Document:

LMI Aerospace, Inc. Exhibit 10.1 to Form 10-Q dated 9-30-06

    EXHIBIT
      10.1

    

    

    

    

    GULFSTREAM
      AEROSPACE CORPORATION

     

    

    MEMORANDUM
      OF AGREEMENT 

    

     

    PREAMBLE
      

     

    This
      Memorandum of Agreement (“MOA”) is executed on this day, January
      1, 2006
      between
      GULFSTREAM Aerospace Corporation (hereinafter "GULFSTREAM”), a Georgia
      corporation having its principal place of business at 500 GULFSTREAM Rd.,
      Savannah, GA 31407 and LMI Aerospace, Inc. (hereinafter "LMI") a Missouri
      corporation having its principal place of business at 3600 Mueller Road,
      St.Charles, MO. 63301. GULFSTREAM and LMI may also be referenced to as a "Party"
      or the "Parties" for the manufacture, delivery and product support of
      GULFSTREAM’s statement of work as described in this MOA.

     

    TABLE
      OF CONTENTS

     

    A.    SCOPE
      OF
      MOA

    B.    PRICING,
      OPTIONS, AND PAYMENT

    C.    PERIOD
      OF
      PERFORMANCE

    D.    DELIVERIES

    E.    INSPECTION
      AND ACCEPTANCE

    F.    PACKAGING
      AND SHIPPING

    G.   
WARRANTY

    H.    TITLE
      AND
      RISK OF LOSS

    I.     DESIGN
      CHANGES

    J.    INTELLECTUAL
      PROPERTY RIGHTS, TOOLING AND DATA OWNERSHIP

    K.    EXCUSABLE
      DELAYS

    L.     PATENT
      INDEMNITY

    M.    INDEMNITY
      BY SUPPLIERS ENTERING GULFSTREAM PREMISES

    N.    SPECIAL
      CONSIDERATIONS 

    O.           
      GENERAL

    

    A.    SCOPE
      OF MOA

    

    1.    Product
      Description / Specification 

    

    General
      Description of “Goods”

    

    Attachment
      A contains a list of detail sheet metal part numbers, attachment B contains
      kits, attachment C contains Leading Edge details, attachment D contains
      Versaform/Tulsa details, attachment E contains estimated annual build rate
      for
      2006. Attachments A thru D include lead time for parts and price list for years
      2006-2010. This listing is subject to revision during the performance period
      of
      this MOA. GULFSTREAM is not obligated to procure any minimum number of units
      to
      obtain the ship set pricing set forth in this MOA. Lead-times will be adjusted
      as mutually agreed upon by both parties (GULFSTREAM and LMI Aerospace) with
      the
      primary focus of reducing manufacturing lead-times. 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    2.    Certification
      

    

    a.  
       LMI
      agrees
      to deliver products and parts hereunder that will meet applicable FAA
      requirements as defined in the current FAR, Part 21, and the JAA requirements
      as
      defined in the JAR for supplied products. GULFSTREAM shall be responsible for
      maintaining FAA Certification and JAA as applicable, on the
      aircraft.

    

    b.    
      LMI
      will
      support GULFSTREAM in its efforts to obtain Foreign Type Certificates as
      mutually agreed. GULFSTREAM will provide reasonable advance notice to
LMI
      of the
      Foreign certifications that it intends to pursue and of the requirements to
      be
      met.

    

    c.    
      Integrated
      Logistics Support
      -LMI
      agrees to perform all work and provide all deliverables as identified in the
      attached GULFSTREAM Document #GER-2011 entitled “Integrated Logistics Support
      Requirements” dated September 4, 2001 at no cost to GULFSTREAM. These
      requirements include Technical Publications, Manuals, Technical and Product
      Support, Technical Training, Reliability, Maintainability, Material
      Services/Ground Support Equipment MSGE and Warranty Administration and other
      data requirements. 

    

    3.    Supplier
      Performance

    

    a.    Performance
      Level 

    

    This
      MOA
      is predicated upon LMI
      maintaining a “green” level
      of
      performance as defined by GULFSTREAM in all tasks required for commitment to
      the
      program and timely satisfaction of all requirements including without limitation
      performance in the areas of quality, product support and on-time deliveries.
      

    

    
      	·   	
              A
                green level of performance in quality is defined as an acceptance
                rating
                of * or
                better.

            

    

     

    
       

      
        	·   	
                A
                  green level of performance in the area of Product Support is defined
                  as
                  having no more than *
                  deliveries received past the original due on dock date as agreed
                  to by LMI
                  per quarter. 

              

      

       

       

      
        	·   	
                A
                  green level of performance for deliveries is defined as * or
                  above on-time deliveries regarding discrete purchase orders with
                  a ship
                  window of * early
                  and * late
                  to the purchase order delivery date, or maintaining a * on
                  time delivery performance rating utilizing the min/max procurement
                  process
                  to the established min/max levels.

              

      

       

       

      
        * The
          text
          noted by asterisks has been redacted in connection with a request to the
          Securities and Exchange Commission for confidential treatment of such text
          pursuant to Rule 24b-2. A copy of this Agreement including the redacted
          information has been submitted to the Securities and Exchange Commission
          as part
          of such request.

 

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    The
      time
      frame for measurement of the items delivered using min/max levels will be
      mutually negotiated by the parties.

     

    

    During
      the performance of this MOA, LMI will be measured and tracked via a supplier
      report card. During the MOA period of performance,
      *
If
      LMI
      fails to achieve the improvement plan, then nothing stated within this Section
      3.a. prevents GULFSTREAM from immediately pursuing termination of the MOA as
      outlined in Section K.

    

     

    b.    Quality
      Assurance

     

    

    
      	 	
              1.
                

            	
              Consistent
                with industry practice, GULFSTREAM has developed Supplier Quality
                Assurance Requirements SQAR-0003 which address such things as Quality
                programs, onsite evaluation
                inspection and testing of equipment and supplies and failure
                analysis.

            

    

    

    
      	 	
              2.
                

            	
              LMI
                shall adhere to the requirements of SQAR-0003 as may be amended from
                time
                to time. GULFSTREAM will provide LMI
                with revisions to SQAR- 0003.

            

    

    

    
      	 	
              3.
                

            	
              In
                addition, the terms and conditions as cited in GULFSTREAM Form GA270
                Rev
                4/05 apply to this MOA, and the specific clauses will be indicated
                as
                applicable at the time purchase orders are released.
                

            

    

    

    c.    Production
      Line Support

    

    1.   
      LMI
      understands the criticality of schedule compliance and will have a minimum
      of *
      of all
      parts
      either in work or in stock to support
      abnormal
      production shortages. If this contract were to be terminated for any reason,
      GULFSTREAM would include the * requirement in the calculation utilizing the
      language in termination of convenience as referenced in paragraph J.2. LMI
      agrees to provide reasonable efforts necessary to comply with the dates on
      the
      purchase order for abnormal production shortages.
      Any
      additional costs incurred by LMI to support these efforts shall be submitted,
      reviewed, and, approved by GULFSTREAM. LMI will use its best efforts to ship
      in
      stock requirements
      within
* 
      of
      GULFSTREAM’s request via Air Express. 

    2.    
      In
      the
      event that GULFSTREAM orders parts utilizing a min/max ordering system, LMI
      agrees to maintain minimum levels of stock at their facility or forward stocking
      location (eventually LMI Tulsa) to guarantee minimum and maximum levels of
      product at GULFSTREAM as set forth by GULFSTREAM. GULFSTREAM and LMI will work
      together to reduce manufacturing lead times due to benefit of utilizing Min/Max
      

    
       

       

      * The
        text
        noted by asterisks has been redacted in connection with a request to the
        Securities and Exchange Commission for confidential treatment of such text
        pursuant to Rule 24b-2. A copy of this Agreement including the redacted
        information has been submitted to the Securities and Exchange Commission
        as part
        of such request.

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

               
      procurement process. All purchase orders released for Min/Max will be estimated
      annual usage quantities only. Gulfstream is not under any obligation to purchase
      set quantities. Quantities to be used for planning purposes only. Gulfstream
      will be accountable for manufacturing lead-times for parts on order as
      referenced on attachment A, B, C, and D.

     

       
      3.     If
      LMI
      determines that it is in its best interest to move work from either one division
      to another or to a sub-tier supplier from internal make, LMI will notify
      GULFSTREAM of the move along with a transition plan to include a move timeline
      and estimated build plan that includes build ahead quantities to support the
      stated transition.

