Table of Contents

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
  Form 10-Q
  (Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the quarterly period ended September 28, 2017
Or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from                    to                 
 
Commission File Number 001-33160
  Spirit AeroSystems Holdings, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
 
20-2436320
(State or other jurisdiction of
 incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
3801 South Oliver
Wichita, Kansas 67210
(Address of principal executive offices and zip code)
 
Registrant’s telephone number, including area code:
(316) 526-9000
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x   No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x   No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company, ” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer x
 
Accelerated filer o
 
Non-accelerated filer  o
(Do not check if a smaller reporting company)
 
Smaller reporting company  o
 
Emerging growth company  o
 
If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of Exchange Act.  o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No x
 
As of October 26, 2017 , the registrant had 115,624,845 shares of class A common stock, $0.01 par value per share, outstanding.
 

1
Table of Contents

TABLE OF CONTENTS
 
 
 
 
 
 
 
 
Page
 
 
 
 


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Table of Contents

PART 1. FINANCIAL INFORMATION
 
Item 1. Financial Statements (unaudited)
 
Spirit AeroSystems Holdings, Inc.
 
Condensed Consolidated Statements of Operations
(unaudited)
 
 
For the Three
 Months Ended
 
For the Nine 
 Months Ended
 
September 28,
2017
 
September 29,
2016
 
September 28,
2017
 
September 29,
2016
 
($ in millions, except per share data)
Net revenues
$
1,748.2

 
$
1,711.4

 
$
5,268.4

 
$
5,222.9

Operating costs and expenses
 

 
 

 
 

 
 

Cost of sales
1,478.5

 
1,439.4

 
4,738.3

 
4,470.4

Selling, general and administrative
48.8

 
52.2

 
146.8

 
172.4

Impact of severe weather event
—

 
—

 
19.9

 
—

Research and development
9.5

 
5.4

 
21.2

 
15.9

Total operating costs and expenses
1,536.8

 
1,497.0

 
4,926.2

 
4,658.7

Operating income
211.4

 
214.4

 
342.2

 
564.2

Interest expense and financing fee amortization
(10.4
)
 
(12.2
)
 
(30.1
)
 
(47.5
)
Other income (expense), net
1.9

 
(0.3
)
 
4.6

 
(8.7
)
Income before income taxes and equity in net income of affiliate
202.9

 
201.9

 
316.7

 
508.0

Income tax provision
(55.9
)
 
(57.3
)
 
(84.9
)
 
(147.8
)
Income before equity in net income of affiliate
147.0

 
144.6

 
231.8

 
360.2

Equity in net income of affiliate
0.2

 
0.5

 
0.3

 
1.3

Net income
$
147.2

 
$
145.1

 
$
232.1

 
$
361.5

Earnings per share
 

 
 

 
 

 
 

Basic
$
1.27

 
$
1.16

 
$
1.97

 
$
2.82

Diluted
$
1.26

 
$
1.16

 
$
1.95

 
$
2.80

Dividends declared per common share
$
0.10

 
$
—

 
$
0.30

 
$
—

 
See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.
 
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
 
 
For the Three
Months Ended
 
For the Nine 
 Months Ended
 
September 28,
2017
 
September 29,
2016
 
September 28,
2017
 
September 29,
2016
 
($ in millions)
Net income
$
147.2

 
$
145.1

 
$
232.1

 
$
361.5

Changes in other comprehensive income (loss), net of tax:
 

 
 

 
 

 
 

Pension, SERP, and Retiree medical adjustments, net of tax effect of $0.2 and ($0.2) for the three months ended, respectively, and $1.2 and ($0.6) for the nine months ended, respectively
(0.6
)
 
0.4

 
(1.5
)
 
1.4

Unrealized foreign exchange loss on intercompany loan, net of tax effect of ($0.4) and $0.3 for three months ended, respectively, and ($1.0) and $1.4 for the nine months ended, respectively
1.3

 
(1.1
)
 
3.9

 
(5.5
)
Foreign currency translation adjustments
13.1

 
(7.8
)
 
31.2

 
(38.8
)
Total other comprehensive income (loss)
13.8

 
(8.5
)
 
33.6

 
(42.9
)
Total comprehensive income
$
161.0

 
$
136.6

 
$
265.7

 
$
318.6

 
See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.
 
Condensed Consolidated Balance Sheets
(unaudited)
 
 
September 28,
2017
 
December 31,
2016
 
($ in millions)
Assets
 

 
 

Cash and cash equivalents
$
726.6

 
$
697.7

Restricted cash
3.2

 
—

Accounts receivable, net
851.7

 
660.5

Inventory, net
1,363.2

 
1,515.3

Other current assets
67.3

 
36.9

Total current assets
3,012.0

 
2,910.4

Property, plant and equipment, net
2,018.7

 
1,991.6

Pension assets
309.2

 
282.3

Other assets
197.3

 
220.9

Total assets
$
5,537.2

 
$
5,405.2

Liabilities
 

 
 

Accounts payable
$
762.1

 
$
579.7

Accrued expenses
258.3

 
216.2

Profit sharing
65.7

 
101.4

Current portion of long-term debt
27.9

 
26.7

Advance payments, short-term
131.0

 
199.3

Deferred revenue and other deferred credits, short-term
68.3

 
312.1

Deferred grant income liability - current
21.0

 
14.4

Other current liabilities
601.7

 
94.4

Total current liabilities
1,936.0

 
1,544.2

Long-term debt
1,060.9

 
1,060.0

Advance payments, long-term
255.6

 
342.0

Pension/OPEB obligation
40.3

 
43.9

Deferred revenue and other deferred credits
166.5

 
146.8

Deferred grant income liability - non-current
44.9

 
63.4

Other liabilities
273.6

 
276.1

Stockholders' Equity
 

 
 

Preferred stock, par value $0.01, 10,000,000 shares authorized, no shares issued
—

 
—

Common stock, Class A par value $0.01, 200,000,000 shares authorized, 115,624,845 and 121,642,556 shares issued and outstanding, respectively
1.2

 
1.2

Additional paid-in capital
1,081.0

 
1,078.9

Accumulated other comprehensive loss
(153.3
)
 
(186.9
)
Retained earnings
2,310.9

 
2,113.9

Treasury stock, at cost (30,273,833 and 23,936,092 shares, respectively)
(1,480.9
)
 
(1,078.8
)
Total stockholders’ equity
1,758.9

 
1,928.3

Noncontrolling interest
0.5

 
0.5

Total equity
1,759.4

 
1,928.8

Total liabilities and stockholders' equity
$
5,537.2

 
$
5,405.2

 See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.  
Condensed Consolidated Statements of Cash Flows
(unaudited)
 
For the Nine Months Ended
 
September 28,
2017
 
September 29,
2016
 
($ in millions)
Operating activities
 

 
 

Net income
$
232.1

 
$
361.5

Adjustments to reconcile net income to net cash provided by operating activities
 

 
 

Depreciation expense
159.0

 
149.1

Amortization expense
0.2

 
0.2

Amortization of deferred financing fees
2.5

 
18.5

Accretion of customer supply agreement
1.5

 
3.5

Employee stock compensation expense
15.9

 
35.7

Excess tax benefit of share-based payment arrangements
—

 
0.1

Loss from interest rate swap
1.1

 
—

(Gain) loss from foreign currency transactions
(5.9
)
 
15.9

Loss (gain) on impairment and disposition of assets
7.9

 
(0.5
)
Deferred taxes
29.0

 
34.7

Pension and other post-retirement benefits, net
(32.5
)
 
(5.0
)
Grant liability amortization
(13.9
)
 
(8.6
)
Equity in net income of affiliate
(0.3
)
 
(1.3
)
Changes in assets and liabilities
 
 
 

Accounts receivable
(177.8
)
 
(220.8
)
Inventory, net
433.9

 
257.3

Accounts payable and accrued liabilities
212.8

 
(18.6
)
Profit sharing/deferred compensation
(35.9
)
 
2.8

Advance payments
(154.7
)
 
(101.8
)
Income taxes receivable/payable
(36.0
)
 
1.3

Deferred revenue and other deferred credits
(222.8
)
 
26.0

Other
208.5

 
24.4

Net cash provided by operating activities
624.6

 
574.4

Investing activities
 

 
 

Purchase of property, plant and equipment
(138.7
)
 
(156.8
)
Proceeds from sale of assets
0.3

 
0.6

Net cash used in investing activities
(138.4
)
 
(156.2
)
Financing activities
 

 
 

Proceeds from issuance of bonds
—

 
299.8

Principal payments of debt
(2.3
)
 
(16.7
)
Payments on term loan
(12.5
)
 
—

Payments on bonds
—

 
(300.0
)
Taxes paid related to net share settlement awards
(13.8
)
 
(15.2
)
Excess tax benefit of share-based payment arrangements
—

 
(0.1
)
Debt issuance and financing costs
(0.9
)
 
(17.2
)
Proceeds from financing under the New Markets Tax Credit Program
7.6

 
—

Purchase of treasury stock
(402.1
)
 
(649.6
)
Change in restricted cash
(3.2
)
 
—

Dividends paid
(35.7
)
 
—

Net cash used in financing activities
(462.9
)
 
(699.0
)
Effect of exchange rate changes on cash and cash equivalents
5.6

 
(6.1
)
Net increase (decrease) in cash and cash equivalents for the period
28.9

 
(286.9
)
Cash and cash equivalents, beginning of period
697.7

 
957.3

Cash and cash equivalents, end of period
$
726.6

 
$
670.4

See notes to condensed consolidated financial statements (unaudited)

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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)



1.  Organization and Basis of Interim Presentation
 
Spirit AeroSystems Holdings, Inc. (“Holdings” or the “Company”) provides manufacturing and design expertise in a wide range of fuselage, propulsion, and wing products and services for aircraft original equipment manufacturers (“OEM”) and operators through its subsidiary, Spirit AeroSystems, Inc. (“Spirit”). The Company's headquarters are in Wichita, Kansas, with manufacturing and assembly facilities in Tulsa and McAlester, Oklahoma; Prestwick, Scotland; Wichita, Kansas; Kinston, North Carolina; Subang, Malaysia; and Saint-Nazaire, France.

The accompanying unaudited interim condensed consolidated financial statements include the Company’s financial statements and the financial statements of its majority-owned or controlled subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the instructions to Form 10-Q and Article 10 of Regulation S-X.  The Company’s fiscal quarters are 13 weeks in length. Because the Company’s fiscal year ends on December 31, the number of days in the Company’s first and fourth quarters varies slightly from year to year. All intercompany balances and transactions have been eliminated in consolidation.
 
As part of the monthly consolidation process, the Company’s international entities that have functional currencies other than the U.S. dollar are translated to U.S. dollars using the end-of-month translation rate for balance sheet accounts and average period currency translation rates for revenue and income accounts. The U.K. and Malaysian subsidiaries use the British pound as their functional currency; and the Singapore subsidiary uses the Singapore dollar as its functional currency.  All other foreign subsidiaries and branches use the U.S. dollar as their functional currency.
 
In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments and elimination of intercompany balances and transactions) considered necessary to fairly present the results of operations for the interim period. The results of operations for the nine months ended September 28, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. Certain reclassifications have been made to the prior year financial statements and notes to conform to the 2017 presentation.

In connection with the preparation of the condensed consolidated financial statements, the Company evaluated subsequent events through the date the financial statements were issued. The interim financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s 2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 10, 2017 (the “2016 Form 10-K”).

2.  New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). ASU 2017-07 requires entities to report the service cost component of net periodic pension and net periodic postretirement benefit cost in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. Further, ASU 2017-07 requires the other components of net periodic pension and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Additionally, only the service cost component is eligible for capitalization, when applicable. The amendments as set forth in ASU 2017-07 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The adoption of ASU 2017-07 is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides guidance on eight specific cash flow classification issues that GAAP does not address. ASU 2016-15 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The adoption of ASU 2016-15 is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This update requires recognition of lease assets and lease liabilities on the balance sheet of lessees. ASU 2016-02 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2018. Early adoption is permitted. ASU 2016-02 requires a modified

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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


retrospective transition approach and provides certain optional transition relief. The Company is currently evaluating the new guidance to determine the impact it may have to the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). Subsequently, the FASB issued several updates to ASU 2014-09, which are codified in Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”). ASC 606 also includes new guidance on costs related to a contract, which is codified in ASC Subtopic 340-40 (“ASC 340-40”).

In applying ASC 606, revenue is recognized when control of promised goods or services transfers to a customer and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The major provisions of the new standard include: the determination of enforceable rights and obligations between parties; the identification of performance obligations, including performance obligations for options that represent material rights granted to a customer; accounting for variable consideration; the determination of whether performance obligations are satisfied over time or at a point in time; and enhanced disclosure requirements.

ASC 606 will be effective for the Company beginning January 1, 2018 and permits two methods of adoption: retrospectively to each prior reporting period presented (“full retrospective method”) or retrospectively with the cumulative effect of the initial application recognized at the date of initial application (“modified retrospective method”). The Company will adopt the standard using the modified retrospective method and will record an adjustment to Retained Earnings for the cumulative effect of initial application on January 1, 2018 (“Transition Adjustment”).

In 2016, the Company established a cross-functional team to assess and prepare for implementation of ASC 606. Earlier this year, the Company completed its implementation assessment as well as the design of the processes, including internal controls, and related systems solutions. The Company has reviewed all of its contracts with customers and has implemented the required process, data, and system changes. The Company is currently performing testing of systems and business processes to ensure that the results are consistent with the new accounting policies and procedures. The Company is currently running parallel systems and processes in anticipation of ASC 606 adoption.

Upon adoption of ASC 606, the Company will no longer recognize revenue using the units-of-delivery method under ASC Topic 605 (“legacy GAAP”). ASC 606 is applied by analyzing each contract, or a combination of contracts, to determine if revenue is recognized over time or at a point in time. The Company has determined that some of its contracts will have performance obligations that are satisfied over time and some at a point in time based on when control of goods and services transfers to the customer.

For performance obligations that are satisfied over time, the Company will use an input method as the basis for recognizing revenue. Input methods recognize revenue on the basis of an entity’s efforts or inputs toward satisfying a performance obligation (for example, resources consumed, labor hours expended, costs incurred, time lapsed, or machine hours used) relative to the total expected inputs to satisfy the performance obligation. Performance obligations that are not recognized over time will be recognized at a point in time.

