995.  Data identifiers shall
be used in all bar codes.  Data identifiers will be added in human readable form
directly below each title.  Table 2, attached, provides data identifiers which
must be included on all shipping labels.
 
K.           Definition of Descriptions.  The following must be included on all
shipping labels:
 
(1)           The Prefix, PO and Item number which shall consist of a three
digit numeric prefix, six digit PO and three digit item number in one bar
code.  Prefix, PO and Item number shall be as listed on the Buyer PO. PO suffix
shall not be bar coded. Illustration 1, attached, may be used as a guide in
locating the required information on Buyer’s PO. Total length is fourteen
characters with no zero suppression. The composition of the Prefix, PO, and Item
number is as follows:
 
[graphic1.jpg]

Examples:                                117-912854-008 114-A68452-023
 
NOTE:                      Dashes have a significant meaning and must be bar
coded.
 
(2)           The Part Number shall be the purchased part number which contains
a maximum of twenty-four (24) characters.  See Illustration 1.
 
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(3)           Total quantity and UM.  The total quantity (Qty) is a maximum of
eight (8) characters and the Unit of Measure (UM) is a maximum of four (4)
characters as called out on the PO. The (UM) is displayed in human readable
form, but is not bar coded. Table 3 contains standard UM’s. See Illustration 1.
 
(4)           Packing List No. will contain a maximum of eight (8)
characters.  If the number exceeds eight characters, only the last eight
characters are bar coded on the label.
 
(5)           No. of Container shall include the container number as well as the
total number of containers in the shipment in human readable form; however, only
the total number of containers is bar coded (example:  bar code for container 1
of 5 would scan NQ5, bar code for container 2 of 5 would scan NQ5, etc.).
 
L.           Label Location, Shipping Instructions, and Protection.  A label
shall be located and affixed to the outer surface of each shipping container.
(See Figure 2.)  A duplicate must be included with the Packing List.
 
M.           Bar Code Placement.
 
(1)           Rectangular Packages - The bar code symbol will be located on one
side panel.  The bar code should be 2.0 inches above the bottom of the
container, and the right edge of the bar code label shall be 2.0 inches from the
side edge of the container, when possible.
 
(2)           Curved Surfaces - The bar code shall be placed on the lower
quarter of the panel, located 1.5 inches below the top edge of the package.
 
(3)           Irregular Shapes - For irregularly shaped containers and bundles
without a visibly suitable surface, a wired tag with the label affixed shall be
attached so as to be visible from the outside.
 
(4)           The leading and trailing edge of the quiet zone must be at least
0.75 inch (19mm) away from all edges of the container or wired tag.
 
(5)           When shipping more than one container per PO, the bar code label
shall be applied to all containers.  For example, if one order consists of three
(3) boxes (all same part number), the containers are bar code labeled “1 of 3,”
“2 of 3” and “3 of 3” in Human Readable characteristics in the container number
field.  The bar code contains only the total quantity of all three (3) boxes.
 
(6)           Multiple PO’s consolidated into one shipping container must be
individually packaged and properly identified and bar coded.  Each line item,
whether from the same or different PO’s, must be packaged separately and
properly identified.  If containers are too small for bar coding, labels may be
affixed to the outside of the shipping container.  A duplicate label shall be
attached to the Packing List.  One line item per Packing List.
 
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(7)           Labels will be protected against moisture, weathering, abrasion or
other harsh environments.  Clear plastic tapes, window envelopes, and clear
plastic pouches are examples of acceptable protection methods.
 
(8)           Labels shall be applied wrinkle-free.
 
N.           Scanning.
 
(1)           A Visible Light Scanner will be used.  The scanner is designed to
read medium density bar codes.
 
(2)           For optimum scanning, the leading and trailing quiet zone margin
(bar code symbol to vertical box lines) will be a minimum of 0.25 inch (6.4mm).
 
15.           DIRECT SHIPMENT FROM SELLER TO THE GOVERNMENT.
 
A.           Seller shall preserve and package all Products in accordance with
requirements specified in the contract including coded packaging data and
Special Packaging Instructions (SPI’s), as applicable.
 
B.           Unless otherwise specified, Seller shall preserve and package all
Products for system spares, all Products for overseas shipments, and all
class 3110 anti-friction bearings in accordance with military level of
preservation criteria.  All other Products shall be preserved and packaged in
accordance with ASTM-D3951 criteria.
 
C.           Seller shall pack all Products for shipment in accordance with
requirements specified in the contract.  Exterior shipping containers shall
comply with the level of pack required.  Unless otherwise specified, the
required packing levels are as follows:
 
(1)           Domestic shipments - None (refer to ASTM-D3951)
 
(2)           Overseas Shipments:
 
(a)           Via air, FPO, APO - Level B
 
(b)           Via freight forwarder - Level B
 
(c)           Via surface - Level A
 
D.           Unless otherwise specified, Seller shall mark all unit containers,
intermediate containers and shipping containers in accordance with MIL-STD-129.
 