    

    

    d.    Raw
      Material Support

    

    1.    LMI
      has
      the ability to utilize all contracts in place by GULFSTREAM for raw material
      support of product. LMI will be responsible for all over wide material purchases
      and contracts. LMI has agreed to support GULFSTREAM and it’s sub-tiers with over
      wide material distribution when applicable. LMI will submit pricing for over
      wide materials and agree to sell when applicable over-wide material to
      GULFSTREAM sub-tiers with that price plus not to exceed *. Please see section
      P.3 for assignment of raw material contracts.

    

    e.    Aircraft
      on Ground (AOG) Support

    

    
      	 	
              1.

            	
              LMI
                will provide 24 hours, 7 days a week, 365 days AOG coverage, * ,
                with the
                exception of out of production or special configuration requests
                if
                applicable, with which additional cost will be agreed upon by both
                parties.. LMI
                will provide GULFSTREAM a listing of individual
                AOG contacts with E-Mail addresses, phone and fax numbers. The listing
                will be maintained by LMI
                with any revisions being provided GULFSTREAM prior to or at the time
                the
                revision is implemented. 

            

    

    

    
      	 	
              2.

            	
              The
                standard AOG response time is as
                follows:

            

    

    

    *

    *

    *

     

    
      	 	
              3.

            	
              LMI
                will, in good faith, replace those assets used by GULFSTREAM for
                warranty
                (if applicable) support * on an AOG critical expedite
                turnaround.

            

       

      * The
        text
        noted by asterisks has been redacted in connection with a request to the
        Securities and Exchange Commission for confidential treatment of such text
        pursuant to Rule 24b-2.  A copy of this Agreement including the redacted
        information has been submitted to the Securities and Exchange Commission
        as part
        of such request.

       

       

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    
      	 	
              4.

            	
              Defective
                components or units will be expeditiously returned to LMI
                for verification of the failure. Upon verification that the failure
                is
                covered under the warranty LMI
                at
                its cost agrees to replace the failed unit or components within thirty
                (30) days * 
                .
                In such cases where this fee may apply, GULFSTREAM will provide
                LMI
                a
                detailed listing of such cases for review and approval by LMI.
                In the event that the unit or component is not verified as a warranty
                failure, GULFSTREAM shall compensate LMI
                within thirty (30) days, as mutually agreed.

            

    

    

    f.    Parts
      Obsolescence 

    

    LMI
      agrees
      to continue all manufacturing capabilities and/or provide alternate support
      for
      the form, fit and functional requirements for the original configurations on
      any/all of the “out-of-production” configurations, modifications or
      enhancements, so long as the model aircraft for which it was designed remains
      in
      service. Provided that the GULFSTREAM furnished tooling is capable of producing
      original configuration. LMI
      further
      agrees to provide GULFSTREAM * for “last-time-buy” options for any obsolete end
      items and parts of assemblies at the pricing set forth in this MOA where
      applicable.

    

    

    B.    PRICING,
      OPTIONS AND PAYMENT

    

    1.    Supplies
      to be furnished

    

    Attachment
      A, B, C, and D contains the MOA statement of work and associated
      pricing

    

    2.    OPTIONS

    

    a.        
      LMI’s
      pricing structure contained in attachment A, B, C, and D shall cover (5) years
      and defined as the period of performance. GULFSTREAM and LMI
      shall
      review this contract in the 12 months prior to end of MOA to discuss exercising
      an additional option period. Pricing terms for this MOA shall be as documented
      in attachment A, B, C, and D for five years. Upon mutual agreement of the
      parties this agreement may be extended prior to end of MOA. *

     

    b.        
      In
      the
      event of engineering changes, ‘800’ Part Number rolls and/or Part Number
      replacements, the Gulfstream letter purchase order will cover any increase
      or
      decrease in unit pricing pending agreed upon pricing by both parties. The
      products listed in Attachment A, B ,C and D will be subject to the same pricing
      or de-escalated pricing from the pricing of the Part Numbers being replaced.
      If
      a fair price cannot be reached then it is understood that GULFSTREAM will quote
      the rolled part number to other suppliers to obtain the best value possible,
      excluding kits and components used in kits supplied by LMI
      Savannah.

     

     

    
      * The
        text
        noted by asterisks has been redacted in connection with a request to the
        Securities and Exchange Commission for confidential treatment of such text
        pursuant to Rule 24b-2. A copy of this Agreement including the redacted
        information has been submitted to the Securities and Exchange Commission
        as part
        of such request.

 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    

    c.        
      The
      prices set forth in this MOA in no way obligates GULFSTREAM to maintain a
      certain level of buy and will remain as stated in Attachment A,B,C and D
      regardless of the quantity purchased by GULFSTREAM.

    

    3.    All
      invoices, except as noted, shall be sent separately to:

    

    GULFSTREAM
      Aerospace Corporation

    Attn:
      Accounts Payable, M/S B-10

    P.O.Box
      2206

    Savannah,
      GA 31402-2206

    

    4.    Payment
      Terms: *  

    

    *

     

    5.    Spares

     

    a.    Spares
      Pricing 

    

    GULFSTREAM
      reserves the right to purchase planned and unplanned requirements of these
      parts
      for in production, *.

     

    

    6.    Taxes

     

    6.1 

     

    Except
      as
      otherwise provided under Subsection 6.2, Seller is responsible for, and
      indemnifies GULFSTREAM against, any and all taxes (including without limitation
      any related penalties, interest, fees, etc. associated therewith) arising out
      of
      or in connection with Seller’s (a) sale of Product(s) or services to GULFSTREAM
      under this Agreement; or (b) business operations to produce or procure the
      Product(s) and services to be sold to GULFSTREAM under this Agreement. In no
      event will Seller attempt to bill or invoice GULFSTREAM for any taxes described
      in this Subsection 6.1. 

     

    
      6.2 

       

      Seller
        agrees that the prices contained herein include any and all Transfer Taxes
        (as
        defined in this Subsection 6.2). Seller accepts GULFSTREAM's representation
        that
        the Product(s) and services purchased by GULFSTREAM hereunder are for resale
        purposes.  Seller will cooperate with GULFSTREAM in obtaining any
        exemptions from Transfer Taxes where applicable. In the event Seller
        determines that it has a duty under applicable law to charge and collect
        from
        GULFSTREAM and remit to the applicable taxing authority any Transfer Tax
        upon
        the sale of Product(s) and services to GULFSTREAM under this Agreement,
        GULFSTREAM will be responsible for and will pay or reimburse Seller for such
        Transfer Taxes. Seller will separately state any Transfer Taxes charged to
        GULFSTREAM on any bill or invoice.  For purposes of Section 6.4, “Transfer
        Taxes” means sales, use, excise, value-added, goods and services or similar-type
        taxes (including without limitation any related penalties, interest, fees,
        etc.
        associated therewith). 

    

     

     

    * The
      text
      noted by asterisks has been redacted in connection with a request to the
      Securities and Exchange Commission for confidential treatment of such text
      pursuant to Rule 24b-2. A copy of this Agreement including the redacted
      information has been submitted to the Securities and Exchange Commission as
      part
      of such request.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    6.3 

     

    If
      a
      claim is made against any Party for taxes with respect to which the other Party
      is liable for a payment or indemnity hereunder, the Party receiving such claim
      will promptly give the other Party notice in writing within fifteen (15) days
      of
      receipt of such claim; provided, however, that failure to give notice will
      not
      relieve any Party of its obligations hereunder.  The Party liable for the
      tax under this Section 6.4 will be required to remit payment to the other Party
      or the tax authority, as appropriate, unless the Party liable for the tax under
      this Section 6.4 is permitted by applicable law to contest such claim and defer
      payment in accordance with the law.  The Party upon whom the tax is being
      legally imposed will coordinate such contest.  The expense of such contest
      will be borne by the Party liable for the tax under this Section 6.4.  If
      either Party receives any refund on account of any suit or action for a tax
      for
      which the other Party has provided funds hereunder, such Party shall promptly,
      but in any event, within thirty (30) days of receipt of such refund, remit
      such
      refund to the other Party, together with any interest and penalties refunded
      on
      such amount. Additionally, GULFSTREAM shall reimburse LMI for all personal
      property taxes applicable to tooling or other assets owned by GULFSTREAM and
      stored by LMI, after receipt by GULFSTREAM of LMI’s invoice for such taxes for
      the amount of tax imposed by the state or local taxing authority. 

     

    6.4 

     

    The
      obligations provided under this Section 6.4 shall survive termination or
      expiration of this Agreement.

     

    
      7.    Sole
        Distribution Rights / Parts Manufacturing Authority

      

      
        	 	
                1.