ASC 606 requires the Company to record performance obligations for material rights granted to the customer when contracts offer the customer future purchase options at an incremental discount. The Company has determined that performance obligations for material rights exist for certain contracts which will result in deferral of revenues attributable to such rights. Primarily due to the material rights identified, the revenue recognized under ASC 606 results in a different revenue recognition pattern when compared to the revenue recognized under legacy GAAP. However, the Company’s operating cash flows from our contracts with customers will not change. The Transition Adjustment will include the establishment of contract assets and liabilities for billings that are lower than, or in excess of, revenue that has been recognized.

The adoption of ASC 606 will not change the Company's accounting method for forward losses. Forward losses relating to unfulfilled contracts and options will continue to be recorded consistent with historical accounting policies.

Under ASC 606, production costs are generally expensed as incurred and not deferred. Additionally, ASC 340-40 is to be applied if existing guidance is not applicable. The Company’s accounting for preproduction, tooling, and certain other costs is expected to continue under existing guidance since they generally do not fall within the scope of ASC 340-40. The Company typically does not incur costs for obtaining contracts that would be capitalized under ASC 340-40.


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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


The Company expects the Transition Adjustment to decrease Retained Earnings, primarily due to the elimination of deferred production costs. The elimination of deferred production is expected to lead to an increase in 2018 pre-tax income compared to what would have been recognized under legacy GAAP due to the fact that these costs deferred under legacy GAAP will no longer impact future earnings under ASC 606. Finally, the Company anticipates that the deferral of revenue related to identified material rights will reduce 2018 revenue under ASC 606 compared to what would have been recognized under legacy GAAP. However, the definitive amounts and associated tax impacts for 2018 revenue and profits have not yet been fully determined.

The enhanced disclosure requirements of ASC 606 include discussions on the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This will result in changes to our existing disclosures, as well as new disclosures, which will impact the information reported in our financial statements.

3.  Changes in Estimates

The Company has a Company-wide quarterly Estimate at Completion (“EAC”) process in which management assesses the progress and performance of the Company’s contracts. This process requires management to review each program’s progress towards completion by evaluating the program schedule, changes to identified risks and opportunities, changes to estimated contract revenues and estimated contract costs over the current contract block, and any outstanding contract matters. Risks and opportunities include management’s judgment about the cost associated with a program’s ability to achieve the schedule, technical requirements (e.g., a newly-developed product versus a mature product) and any other contract requirements. Due to the span of years it may take to complete a contract block and the scope and nature of the work required to be performed on those contracts, the estimation of total revenue and costs at completion is complicated and subject to many variables and, accordingly, is subject to change. When adjustments in estimated total contract block revenue or estimated total cost are required, any changes from prior estimates for delivered units are recognized in the current period as a cumulative catch-up adjustment for the inception-to-date effect of such changes. Cumulative catch-up adjustments are driven by several factors including improved production efficiencies, assumed rate of production, the rate of overhead absorption, changes to scope of work, and contract modifications. When the total cost estimate exceeds the total revenue estimate on a contract block, a provision for the entire loss on the contract block is recorded in the period in which the loss is determined. Changes in estimates are summarized below:
 
 
For the Three Months Ended
 
For the Nine Months Ended
Changes in Estimates
 
September 28, 2017
 
September 29, 2016
 
September 28, 2017
 
September 29, 2016
(Unfavorable) Favorable Cumulative Catch-up Adjustment by Segment
 
 
 
 
 
 
 
 
Fuselage Systems
 
$
(2.4
)
 
$
(1.9
)
 
$
5.3

 
$
15.1

Propulsion Systems
 
2.4

 
(1.6
)
 
4.3

 
(1.8
)
Wing Systems
 
(2.8
)
 
(0.8
)
 
19.1

 
18.7

Total (Unfavorable) Favorable Cumulative Catch-up Adjustment
 
$
(2.8
)
 
$
(4.3
)
 
$
28.7

 
$
32.0

 
 
 
 
 
 
 
 
 
(Forward Loss) and Changes in Estimates on Loss Programs by Segment
 
 
 
 
 
 
 
 
Fuselage Systems
 
$
(0.9
)
 
$
(1.6
)
 
$
(238.5
)
 
$
(133.0
)
Propulsion Systems
 
1.3

 
(0.5
)
 
(46.7
)
 
6.0

Wing Systems
 
(2.4
)
 
0.9

 
(74.4
)
 
5.1

Total Forward Loss
 
$
(2.0
)
 
$
(1.2
)
 
$
(359.6
)
 
$
(121.9
)
 
 
 
 
 
 
 
 
 
Total Change in Estimate
 
$
(4.8
)
 
$
(5.5
)
 
$
(330.9
)
 
$
(89.9
)
EPS Impact (diluted per share based upon statutory rates)
 
$
(0.03
)
 
$
(0.03
)
 
$
(1.75
)
 
$
(0.44
)

Boeing Memorandum of Understanding and Definitive Documentation

On August 1, 2017, Boeing and the Company through its subsidiary, Spirit, entered into a Memorandum of Understanding (the “MOU”), which required Boeing and Spirit to negotiate and execute definitive documentation implementing the agreements set forth in the MOU by September 29, 2017.

On September 22, 2017, Boeing and Spirit completed their negotiation of such definitive documentation and entered into Amendment No. 30 to the long-term supply agreement covering products for Boeing’s B737, B747, B767, and B777 commercial aircraft programs (“Sustaining Amendment #30”). Sustaining Amendment #30 generally establishes pricing terms for the B737,

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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


B747, B767, and B777 models (excluding the B777x) through 2022 (with certain limited exceptions). Sustaining Amendment #30 further provides that Boeing and Spirit will negotiate follow-on pricing for periods beyond January 1, 2023 beginning 24 months prior to January 1, 2023. If Boeing and Spirit are unable to reach an agreement with respect to follow-on pricing prior to January 1, 2023, Sustaining Amendment #30 provides a mechanism to establish interim pricing that takes into account escalation and reduces certain rate-based discounts. In addition, Sustaining Amendment #30 provides that the parties will make certain investments for rate increases on the B737 program and implements industry standard payment terms.

In addition, Boeing and Spirit also entered into Amendment No. 25 to the long-term supply agreement covering products for Boeing’s B787 commercial aircraft program (the “787 Amendment,” and, together with Sustaining Amendment #30, the “Definitive Documentation”). The 787 Amendment establishes pricing terms for the B787-8, -9, and -10 derivative models between line unit 501 and line unit 1405. The 787 Amendment provides that the parties will negotiate pricing for B787 line units 1406 and beyond beginning 24 months prior to the scheduled delivery date for line unit 1405.

In the second quarter of 2017, as a result of the expected completion of the 787 Amendment, the Company formally extended the current contract block ending at line unit 1003 to line unit 1300 and established a planning block from line units 1301 to 1405. Based on the pricing updates, contract block extension, and planning block addition, the Company updated its estimated contract costs and revenue for the B787 program. As a result, the Company recorded a second quarter 2017 reach-forward loss of $352.8 on its B787 program.  See Note 8, Advance Payments and Deferred Revenue/Credits, and Note 21, Boeing Definitive Documentation, as well as Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, for further details regarding the Definitive Documentation.

4.  Accounts Receivable, net
 
Accounts receivable, net consists of the following:
 
September 28,
2017
 
December 31,
2016
Trade receivables
$
837.7

 
$
647.3

Other
14.7

 
18.4

Less: allowance for doubtful accounts
(0.7
)
 
(5.2
)
Accounts receivable, net
$
851.7

 
$
660.5


Accounts receivable, net includes unbilled receivables on long-term aerospace contracts, comprised principally of revenue recognized on contracts for which amounts were earned but not contractually billable as of the balance sheet date, or amounts earned for which the recovery will occur over the term of the contract, which could exceed one year.

5.  Inventory

Capitalized pre-production costs include certain contract costs, including applicable overhead, incurred before a product is manufactured on a recurring basis. Significant statement of work changes considered not reimbursable by the customer can also cause pre-production costs to be incurred. These costs are typically amortized over a certain number of shipset deliveries. Capitalized pre-production may be amortized over multiple blocks. See the contract block and deliveries table noted below.

Deferred production includes costs for the excess of production costs over the estimated average cost per shipset, and credit balances for favorable variances on contracts between actual costs incurred and the estimated average cost per shipset for units delivered under the current production blocks. Recovery of excess-over-average deferred production costs is dependent on the number of shipsets ultimately sold and the ultimate selling prices and lower production costs associated with future production under these contract blocks. The Company believes these amounts, net of forward loss provisions, will be fully recovered over the contract block quantities noted in the contract block and deliveries table below. Should orders not materialize in future periods to fulfill the block, potential forward loss charges may be necessary to the extent the final delivered quantity does not absorb deferred inventory costs. Sales significantly under estimates or costs significantly over estimates could result in losses on these contracts in future periods.

Capitalized pre-production and deferred production inventories are at risk to the extent that the Company does not achieve the orders in the forecasted blocks or if future actual costs exceed current projected estimates, as those categories of inventory are recoverable over future deliveries.

Forward loss provisions on contract blocks are recorded in the period in which they become evident and included in inventory with any remaining amount reflected in accrued contract liabilities.


10
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


Inventories are summarized as follows:

 
September 28,
2017
 
December 31,
2016
Raw materials
$
314.6

 
$
281.9

Work-in-process
760.4

 
790.7

Finished goods
34.1

 
30.9

Product inventory
1,109.1

 
1,103.5

Capitalized pre-production (1)
85.4

 
103.5

Deferred production (2)
657.6

 
717.4

Forward loss provision (3)
(488.9
)
 
(409.1
)
Total inventory, net
$
1,363.2

 
$
1,515.3

 
For contract blocks that have not closed, the following non-product inventory amounts were included in the inventory table above:
(1)
For the period ended September 28, 2017, includes $73.6 and $7.9 on the A350 XWB and Rolls-Royce BR725 programs, respectively. For the period ended December 31, 2016, includes $83.7 and $15.2 on the A350 XWB and Rolls-Royce BR725 programs, respectively.

(2)
For the period ended September 28, 2017, includes $629.1 and $126.3 on the A350 XWB and Rolls-Royce BR725 programs, respectively. For the period ended December 31, 2016, includes $657.2 and $114.6 on the A350 XWB and Rolls-Royce BR725 programs, respectively.

(3)
For the period ended September 28, 2017, includes ($263.1) , ($139.4) , and ($76.9) on the A350 XWB, Rolls-Royce BR725, and B787 programs, respectively. For the period ended December 31, 2016, includes ($255.8) and ($140.8) on the A350 XWB and Rolls-Royce BR725 programs, respectively. The forward loss charge recorded on the B787 program in the second quarter of 2017 exceeded the program's inventory balance. The excess of the charge over the program's inventory was classified as a contract liability and reported in other current liabilities on the balance sheet in the amount of $275.9 as of September 28, 2017. Includes a $2.1 reclassification between Work-in-process and Forward loss provision as of December 31, 2016.
 
Significant amortization of capitalized pre-production and deferred production inventory has occurred over the following contract block deliveries and will continue to occur over the following contract blocks:

Model
 
Current Block Deliveries
 
Contract Block
Quantity
A350 XWB
 
198

 
800

Rolls-Royce BR725
 
302

 
350


6.  Property, Plant and Equipment, net
 
Property, plant and equipment, net consists of the following: 
 

11
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


 
September 28,
2017
 
December 31,
2016
Land
$
15.8

 
$
14.9

Buildings (including improvements)
693.5

 
642.5

Machinery and equipment (1)
1,452.1

 
1,373.9

Tooling
999.6

 
982.4

Capitalized software (1)
262.1

 
261.9

Construction-in-progress
239.6

 
193.7

Total
3,662.7

 
3,469.3

Less: accumulated depreciation
(1,644.0
)
 
(1,477.7
)
Property, plant and equipment, net
$
2,018.7

 
$
1,991.6

 

 (1) Includes a $6.9 reclassification between Machinery and equipment and Capitalized software for the period ended December 31, 2016.

Repair and maintenance costs are expensed as incurred. The Company recognized repair and maintenance costs of $37.6 and $31.2 for the three months ended September 28, 2017 and September 29, 2016 , respectively, and $88.9 and $85.5 for the nine months ended September 28, 2017 and September 29, 2016 , respectively.
 
The Company capitalizes certain costs, such as software coding, installation, and testing, that are incurred to purchase or to create and implement internal-use computer software.  Depreciation expense related to capitalized software was $4.5 and $4.5 for the three months ended September 28, 2017 and September 29, 2016 , respectively, and $14.8 and $13.4 for the nine months ended September 28, 2017 and September 29, 2016 , respectively.
 
The Company reviews capital and amortizing intangible assets (long-lived assets) for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  The Company evaluated its long-lived assets at its locations and determined no impairment was necessary for the three months ended September 28, 2017 .


12
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


7.  Other Assets
 
Other assets are summarized as follows:
 
 
September 28,
2017
 
December 31,
2016
Intangible assets
 

 
 

Patents
$
1.9

 
$
1.9

Favorable leasehold interests
6.3

 
6.3

Total intangible assets
8.2

 
8.2

Less: Accumulated amortization - patents
(1.8
)
 
(1.8
)
Accumulated amortization - favorable leasehold interest
(4.5
)
 
(4.2
)
Intangible assets, net
1.9

 
2.2

Deferred financing
 

 
 

Deferred financing costs
39.5

 
38.5

Less: Accumulated amortization - deferred financing costs
(33.4
)
 
(32.2
)
Deferred financing costs, net
6.1

 
6.3

Other
 

 
 

Goodwill - Europe
2.5

 
2.3

Equity in net assets of affiliates
4.7

 
4.4

Supply agreements (1)
21.1

 
17.0

Restricted cash - collateral requirements
20.0

 
19.9

Deferred Tax Asset - non-current
100.3

 
128.8

Other
40.7

 
40.0

Total
$
197.3

 
$
220.9

 

(1)
Under two agreements, certain payments accounted for as consideration paid by the Company to a customer and a supplier are being amortized as reductions to net revenues.