11

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[graphic2.jpg]
 
 
Figure 1.  Example of Buyer — Bar Code Label
 

12

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[graphic3.jpg]

 
Figure 2.  Bar Code Placement
 
13

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Table 1 Bar Code Human Readable Characteristics
 
Data Identifier
Description
Height
 
Ship To:
Company and Address
as Specified on PO
0.1875 inch (4.78mm)
NQ
No. of Container
0.1875 inch (4.78mm)
2K
Packing List No.
0.1875 inch (4.78mm)
7Q
Total Qty UM
0.1875 inch (4.78mm)
K
Prefix-PO-Item Number
0.250 inch (6.37mm)
P
Part No.
0.250 inch (6.37mm)

Table 2.  Data Identifiers
 
Data Identifier
Block Title
Description
Characteristics
 
From:
“From” Seller’s Address
Variable Length
 
Ship To:
Purchase Order “Ship To”
Address
Variable Length
NQ
No. Of Container
Container Number and
Total Number of
Containers  (e.g. 1 of 5)
3 Character Numeric – Variable
2K
Packing List No.
Packing List Number
8 Characters Alpha Numeric – Variable
7Q
Total Qty UM
Ship Quantity Unit of
Measure
8 Characters Numeric – Variable
4 Characters Alpha – Fixed
K
Prefix-PO-Item
Prefix Purchase Order
Number Item Number
3 Character Numeric – Fixed
6 Characters Numeric/Alpha Numeric –
Fixed 3 Characters Numeric – Fixed
P
Part No.
Part Number
24 Characters Alpha Numeric – Variable

 

 
14

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Table 3.  Standard Units of Measure
 
Description
UP
DIM
Code
Bag
BG
1
Bale
BA
1
Barrel
BL
1
Barrel
BR
1
Barrel
BRRL
1
Board Foot
BD
8
Board Foot
BDFT
8
Board Foot
BF
8
Bolt
BO
1
Bolt
BOLT
1
Bottle
BT
1
Boxes
BX
1
Boxes
BXES
1
Bundle
BN
1
Bundle
BNDL
1
Can
CN
1
Carboy
CB
1
Carboy
CR
1
Carboy
CRBY
1
Carton
CT
1
Carton
CTON
1
Case
CA
1
Case
CS
1
Case
CSES
1
Centimeter
CM
1
Coil
COIL
1
Cone
CO
1
Cubic Centimeter
CC
1
Cubic Feet
CF
1
Cubic Meter
M3
1
Cylinder
CY
1
Day
D
1
Dollar
DO
1
Dozen
DZ
1
Dozen
DZEN
1
Dram
DM
1
Drum
DR
1
Drum
DRUM
1
Each
EA
1
Each
EACH
1
Equipment
EQ
1

 
 
15

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Description
 UP
DIM
Code
Feet
FE
3
Feet
FEET
3
Feet
FT
3
Gallon
GA
1
Gallon
GL
1
Gallon
GLLN
1
Gallon Kit
GK
1
Gram
GM
1
Gross
GR
1
Gross
GROS
1
Hank
HA
1
Hank
HANK
1
Head Count
HC
1
Hours
HR
1
Hundred
C
1
Hundred Weight
CW
1
Inch
IN
2
Inch
INS
2
Keg
KE
1
Keg
KEGS
1
Kilogram
K
1
Kilogram
KG
1
Kit
KI
1
Kit
KITS
1
Kit
KT
1
Length
LG
1
Length
LGTS
1
Linear Meter
LM
1
Linear Meter
LMET
1
Linear Yard
LY
6
Linear Yard
LYRS
6
Liter
LI
1
Liter
LR
1
Lot
LO
1
Lot
LOT
1
Lot
LOTS
1
Lot
LT
1
Meter
MT
1
Miles
MI
1
Million Cubic Feet
MC
1
Month
MO
1
Nut
NU
1
Nut
NUTS
1

 
 
16

--------------------------------------------------------------------------------

 
 
Description
 UP
DIM
Code
Ounce
OZ
1
Ounce
OZS
1
Package
PG
1
Package
PK
1
Package
PKGS
1
Pad
PA
1
Pad
PADS
1
Pad
PD
1
Pail
PL
1
Pail
PLS
1
Pair
PR
1
Pair
PRS
1
Piece
PC
1
Pint
PI
1
Pint
PINT
1
Pint
PT
1
Pound
LB
1
Pound
LBS
1
Quart
QT
1
Quart
QTS
1
Quart Kit
QK
1
Quire
QR
1
Quire
QRES
1
Ream
RE
1
Ream
REAM
1
Ream
RM
1
Roll
RL
1
Roll
RO
1
Roll
ROLL
1
Sack
SK
1
Set
SE
1
Set
SETS
1
Set
ST
1
Sheet
SH
1
Sheet
SHTS
1
Spool
SP
1
Spool
SPLS
1
Sq. Foot
SF
5
Sq. Foot
SFET
5
Sq. Inch
SI
4
Sq. Inch
SINS
4
Sq. Yard
SY
7
Sq. Yard
SYRS
7

 
 
17

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Description
 UP
DIM
Code
Tank
TK
1
Thousand
M
1
Ton
TN
1
Ton
TNS
1
Ton
TO
1
Troy Ounce
TR
1
Troy Ounce
TROZ
1
Tube
TB
1
Tube
TU
1
Unit
UN
1
Unit
UNIT
1
Yard
YARD
1
Year
YR
1

 
 
18

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Illustration 1.  Sample Buyer Purchase Order
 
[graphic4.jpg]

 
19

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ATTACHMENT 4
 
LISTED PARTIES
 
[…***…]
 
 
 
 
 
***CONFIDENTIAL TREATMENT REQUESTED

--------------------------------------------------------------------------------

ATTACHMENT 5
 
PRE-EXISTING PURCHASE COMMITMENTS
 
[…***…]
 
 
 
 
***CONFIDENTIAL TREATMENT REQUESTED