              	
                LMI
                  acknowledges
                  that all rights to the distribution of any components designated
                  for use
                  on any GULFSTREAM aircraft, belongs solely to GULFSTREAM, LMI's
                  shall not
                  solicit Parts Manufacturing Authority (PMA) from
                  FAA.

              

      

      

      
        	 	
                2.
                  

              	
                LMI
                  shall provide all components to GULFSTREAM only, for resale to
                  GULFSTREAM
                  customers through the GULFSTREAM distribution
                  network.

              

      

      

    

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    C.    PERIOD
      OF PERFORMANCE

    

    The
      period of performance for this MOA will be from January 1, 2006 through December
      31, 2010.
      The
      pricing (and relevant provision of this MOA) provided for shipsets will apply
      for orders placed by GULFSTREAM prior to the end of the period of performance
      even if the delivery and acceptance by GULFSTREAM occurs after the period of
      performance. Time is of the essence in the performance of obligations set out
      in
      this MOA.

    

    D.    DELIVERIES

    

    1.  
      Delivery
      Schedules 

    

    The
      delivery schedules in this MOA are estimated delivery schedules. 

    GULFSTREAM
      will issue purchase orders segregated by year for the supplies acquired under
      this MOA. Individual items ordered will be identified on the purchase orders
      with GULFSTREAM’s part number. The required delivery schedule for supplies will
      be established on purchase orders. In addition, with Min/Max purchase orders,
      LMI is obligated to perform to the conditions as referenced in Section A.3.c.2,
      Supplier Performance.

    

    2.    JIT
      (Just
      In Time) deliveries

    

    The
      JIT
      delivery schedule herein permits receipts no earlier than * 
      prior to
      the Due-On-Dock date and not later than * late to Due-On-Dock date. Components
      delivered * or more in advance of the Due-On-Dock date will not be accepted
      until, and unless, appropriate Purchasing approval is provided for all detail
      parts. Kit JIT delivery permits receipts no earlier than * to the due on dock
      date. If such approval has not been provided in writing, the components will
      be
      returned collect.

     

    3.    Delivery
      requirements change to the actual Delivery Schedule 

    
       

      GULFSTREAM
        will provide a minimum of 30 days notice to LMI
        in the
        event of production schedule decelerations and/or production schedule
        accelerations. GULFSTREAM will be allowed *. GULFSTREAM and LMI
        will
        work together on a best effort basis to provide as much advance notice as
        possible for schedule changes. In the event of “short lead-time” requests of
        support, LMI Aerospace will provide the best “Promise Date” of delivery to
        GULFSTREAM. That date will be used to track on-time delivery performance.
        All
        efforts to support GULFSTREAM’s required need dates will be expected of LMI
        Aerospace.

      

    

     

    * The
      text
      noted by asterisks has been redacted in connection with a request to the
      Securities and Exchange Commission for confidential treatment of such text
      pursuant to Rule 24b-2. A copy of this Agreement including the redacted
      information has been submitted to the Securities and Exchange Commission as
      part
      of such request.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    4. *
      

    

    *

    *

     

     

    3. Local
      Distribution Center 

    

    
      	 	
              1.

            	
              LMI
                agrees to maintain at its expense its GULFSTREAM Distribution Center
                within a fifty (50) mile radius from GULFSTREAM’s Savannah
                facility.

            

    

    
      	 	
              2.

            	
              LMI
                agrees to maintain at its expense a facility that will be sufficient
                in
                size and functionality to support all roles pertaining to this MOA
                such as
                but not limited to:

            

    

    

    
      	 
              ·   	
              Warehousing
                minimum agreed upon shipsets of LMI and Versaform
                parts.

            

    

     

    
      	                         ·   	
              Capacity
                and reliable capability to perform required processes in order to
                supply
                GULFSTREAM with the highest possible quality kitted products defined
                within this MOA.

            

    

     

    
      	·  	
              A
                facility adequately secure from natural elements and outside
                influences.

            

    

     

    
      E. INSPECTION,
        ACCEPTANCE AND REMEDIES FOR NON-CONFORMING SUPPLIES

      

      1.
         Inspections
        and Acceptance of Supplies

      

      
        	 	
                a.

              	
                GULFSTREAM
                  has the right to perform an incoming inspection on each supplied
                  good upon
                  delivery prior to acceptance. Acceptance of material ordered under
                  this
                  MOA will occur at the designated GULFSTREAM facility as soon as
                  possible
                  following delivery of material and all required material documentation
                  (i.e. Correct Packing Tickets, Certificates of Conformance, 8130
                  forms,
                  etc.), but no more than forty-five (45) days after delivery to
                  GULFSTREAM’s facility.

              

      

      
 

    

     

    
      * The
        text
        noted by asterisks has been redacted in connection with a request to the
        Securities and Exchange Commission for confidential treatment of such text
        pursuant to Rule 24b-2. A copy of this Agreement including the redacted
        information has been submitted to the Securities and Exchange Commission
        as part
        of such request.

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	 	
              b.

            	
              Notwithstanding
                any prior inspection or test, payment, or receiving documents,
                supplied
                goods
                are subject to final inspection, test, and acceptance at destination
                stated herein or at the GULFSTREAM Facility, which orders
                part(s).

            

    

    

    2.    Remedies
      for Non-Conforming Supplies

    

    
      	 	
              a.

            	
              *

            

    

    

    
      	 	
              1.

            	
              *

            

    

    

    
      	 	
              2.

            	
              *

            

    

    

    
      	 	
              3.

            	
              *

            

    

    

    
      	 	
              4.

            	
              *

            

    

     

    
          3.    Quality
        Assurance Inspections of Systems

      

      
        	 	
                a.

              	
                LMI
                  and LMI
                  subcontractors will maintain reasonable quality control and inspection
                  systems and will provide the Supplier’s Quality Organization a failure
                  analysis and corrective action program for all design, tooling,
                  test
                  equipment, manufacturing and test operations supplied to GULFSTREAM.
                  Each
                  type of non-conformance shall be documented, investigated, and
                  the
                  appropriate corrective action implemented. The supplier will have
                  a method
                  for positive identification, recall, and replacement of priority
                  parts in
                  the event of a nonconformance. 

              

      

      

      
        	 	
                b.

              	
                At
                  all reasonable times, including the period of manufacture, GULFSTREAM
                  may
                  inspect and test the supplied
                  goods
                  and inspect the involved plants of LMI
                  and LMI
                  subcontractors. LMI
                  and its subcontractors will at their expense provide GULFSTREAM
                  with
                  reasonable assistance to effectively and efficiently conduct the
                  inspections and LMI
                  and its subcontractors will at their expense promptly comply with
                  written
                  directions by GULFSTREAM reasonably necessary to correct deficiencies
                  in
                  such systems.

              

      

       

       

       

      
        * The
          text
          noted by asterisks has been redacted in connection with a request to the
          Securities and Exchange Commission for confidential treatment of such text
          pursuant to Rule 24b-2. A copy of this Agreement including the redacted
          information has been submitted to the Securities and Exchange Commission
          as part
          of such request.

      

    

    
 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    F.    PACKAGING
      AND SHIPPING - GULFSTREAM document GA 75

     

    1.    Packing
      tickets

    

    LMI
      will
      submit a packing ticket with each shipment. Packing tickets shall include the
      following:

    

    
      	 	
              a.

            	
              All
                packing tickets shall include purchase order number(s), MRA/MRP release
                numbers, item number(s), quantity, serial number(s) (as applicable),
                and
                nomenclature exactly as it appears on the purchase order.
                

            

    

    

    
      	 	
              b.

            	
              All
                parts shall be identified either on the part itself or on the container
                in
                which the part is shipped as specified per GULFSTREAM’s purchase order
                and/or engineering specification.

            

    

    

    
      	 	
              c.

            	
              All
                components, which are serialized, must have the serial numbers stated
                on
                the packing ticket. 

            

    

    

    
      	 	
              d.

            	
              The
                serial number on the packing ticket and the serial number on the
                component
                must be identical. Copies of functional test results must be included.
                

            

    

    

    
      	 	
              e.

            	
              Due
                to FAA requirements, two sets of paperwork must be sent with each
                kit
                shipment. One set for GULFSTREAM receiving to process receipt of
                the kit
                and one set inside the kit-packaging container for review by GULFSTREAM’s
                Composite Bond Room.

            

    

     

    
       

      
        	 	
                f.

              	
                LMI
                  will be accountable for all shipping costs between its own divisions
                  and
                  from the LMI Savannah facility to GULFSTREAM Savannah for kit deliveries.
                  