8.  Advance Payments and Deferred Revenue/Credits
 
Advance payments. Advance payments are those payments made to Spirit by customers in contemplation of the future performance of services, receipt of goods, incurrence of expenditures, or for other assets to be provided by Spirit under a contract and are repayable if such obligation is not satisfied. The amount of advance payments to be recovered against production units expected to be delivered within a year is classified as a short-term liability on the Company’s consolidated balance sheet, with the balance of the unliquidated advance payments classified as a long-term liability.

Boeing has made advance payments to Spirit under the B787 Supply Agreement, which are required to be repaid to Boeing by way of offsets against the purchase price for future shipset deliveries. Advance repayments were scheduled to be spread evenly over the remainder of the first 1,000 B787 shipsets delivered to Boeing. In April 2014, the Company signed a memorandum of agreement with Boeing which suspended advance repayments related to the B787 programs for a period of twelve months beginning April 1, 2014. The Company recommenced our repayment on April 1, 2015 and any repayments which otherwise would have become due during the twelve-month period beginning April 1, 2014 will be offset against the purchase price for B787 shipsets 1001 through 1120 .

Deferred revenue/credits. Deferred revenue/credits generally consist of nonrefundable amounts received in advance of revenue being earned for specific contractual deliverables. However, certain amounts of deferred revenue/credits could be required to be refunded if certain performance obligations or conditions are not met. These payments are classified as deferred revenue/credits on the Company’s condensed consolidated balance sheet when received, and recognized as revenue as the production units are delivered or performance obligations or conditions are met.

13
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)



In November 2014, Spirit and Boeing entered into a Memorandum of Agreement (“November 2014 MOA”). As part of the November 2014 MOA, Boeing and Spirit established interim prices for certain B787 shipsets, and the parties agreed to negotiate future rate increases, recurring prices, and other issues across multiple programs during 2015. The parties did not reach an agreement on pricing until August 1, 2017, when Boeing and the Company executed the MOU. As described in Note 3, Changes in Estimates, and Note 21, Boeing Definitive Documentation, as well as Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations, the MOU and the Definitive Documentation provide that the Company will repay to Boeing $235.0 less certain adjustments, as a retroactive adjustment for payments that were based on interim pricing. As a result, the $235.0 is reflected in other current liabilities on the Company's balance sheet as of September 28, 2017. This amount was repaid in October 2017.

Advance payments and deferred revenue/credits are summarized by program as follows:

 
September 28,
2017
 
December 31,
2016
B787
$
549.8

 
$
834.8

Boeing - All other programs
9.6

 
18.6

A350 XWB
34.5

 
116.7

Airbus — All other programs
1.6

 
2.2

Other
25.9

 
27.9

Total advance payments and deferred revenue/credits
$
621.4

 
$
1,000.2

 

9. Government Grants
 
The Company received grants in the form of government funding for a portion of the site construction and other specific capital asset costs at the Company’s Kinston, North Carolina and Subang, Malaysia sites. Deferred grant income is being amortized as a reduction to production cost. This amortization is based on specific terms associated with the different grants. In North Carolina, the deferred grant income related to the capital investment criteria, which represents half of the grant, is being amortized over the lives of the assets purchased to satisfy the capital investment performance criteria. The other half of the deferred grant income is being amortized over a ten -year period, which began in 2010, in a manner consistent with the job performance criteria. Under the agreement, failure by Spirit to meet job performance criteria, including creation of a targeted number of jobs, could result in Spirit being obligated to make incremental rent payments to the North Carolina Global TransPark Authority over the initial term of the lease. The amount of the incremental rent payments would vary depending on Spirit’s level of attainment of the specified requirements not to exceed a certain dollar threshold. In Malaysia, the deferred grant income is being amortized based on the estimated lives of the eligible assets constructed with the grant funds as there are no performance criteria. The assets related to deferred grant income are consolidated within property, plant and equipment.
 
Deferred grant income liability, net consists of the following:

Balance, December 31, 2016
$
77.8

Grant liability amortized
(13.8
)
Exchange rate
1.9

Total deferred grant income liability, September 28, 2017
$
65.9

 
10.  Fair Value Measurements
 
The FASB’s authoritative guidance on fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance discloses three levels of inputs that may be used to measure fair value:

Level 1
Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market.


14
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


Level 2                       Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Observable inputs, such as current and forward interest rates and foreign exchange rates, are used in determining the fair value of the interest rate swaps and foreign currency hedge contracts.
 
Level 3                       Unobservable inputs that are supported by little or no market activity and are significant to the fair value of assets and liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
 
 
 At September 28, 2017 and December 31, 2016, the Company did not hold any cash within money market funds.

The Company’s long-term debt includes a senior unsecured term loan and senior unsecured notes.  The estimated fair value of the Company’s debt obligations is based on the quoted market prices for such obligations or the historical default rate for debt with similar credit ratings. The following table presents the carrying amount and estimated fair value of long-term debt:
 
 
September 28, 2017
 
December 31, 2016
 
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
 
Senior unsecured term loan A (including current portion)
$
473.1

 
$
473.1

(2)
$
485.2

 
$
484.8

(2)
Senior unsecured notes due 2022
294.5

 
306.4

(1)
293.8

 
307.0

(1)
Senior unsecured notes due 2026
297.2

 
298.2

(1)
296.9

 
292.4

(1)
Malaysian loan
—

 
—

(2)
1.0

 
0.9

(2)
Total
$
1,064.8

 
$
1,077.7

 
$
1,076.9

 
$
1,085.1

 
 
(1)
Level 1 Fair Value hierarchy.
(2)
Level 2 Fair Value hierarchy. 

11.  Derivative and Hedging Activities
 
The Company has historically entered into interest rate swap agreements to reduce its exposure to the variable rate portion of its long-term debt. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values.

The Company has historically entered into derivative instruments covered by master netting arrangements whereby, in the event of a default as defined by the A&R Credit Agreement (as defined below) or termination event, the non-defaulting party has the right to offset any amounts payable against any obligation of the defaulting party under the same counterparty agreement. See Note 12, Debt, for more information.

Interest Rate Swaps
 
On March 15, 2017, the Company entered into an interest rate swap agreement, with an effective date of March 31, 2017. The swaps have a notional value of $250.0 and fix the variable portion of the Company’s floating rate debt at 1.815% . The fair value of the interest rate swaps, using Level 2 inputs, was a liability of $1.1 as of September 28, 2017. For the nine months ended September 28, 2017, the Company recorded a loss related to swap activity of $1.1 .

12.  Debt
 
Total debt shown on the balance sheet is comprised of the following: 

15
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


 
September 28, 2017
 
December 31, 2016
 
Current
Noncurrent
 
Current
Noncurrent
Senior unsecured term loan A
$
24.9

$
448.2

 
$
24.9

$
460.3

Senior notes due 2022
—

294.5

 
—

293.8

Senior notes due 2026
—

297.2

 
—

296.9

Malaysian term loan
—

—

 
1.0

—

Present value of capital lease obligations
3.0

21.0

 
0.8

9.0

Total
$
27.9

$
1,060.9

 
$
26.7

$
1,060.0


Senior Unsecured Credit Facility
 
On June 6, 2016, we entered into the senior unsecured Amended and Restated Credit Agreement, among Spirit, as borrower, the Company, as parent guarantor, the lenders party thereto, Bank of America, N.A., as administrative agent, and the other agents named therein (the “A&R Credit Agreement”). The A&R Credit Agreement provides for a $650.0 revolving credit facility (the “Revolver”) and a $500.0 term loan A facility (the “Term Loan”). Each of the Revolver and the Term Loan has a maturity date of June 4, 2021 , and each bears interest, at Spirit’s option, at either LIBOR plus 1.5% or a defined “base rate” plus 0.50% , subject to adjustment to amounts between and including LIBOR plus 1.125% and LIBOR plus 2.0% (or amounts between and including base rate plus 0.125% and base rate plus 1.0% , as applicable) based on changes to Spirit’s senior unsecured debt rating provided by Standard & Poor’s Financial Services LLC and/or Moody’s Investors Service, Inc. The principal obligations under the Term Loan are to be repaid in equal quarterly installments of $6.25 , with the remaining balance due at maturity of the Term Loan. The A&R Credit Agreement contains affirmative and negative covenants available to investment grade companies, including certain financial covenants that are tested on a quarterly basis. The A&R Credit Agreement contains an accordion feature that provides Spirit with the option to increase the Revolver commitments and/or institute one or more additional term loans by an amount not to exceed $500.0 in the aggregate, subject to the satisfaction of certain conditions and the participation of the lenders. Spirit used the proceeds of the Term Loan, along with cash on hand, to pay off the outstanding amounts of the term loan under our prior credit agreement and to pay a portion of the fees and expenses payable in connection with the A&R Credit Agreement.

On September 22, 2017, the Company, the lenders, and the administrative agent entered into Amendment No. 1 to the A&R Credit Agreement, which made certain minor administrative changes to the A&R Credit Agreement to account for the Company’s upcoming adoption of ASU 2014-09, among other things.

As of September 28, 2017, the outstanding balance of the Term Loan was $475.0 and the carrying value was $473.1 .

  Senior Notes
 
2022 Notes. In March 2014, the Company issued $300.0 in aggregate principal amount of 5.25% Senior Notes due March 15, 2022 (the “2022 Notes”) with interest payable, in cash in arrears, on March 15 and September 15 of each year, beginning September 15, 2014. The carrying value of the 2022 Notes was $294.5 as of September 28, 2017.

2026 Notes. In June, 2016, the Company issued $300.0 in aggregate principal amount of 3.850% Senior Notes due June 15, 2026 (the “2026 Notes”) with interest payable, in cash in arrears, on June 15 and December 15 of each year, beginning December 15, 2016. The carrying value of the 2026 Notes was $297.2 as of September 28, 2017.
 

16
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


13. Pension and Other Post-Retirement Benefits
 
 
 
Defined Benefit Plans
 
 
For the Three
  Months Ended
 
For the Nine
  Months Ended
Components of Net Periodic Pension Expense/(Income)
 
September 28,
2017
 
September 29,
2016
 
September 28,
2017
 
September 29,
2016
Service cost
 
$
0.2

 
$
0.2

 
$
0.7

 
$
0.8

Interest cost
 
9.4

 
11.4

 
28.3

 
34.5

Expected return on plan assets
 
(18.2
)
 
(19.7
)
 
(54.6
)
 
(59.0
)
Amortization of net loss
 
0.1

 
1.6

 
0.1

 
4.0

Special termination benefits (1)
 
—

 
—

 
—

 
10.9

Net periodic pension (income) expense
 
$
(8.5
)
 
$
(6.5
)
 
$
(25.5
)
 
$
(8.8
)
 
 

(1)
Special termination benefits related to early retirement incentives offered as part of a voluntary retirement plan in the first quarter of 2016.
 
 
 
Other Benefits
 
 
For the Three
Months Ended
 
For the Nine
  Months Ended
Components of Other Benefit Expense
 
September 28,
2017
 
September 29,
2016
 
September 28,
2017
 
September 29,
2016
Service cost
 
$
0.3

 
$
0.5

 
$
0.9

 
$
1.4

Interest cost
 
0.3

 
0.5

 
0.9

 
1.6

Amortization of prior service cost
 
(0.2
)
 
(0.2
)
 
(0.7
)
 
(0.7
)
Amortization of net gain
 
(0.5
)
 
—

 
(1.6
)
 
—

Special termination benefits (1)
 
—

 
—

 
—

 
3.1

Net periodic other benefit (income) expense
 
$
(0.1
)
 
$
0.8

 
$
(0.5
)
 
$
5.4

 
 

(1)
Special termination benefits related to early retirement incentives offered as part of a voluntary retirement plan in the first quarter of 2016.

Employer Contributions
 
The Company expects to contribute zero dollars to the U.S. qualified pension plan and a combined total of approximately $8.6 for the Supplemental Executive Retirement Plan (“SERP”) and post-retirement medical plans in 2017.  The Company’s projected contribution to the U.K. pension plan for 2017 is zero . The entire amount contributed can vary based on exchange rate fluctuations.
 
14.  Stock Compensation
 
The Company recognized net stock compensation expense of $4.8 and $6.3 for the three months ended September 28, 2017 and September 29, 2016 , respectively, and $15.9 and $35.2 for the nine months ended September 28, 2017 and September 29, 2016 , respectively. The additional stock compensation expense recognized during 2016 was related to executive retirements and severance recorded in the second quarter of 2016.

During the nine months ended September 28, 2017 , 650,899 shares of class A common stock were granted under the Company's stock compensation plan with aggregate grant date fair values of $35.4 . Additionally, awards of 671,545 shares of class A common stock granted under the Company's stock compensation plans with an aggregate grant date fair value of $25.7 vested during the nine months ended September 28, 2017 .

17
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)



15. Income Taxes
 
The process for calculating the Company’s income tax expense involves estimating actual current taxes due plus assessing temporary differences arising from differing treatment for tax and accounting purposes that are recorded as deferred tax assets and liabilities. Deferred tax assets are periodically evaluated to determine their recoverability. The total net deferred tax asset at September 28, 2017 and December 31, 2016 was $100.3 and $128.7 , respectively. The difference is primarily due to the utilization of deductible temporary differences within current year taxable income.

The Company files income tax returns in all jurisdictions in which it operates. The Company establishes reserves to provide for additional income taxes that may be due upon audit. These reserves are established based on management’s assessment as to the potential exposure attributable to permanent tax adjustments and associated interest. All tax reserves are analyzed quarterly and adjustments made as events occur that warrant modification.

In general, the Company records income tax expense each quarter based on its estimate as to the full year’s effective tax rate. Certain items, however, are given discrete period treatment and the tax effects for such items are therefore reported in the quarter that an event arises. Events or items that may give rise to discrete recognition include excess tax benefits with respect to share-based compensation, finalizing amounts in income tax returns filed, finalizing audit examinations for open tax years and expiration of statutes of limitations and changes in tax law.

The 26.8% effective tax rate for the nine months ended September 28, 2017 differs from the 29.1% effective tax rate for the same period of 2016 primarily due to higher pre-tax income in jurisdictions with tax rates lower than the U.S. rate in 2017 and the proportional tax rate effects of lower pre-tax income in 2017.

The Company will continue to participate in the Internal Revenue Service’s Compliance Assurance Process (“CAP”) program for its 2016 and 2017 tax years. The CAP program’s objective is to resolve issues in a timely, contemporaneous manner and eliminate the need for a lengthy post-filing examination.  There are no open audits in the Company’s foreign jurisdictions. The Company expects no material change in its recorded unrecognized tax benefit liability in the next 12 months.
 
16.  Equity
 
Elimination of Class B Common Stock

In April 2017, the Company's stockholders approved the proposed Third Amended and Restated Certificate of Incorporation of the Company (the “Certificate”) which eliminated all references to class B common stock, including but not limited to the provisions relating to the rights, preferences and limitations of class B common stock, and made related conforming changes.

As a result of the elimination of 150,000,000 previously authorized shares of class B common stock, the Company's total number of shares of capital stock authorized to be issued was reduced from 360,000,000 to 210,000,000 , comprised of 200,000,000 shares of class A common stock and 10,000,000 shares of preferred stock. The Certificate did not change any substantive terms of the Company's class A common stock or preferred stock or any powers or rights of their respective holders.

Earnings Per Share Calculation
 
Basic net income per share is computed using the weighted-average number of outstanding shares of common stock during the measurement period. Diluted net income per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential outstanding shares of common stock during the measurement period.

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders’ equity. As of September 28, 2017 , no treasury shares have been reissued or retired.


18
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


The following table sets forth the computation of basic and diluted earnings per share:
 
 
For the Three Months Ended
 
September 28, 2017
 
September 29, 2016
 
Income
 
Shares
 
Per Share
Amount
 
Income
 
Shares
 
Per Share
Amount
Basic EPS
 

 
 

 
 

 
 

 
 

 
 

Income available to common stockholders
$
147.1

 
115.8

 
$
1.27

 
$
144.9

 
124.4

 
$
1.16

Income allocated to participating securities
0.1

 
0.1

 
 

 
0.2

 
0.1

 
 

Net income
$
147.2

 
 

 
 

 
$
145.1

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Diluted potential common shares
 

 
1.1

 
 

 
 

 
0.8

 
 

Diluted EPS
 

 
 

 
 

 
 

 
 

 
 

Net income
$
147.2

 
117.0

 
$
1.26

 
$
145.1

 
125.3

 
$
1.16

 
 
For the Nine Months Ended
 
September 28, 2017
 
September 29, 2016
 
Income
 
Shares
 
Per Share
Amount
 
Income
 
Shares
 
Per Share
Amount
Basic EPS
 

 
 

 
 

 
 

 
 

 
 

Income available to common shareholders
$
231.9

 
117.8

 
$
1.97

 
$
361.2

 
128.2

 
$
2.82

Income allocated to participating securities
0.2

 
0.1

 
 

 
0.3

 
0.1

 
 

Net income
$
232.1

 
 

 
 

 
$
361.5

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Diluted potential common shares
 

 
1.1

 
 

 
 

 
0.7

 
 

Diluted EPS
 

 
 

 
 

 
 

 
 

 
 

Net income
$
232.1

 
119.0

 
$
1.95

 
$
361.5

 
129.0

 
$
2.80


Included in the outstanding common shares were 1.5 million and 1.6 million of issued but unvested shares at September 28, 2017 and September 29, 2016 , respectively, which are excluded from the basic EPS calculation.
 
Accumulated Other Comprehensive Loss
 
Accumulated Other Comprehensive Loss is summarized by component as follows:
 
 
As of
 
As of
 
September 28, 2017
 
December 31, 2016
Pension
$
(98.5
)
 
$
(98.5
)
SERP/Retiree medical
19.0

 
20.5

Foreign currency impact on long term intercompany loan
(15.2
)
 
(19.1
)
Currency translation adjustment
(58.6
)
 
(89.8
)
Total accumulated other comprehensive loss
$
(153.3
)
 
$
(186.9
)
     
17.  Commitments, Contingencies and Guarantees
 
Litigation
 
From time to time the Company is subject to, and is presently involved in, litigation or other legal proceedings arising in the ordinary course of business. While the final outcome of these matters cannot be predicted with certainty, considering, among other

19
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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


things, the meritorious legal defenses available, it is the opinion of the Company that none of these items, when finally resolved, will have a material adverse effect on the Company’s long-term financial position or liquidity. The Company had outstanding obligations with respect to litigation or other legal proceedings of zero and $25.0 as of September 28, 2017 and December 31, 2016, respectively.

From time to time, in the ordinary course of business and similar to others in the industry, the Company receives requests for information from government agencies in connection with their regulatory or investigational authority. Such requests can include subpoenas or demand letters for documents to assist the government in audits or investigations. The Company reviews such requests and notices and takes appropriate action. Additionally, the Company is subject to federal and state requirements for protection of the environment, including those for disposal of hazardous waste and remediation of contaminated sites. As a result, the Company is required to participate in certain government investigations regarding environmental remediation actions.

On December 5, 2014, Boeing filed a complaint in Delaware Superior Court, Complex Commercial Litigation Division, entitled The Boeing Co. v. Spirit AeroSystems, Inc., No. N14C-12-055 (EMD) (the “Complaint”). Boeing seeks indemnification from Spirit for (a) damages assessed against Boeing in International Union, United Automobile, Aerospace and Agricultural Workers of America v. Boeing Co., AAA Case No. 54 300 00795 07 (“UAW Arbitration”), which was brought on behalf of certain former Boeing employees in Tulsa and McAlester, Oklahoma, and (b) claims that Boeing settled in Society of Professional Engineering Employees in Aerospace v. Boeing Co., Nos. 05-1251-MLB, 07-1043-MLB (D. Kan.) (“Harkness Class Action”). The Company, Spirit, and certain Spirit retirement plan entities were parties to the Harkness Class Action, but all claims against the Spirit entities were subsequently dismissed.

Boeing’s Complaint asserts that the damages assessed against Boeing in the UAW Arbitration and the claims settled by Boeing in the Harkness Class Action are liabilities that Spirit assumed under an Asset Purchase Agreement between Boeing and Spirit, dated February 22, 2005 (the “APA”). Boeing asserts claims for breach of contract and declaratory judgment regarding its indemnification rights under the APA. Boeing's Complaint alleges that the UAW Arbitration decision had a net present value of $39.0 . In regard to the Harkness Class Action, the district court approved a settlement in an amount of $90.0 . In addition to the amounts related to the UAW Arbitration and Harkness Class Action, Boeing seeks indemnification for more than $10.0 in attorneys’ fees it alleges it expended to defend the UAW Arbitration and Harkness Class Action, as well as for the reasonable fees, costs and expenses Boeing expends litigating the case against Spirit.

Following a motion to dismiss (which was denied by Court Order dated August 14, 2015), Spirit answered Boeing’s Complaint and asserted a Counterclaim against Boeing, on the ground that the liabilities at issue were Boeing’s responsibility under the APA. Spirit’s Counterclaim alleges breach of contract and seeks a declaratory judgment regarding Spirit’s right to indemnification from Boeing under the APA. Spirit’s Counterclaim seeks to recover the amounts that Spirit spent litigating the Harkness Class Action, responding to Boeing’s indemnification demands concerning the Harkness Class Action and UAW Arbitration, and also litigating the current lawsuit against Boeing. On December 20, 2016, Boeing and Spirit moved for summary judgment. Summary judgment briefing was completed on February 9, 2017 and oral argument was held on the parties’ motions for summary judgment on March 22, 2017.

On June 27, 2017, the Delaware Superior Court issued an order denying Boeing’s Motion for Summary Judgment and granting Spirit’s Motion for Summary Judgment, finding that the liabilities at issue were excluded liabilities under the APA and holding that Spirit is entitled to recover reasonable attorneys' fees, costs and other expenses from Boeing. On July 10, 2017, Boeing filed a Motion for Entry of Judgment so that Boeing could pursue an appeal of the Court's June 27, 2017 Order prior to the determination of the amount of reasonable attorneys' fees, costs and other expenses to which Spirit is entitled. On July 17, 2017, Spirit filed its response opposing Boeing's Motion for Entry of Judgment and oral argument occurred on July 24, 2017. On July 28, 2017, the Court denied Boeing’s Motion for Entry of Judgment finding that there was just reason to delay an appeal to allow the Court to rule on Spirit’s Motion for Attorneys’ Fees, Costs, Expenses, and Pre- and Post-Judgment Interest (“Motion for Fees”). Spirit’s Motion for Fees is fully briefed and the Court has set a hearing on the Motion for Fees on December 1, 2017. Spirit intends to pursue its Motion for Fees and to defend vigorously against any future appeals.

Guarantees
 
Outstanding guarantees were $20.5 and $20.7 at September 28, 2017 and December 31, 2016 , respectively.


Restricted Cash - Collateral Requirements

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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)



The Company was required to maintain $20.0 and $19.9 of restricted cash as of September 28, 2017 and December 31, 2016 , respectively, related to certain collateral requirements for obligations under its workers’ compensation programs. The restricted cash is included in “Other assets” in the Company’s condensed consolidated balance sheets.
 
Indemnification
 
The Company has entered into customary indemnification agreements with each of its nonemployee directors, and some of its executive employment agreements include indemnification provisions. Under those agreements, the Company agrees to indemnify each of these individuals against claims arising out of events or occurrences related to that individual’s service as the Company’s agent or the agent of any of its subsidiaries to the fullest extent legally permitted.

The Company has agreed to indemnify parties for specified liabilities incurred, or that may be incurred, in connection with transactions they have entered into with the Company. The Company is unable to assess the potential number of future claims that may be asserted under these indemnities, nor the amounts thereof (if any). As a result, the Company cannot estimate the maximum potential amount of future payments under these indemnities and therefore, no liability has been recorded.

Service and Product Warranties and Extraordinary Rework
 
Provisions for estimated expenses related to service and product warranties and certain extraordinary rework are evaluated on a quarterly basis. These costs are accrued and are recorded to unallocated cost of goods sold. These estimates are established using historical information on the nature, frequency, and average cost of warranty claims, including the experience of industry peers. In the case of new development products or new customers, Spirit considers other factors including the experience of other entities in the same business and management judgment, among others. Service warranty and extraordinary work is reported in current liabilities and other liabilities in the condensed consolidated balance sheet.

The warranty balance presented in the table below includes unresolved warranty claims that are in dispute in regards to their value as well as their contractual liability. The Company estimated the total costs related to some of these claims, however there is significant uncertainty surrounding the disposition of these disputed claims and as such, the ultimate determination of the provision’s adequacy requires significant management judgment. The amount of the specific provisions recorded against disputed warranty claims was $99.7 and $99.0 as of September 28, 2017 and December 31, 2016 , respectively. These specific provisions represent the Company’s best estimate of reasonably possible warranty costs. Should the Company incur higher than expected warranty costs and/or discover new or additional information related to these warranty provisions, the Company may incur charges that exceed these recorded amounts. The Company utilized available information to make appropriate assessments, however the Company recognizes that data on actual claims experience is of limited duration and therefore, claims projections are subject to judgment. The amount of the disputed warranty claims in excess of the specific warranty provision was $218.3 and $209.0 , as of September 28, 2017 and December 31, 2016 , respectively.

The following is a roll forward of the service warranty and extraordinary rework balance at September 28, 2017 :
 
Balance, December 31, 2016
$
163.7

Charges to costs and expenses
5.4

Payouts
(3.6
)
Exchange rate
0.8

Balance, September 28, 2017
$
166.3

 

18.  Other Income (Expense), Net
 
Other income (expense), net is summarized as follows:
 

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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


 
For the Three Months Ended
 
For the Nine Months Ended
 
September 28,
2017
 
September 29,
2016
 
September 28,
2017
 
September 29,
2016
Kansas Development Finance Authority bond
$
0.6

 
$
0.8

 
$
2.3

 
$
2.7

Rental and miscellaneous income (loss)
0.5

 
0.2

 
(0.9
)
 
0.3

Interest income
1.9

 
1.0

 
4.4

 
2.7

Foreign currency losses
(1.1
)
 
(2.3
)
 
(1.2
)
 
(14.4
)
Total
$
1.9

 
$
(0.3
)
 
$
4.6

 
$
(8.7
)

Foreign currency losses are due to the impact of movement in foreign currency exchange rates on an intercompany revolver and long-term contractual rights/obligations, as well as trade and intercompany receivables/payables which are denominated in a currency other than the entity’s functional currency.
 
19.  Segment Information
 
The Company operates in three principal segments: Fuselage Systems, Propulsion Systems, and Wing Systems. All other Company activities fall within the All Other segment, principally made up of sundry sales of miscellaneous services, tooling contracts, and sales of natural gas through Kansas Industrial Energy Supply Company (“KIESC”), a tenancy-in-common with other companies that have operations in Wichita, Kansas.

The Company’s Fuselage Systems segment includes development, production and marketing of forward, mid and rear fuselage sections and systems, primarily to aircraft OEMs, as well as related spares and maintenance, repairs and overhaul (“MRO”) services. The Fuselage Systems segment manufactures products at the Company’s facilities in Wichita, Kansas and Kinston, North Carolina.  The Fuselage Systems segment also includes an assembly plant for the A350 XWB aircraft in Saint-Nazaire, France.

The Company’s Propulsion Systems segment includes development, production, and marketing of struts/pylons, nacelles (including thrust reversers), and related engine structural components primarily to aircraft or engine OEMs, as well as related spares and MRO services.  The Propulsion Systems segment manufactures products at the Company’s facility in Wichita, Kansas.

The Company’s Wing Systems segment includes development, production, and marketing of wings and wing components (including flight control surfaces) as well as other miscellaneous structural parts primarily to aircraft OEMs, as well as related spares and MRO services. These activities take place at the Company’s facilities in Tulsa and McAlester, Oklahoma; Kinston, North Carolina; Prestwick, Scotland; and Subang, Malaysia.

The Company’s segments are consistent with the organization and responsibilities of management reporting to the chief operating decision-maker for the purpose of assessing performance. The Company’s definition of segment operating income differs from net profit margin as presented in its primary financial statements and a reconciliation of the segment and consolidated results is provided in the table set forth below.

The Company’s primary profitability measure to review a segment’s operating performance is segment operating income before corporate selling, general and administrative expenses, research and development and unallocated cost of sales. Corporate selling, general and administrative expenses include centralized functions such as accounting, treasury and human resources that are not specifically related to the Company’s operating segments and are not allocated in measuring the operating segments’ profitability and performance and net profit margins. Research and development includes research and development efforts that benefit the Company as a whole and are not unique to a specific segment. Unallocated cost of sales includes general costs not directly attributable to segment operations, such as warranty, early retirement, and other incentives. All of these items are not specifically related to the Company’s operating segments and are not utilized in measuring the operating segments’ profitability and performance.