              

      

      

       
        i.    Once
        LMI
        and GULFSTREAM have completed transition of all details being procured from
        LMI
        for Savannah production requirements

             
        utilizing
        Min/Max, GULFSTREAM has agreed to allow LMI to ship kit detail parts on the
        same
        truck that is carrying regular details 

             
        to GULFSTREAM
        Savannah from LMI Tulsa. Kit detail parts will be dropped off at the LMI
        Savannah facility at GULFSTREAM cost. 

             
        All  information
        of kit details being shipped to LMI Savannah is required prior to
        shipment.

       

    

    
 

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

                 
      ii.   All
      expedite costs or special delivery costs for kit details going to LMI Savannah
      that are necessary to make delivery schedule  will be the responsibility of
      LMI when LMI is found to be at fault. It is LMI’s responsibility to have
      personnel available at LMI Savannah to unload kit details off the GULFSTREAM
      truck.

     

    Failure
      to comply with shipping documentation requirements in excess of 3% of all
      deliveries quarterly, thus displaying a chronic problem shall cause LMI’s
      account
      to be debited in the amount of $200.00 to compensate for time expended in
      correcting discrepancies at the buyers own discretion..

     

    2.    Shipping,
      Marking and Packing Instructions

    

    Unless
      otherwise stated herein, all Shipping, Marking and Packing instructions will
      be
      in accordance with GULFSTREAM Document Number GA 75, 9/05 as amended from time
      to time.

    

    3.    Certification
      of country of manufacture

    

    U.S.
      Customs has increased requirements for the identification of foreign made items
      entering the United States of America. Therefore, proof of Country of
      Manufacture is required for all end items. Please complete form GA3707,
      3/05.

    

     

    -
      EXPORT/IMPORT COMPLIANCE 

     

     

    
      	 	
              4.

            	
              Compliance
                with Export Laws.  Each Party shall perform under this Agreement in
                compliance with all applicable export control laws and regulations,
                including without limitation the U.S. Department of Commerce’s Export
                Administration Regulations (“EAR") and, to the extent applicable, the U.S.
                Department of State’s International Traffic in Arms Regulations
                (“ITAR"). 

            

    

     

    
       

      
        	 	
                5.

              	
                Export
                  Representations and Warranties.  Seller represents and warrants that
                  all Deliverables (as defined below) provided by Seller to Gulfstream
                  under
                  this Agreement shall: 

              

      

       

       

      a.
        not be
        subject to any controls, requirements or restrictions set forth under the
        ITAR; 

       

      b.
        to the
        extent that the Deliverables are subject to the EAR and except for prohibitions
        relating to exports or re-exports destined for countries listed in Country
        Group
        E of the EAR, be classified under the EAR, or be otherwise eligible for an
        exemption or license exception available under the EAR, such that the
        Deliverables may be exported from the United States, and thereafter re-exported
        to a country other than the United States (a “Foreign
        Country"),
        without first requiring authorization by, or notification to, the U.S.
        Department of Commerce’s Bureau of Industry and Security; and 

       

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    c.
      to the
      extent that the Deliverables are subject to export control laws or regulations
      promulgated in any Foreign Country, be classified under such foreign laws or
      regulations such that the Deliverables may be imported into and exported from
      the United States, and thereafter re-exported to a Foreign Country, without
      first requiring authorization by, or notification to, any other foreign
      governmental authority. 

     

    “Deliverables"
      means all items supplied by Seller to Gulfstream under this Agreement, including
      without limitation goods, components, spare parts, accessories, software and
      technical data thereof.   

     

    
      	 	
              6.

            	
              Remedy. 
                In the event that Seller determines that any Deliverable fails to
                satisfy
                the representations and warranties of Section F.5, then Seller shall
                promptly provide notice thereof to Gulfstream.  Seller shall fully
                indemnify the Gulfstream Parties (as defined below) with respect
                to all
                losses, damages, expenses, penalties and judgments arising from a
                breach
                by Seller of Section F.5, including without limitation those arising
                from
                or related to obtaining and retrofitting a substitute item that conforms
                to the representations and warranties of Sections 

            

    

     

     

     

     

    
      	 	
              7.

            	
              Certification
                of Export Classification.  Prior to the first shipment to Gulfstream
                of each unique part number of any of the Deliverables, and prior
                to the
                first shipment following a change to the export classification of
                any
                Deliverable, Seller shall provide to Gulfstream written certification
                for
                each such part number of the following: (a) for each Deliverable
                supplied
                from the United States, its EAR Export Classification Control Number
                (“ECCN")
                number and Schedule B number; and (b) for each Deliverable supplied
                from a
                Foreign Country, its Harmonized Tariff Schedule (“HTS")
                number.  Such information shall be certified in writing using
                Gulfstream Part Information Request Form GA3688 or other mutually
                agreeable format. 

            

    

     

    
       

      
        	 	
                8.

              	
                Possible
                  Future Export Restricted Activity.  The Parties acknowledge that from
                  time to time Gulfstream develops proposals for and enters into
                  contracts
                  with governments and other customers that involve equipment and/or
                  modifications subject to control under the ITAR or under sections
                  of the
                  EAR that require individual licenses.  If in connection with any such
                  effort Gulfstream desires technical assistance, equipment or any
                  other
                  item from Seller that is subject to control under the ITAR or to
                  individual license requirements under the EAR, and Seller agrees
                  to
                  provide such support, then the Parties shall enter into either
                  an
                  amendment to this Agreement or a separate agreement concerning
                  such
                  support. Any such amendment or agreement shall address written
                  certification by Seller of the applicable export control classification
                  of
                  Deliverables, including without limitation USML Category Number(s),
                  and
                  the Parties’ respective obligations regarding compliance with applicable
                  licensing requirements. 

              

      

       

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

     

    G.     WARRANTY
      

    

    1.    General
      

    

    Subject
      to the limitations and conditions hereinafter
      set forth, LMI warrants that the supplied goods and its components supplied
      hereunder
      shall:

    

    
      	 	
              a.

            	
              At
                the Date of Delivery, be free from:

            

    

    

    
      	 	
              i.

            	
              Defects
                in material or workmanship

            

    

    

    
      	 	
              ii.

            	
              Defects
                arising from the selection of material or process of
                manufacture other than as specified by GULFSTREAM or contained in
                GULFSTREAM’s provided design under the Product Description; or GULFSTREAM
                approved design. 

            

    

    

    
      	 	
              iii.

            	
              Defects
                inherent in the design thereof, in view of the state of the art at
                the
                time of design thereof, except for those portions which have been
                retained
                from the prior G350/G450 and G500/G550 design or which are based
                upon
                GULFSTREAM directed or furnished engineering criteria but, only to
                the
                extent such criteria is defective or
                incorrect.

            

    

    

    
      	 	
              b.

            	
              At
                the Date of Delivery, and throughout the duration of the warranty,
                be free
                from: Defects arising from the failure to conform to the Type Design
                specifications and drawings, as certified by the FAA or other
                airworthiness authorities, developed by LMI
                pursuant to the Product Description or the Engineering Statement
                of Work.
                For the purpose of this section, a nonconformance recognized, documented
                and approved by LMI
                quality control and inspection system shall not be considered a
                defect.

            

    

     

    2.    Duration

     

    *         

    

     

    
      * The
        text
        noted by asterisks has been redacted in connection with a request to the
        Securities and Exchange Commission for confidential treatment of such text
        pursuant to Rule 24b-2. A copy of this Agreement including the redacted
        information has been submitted to the Securities and Exchange Commission
        as part
        of such request.

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    

    3.    Remedies

    

    
      	 	
              a.

            	
              LMI’s
                obligation for a breach of a warranty provided under this Section
                during
                the periods described in this Section. shall be to promptly repair,
                replace or correct (to include all costs associated with removal
                and
                reinstallation) at LMI’s
                sole election and cost, the defective part or condition with reasonable
                care and dispatch. LMI
                will reimburse GULFSTREAM for the costs associated with the removal
                of
                defective units, installation of the replacement unit and required
                operational checks provided the work is performed by GULFSTREAM,
                an
                Authorized Warranty Repair Facility or by a facility as directed
                by
                GULFSTREAM. Reimbursement will be based on standard hours applicable
                to
                the removal and replacement of each unit, utilizing standard published
                GULFSTREAM post-production labor
                rates.

            

    

     

    4.    Removal
      and Reinstallation of LMI
      Components 

    

    a.  *

     

    

    b.
       *

    

    *

    *

    *

    *

    *

    *

    * 

    

    
      	 	
              c.

            	
              LMI
                will have 60 days from the date of notification to take exception
                to any
                item(s) submitted. If upon review, GULFSTREAM concurs with said exception,
                GULFSTREAM will adjust debit amount accordingly. If GULFSTREAM does
                not
                concur with such exception, the parties agree to submit the dispute
                to
                their respective Vice President’s responsible for oversight of this MOA
                for resolution. In the event that no resolution is reached, the parties
                agree to seek resolution through mediation. Any claims not contested
                by
                LMI
                within the 60 day period will be debited to LMI
                account.

            

    

     

     

     

    
      * The
        text
        noted by asterisks has been redacted in connection with a request to the
        Securities and Exchange Commission for confidential treatment of such text
        pursuant to Rule 24b-2. A copy of this Agreement including the redacted
        information has been submitted to the Securities and Exchange Commission
        as part
        of such request.

 

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    5.    Disclaimer

    

    THE
      WARRANTIES SET FORTH IN THIS MOA ARE EXCLUSIVE AND NO OTHER WARRANTIES OF ANY
      KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING ALL WARRANTIES OF MERCHANTABILITY
      AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM THE COURSE
      OF DEALING OR USAGE OF TRADE, SHALL APPLY. THE REMEDIES SET FORTH IN THIS MOA
      ARE THE SOLE AND EXCLUSIVE REMEDIES OF GULFSTREAM FOR ANY CLAIMS, EXPENSES,
      OR
      DAMAGE ARISING OUT OF OR RELATED TO PRODUCTS DELIVERED UNDER THIS
      MOA.

    

    IN
      NO
      EVENT SHALL EITHER PARTY BE LIABLE IN TORT OR IN CONTRACT FOR ANY INCIDENTAL,
      SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES.

     

    H.    TITLE
      AND RISK OF LOSS

    

         1.    Title
      and Shipping Point

    

    Title
      to
      all property to be delivered hereunder shall transfer to GULFSTREAM at such
      time
      material is transferred to the designated shipping company, all risks of loss
      or
      damage to property shall be borne by GULFSTREAM at time of shipment, except
      for
      KIT details traveling to LMI Savannah as referenced in Section F.1.f.ii LMI
      will
      retain all risk of loss or damage until delivery to GULFSTREAM
      Savannah.

    

    2.    Risk
      of Loss

    

    Notwithstanding
      the foregoing, LMI
      shall
      bear risk of loss or damage to property subsequently rejected by GULFSTREAM
      and
      placed on transport for return to LMI
      until
      such property is redelivered to GULFSTREAM, except for the loss, destruction
      of,
      or damage to such rejected property resulting from the negligence of officers,
      agents or employees of GULFSTREAM acting within the scope of their employment.
      GULFSTREAM shall notify LMI
      prior to
      shipping the supplied goods back to LMI to ensure proper receipt and
      handling.

     

    

    
      	 	
              a.

            	
              If
                property is furnished by GULFSTREAM for performance of this MOA all
                risks
                of loss or damage to such property shall be upon LMI
                until the said property has been redelivered to GULFSTREAM. LMI
                shall properly segregate, identify and protect all such
                property.

            

    

    

    
      	 	
              b.

            	
              Processing
                of claims relating to loss of or damage to property to be furnished
                hereunder shall be accomplished by the party responsible for risk
                of loss
                or damage to such property at the time the claim
                arises.

            

    

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    I.    DESIGN
      CHANGES 

     

     

    1.    Design
      Changes

    

    
      	 	
              a.

            	
              GULFSTREAM
                may at any time make changes in drawings, designs, specifications,
                materials, packaging, time and place of delivery, method of transportation
                or other terms of this MOA, which changes GULFSTREAM shall document
                in
                writing and which LMI
                will exhaust all means to implement changes in an expeditious manner.
                If
                such changes cause an increase or decrease in the cost of performance
                of
                this MOA or in time required for performance, an equitable adjustment
                shall be made, as applicable, to the price and/or the delivery schedule
                of
                the affected performance and this MOA shall be amended in writing
                accordingly. Any claim by LMI
                for an equitable adjustment under this clause must be asserted
                * 
                effecting the changes or GULFSTREAM shall not be obligated to consider
                LMI’s
                claim for an equitable adjustment. In no event shall GULFSTREAM be
                liable
                for any claim for an increase in price after payment for the supplies.
                If
                property is made obsolete as a result of a change, GULFSTREAM shall
                have
                the right to prescribe the manner of disposition of such
                property.

            

    

    

    2.    Class
      1 & 2 Design Changes - Supplier Requested Changes

    

    
      	 	
              a.
                

            	
              Class
                1 changes are those that affect fit, form, function, interchangeability,
                safety, strength, performance, flight characteristics, weight, balance,
                product qualifications, service life or installation of the next
                assembly.
                These changes are required to be submitted to and approved by GULFSTREAM
                Engineering prior
                to
                incorporation.

            

    

    

    
      	 	
              b.
                

            	
              Class
                2 changes (those that do not affect fit, form, function,
                interchangeability, safety, strength, performance, flight characteristics,
                weight, balance, product qualification, service life or installation
                of
                the next assembly) must also be submitted for GULFSTREAM Engineering’s
                review and concurrence with respect to classification prior
                to
                incorporation. GULFSTREAM will respond with said concurrence or any
                exceptions taken within 2 weeks after receipt of supplier
                notification.

            

    

    

    
      	 	
              c.
                

            	
              All
                Class 1 and Class 2 Design changes shall be submitted in writing
                via a
                “Seller Engineering Memo” (SEM) to GULFSTREAM Engineering with copies to
                GULFSTREAM Purchasing and Quality
                Assurance.

            

    

     

     

     

    
      * The
        text
        noted by asterisks has been redacted in connection with a request to the
        Securities and Exchange Commission for confidential treatment of such text
        pursuant to Rule 24b-2. A copy of this Agreement including the redacted
        information has been submitted to the Securities and Exchange Commission
        as part
        of such request.

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    3.    Supplier
      Escapes 

    

    LMI
      will
      immediately notify GULFSTREAM, in writing, of any material/component escapes.
      Escapes are any material/ component issue that may result in performance,
      airworthiness, FAR non-compliance, or non-conformance as defined
      below:

    

    
      	 	
              a. 

            	
              Material
                or component issues that might affect the item’s ability to perform to
                original specifications.

            

    

    

    
      	 	
              b. 

            	
              Airworthiness
                of the component or end use product in
                question.

            

    

    

    
      	 	
              c. 

            	
              FAR
                non-compliance has been identified with
                components.

            

    

    

    
      	 	
              d. 

            	
              Non-conformance
                to original specification (component or material does not conform
                to
                Engineering specification, drawing or
                document).

            

    

    

    Written
      notification must include: 

    

    
      	 	
              1.

            	
              Nature
                of the Issue

            

    

    

    “What,
      why, how and when” information 

    

    
      	 	
              2.

            	
              Inspections/Action 

            

    

    

    State
      if
      it is satisfactory to simply inspect for this condition and what inspection
      methods are required. If the item needs to be replaced, state NDT standards,
      tools, and inspection resources available. Identify specific series (by serial
      number, by date of manufacture, by location of manufacture, etc.) if
      possible.

     

    
      	 	
              3.

            	
              Compliance
                Time

            

    

    

    State
      the
      urgency of the issue and recommended compliance time.

    

    
      	 	
              4.

            	
              Spares

            

    

    

    State
      if
      replacement or return to supplier for repair is required, whether or not
      adequate spares exist to either replace outright, or to develop a rotable pool
      to keep in service aircraft flying.

    

    
      	 	
              5.

            	
              Remedy

            

    

    

    If
      appropriate, recommend actions to preclude this event from happening again,
      both
      short term and long term.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              6.

            	
              Suppliers
                identification of the issue 

            

    

    

    State
      if
      Airworthiness issue, Quality issue, FAR non-compliance (or all of the
      above).

    

    
      	 	
              7.

            	
              Service Bulletin 

            

    

    

    If
      the
      above information is the basis of a Service Bulletin, then LMI
      should
      provide a draft Service Bulletin at this time if possible.

     

    However,
      in those cases where LMI
      has the
      Material Review Board (MRB) authority and the escape disposition meets type
      design, then a separate submission, other than MRB with the component, is not
      necessary.

    

    J.    TERMINATION

    

    1.    For
      default

    

    
      	 	
              a. 

            	
              GULFSTREAM
                may terminate this MOA or any part thereof, by giving notice of default
                to
                LMI
                under any of the following
                circumstances.