While some working capital accounts are maintained on a segment basis, much of the Company’s assets are not managed or maintained on a segment basis. Property, plant and equipment, including tooling, are used in the design and production of products for each of the segments and, therefore, are not allocated to any individual segment. In addition, cash, prepaid expenses, other assets, and deferred taxes are managed and maintained on a consolidated basis and generally do not pertain to any particular segment. Raw materials and certain component parts are used in the production of aerostructures across all segments. Work-in-process inventory is identifiable by segment, but is managed and evaluated at the program level. As there is no segmentation of

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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


the Company’s productive assets, depreciation expense (included in fixed manufacturing costs and selling, general and administrative expenses) and capital expenditures, no allocation of these amounts has been made solely for purposes of segment disclosure requirements.

The following table shows segment revenues and operating income for the three and nine months ended September 28, 2017 and September 29, 2016 :
 
 
Three Months Ended
 
Nine Months Ended
 
September 28,
2017
 
September 29,
2016
 
September 28,
2017
 
September 29,
2016
Segment Revenues
 

 
 

 
 

 
 

Fuselage Systems
$
957.0

 
$
880.3

 
$
2,812.1

 
$
2,679.7

Propulsion Systems
407.9

 
453.0

 
1,250.7

 
1,373.3

Wing Systems
382.2

 
376.8

 
1,201.7

 
1,161.5

All Other
1.1

 
1.3

 
3.9

 
8.4

 
$
1,748.2

 
$
1,711.4

 
$
5,268.4

 
$
5,222.9

Segment Operating Income
 

 
 

 
 

 
 

Fuselage Systems  (1)
$
148.3

 
$
142.5

 
$
218.5

 
$
340.9

Propulsion Systems (1)
74.2

 
77.5

 
188.9

 
250.9

Wing Systems (1)
50.9

 
51.1

 
140.2

 
174.7

All Other
0.2

 
0.6

 
(0.5
)
 
2.0

 
273.6

 
271.7

 
547.1

 
768.5

Corporate SG&A
(48.8
)
 
(52.2
)
 
(146.8
)
 
(172.4
)
Impact of severe weather event
—

 
—

 
(19.9
)
 
—

Research and development
(9.5
)
 
(5.4
)
 
(21.2
)
 
(15.9
)
Unallocated cost of sales (2) 
(3.9
)
 
0.3

 
(17.0
)
 
(16.0
)
Total Operating Income
$
211.4

 
$
214.4

 
$
342.2

 
$
564.2

 

(1)
Includes forward losses, changes in estimates on loss programs, and cumulative catch-up adjustments. These changes in estimates are further detailed in Note 3, Changes in Estimates.
(2)
Includes $1.5 and $7.7 of warranty expense for the three months ended September 28, 2017 and September 29, 2016 , respectively and $3.2 and $12.0 for the nine months ended September 28, 2017 and September 29, 2016 , respectively. Also includes a charge for excess purchases and purchase commitments of $11.5 for the nine months ended September 28, 2017 and $11.8 related to early retirement incentives for the nine months ended September 29, 2016 .

20.  Condensed Consolidating Financial Information
 
The 2022 Notes and 2026 Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company. No subsidiaries are guarantors to the 2022 Notes or 2026 Notes.

The following condensed consolidating financial information, which has been prepared in accordance with the requirements for presentation of Rule 3-10(d) of Regulation S-X promulgated under the Securities Act, presents the condensed consolidating financial information separately for:

(i)
Holdings, as the parent company and parent guarantor to the A&R Credit Agreement, as further detailed in Note 12, Debt;
(ii)
Spirit, as the subsidiary issuer of the 2022 Notes and the 2026 Notes;
(iii)
The Company’s subsidiaries (“Non-Guarantor Subsidiaries”) on a combined basis;

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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


(iv)
Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among Holdings and the Non-Guarantor Subsidiaries, (b) eliminate the investments in the Company’s subsidiaries, and (c) record consolidating entries; and
(v)
Holdings and its subsidiaries on a consolidated basis.

Condensed Consolidating Statements of Operations
For the Three Months Ended September 28, 2017

 
Holdings
 
Spirit
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Net revenues
$
—

 
$
1,573.0

 
$
311.8

 
$
(136.6
)
 
$
1,748.2

Operating costs and expenses
 

 
 

 
 
 
 

 
 

Cost of sales
—

 
1,331.1

 
284.0

 
(136.6
)
 
1,478.5

Selling, general and administrative
3.9

 
41.3

 
3.6

 
—

 
48.8

Research and development
—

 
8.8

 
0.7

 
—

 
9.5

Total operating costs and expenses
3.9

 
1,381.2

 
288.3

 
(136.6
)
 
1,536.8

Operating (loss) income
(3.9
)
 
191.8

 
23.5

 
—

 
211.4

Interest expense and financing fee amortization
—

 
(10.5
)
 
(1.3
)
 
1.4

 
(10.4
)
Other income (expense), net
—

 
4.0

 
(0.7
)
 
(1.4
)
 
1.9

(Loss) income before income taxes and equity in net income of affiliate and subsidiaries
(3.9
)
 
185.3

 
21.5

 
—

 
202.9

Income tax benefit (provision)
0.8

 
(53.0
)
 
(3.7
)
 
—

 
(55.9
)
(Loss) income before equity in net income of affiliate and subsidiaries
(3.1
)
 
132.3

 
17.8

 
—

 
147.0

Equity in net income of affiliate
0.2

 
—

 
0.2

 
(0.2
)
 
0.2

Equity in net income of subsidiaries
150.1

 
17.7

 
—

 
(167.8
)
 
—

Net income
147.2

 
150.0

 
18.0

 
(168.0
)
 
147.2

Other comprehensive income (loss)
13.8

 
13.8

 
14.3

 
(28.1
)
 
13.8

Comprehensive income (loss)
$
161.0

 
$
163.8

 
$
32.3

 
$
(196.1
)
 
$
161.0


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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


  Condensed Consolidating Statements of Operations
For the Three Months Ended September 29, 2016
 
 
Holdings
 
Spirit
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Net revenues
$
—

 
$
1,549.3

 
$
308.7

 
$
(146.6
)
 
$
1,711.4

Operating costs and expenses
 

 
 

 
 
 
 

 
 

Cost of sales
—

 
1,298.8

 
287.2

 
(146.6
)
 
1,439.4

Selling, general and administrative
2.2

 
46.6

 
3.4

 
—

 
52.2

Research and development
—

 
5.0

 
0.4

 
—

 
5.4

Total operating costs and expenses
2.2

 
1,350.4

 
291.0

 
(146.6
)
 
1,497.0

Operating (loss) income
(2.2
)
 
198.9

 
17.7

 
—

 
214.4

Interest expense and financing fee amortization
—

 
(12.1
)
 
(1.9
)
 
1.8

 
(12.2
)
Other income (expense), net
—

 
4.0

 
(2.5
)
 
(1.8
)
 
(0.3
)
(Loss) income before income taxes and equity in net income of affiliate and subsidiaries
(2.2
)
 
190.8

 
13.3

 
—

 
201.9

Income tax benefit (provision)
0.6

 
(55.8
)
 
(2.1
)
 
—

 
(57.3
)
(Loss) income before equity in net income of affiliate and subsidiaries
(1.6
)
 
135.0

 
11.2

 
—

 
144.6

Equity in net income of affiliate
0.5

 
—

 
0.5

 
(0.5
)
 
0.5

Equity in net income of subsidiaries
146.2

 
11.2

 
—

 
(157.4
)
 
—

Net income
145.1

 
146.2

 
11.7

 
(157.9
)
 
145.1

Other comprehensive (loss) income
(8.5
)
 
(8.5
)
 
(17.7
)
 
26.2

 
(8.5
)
Comprehensive income (loss)
$
136.6

 
$
137.7

 
$
(6.0
)
 
$
(131.7
)
 
$
136.6







 





















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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


Condensed Consolidating Statements of Operations
For the Nine Months Ended September 28, 2017

 
Holdings
 
Spirit
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Net revenues
$
—

 
$
4,701.1

 
$
1,025.4

 
$
(458.1
)
 
$
5,268.4

Operating costs and expenses
 

 
 

 
 
 
 

 
 

Cost of sales
—

 
4,282.9

 
913.5

 
(458.1
)
 
4,738.3

Selling, general and administrative
8.8

 
127.3

 
10.7

 
—

 
146.8

Impact of severe weather event
—

 
19.9

 
—

 
—

 
19.9

Research and development
—

 
19.4

 
1.8

 
—

 
21.2

Total operating costs and expenses
8.8

 
4,449.5

 
926.0

 
(458.1
)
 
4,926.2

Operating (loss) income
(8.8
)
 
251.6

 
99.4

 
—

 
342.2

Interest expense and financing fee amortization
—

 
(30.1
)
 
(4.5
)
 
4.5

 
(30.1
)
Other income (expense), net
—

 
9.8

 
(0.7
)
 
(4.5
)
 
4.6

(Loss) income before income taxes and equity in net income of affiliate and subsidiaries
(8.8
)
 
231.3

 
94.2

 
—

 
316.7

Income tax benefit (provision)
2.7

 
(70.2
)
 
(17.4
)
 
—

 
(84.9
)
(Loss) income before equity in net income of affiliate and subsidiaries
(6.1
)
 
161.1

 
76.8

 
—

 
231.8

Equity in net income of affiliate
0.3

 
—

 
0.3

 
(0.3
)
 
0.3

Equity in net income of subsidiaries
237.9

 
76.8

 
—

 
(314.7
)
 
—

Net income
232.1

 
237.9

 
77.1

 
(315.0
)
 
232.1

Other comprehensive (loss) income
33.6

 
33.6

 
35.0

 
(68.6
)
 
33.6

Comprehensive income (loss)
$
265.7

 
$
271.5

 
$
112.1

 
$
(383.6
)
 
$
265.7


























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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


  Condensed Consolidating Statements of Operations
For the Nine Months Ended September 29, 2016

 
Holdings
 
Spirit
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Net revenues
$
—

 
$
4,711.7

 
$
984.5

 
$
(473.3
)
 
$
5,222.9

Operating costs and expenses
 

 
 

 
 
 
 

 
 

Cost of sales
—

 
4,047.0

 
896.7

 
(473.3
)
 
4,470.4

Selling, general and administrative
6.0

 
154.4

 
12.0

 
—

 
172.4

Research and development
—

 
14.4

 
1.5

 
—

 
15.9

Total operating costs and expenses
6.0

 
4,215.8

 
910.2

 
(473.3
)
 
4,658.7

Operating (loss) income
(6.0
)
 
495.9

 
74.3

 
—

 
564.2

Interest expense and financing fee amortization
—

 
(47.2
)
 
(6.0
)
 
5.7

 
(47.5
)
Other income (expense), net
—

 
11.5

 
(14.5
)
 
(5.7
)
 
(8.7
)
(Loss) income before income taxes and equity in net income of affiliate and subsidiaries
(6.0
)
 
460.2

 
53.8

 
—

 
508.0

Income tax benefit (provision)
1.8

 
(140.1
)
 
(9.5
)
 
—

 
(147.8
)
(Loss) income before equity in net income of affiliate and subsidiaries
(4.2
)
 
320.1

 
44.3

 
—

 
360.2

Equity in net income of affiliate
1.3

 
—

 
1.3

 
(1.3
)
 
1.3

Equity in net income of subsidiaries
364.4

 
44.3

 
—

 
(408.7
)
 
—

Net income
361.5

 
364.4

 
45.6

 
(410.0
)
 
361.5

Other comprehensive (loss) income
(42.9
)
 
(42.9
)
 
(44.5
)
 
87.4

 
(42.9
)
Comprehensive income (loss)
$
318.6

 
$
321.5

 
$
1.1

 
$
(322.6
)
 
$
318.6





























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Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


Condensed Consolidating Balance Sheet
September 28, 2017
 
 
Holdings
 
Spirit
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
—

 
$
687.8

 
$
38.8

 
$
—

 
$
726.6

Restricted cash
—

 
3.2

 
—

 
—

 
3.2

Accounts receivable, net
—

 
876.9

 
330.4

 
(355.6
)
 
851.7

Inventory, net
—

 
925.1

 
438.1

 
—

 
1,363.2

Other current assets
—

 
63.7

 
3.6

 
—

 
67.3

Total current assets
—

 
2,556.7

 
810.9

 
(355.6
)
 
3,012.0

Property, plant and equipment, net
—

 
1,499.4

 
519.3

 
—

 
2,018.7

Pension assets, net
—

 
293.8

 
15.4

 
—

 
309.2

Investment in subsidiary
1,759.4

 
677.0

 
—

 
(2,436.4
)
 
—

Other assets
—

 
333.6

 
121.1

 
(257.4
)
 
197.3

Total assets
$
1,759.4

 
$
5,360.5

 
$
1,466.7

 
$
(3,049.4
)
 
$
5,537.2

Liabilities
 

 
 

 
 

 
 

 
 

Accounts payable
$
—

 
$
685.9

 
$
431.8

 
$
(355.6
)
 
$
762.1

Accrued expenses
—

 
231.8

 
26.5

 
—

 
258.3

Profit sharing
—

 
63.0

 
2.7

 
—

 
65.7

Current portion of long-term debt
—

 
27.1

 
0.8

 
—

 
27.9

Advance payments, short-term
—

 
131.0

 
—

 
—

 
131.0

Deferred revenue and other deferred credits, short-term
—

 
66.8

 
1.5

 
—

 
68.3

Deferred grant income liability - current
—

 
—

 
21.0

 
—

 
21.0

Other current liabilities
—

 
597.2

 
4.5

 
—

 
601.7

Total current liabilities
—

 
1,802.8

 
488.8

 
(355.6
)
 
1,936.0

Long-term debt
—

 
1,052.4

 
165.3

 
(156.8
)
 
1,060.9

Advance payments, long-term
—

 
255.6

 
—

 
—

 
255.6

Pension/OPEB obligation
—

 
40.3

 
—

 
—

 
40.3

Deferred grant income liability - non-current
—

 
—

 
44.9

 
—

 
44.9

Deferred revenue and other deferred credits
—

 
163.6

 
2.9

 
—

 
166.5

Other liabilities
—

 
366.3

 
7.9

 
(100.6
)
 