            

    

    

    
      	 	
              1. 

            	
              If
                LMI
                refuses or fails to make deliveries or perform the services within
                the
                time specified in this MOA or fails to satisfy all performance criteria
                as
                stated in Section A.3 performance level.

            

    

    

    
      	 	
              2. 

            	
              If
                LMI
                fails to comply with any of the other provisions of this MOA, or
                so fails
                to make progress as to endanger performance of this MOA in accordance
                with
                its terms, and does not cure or make reasonable progress to cure
                any such
                failure within a period of Ninety (90) days (or such longer period
                as
                GULFSTREAM may authorize in writing) after receipt of written notice
                from
                GULFSTREAM specifying such failure. If circumstances warrant and
                that
                GULFSTREAM and LMI AEROSPACE agree that performance will not improve
                in
                the cure period then termination for default will be
                implemented.

            

    

    

    
      	 	
              3. 

            	
              If
                LMI
                becomes insolvent or is subject to proceedings under any law relating
                to
                bankruptcy, insolvency or the relief of
                debtors.

            

    

    

    b.     In
      the
      event of such termination, GULFSTREAM may purchase 

    or
      manufacture similar product and/or require LMI
      to
      transfer title and deliver to GULFSTREAM any or all property produced or
      procured by LMI
      under
      this MOA, and LMI
      shall be
      liable to GULFSTREAM for any excess cost to GULFSTREAM; provided, however,
      LMI
      shall
      not be liable to GULFSTREAM for such excess cost when the default of
LMI
      is due
      to causes beyond the control and without the fault or negligence of LMI;
      provided further, and LMI
      has
      exercised due diligence to remove delay, LMI
      shall
      not be excused from liability unless LMI
      has
      notified GULFSTREAM in writing of the existence of such cause within ten (10)
      days from the beginning thereof.

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              c. 

            	
              GULFSTREAM's
                liability in the event of a default termination shall be limited
                to the
                agreed price of items delivered and accepted, subject to downward
                equitable adjustment if such product(s) are nonconforming, and to
                the
                reasonable value of any property, inclusive of tooling, design data,
                survival of warranties and obligations thereunder that GULFSTREAM
                may
                require to be delivered pursuant to b.
                above.

            

    

    

    2.    For
      Convenience

    

    GULFSTREAM
      may terminate this MOA, or any part thereof, by giving written notice thereof
      to
LMI.
      In the
      event of such termination, GULFSTREAM shall pay to LMI
      costs
      incurred by LMI
      determined in accordance with sound accounting practices plus a reasonable
      allowance for profit earned thereon for all active production parts or open
      purchase order on order within manufacture lead-time as stated on "Attachment
      A,B, C and D", provided that LMI
      shall
      not be entitled to any profits with respect to work and/or services not
      performed prior to effective date of such termination, nor shall the total
      termination sum payable to LMI
      exceed
      the total agreed to price as reduced by the amount of payments otherwise made,
      and as further reduced by the agreed to price of work not terminated. In no
      event will GULFSTREAM pay LMI
      more
      than the purchase order/contract price. LMI must provide its internal inventory
      and WIP position to GULFSTREAM as of the day of termination no later than 60
      days after receipt of termination. If the inventory information is not provided
      within stated time period, GULFSTREAM is under no obligation to accept the
      data.

    

    K.    INTELLECTUAL
      PROPERTY RIGHTS, TOOLING AND DATA OWNERSHIP

    

    1.    Ownership
      of Design Drawings/Data

    

    
      	 	
              a.
                

            	
              Title
                and rights to all design and design data (drawings) created by
                LMI
                under this MOA are owned by GULFSTREAM upon full payment for
                supplies.

            

    

    

    
      	 	
              b.
                

            	
              If
                the supplies have been either originated or designed by GULFSTREAM
                in
                accordance with specifications or other data furnished by GULFSTREAM,
                all
                rights to supplies or other data and the reproduction, use or sale
                thereof
                are owned solely by GULFSTREAM.

            

    

     

            2.    Ownership
      of Tooling, Design and Data 

    

    
      	 	
              a.

            	
              All
                tooling, the cost of which is included in the price of this MOA,
                whether
                designed by LMI,
                by GULFSTREAM or by a third party, shall become, upon acquisition
                or
                manufacture, the property of GULFSTREAM. LMI
                shall deliver such tooling to GULFSTREAM or GULFSTREAM’s designees after
                performance is completed hereunder or upon termination, unless such
                tooling is needed to fill further orders from GULFSTREAM and retention
                by
                LMI
                of
                such tooling has been consented to in writing by GULFSTREAM.
                

            

    

    

    
      	 	
              b.
                

            	
              The
                term “tooling” shall include, but not be limited to, all tools, catia or
                NC programs, dies, jigs, fixtures, molds, patterns, special taps,
                special
                gauges, special test equipment, other special equipment and manufacturing
                aids, and replacement thereof, acquired or manufactured by LMI
                for the performance of this MOA, which are of such a specialized
                nature
                that without substantial modification or alteration, their use is
                limited
                to the production of supplies or parts hereof, or the performance
                of such
                services as are to be supplied to GULFSTREAM hereunder. LMI
                agrees to comply with the provisions of the GULFSTREAM Tooling Manual
                for
                Subcontractors and SD 20 Tool Manual.

            

    

     

    
 

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    3.    Disposition
      of Tools

    

    
      	 	
              a.
                

            	
              LMI
                is
                wholly responsible for all GULFSTREAM tooling located in its
                facility/facilities against loss or damage, fire, theft and will
                have
                adequate insurance coverage for the replacement of all Gulfstream
                owned
                tooling in the event a catastrophe. LMI shall maintain tool control
                per
                GULFSTREAM "SQAR 0003 Rev D, paragraph 5.11".When tooling is deemed
                no
                longer necessary, LMI
                will receive, in writing, from GULFSTREAM guidance on disposition
                for said
                tools.

            

    

    

    
      	 	
              b.

            	
              Upon
                completion of payments, all tooling shall be properly marked to indicate
                its ownership by GULFSTREAM in accordance with the mutually agreed
                to
                tooling philosophy by GULFSTREAM and LMI.
                GULFSTREAM may file, with the cooperation of LMI,
                a
                UCC Financing statement confirming GULFSTREAM's ownership
                interest.

            

    

    

    
      	 	
              c.

            	
              Upon
                completion of contract GULFSTREAM will be responsible for the
                transportation of all tooling associated with the supplied goods
                referenced in Attachment A, B, C, and
                D.

            

    

    

    L.    EXCUSABLE
      DELAYS 

    

    
      	 	
              1.

            	
              Neither
                party hereto shall be responsible for, nor deemed to be in default,
                on
                account of delays in performance of the MOA due to causes beyond
                its
                control and not occasioned by its fault or negligence. Such causes
                include, but are not limited to: acts of God, force majeure, action
                by the
                Governments, delays in transportation, labor disputes or strikes;
                provided, however, that the existence of such causes shall not excuse
                the
                delaying party from the resulting delay unless such party shall have
                given
                the other party written notice on any excusable delays referred to
                above,
                within 10 days (or such additional time as may be approved by the
                other
                party) after the delaying party has actual knowledge that such occurrences
                will result in a delay in delivery and the delaying
                party.

            

    

    

    
      	 	
              2.

            	
              In
                the event the delivery of any product from LMI
                is
                delayed for any cause deemed excusable hereunder, so that the extent
                of
                such delay in delivery of any product will exceed 1 month from the
                date of
                scheduled delivery, the MOA, for the undelivered delayed products,
                may be
                terminated by GULFSTREAM upon written notice to LMI.
                Any termination under this
                paragraph shall be treated as a termination for default as described
                elsewhere in these terms and
                conditions.

            

    

    

    
      	 	
              3. 

            	
              In
                the event of a significant force majeure event, terrorist act or
                other act
                or declaration of war that materially impacts GULFSTREAM’s aircraft
                backlog or sales activities, GULFSTREAM may in addition to the other
                rights set forth in this MOA reschedule or cancel deliveries affected
                by
                such an event, as required (in GULFSTREAM’s sole determination). In the
                event GULFSTREAM determines a requirement to either reschedule or
                cancel
                deliveries, GULFSTREAM will notify the supplier in writing of the
                deliveries impacted by GULFSTREAM’s determination. The MOA will be
                modified accordingly and all other deliveries, rights and obligations
                under the MOA will remain unchanged and there shall be no penalty,
                additional costs or liability assessed to GULFSTREAM as a result
                of its
                cancellation or rescheduling of deliveries under this
                section.