273.6

Total equity
1,759.4

 
1,679.5

 
756.9

 
(2,436.4
)
 
1,759.4

Total liabilities and stockholders’ equity
$
1,759.4

 
$
5,360.5

 
$
1,466.7

 
$
(3,049.4
)
 
$
5,537.2




28
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


Condensed Consolidating Balance Sheet
December 31, 2016

 
Holdings
 
Spirit
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Assets
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
—

 
$
680.1

 
$
17.6

 
$
—

 
$
697.7

Accounts receivable, net
—

 
785.0

 
249.4

 
(373.9
)
 
660.5

Inventory, net
—

 
1,058.8

 
456.5

 
—

 
1,515.3

Other current assets
—

 
29.0

 
7.9

 
—

 
36.9

Total current assets
—

 
2,552.9

 
731.4

 
(373.9
)
 
2,910.4

Property, plant and equipment, net
—

 
1,462.3

 
529.3

 
—

 
1,991.6

Pension assets, net
—

 
268.1

 
14.2

 
—

 
282.3

Investment in subsidiary
1,928.8

 
544.4

 
—

 
(2,473.2
)
 
—

Other assets
—

 
398.9

 
101.4

 
(279.4
)
 
220.9

Total assets
$
1,928.8

 
$
5,226.6

 
$
1,376.3

 
$
(3,126.5
)
 
$
5,405.2

Liabilities
 

 
 

 
 

 
 

 
 

Accounts payable
$
—

 
$
527.0

 
$
426.6

 
$
(373.9
)
 
$
579.7

Accrued expenses
—

 
192.8

 
23.4

 
—

 
216.2

Profit sharing
—

 
97.2

 
4.2

 
—

 
101.4

Current portion of long-term debt
—

 
25.1

 
1.6

 
—

 
26.7

Advance payments, short-term
—

 
199.3

 
—

 
—

 
199.3

Deferred revenue and other deferred credits, short-term
—

 
310.8

 
1.3

 
—

 
312.1

Deferred grant income liability - current
—

 
—

 
14.4

 
—

 
14.4

Other current liabilities
—

 
94.2

 
0.2

 
—

 
94.4

Total current liabilities
—

 
1,446.4

 
471.7

 
(373.9
)
 
1,544.2

Long-term debt
—

 
1,052.5

 
206.9

 
(199.4
)
 
1,060.0

Advance payments, long-term
—

 
342.0

 
—

 
—

 
342.0

Pension/OPEB obligation
—

 
43.9

 
—

 
—

 
43.9

Deferred grant income liability - non-current
—

 
—

 
63.4

 
—

 
63.4

Deferred revenue and other deferred credits
—

 
143.4

 
3.4

 
—

 
146.8

Other liabilities
—

 
349.5

 
6.6

 
(80.0
)
 
276.1

Total equity
1,928.8

 
1,848.9

 
624.3

 
(2,473.2
)
 
1,928.8

Total liabilities and stockholders’ equity
$
1,928.8

 
$
5,226.6

 
$
1,376.3

 
$
(3,126.5
)
 
$
5,405.2


 

29
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


Condensed Consolidating Statements of Cash Flows
For the Nine Months Ended September 28, 2017
 
 
Holdings
 
Spirit
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Operating activities
 

 
 

 
 

 
 

 
 

Net cash provided by operating activities
$
—

 
$
525.7

 
$
98.9

 
$
—

 
$
624.6

Investing activities
 

 
 

 
 

 
 

 
 

Purchase of property, plant and equipment
—

 
(122.1
)
 
(16.6
)
 
—

 
(138.7
)
Proceeds from sale of assets
—

 
0.3

 
—

 
—

 
0.3

Net cash used in investing activities
—

 
(121.8
)
 
(16.6
)
 
—

 
(138.4
)
Financing activities
 

 
 

 
 

 
 

 
 

Principal payments of debt
—

 
(0.7
)
 
(1.6
)
 
—

 
(2.3
)
Payment on term loan
—

 
(12.5
)
 
—

 
—

 
(12.5
)
Proceeds (payments) from intercompany debt
—

 
65.1

 
(65.1
)
 
—

 
—

Taxes paid related to net share settlement of awards
—

 
(13.8
)
 
—

 
—

 
(13.8
)
Debt issuance and financing costs
—

 
(0.9
)
 
—

 
—

 
(0.9
)
Proceeds from financing under the New Markets Tax Credit Program
—

 
7.6

 
—

 
—

 
7.6

Proceeds (payments) from subsidiary for purchase of treasury stock
402.1

 
(402.1
)
 
—

 
—

 
—

Purchase of treasury stock
(402.1
)
 
—

 
—

 
—

 
(402.1
)
Change in restricted cash
—

 
(3.2
)
 
—

 
—

 
(3.2
)
Proceeds (payments) from subsidiary for dividends paid
35.7

 
(35.7
)
 
—

 
—

 
—

Dividends paid
(35.7
)
 


 
—

 
—

 
(35.7
)
Net cash used in financing activities
—

 
(396.2
)
 
(66.7
)
 
—

 
(462.9
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
5.6

 
—

 
5.6

Net increase in cash and cash equivalents for the period
—

 
7.7

 
21.2

 
—

 
28.9

Cash and cash equivalents, beginning of period
—

 
680.1

 
17.6

 
—

 
697.7

Cash and cash equivalents, end of period
$
—

 
$
687.8

 
$
38.8

 
$
—

 
$
726.6




 

30
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


Condensed Consolidating Statements of Cash Flows
For the Nine Months Ended September 29, 2016

 
Holdings
 
Spirit
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Operating activities
 

 
 

 
 

 
 

 
 

Net cash provided by operating activities
$
—

 
$
481.3

 
$
93.1

 
$
—

 
$
574.4

Investing activities
 

 
 

 
 

 
 

 
 

Purchase of property, plant and equipment
—

 
(121.4
)
 
(35.4
)
 
—

 
(156.8
)
Proceeds from sale of assets
—

 
0.6

 
—

 
—

 
0.6

Other
—

 
0.4

 
(0.4
)
 
—

 
—

Net cash used in investing activities
—

 
(120.4
)
 
(35.8
)
 
—

 
(156.2
)
Financing activities
 

 
 

 
 

 
 

 
 

Proceeds from issuance of bonds
—

 
299.8

 
—

 
—

 
299.8

Principal payments of debt
—

 
(14.4
)
 
(2.3
)
 
—

 
(16.7
)
Payments on bonds
—

 
(300.0
)
 
—

 
—

 
(300.0
)
Excess tax benefits from share-based payment arrangements
—

 
(0.1
)
 
—

 
—

 
(0.1
)
Proceeds (payments) from intercompany debt
—

 
51.0

 
(51.0
)
 
—

 
—

Debt issuance and financing costs
—

 
(17.2
)
 
—

 
—

 
(17.2
)
Taxes paid related to net share settlement of awards
—

 
(15.2
)
 
—

 
—

 
(15.2
)
Proceeds (payments) from subsidiary for purchase of treasury stock
649.6

 
(649.6
)
 
—

 
—

 
—

Purchase of treasury stock
(649.6
)
 
—

 
—

 
—

 
(649.6
)
Net cash used in financing activities
—

 
(645.7
)
 
(53.3
)
 
—

 
(699.0
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
(6.1
)
 
—

 
(6.1
)
Net decrease in cash and cash equivalents for the period
—

 
(284.8
)
 
(2.1
)
 
—

 
(286.9
)
Cash and cash equivalents, beginning of period
—

 
894.2

 
63.1

 
—

 
957.3

Cash and cash equivalents, end of period
$
—

 
$
609.4

 
$
61.0

 
$
—

 
$
670.4


21.  Boeing Definitive Documentation

On August 1, 2017, Boeing and the Company through its subsidiary, Spirit, entered into the MOU. Subsequently, on September 22, 2017, the parties entered into the Definitive Documentation.

On September 22, 2017, Boeing and Spirit completed their negotiation of such definitive documentation and entered into Sustaining Amendment #30. Sustaining Amendment #30 generally establishes pricing terms for the B737, B747, B767, and B777 models (excluding the B777x) through 2022 (with certain limited exceptions). Sustaining Amendment #30 further provides that Boeing and Spirit will negotiate follow-on pricing for periods beyond January 1, 2023 beginning 24 months prior to January 1, 2023. If Boeing and Spirit are unable to reach an agreement with respect to follow-on pricing prior to January 1, 2023, Sustaining Amendment #30 provides a mechanism to establish interim pricing that takes into account escalation and reduces certain rate-based discounts. In addition, Sustaining Amendment #30 provides that the parties will make certain investments for rate increases on the B737 program and implements industry standard payment terms.

As contemplated by the MOU, Boeing and Spirit also executed the 787 Amendment. The 787 Amendment establishes pricing terms for the B787-8, -9, and -10 derivative models between line unit 501 and line unit 1405. The 787 Amendment provides that the parties will negotiate pricing for B787 line units 1406 and beyond beginning 24 months prior to the scheduled delivery date for line unit 1405. In addition, the 787 Amendment provides that Spirit will repay to Boeing $235.0 , less certain adjustments as a

31
Table of Contents
Spirit AeroSystems Holdings, Inc.  
Notes to the Condensed Consolidated Financial Statements (unaudited)
($, €, and RM in millions other than per share amounts)


retroactive adjustment for payments that were based on interim pricing, and that Boeing will assist Spirit regarding supply chain cost reduction opportunities on the B787 program. This amount was repaid in October 2017.

In the second quarter of 2017, as a result of the expected completion of the 787 Amendment, the Company formally extended the current contract block ending at line unit 1003 to line unit 1300 and established a planning block from line units 1301 to 1405. Based on the pricing updates, contract block extension, and planning block addition, the Company updated its estimated contract costs and revenue for the B787 program. As a result, the Company recorded a second quarter 2017 reach-forward loss $352.8 on its B787 program.

The foregoing descriptions of the Definitive Documentation do not purport to be complete and are qualified in their entirety by reference to the full text of the MOU, which was filed as Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended June 29, 2017, and Sustaining Amendment #30 and the 787 Amendment, each of which are filed as an exhibit hereto. The B787 Special Business Provisions BCA-MS-65530-0019, dated June 16, 2005, as amended up to the 787 Amendment, and the related General Terms Agreement, dated June 16, 2005, as amended, are also filed as exhibits hereto. See Note 3, Changes in Estimates, Note 8, Advance Payments and Deferred Revenue/Credits, and Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional discussion of the Definitive Documentation.

22. New Markets Tax Credit

During the first quarter of 2017, the Company entered into a financing transaction with Chase Community Equity, LLC (“Chase”) related to the purchase and installation of certain equipment at the Company’s facility in Wichita, Kansas.  Chase  made a capital contribution and the Company made a loan to Chase NMTC Spirit Investment Fund, LLC (“Investment Fund”) under a qualified New Markets Tax Credit (“NMTC”) program.  The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (“Act”) and is intended to induce capital investment in qualified lower income communities.  The Act permits taxpayers to claim credits against their Federal income taxes for up to 39% of qualified investments in the equity of community development entities (“CDE”).  CDEs are privately managed investment institutions that are certified to make qualified low-income community investments.

In connection with the financing, the Company loaned $20.6 aggregate principal amount of a 1.0% loan (“Leverage Loan”) due December 2050, to the Investment Fund.  Additionally, Chase contributed $9.7 to the Investment Fund, and as such, Chase is entitled to substantially all of the benefits derived from the NMTCs.  The Investment Fund then contributed the proceeds to certain CDEs, which, in turn, loaned the funds on similar terms as the Leverage Loan to Spirit AeroSystems, Inc. a wholly-owned subsidiary of the Company.  The proceeds of the loans from the CDEs, including loans representing the capital contribution made by Chase, net of syndication fees, are restricted for use on the purchase and installation of equipment outlined within the NMTC agreement.  As of September 28, 2017, after qualifying capital expenditures, the Company held restricted cash of $3.2 .

The NMTC is subject to 100% recapture for a period of seven years as provided in the Internal Revenue Code.  The Company is required to comply with various regulations and contractual provisions that apply to the NMTC arrangement.  Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, require the Company to indemnify Chase for any loss or recapture of NMTCs related to the financing until such time as the Company’s obligation to deliver tax benefits is relieved.  The Company does not anticipate any credit recaptures will be required in connection with this arrangement.  This transaction also includes a put/call provision whereby the Company may be obligated or entitled to repurchase Chase’s interest in the Investment Fund.  The Company believes that Chase will exercise the put option in March 2024, at the end of the recapture period.  The value attributed to the put/call is negligible.

The Company has determined that the financing arrangement with the Investment Fund and CDEs is a variable interest entity (“VIE”), and that it is the primary beneficiary of the VIE. This conclusion was reached based on the following:

•
The ongoing activities of the VIE, collecting and remitting interest and fees, and NMTC compliance were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the VIE;
•
Contractual arrangements obligate the Company to comply with NMTC rules and regulations and provide various other guarantees to the Investment Fund and CDEs;
•
Chase lacks a material interest in the underlying economics of the project; and
•
The Company is obligated to absorb losses of the VIE.

Because the Company is the primary beneficiary of the VIE, it has been included in the Company’s condensed consolidated financial statements. Chase’s contribution of $9.7 was initially recorded as restricted cash and its interest in the Investment Fund is included in other liabilities.


32
Table of Contents

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and the notes to the unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). The following section may include “forward-looking statements.” Forward-looking statements generally can be identified by the use of forward-looking terminology such as “aim,” “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “should,” “target,” “will,” “would,” and other similar words or phrases, or the negative thereof, unless the context requires otherwise. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties, both known and unknown, including, but not limited to, those described in the “Risk Factors” section of the Company’s 2016 Form 10-K. Our actual results may vary materially from those anticipated in forward-looking statements. We caution investors not to place undue reliance on any forward-looking statements.

Important factors that could cause actual results to differ materially from those reflected in such forward-looking statements and that should be considered in evaluating our outlook include, but are not limited to, the following:
•
our ability to continue to grow our business and execute our growth strategy, including the timing, execution, and profitability of new and maturing programs;
•
our ability to perform our obligations under our new and maturing commercial, business aircraft and military development programs, and the related recurring production;
•
our ability to accurately estimate and manage performance, cost, and revenue under our contracts, including our ability to achieve certain cost reductions with respect to the B787 program;
•
margin pressures and the potential for additional forward losses on new and maturing programs;
•
our ability to accommodate, and the cost of accommodating, announced increases in the build rates of certain aircraft;
•
the effect on aircraft demand and build rates of changing customer preferences for business aircraft, including the effect of global economic conditions on the business aircraft market and expanding conflicts or political unrest in the Middle East or Asia;
•
customer cancellations or deferrals as a result of global economic uncertainty or otherwise;
•
the effect of economic conditions in the industries and markets in which we operate in the U.S. and globally and any changes therein, including fluctuations in foreign currency exchange rates;
•
the success and timely execution of key milestones such as the receipt of necessary regulatory approvals and customer adherence to their announced schedules;
•
our ability to successfully negotiate, or re-negotiate, future pricing under our supply agreements with Boeing and our other customers;
•
our ability to enter into profitable supply arrangements with additional customers;
•
the ability of all parties to satisfy their performance requirements under existing supply contracts with our two major customers, Boeing and Airbus, and other customers, and the risk of nonpayment by such customers;
•
any adverse impact on Boeing’s and Airbus’ production of aircraft resulting from cancellations, deferrals, or reduced orders by their customers or from labor disputes or acts of terrorism;
•
any adverse impact on the demand for air travel or our operations from the outbreak of diseases or epidemic or pandemic outbreaks;
•
our ability to avoid or recover from cyber-based or other security attacks, information technology failures, or other disruptions;
•
returns on pension plan assets and the impact of future discount rate changes on pension obligations;
•
our ability to borrow additional funds or refinance debt;
•
competition from commercial aerospace OEMs and other aerostructures suppliers;

33
Table of Contents

•
the effect of governmental laws, such as U.S. export control laws and U.S. and foreign anti-bribery laws such as the Foreign Corrupt Practices Act and the United Kingdom Bribery Act, and environmental laws and agency regulations, both in the U.S. and abroad;
•
the effect of potential changes in tax law, such as those outlined in recent proposals on U.S. Tax Reform;
•
any reduction in our credit ratings;
•
our dependence on our suppliers, as well as the cost and availability of raw materials and purchased components;
•
our ability to recruit and retain highly-skilled employees and our relationships with the unions representing many of our employees;
•
spending by the U.S. and other governments on defense;
•
the possibility that our cash flows and the A&R Credit Agreement may not be adequate for our additional capital needs or for payment of interest on and principal of our indebtedness;
•
our exposure under our Revolver to higher interest payments should interest rates increase substantially;
•
the effectiveness of any interest rate hedging programs;
•
the effectiveness of our internal control over financial reporting;
•
the outcome or impact of ongoing or future litigation, claims and regulatory actions; and
•
our exposure to potential product liability and warranty claims.
 
These factors are not exhaustive and it is not possible for us to predict all factors that could cause actual results to differ materially from those reflected in our forward-looking statements. These factors speak only as of the date hereof, and new factors may emerge or changes to the foregoing factors may occur that could impact our business. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. Except to the extent required by law, we undertake no obligation to, and expressly disclaim any obligation to, publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should review carefully the section captioned “Risk Factors” in the Company’s 2016 Form 10-K, our Form 10-Qs for the quarters ended March 30, 2017 and June 29, 2017, for a more complete discussion of these and other factors that may affect our business.

Management’s Focus
 
The Company’s focus is on ensuring that our quality, operational performance, and cost performance are world class. As we continue to position the Company for future success, our focus in 2017 remains executing our supply chain strategy, improving our productivity, and meeting our customers’ requirements for production rate changes. Additionally, we will strive to become more innovative by investing in technology and automation. These investments will be aimed at reducing costs and allowing us to meet increasing production rates on many of our programs as well as ensuring we are remaining competitive for the next generation of aircraft. Additionally, we will focus on positioning ourselves for growth within both the commercial and defense markets. Considering the strong demand for commercial aircraft and the expected continued need for defense aircraft for the foreseeable future, both markets offer possibilities for growth.
   
Recent Events

In the fourth quarter of 2016, the aftermath of Hurricane Matthew caused the Company's Kinston, North Carolina site operations to temporarily shut down. We are currently pursuing claims to recover a portion of our losses related to the shut down under applicable insurance policies.

In October 2017, the Company entered into an agreement to sell, without recourse, certain trade accounts receivable balances to a third party financial institution. The Company will have no retained interests in the receivables sold. Transfers under this agreement will be accounted for as a sale of receivables with any loss on sale recorded to other income and expense.

In November 2014, Spirit and Boeing entered into the November 2014 MOA. As part of the November 2014 MOA, Boeing and Spirit established interim prices for certain B787 shipsets, and the parties agreed to negotiate future rate increases, recurring

34
Table of Contents

prices, and other issues across multiple programs during 2015. The parties did not reach an agreement on pricing until August 1, 2017, when Boeing and the Company executed the MOU. The MOU and the Definitive Documentation provide that the Company will repay to Boeing $235.0 less certain adjustments as a retroactive adjustment for payments that were based on interim pricing. As a result, the $235.0 is reflected in other current liabilities on the Company's balance sheet. This amount was repaid in October 2017.

Programs

Boeing 787 and Legacy Programs

On August 1, 2017, Boeing and the Company through its subsidiary, Spirit, entered into the MOU, which required Boeing and Spirit to negotiate and execute definitive documentation implementing the agreements set forth in the MOU by September 29, 2017.

On September 22, 2017, Boeing and Spirit completed their negotiation of such definitive documentation and entered into Sustaining Amendment #30. Sustaining Amendment #30 generally establishes pricing terms for the B737, B747, B767, and B777 models (excluding the B777x) through 2022 (with certain limited exceptions). Sustaining Amendment #30 further provides that Boeing and Spirit will negotiate follow-on pricing for periods beyond January 1, 2023 beginning 24 months prior to January 1, 2023. If Boeing and Spirit are unable to reach an agreement with respect to follow-on pricing prior to January 1, 2023, Sustaining Amendment #30 provides a mechanism to establish interim pricing that takes into account escalation and reduces certain rate-based discounts. In addition, Sustaining Amendment #30 provides that the parties will make certain investments for rate increases on the B737 program and implements industry standard payment terms.

As contemplated by the MOU, Boeing and Spirit also executed the 787 Amendment. The 787 Amendment establishes pricing terms for the B787-8, -9, and -10 derivative models between line unit 501 and line unit 1405. The 787 Amendment provides that the parties will negotiate pricing for B787 line units 1406 and beyond beginning 24 months prior to the scheduled delivery date for line unit 1405.

In addition, the 787 Amendment provides that Spirit will repay to Boeing $235.0 million less certain adjustments as a retroactive adjustment for payments that were based on interim pricing, and that Boeing will assist Spirit regarding supply chain cost reduction opportunities on the B787 program.

As a result of the expected completion of the 787 Amendment, in the second quarter of 2017, the Company formally extended the current contract block ending at line unit 1003 to line unit 1300, which is in line with program accounting quantities established by Boeing. In addition, the Company established a planning block from line units 1301 to 1405, which is consistent with negotiated firm pricing as well as third-party long-term market forecasts for the B787 aircraft. The contract block quantity change was made in accordance with applicable accounting guidance as well as the Company’s accounting policies and past practices.

Based on the pricing update, contract block extension, and planning block addition, the Company updated its estimated contract costs and revenue for the B787 program. As a result, the Company recorded a second quarter 2017 reach-forward loss of $352.8 on the B787 program.

The amount of the reach-forward loss we recorded in the second quarter of 2017 for the B787 program is dependent upon our ability to achieve certain cost reductions. While we believe we will achieve these cost reductions, we cannot guarantee they will be achieved. If they are not achieved, we may need to record an additional forward loss.

The foregoing descriptions of the MOU, Sustaining Amendment #30, and the 787 Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of the MOU, which was filed as Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended June 29, 2017, and Sustaining Amendment #30 and the 787 Amendment, each of which are filed as an exhibit hereto. The B787 Special Business Provisions BCA-MS-65530-0019, dated June 16, 2005, as amended up to the 787 Amendment, and the related General Terms Agreement, dated June 16, 2005, are also filed as exhibits hereto. See Note 3, Changes in Estimates, Note 8, Advance Payments and Deferred Revenue/Credits, and Note 21, Boeing Definitive Documentation, to our condensed consolidated financial statements for additional discussion of the Definitive Documentation.

A350 XWB - Fuselage Program

As previously disclosed, our A350 XWB fuselage recurring program experienced various production inefficiencies in its earlier stages of production which resulted in previously recorded forward losses, mostly driven by early development discovery

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and engineering changes to the aircraft design, as well as higher test and transportation costs. The Company could record additional forward loss charges if there are further changes to revenue and cost estimates and/or if risks are not mitigated.


Results of Operations
 
The following table sets forth, for the periods indicated, certain of our operating data:
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 28,
2017
 
September 29,
2016
 
September 28,
2017
 
September 29,
2016
 
 
($ in millions)
 
($ in millions)
 
Net revenues
$
1,748.2

 
$
1,711.4

 
$
5,268.4

 
$
5,222.9

 
Cost of sales
1,478.5

 
1,439.4

 
4,738.3

 
4,470.4

 
Gross profit
269.7

 
272.0

 
530.1

 
752.5

 
Selling, general and administrative
48.8

 
52.2

 
146.8

 
172.4

 
Impact of severe weather event
—

 
—

 
19.9

 
—

 
Research and development
9.5

 
5.4

 
21.2

 
15.9

 
Operating income
211.4

 
214.4

 
342.2

 
564.2

 
Interest expense and financing fee amortization
(10.4
)
 
(12.2
)
 
(30.1
)
 
(47.5
)
 
Other income (expense), net
1.9

 
(0.3
)
 
4.6

 
(8.7
)
 
Income before income taxes and equity in net income of affiliate
202.9

 
201.9

 
316.7

 
508.0

 
Income tax provision
(55.9
)
 
(57.3
)
 
(84.9
)
 
(147.8
)
 
Income before equity in net income of affiliate
147.0

 
144.6

 
231.8

 
360.2

 
Equity in net income of affiliate
0.2

 
0.5

 
0.3

 
1.3

 
Net income
$
147.2

 
$
145.1

 
$
232.1

 
$
361.5

 
 
Comparative shipset deliveries by model are as follows:
 
 
 
Three Months Ended
 
Nine Months Ended
Model
 
September 28,
2017
 
September 29,
2016
 
September 28,
2017
 
September 29,
2016
B737
 
137
 
126
 
399
 
384
B747
 
1
 
2
 
4
 
7
B767
 
8
 
6
 
21
 
19
B777
 
15
 
26
 
55
 
77
B787
 
37
 
30
 
105
 
99
Total Boeing
 
198
 
190
 
584
 
586
A320 Family
 
146
 
135
 
452
 
427
A330/340
 
21
 
17
 
60
 
50
A350 XWB
 
18
 
16
 
65
 
50
A380
 
2
 
4
 
10
 
17
Total Airbus
 
187
 
172
 
587
 
544
Business/Regional Jets
 
19
 
22
 
67
 
59
Total
 
404
 
384
 
1,238
 
1,189
 


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For purposes of measuring production or shipset deliveries for Boeing aircraft in a given period, the term “shipset” refers to sets of structural fuselage components produced or delivered for one aircraft in such period. For purposes of measuring production or shipset deliveries for Airbus and Business/Regional Jet aircraft in a given period, the term “shipset” refers to all structural aircraft components produced or delivered for one aircraft in such period. For the purposes of measuring wing shipset deliveries, the term “shipset” refers to all wing components produced or delivered for one aircraft in such period. Other components which are part of the same aircraft shipsets could be produced or shipped in earlier or later accounting periods than the components used to measure production or shipset deliveries, which may result in slight variations in production or delivery quantities of the various shipset components in any given period.
 
Net revenues by prime customer are as follows: 
 
 
Three Months Ended
 
Nine Months Ended
Prime Customer
 
September 28,
2017
 
September 29,
2016
 
September 28,
2017
 
September 29,
2016
 
 
($ in millions)
 
($ in millions)
Boeing
 
$
1,418.8

 
$
1,410.2

 
$
4,172.7

 
$
4,257.2

Airbus
 
257.4

 
240.4

 
853.8

 
744.2

Other
 
72.0

 
60.8

 
241.9

 
221.5

Total net revenues
 
$
1,748.2

 
$
1,711.4

 
$
5,268.4

 
$
5,222.9


Changes in Estimates

The Company’s long-term contract estimates are based on estimated contract revenues and costs over the Company’s current contract blocks. Estimated contract revenues are generally not subject to significant revisions as most of the Company's contracts are fixed price and known at the inception of the contract. However, the estimated contract costs change frequently as the programs mature and, accordingly, costs have historically been the primary driver of the changes in our estimates. Contract costs are estimated based on actual costs incurred to date and an estimate of remaining costs over the current contract block, which can extend for multiple years. During the early phases of our development contracts, the future cost estimates are subject to significant variability and are based on numerous assumptions and judgments and require management to use its historical experience on similar programs.

When adjustments in estimated total contract block revenue or estimated total costs are required, any changes from prior estimates for delivered units are recognized in the current period as a cumulative catch-up adjustment for the inception-to-date effect of such changes. Cumulative catch-up adjustments are driven by several factors, including improved production efficiencies, assumed rate of production, the rate of overheard absorption, changes to scope of work, and contract modifications. When the total cost estimate exceeds the total revenue estimate on a contract block, a provision for the entire loss on the contract block is recorded in the period in which the loss is determined.

During the second quarter of 2017, we recognized total changes in estimates of $(4.8) million , which included net forward loss charges of $2.0 million , and unfavorable cumulative catch-up adjustments related to periods prior to the third quarter of 2017 of $2.8 million . During the same period in the prior year, we recognized a total charge for changes in estimates of $5.5 million, which included net forward loss charges of $1.2 million and unfavorable cumulative catch-up adjustments related to periods prior to the third quarter of 2016 of $(4.3) million .