            

    

     

    M.  
      PATENT INDEMNITY

    

    
      	 	
              1.

            	
              Unless
                the supplied goods are made to the detailed design of GULFSTREAM,
                LMI
                shall at its expense defend and indemnify GULFSTREAM against any
                claim of
                patent infringement provided timely notice of such claim be given
                LMI.

            

    

    

    
      	 	
              2.

            	
              GULFSTREAM
                agrees to pay LMI
                all costs and expenses in its defense and to pay LMI
                the amount of any judgment against LMI
                in
                any suit proceeding against LMI,
                based upon a claim of infringement resulting solely from GULFSTREAM
                connecting any equipment purchased herein with any article or device
                not
                manufactured or supplied by LMI,
                or from the sale or use of any such combination by
                GULFSTREAM.

            

    

     

    
 

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    
      	 	
              N.

            	
              INDEMNITY
                BY LMI
                ENTERING GULFSTREAM PREMISES OR GULFSTREAM ENTERING LMI
                PREMISES

            

    

    

    If
      LMI
      enters
      the premises of GULFSTREAM or its customer, LMI
      shall
      indemnify and hold harmless GULFSTREAM, its officers, agents, and employees
      from
      any loss or liability by reason of property damage, personal injury or death
      arising out of LMI
      presence
      thereon including loss or liability as a result of GULFSTREAMS negligence.
      LMI
      shall
      maintain adequate Worker’s Compensation, public liability, property damage and
      automobile liability insurance and will, upon request, provide a certificate
      of
      insurance.

    

    If
      GULFSTREAM
      enters
      the premises of LMI or its customer, GULFSTREAM
      shall
      indemnify and hold harmless LMI, its officers, agents, and employees from any
      loss or liability by reason of property damage, personal injury or death arising
      out of GULFSTREAM
      presence
      thereon including loss or liability as a result of LMI’s negligence.
GULFSTREAM
      shall
      maintain adequate Worker’s Compensation, public liability, property damage and
      automobile liability insurance and will, upon request, provide a certificate
      of
      insurance. 

    

    
      	 	
              O.

            	
              SPECIAL
                CONSIDERATIONS SECTION

            

    

    

    1.   
      GULFSTREAM
      and LMI agree to openly negotiate research and development cost associated
      with
      the transition from side pull to end pull for GULFSTREAM skins and doublers
      currently manufactured at Versaform/LMI. GULFSTREAM is under no obligation
      to
      enter into an agreement for the manufacturing of the development details. If
      GULFSTREAM and LMI do not enter into agreement for these details in this MOA
      this MOA will stay in full force and effect as written to all other aspects
      without any adjustments to price.

    

    2.    
      LMI
      and
      Sub-tier suppliers to LMI: LMI agrees to secure, maintain, and oversee
      contractual agreements with sub-tier suppliers that insure the level of
      performance defined in terms of this MOA. Such contracts should include, but
      not
      be limited to, terms that support the quality, pricing, and delivery
      requirements defined in this MOA and for the period of performance of this
      MOA.
      If LMI Aerospace sub-tier suppliers are not meeting performance requirements
      GULFSTREAM agrees to assist LMI Aerospace in their needs to approve additional
      sub-tier suppliers upon LMI Aerospace request.

    

    

    P.    GENERAL

    

    1.    Disputes

    

    Any
      controversy or claim between the parties arising out of or relating to this
      MOA,
      or breach thereof, shall be governed by the laws of the State of Georgia and
      shall be settled by arbitration in Savannah, Georgia under the Commercial
      Arbitration Rules of the American Arbitration Association (“AAA”) and
      administered by the AAA. Pending settlement by agreement or a final judgment,
      LMI
      shall
      proceed diligently with the performance hereof according to GULFSTREAM’s
      decision and instructions.

    

    2.    Substance
      Abuse Policy 

    

    LMI,
      its
      subcontractors, agent and employees acknowledges and understands
      that:

    

    
      	 	
              a.
                

            	
              The
                possession, sale, transfer, purchase and/or presence in one’s system of a
                controlled substance(s) or alcohol by any person on GULFSTREAM property
                is
                prohibited;

            

    

    

    
      	 	
              b.
                

            	
              Entry
                onto GULFSTREAM property constitutes consent to an inspection of
                any
                individual and their personal effects when entering, on, or leaving
                GULFSTREAM property;

            

    

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    
 

    
      	 	
              c.
                

            	
              Any
                individual found in violation of (1) above or who refuses to permit
                an
                inspection may be removed and barred from GULFSTREAM property at
                the
                discretion of GULFSTREAM.

            

    

    

    
      	 	
              d.
                

            	
              LMI
                agrees to abide by and to advise its subcontractors, agents and its
                employees of the provisions herein.

            

    

    

    
      	 	
              e.
                

            	
              GULFSTREAM
                Aerospace Corporation’s Substance Abuse Policy (GA 3059)
                is
                enclosed and incorporated by reference and will apply while LMI
                and/or any of its subcontractors are on GULFSTREAM’s premises.
                

            

    

    

    3.    TSO
      (Technical Services Order)

    

    The
      G350/G450 and G500/G550 will be covered by TSO, if applicable.

    

    4.    Press
      Releases

    

    All
      press
      releases by LMI
      regarding the goods and services identified herein require GULFSTREAM’s written
      approval prior to release.

    

     

    5.    Marketing/Advertising
      Assistance 

    

    LMI
      agrees,
      at its expense, and upon the direction of GULFSTREAM to provide reasonable
      and
      normal assistance in support of the following:

    

    a.    Green
      Aircraft Sales

    b.    Customer/Options/Retrofits

    c.    Air
      Shows/Trade Shows

    d.    GULFSTREAM’s
      Customer Workshops

    e.    Other
      GULFSTREAM sponsored activities

    

    6.    Assignment

    

    Except
      as
      to the sale of the business to which this MOA relates, the rights of the parties
      under this MOA may not be assigned or transferred, in whole or in part, to
      any
      person, firm, corporation, or subcontractors without the express prior consent
      of the other party.

    

    7.    Entire
      Agreement

    

    This
      MOA
      constitutes the entire understanding between the parties and supersedes all
      previous understandings, agreements, communications and representations, whether
      written or oral, concerning the subject matter of the agreement.

     

    8.    MOA
      Acceptance

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

     

    Agreement
      by LMI
      to
      furnish materials or services hereby ordered or partial performance hereunder
      or
      shipment of any supplied goods ordered hereby constitutes acceptance of the
      terms and conditions of this MOA. The terms and conditions set forth shall
      be
      the only applicable terms and conditions for this purchase, unless changes
      or
      substitutions are agreed to, in writing, by an authorized agent or
      representative for GULFSTREAM and LMI.
      

    

    9.    Offset
      Credits 

    

    Any
      order
      placed by LMI
      with a
      sub-contractor outside the United States may be used to satisfy GULFSTREAM’s
      (including its parent company, General Dynamics Corporation, and all other
      affiliated entities) contractual obligations, current and future to procure
      goods and/or services from firms in said country to offset, in part, their
      sales
      of goods and services into that country and their impact on that country’s
      balance-of-trade accounts. GULFSTREAM shall reimburse for any LMI
      cost
      associated in implementing / obtaining these offset credits.

    

    10.   Most
      Favored Customers

    

    LMI
      shall
      warrant that prices, terms and warranties under this MOA are at least as
      favorable as those being offered to any other purchaser of similar products
      under the same or similar circumstances.

     

     

    11.   Records
      Review

     

    To
      aid in
      the establishment of reasonable pricing, LMI agrees to permit an on-site review
      of cost data, rationale and related documentation used by LMI to develop
      proposed pricing.

     

    13.   Order
      of Precedence 

     

                                                    
      In the event of conflict in terms, conditions or other GULFSTREAM documents,
      the
      following order of precedence will apply:

     

    

    
      	 	
              A.

            	
              Memorandum
                of Agreement

            

    

    
      	 	
              B.

            	
              Purchase
                Order Issues per MOA (PO text can supercede MOA
                language)

            

    

    
      	 	
              C.

            	
              Statement
                of Work 

            

    

    
      	 	
              D.

            	
              GV-GER-608,
                Rev. A, July 15, 1993

            

    

    
      	 	
              E.

            	
              SQAR-0003,
                Rev. N/C, Quality

            

    

    
      	 	
              F.

            	
              GA
                270 5/04 Additional Conditions

            

    

    
      	 	
              G.

            	
              GA75
                3/05 SHIPPING, MARKING AND PACKING
                INSTRUCTIONS

            

    

    

    12.    Attachments

    

    A. Part
      Numbers steel and sheetmetal details

    B. Part
      numbers for Kits and Versaform details

    C. Part
      numbers for Leading Edges 

    D. G350/G400
      and G500/G550 current schedule 

    

    

    

    
      
        
          
          

        

        
          24

          
            

          

        

        
          
          

          

          

        

      

    

    

    IN
      WITNESS WHEREOF, the parties hereunto have signed, by their duly authorized
      representatives.

    

    

    
      	
              LMI
                AEROSPACE, INC.

            	 	
              GULFSTREAM
                AEROSPACE CORPORATION

            
	 	 	 
	 	 	 
	/s/
              Ronald Saks	 	 /s/
              Jim McQueeny
	
              Ronald
                Saks

            	 	
              Jim
                McQueeny

            
	
              President

            	 	
              Vice
                President, Materials

            
	 	 	 
	 	 	 
	 	 	 
	 /s/
              Ron Llopis	 	 /s/
              Bill Williams
	
              Ron
                Llopis

            	 	
              Bill
                Williams

            
	
              Field
                Service Rep.

            	 	
              Director,
                Initial Phase Procurement

            
	 	 	 
	 	 	 
	 	 	 /s/
              Larry Nelson
	 	 	
              Larry
                Nelson

            
	 	 	
              Manager,
                Procurement

            
	 	 	 
	 	 	 
	 	 	 /s/
              Dianne Lantz
	 	 	
              Dianne
                Lantz

            
	 	 	
              Senior
                Buyer

            
	 	 	 
	 	 	 
	 	 	 /s/
              Jessica Steptoe
	 	 	
              Jessica
                Steptoe

            
	 	 	
              Senior
                Buyer

            

    

    

    

    

    

      
 

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

    

    

    
       

    

     

    Attachment
      “A”

    

    
      	
               

              Part
                Number

            	
               

              Current
                Plant

            	
               

              Lead
                Time

              (in
                weeks)

            	
               

              Pricing
                Category

            	
               

              2006
                change

            	
               

              2006

              price

            	
               

              2007
                change

            	
               

              2007

              price

            	
               

              2008
                change

            	
               

              2008

              price

            	
               

              2009
                change

            	
               

              2009

              price

            	
               

              2010
                change

            	
               

              2010

              price

            
	
               

              * 

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            

    

    

    

    

    
      
        
          
            * The
              text
              noted by asterisks has been redacted in connection with a request to
              the
              Securities and Exchange Commission for confidential treatment of such
              text
              pursuant to Rule 24b-2. A copy of this Agreement including the redacted
              information has been submitted to the Securities and Exchange Commission
              as part
              of such request.

             

             

             

          

        

        
          26

          
            

          

        

        
          
          

          

          

        

      

    

    

    Attachment
      “B”

    

    
      	
               

              Used
                on Model

            	
               

              Part

              Number

            	
               

              Part

              Description

            	
               

              Lead
                Time

              (in
                weeks)

            	 	
               

              2006
                change

            	
               

              2006

              price

            	
               

              2007
                change

            	
               

              2007

              price

            	
               

              2008
                change

            	
               

              2008

               price

            	
               

              2009
                change

            	
               

              2009

              price

            	
               

              2010
                change

            	
               

              2010
                

              price

            
	
               

              * 

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            

    

    

    

    

    
      
        
          
            * The
              text
              noted by asterisks has been redacted in connection with a request to
              the
              Securities and Exchange Commission for confidential treatment of such
              text
              pursuant to Rule 24b-2. A copy of this Agreement including the redacted
              information has been submitted to the Securities and Exchange Commission
              as part
              of such request.

             

             

             

          

        

        
          27

          
            

          

        

        
          
          

          

          

        

      

    

    

    Attachment
      “C”

    

    
      	
               

              Part

              Number

            	
               

              Current

              Plant

            	
               

              Lead
                Time

              (in
                weeks)

            	
               

              Pricing
                Category

            	
               

              2006

              change

            	
               

              2006

              price

            	
               

              2007

              change

            	
               

              2007

              price

            	
               

              2008

              change

            	
               

              2008

              price

            	
               

              2009

              change

            	
               

              2009

              price

            	
               

              2010
                change

            	
               

              2010

              price

            
	
               

              * 

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            

    

    

    

    

    
      
        
          
            * The
              text
              noted by asterisks has been redacted in connection with a request to
              the
              Securities and Exchange Commission for confidential treatment of such
              text
              pursuant to Rule 24b-2. A copy of this Agreement including the redacted
              information has been submitted to the Securities and Exchange Commission
              as part
              of such request.

             

             

             

          

        

        
          28

          
            

          

        

        
          
          

          

          

        

      

    

    

    Attachment
      “D”

    

    
      	
               

              Part

              Number

            	
               

              Current

              Plant

            	
               

              Lead
                Time

              (in
                weeks)

            	
               

              Pricing
                Category

            	
               

              2006

              change

            	
               

              2006

              price

            	
               

              2007

              change

            	
               

              2007

              price

            	
               

              2008

              change

            	
               

              2008

              price

            	
               

              2009

              change

            	
               

              2009

              price

            	
               

              2010
                change

            	
               

              2010

               price

            
	
               

              * 

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            

    

    

    

    

    
      
        
          
            * The
              text
              noted by asterisks has been redacted in connection with a request to
              the
              Securities and Exchange Commission for confidential treatment of such
              text
              pursuant to Rule 24b-2. A copy of this Agreement including the redacted
              information has been submitted to the Securities and Exchange Commission
              as part
              of such request.

             

             

             

          

        

        
          29

          
            

          

        

        
          
          

          

          

        

      

    

    

    Attachment
      “E”

     

     

    2006
      Delivery Schedule

     

     

    
      	
              Bsin

              48.0

            	
               

              G550
                Aircraft C of A

            	 	
               

              G450
                Aircraft C of A

            
	 	
               

              Qtr

            	
               

              A/C

            	
               

              Sch

            	
               

              Proj

            	
               

              Act

            	
               

              Qty

            	 	
               

              Qtr

            	
               

              A/C

            	
               

              Sch

            	
               

              Proj

            	
               

              Act
                

            	
               

              Qty

            
	
               

              * 

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            	
               

              *

            

    

    

     

     

     

    
      
        *  The
          text
          noted by asterisks has been redacted in connection with a request to the
          Securities and Exchange Commission for confidential treatment of such text
          pursuant to Rule 24b-2. A copy of this Agreement including the redacted
          information has been submitted to the Securities and Exchange Commission
          as part
          of such request.

         

         

        30Exhibit 10.1

November 6, 2006

Mr. Dennis J. Nasto
3921 Via Cangrejo
San Diego, CA 92130

Dennis,

This will formalize our conversations and serve as an offer for you to become
the Chief Executive Officer for SecureCARE Technologies, Inc. effective November
6, 2006. The proposal to move ahead on a plan for you consists of the following:

Position

Chief Executive Officer, reporting to the Chairman of the Board of Directors

Board of Directors Participation

Effective immediately, you will also serve on the Board of Directors

Direct Reports

Vice-President, Product and Technology Development, Eugene Fry and Chief
Financial Officer, Neil Burley

Responsibilities

Responsible for all aspects of the Company's sales, marketing and distribution
and its product and technology development, including implementation and
integration; you are responsible for the overall operations of SecureCARE
Technologies, Inc.

Base Pay
$180,000 annually, payable semi-monthly
<PAGE>

Bonus

A performance-based bonus plan, consisting of cash and stock will be payable
quarterly beginning in the first quarter of 2007. You will work with Neil
Burley, CFO and the Board of Directors to create this performance-based bonus
plan to have it structured and approved by December 31, 2006.

Equity Position
We are developing the management equity structure as of the date of this offer
letter. The management team will share in a significant equity position. No
later than December 31, 2006, the Board of Directors will approve an Executive
Incentive Plan, from which your stock option grant will be issued.

Business and Travel Expenses
All pre-approved business and travel related expenses directly associated with
the execution of your responsibilities will be reimbursed by the company. Neil
Burley, CFO will be responsible for such approvals, required documentation and
issuing reimbursements.

Other Points
Our vacation policy is to take it if and as you can. Neil Burley is available to
discuss other company-paid benefits at your convenience.

Regards,

/s/ NEIL BURLEY
-----------------------------
Neil Burley
Chief Financial Officer
SecureCARE Technologies, Inc.

Cc: Richard Corlin, Chairman and Chief Medical Officer

Accepted:
/s/ DENNIS NASTO          11/6/06
--------------------------------------
Dennis Nasto               Date

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