Three Months Ended September 28, 2017 as Compared to Three Months Ended September 29, 2016
 
Net Revenues.   Net revenues for the three months ended September 28, 2017 were $1,748.2 million , an increase of $36.8 million , or 2%, compared to net revenues of $1,711.4 million  for the same period in the prior year. Higher revenues were recorded for the Fuselage Systems and Wing Systems segments and lower revenues were recorded for the Propulsion Systems segment during the third quarter of 2017 compared to the same period in the prior year. The increase in net revenues was primarily due to higher production deliveries on the B737, B787, A350 XWB, and A320 programs, higher revenues recognized on certain non-recurring Boeing programs, and increased defense related activities, partially offset by lower production deliveries on the B777 and decreased Global Customer Support and Services (“GCS&S”) activity in the third quarter of 2017. Approximately 96% of Spirit’s net revenues for the third quarter of 2017 came from our two largest customers, Boeing and Airbus.

Total production deliveries to Boeing increased to 198 shipsets during the third quarter of 2017, compared to 190 shipsets delivered in the same period of the prior year, primarily driven by increased production on the B737 and B787 programs, partially

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offset by decreased production on the B777 program. Total production deliveries to Airbus increased to 187 shipsets during the third quarter of 2017, compared to 172 shipsets delivered in the same period of the prior year, primarily driven by increased production of the A320, A350 XWB, and A330 programs, partially offset by lower A380 deliveries. Total production deliveries of business/regional jet wing and wing components decreased to 19 shipsets during the third quarter of 2017, compared to 22 shipsets delivered in the same period of the prior year, driven by lower production on the CSeries and the Rolls-Royce BR725 programs. In total, production deliveries increased to 404 shipsets during the third quarter of 2017, compared to 384 shipsets delivered in the same period of the prior year.
 
Gross Profit.   Gross profit was $269.7 million for the three months ended September 28, 2017, as compared to $272.0 million for the same period in the prior year.  The decrease in gross profit was primarily driven by decreased deliveries on the B777 program and decreased GCS&S activity, partially offset by increased deliveries on higher profit programs and increased work on certain non-recurring Boeing programs.
 
SG&A and Research and Development.   SG&A expense was $3.4 million lower for the three months ended September 28, 2017, compared to the same period in the prior year. Research and development expense was $4.1 million higher for the three months ended September 28, 2017, compared to the same period in the prior year, primarily due to more internal projects underway.
 
Operating Income.   Operating income for the three months ended September 28, 2017 was $211.4 million , a decrease of $3.0 million , or (1)% compared to operating income of $214.4 million for the same period in the prior year. The decrease in operating income was primarily driven by primarily driven by decreased deliveries on the B777 program and decreased GCS&S activity, partially offset by increased deliveries on higher profit programs and increased work on certain non-recurring Boeing programs.
 
Interest Expense and Financing Fee Amortization.   Interest expense and financing fee amortization for the three months ended September 28, 2017 includes $9.0 million of interest and fees paid or accrued in connection with long-term debt and $0.9 million in amortization of deferred financing costs and original issue discount, compared to $11.1 million of interest and fees paid or accrued in connection with long-term debt and $0.8 million in amortization of deferred financing costs and original issue discount for the same period in the prior year.

Other (Expense) Income, net. Other income, net for the three months ended September 28, 2017 was $1.9 million , compared to Other expense, net of $0.3 million for the same period in the prior year. Other income, net during the third quarter of 2017 was primarily driven by foreign exchange rate gains as the British Pound value strengthened against the U.S. Dollar.
 
Provision for Income Taxes. Our reported tax rate includes two principal components: an expected annual tax rate and discrete items resulting in additional provisions or benefits that are recorded in the quarter that an event arises. Events or items that could give rise to discrete recognition could include excess tax benefits with respect to share-based compensation, finalizing audit examinations for open tax years, statute of limitations expiration, or a change in tax law.

The income tax provision for the three months ended September 28, 2017 includes $52.8 million for federal taxes, $0.4 million for state taxes, and $2.7 million for foreign taxes. The income tax provision for the three months ended September 28, 2016 includes $53.3 million for federal taxes, $2.7 million for state taxes, and $1.3 million for foreign taxes. The effective tax rate for the three months ended September 28, 2017 was 27.5% as compared to 28.4% for the same period in 2016. The difference in the effective tax rate recorded for 2017 as compared to 2016 was primarily related to higher pre-tax book income in jurisdictions with tax rates lower than the U.S. rate and higher state tax credits generated in 2017, offset by lower federal R&D credits generated and lower U.S. qualified domestic production activities deduction in 2017. The decrease from the U.S. statutory tax rate is primarily attributable to a pre-tax income in jurisdictions with tax rates lower than the U.S. rate, the inclusion of the tax effects of the U.S. qualified domestic production activities deduction, and the generation of federal research and state income tax credits.
Segments.   The following table shows segment revenues and operating income for the three months ended September 28, 2017 and September 29, 2016 :
 

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Three Months Ended
 
September 28,
2017
 
September 29,
2016
 
($ in millions)
Segment Revenues
 

 
 

Fuselage Systems
$
957.0

 
$
880.3

Propulsion Systems
407.9

 
453.0

Wing Systems
382.2

 
376.8

All Other
1.1

 
1.3

 
$
1,748.2

 
$
1,711.4

Segment Operating Income
 

 
 

Fuselage Systems
$
148.3

 
$
142.5

Propulsion Systems
74.2

 
77.5

Wing Systems
50.9

 
51.1

All Other
0.2

 
0.6

 
273.6

 
271.7

Corporate SG&A
(48.8
)
 
(52.2
)
Impact of severe weather event
—

 
—

Research and development
(9.5
)
 
(5.4
)
Unallocated cost of sales (1)
(3.9
)
 
0.3

Total operating income
$
211.4

 
$
214.4

 
(1) Includes $1.5 million and $7.7 million of warranty expense for the three months ended September 28, 2017 and September 29, 2016 , respectively. Also includes $7.9 million for the settlement of historical claims with suppliers for the three months ended September 29, 2016.

Fuselage Systems, Propulsion Systems, Wing Systems, and All Other represented approximately 55% , 23% , 22% , and less than 1%, respectively, of our net revenues for the three months ended September 28, 2017 .
 
Fuselage Systems.   Fuselage Systems segment net revenues for the three months ended September 28, 2017 were $957.0 million , an increase of $76.7 million, or 9%, compared to the same period in the prior year. The increase was primarily due to higher production deliveries on the B737 and A350 XWB programs, increased defense-related activity, and increased revenue on certain non-recurring Boeing programs, partially offset by lower production deliveries on the B777 program. Fuselage Systems segment operating margins were 15% for the three month period ended September 28, 2017, compared to 16% for the same period in the prior year. In the third quarter of 2017, the segment recorded unfavorable cumulative catch-up adjustments of $2.4 million and net forward loss charges of $0.9 million . In comparison, during the third quarter of 2016, the segment recorded unfavorable cumulative catch-up adjustments of $1.9 million and net forward loss charges of $1.6 million.
 
Propulsion Systems.   Propulsion Systems segment net revenues for the three months ended September 28, 2017 were $407.9 million , a decrease of $45.1 million, or 10%, compared to the same period in the prior year. The decrease was primarily due to lower production deliveries on the B777 and B747 programs, decreased GCS&S activity, and lower revenues recognized on the B787 program, partially offset by higher deliveries on the B737 program. Propulsion Systems segment operating margins were 18% for the three months ended September 28, 2017, compared to 17% for the same period in the prior year. The segment recorded favorable cumulative catch-up adjustments of $2.4 million and favorable changes in estimates on our loss programs of $1.3 million for the three months ended September 28, 2017. In comparison, during the same period of the prior year, the segment recorded unfavorable cumulative catch-up adjustments of $1.6 million as well as net forward loss charges of $0.5 million.
 
Wing Systems.   Wing Systems segment net revenues for the three months ended September 28, 2017 were $382.2 million , an increase of $5.4 million, or 1%, compared to the same period in the prior year. The increase was primarily due to higher production deliveries on the A350 XWB, A320, and B737 programs, partially offset by lower production deliveries on the B777 and A380 programs. Wing Systems segment operating margins were 13% for the three months ended September, 2017, compared to 14% for the same period in the prior year. In the third quarter of 2017, the segment recorded net forward loss charges of $2.4 million as well as favorable cumulative catch-up adjustments of $2.8 million . In comparison, during the third quarter of 2016, the segment

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recorded $0.9 million of favorable changes in estimates on loss programs, partially offset by unfavorable cumulative catch-up adjustments of $0.8 million .
 
All Other.   All Other segment net revenues consist of sundry sales of miscellaneous services, tooling contracts, and natural gas revenues from KIESC. In the three months ended September 28, 2017, All Other segment net revenues were $1.1 million , a decrease of $0.2 million compared to the same period in the prior year primarily due to lower revenue from tooling contracts and lower sundry sales.

Nine Months Ended September 28, 2017 as Compared to Nine Months Ended September 29, 2016

Net Revenues.   Net revenues for the nine months ended September 28, 2017 were $5,268.4 million, an increase of $45.5 million, or less than one percent, compared to net revenues of $5,222.9 million for the same period in the prior year. Higher revenues were recorded for the Fuselage Systems and Wing Systems segments and lower revenues were recorded for the Propulsion Systems segment during the first nine months of 2017 as compared to the same period in the prior year. The increase in net revenues was primarily due to higher production deliveries of the B737, A350 XWB, and A320 programs, increased defense related activities, and higher revenues recognized on certain non-recurring Boeing programs, partially offset by lower production deliveries of the B777 and B747 and decreased GCS&S work. Approximately 95% of Spirit’s net revenues for the first three quarters of 2017 came from our two largest customers, Boeing and Airbus.

Production deliveries to Boeing decreased slightly to 584 shipsets during the first nine months of 2017, compared to 586 shipsets delivered in the same period of the prior year, primarily driven by decreased production of the B777 program, partially offset by increased production on the B737 and B787 programs. Production deliveries to Airbus increased to 587 shipsets during the first nine months of 2017, compared to 544 shipsets delivered in the same period of the prior year, primarily driven by higher production of the A320 and A350 XWB programs, partially offset by lower A380 deliveries. Production deliveries of business/regional jet wing and wing components increased to 67 shipsets during the first nine months of 2017, compared to 59 shipsets delivered in the same period of the prior year. In total, production deliveries increased by 6% to 1,238 shipsets during the first nine months of 2017, compared to 1,189 shipsets delivered in the same period of the prior year.

Gross Profit.   Gross profit was $530.1 million, or 10%, for the nine months ended September 28, 2017, as compared to $752.5 million, or 14%, for the same period in the prior year. The decrease in gross profit was primarily driven by the recognition of the $352.8 million reach-forward loss on the B787 program in the second quarter of 2017, partially offset by the absence of a $135.7 million forward loss charge on the A350 XWB fuselage program recognized during the second quarter of 2016.

SG&A and Research and Development.   SG&A expense was $25.6 million lower for the nine months ended September 28, 2017, compared to the same period in the prior year primarily due to expenses recognized in 2016 related to executive retirements and severance, including stock compensation. Research and development expense was $5.3 million higher for the nine months ended September 28, 2017, compared to the same period in the prior year primarily due to more internal projects underway.

Impact of Severe Weather Event.   For the nine months ended September 28, 2017, the Company recorded a $19.9 million charge against operating income related to the aftermath of Hurricane Matthew, which caused the Company's Kinston, North Carolina site operations to temporarily shut down in the fourth quarter of 2016.

Operating Income.   Operating income for the nine months ended September 28, 2017 was $342.2 million, a decrease of $222.0 million, or 39%, compared to operating income of $564.3 million for the same period in the prior year. The decrease in operating income was primarily the result of higher net forward loss charges recorded in the second quarter of 2017 than in 2016, decreased sales on the B777 and B747 programs, decreased GCS&S activity in 2017, and expenses related to the impact of the severe weather event. These decreases were partially offset by increased sales on the A320 program, the reversal of a customer litigation reserve, and the absence of executive retirement and severance expenses recognized in the second quarter of 2016.

Interest Expense and Financing Fee Amortization.   Interest expense and financing fee amortization for the nine months ended September 28, 2017 includes $27.0 million of interest and fees paid or accrued in connection with long-term debt and $2.6 million in amortization of deferred financing costs and original issue discount, compared to $29.0 million of interest and fees paid or accrued in connection with long-term debt and $18.5 million in amortization of deferred financing costs and original issue discount for the same period in the prior year. During the first nine months of 2016, we recognized $15.8 million in interest expense for the write-down of deferred financing costs, original issue discount and third party fees and a call premium resulting from the financing activities that occurred during the second quarter of 2016 which included the amendment and restatement of our senior credit agreement and redemption of our senior notes due in 2020 using proceeds from the issuance of our 2026 Notes. The

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refinancing activity also resulted in lower interest expense recognized during 2017 due to lower interest rates on our bonds compared to 2016. This decrease was partially offset by increasing LIBOR rates and interest rate swaps.

Other (Expense) Income, net. Other income for the nine months ended September 28, 2017 was $4.6 million, compared to Other expense of $8.7 million for the same period in the prior year. Other expense during 2016 was primarily driven by foreign exchange rate losses as the British Pound value weakened against the U.S. Dollar.

Provision for Income Taxes. Our reported tax rate includes two principal components: an expected annual tax rate and discrete items resulting in additional provisions or benefits that are recorded in the quarter that an event arises. Events or items that give rise to discrete recognition could include excess tax benefits in respect of share-based compensation, finalizing audit examinations for open tax years, statute of limitations expiration, or a change in tax law.

The income tax provision for the nine months ended September 28, 2017 includes $69.8 million for federal taxes, $0.9 million for state taxes, and $14.2 million for foreign taxes. The income tax provision for the nine months ended September 29, 2016 includes $136.2 million for federal taxes, $5.0 million for state taxes and $6.6 million for foreign taxes. The effective tax rate for the nine months ended September 28, 2017 was 26.8% as compared to 29.1% in 2016. The difference in the effective tax rate recorded for 2017 as compared to 2016 is primarily related to higher pre-tax income in jurisdictions with tax rates lower than the U.S. rate in 2017 and the proportional tax rate effects of lower pre-tax income in 2017. The decrease from the U.S. statutory tax rate in attributable primarily to pre-tax income in jurisdictions with tax rates lower than the U.S. rate, the inclusion of the tax effects of the U.S. qualified domestic production activities deduction, the generation of federal research and state income tax credits, and share based compensation excess tax benefit.

Segments.   The following table shows segment revenues and operating income for the nine months ended September 28, 2017 and September 29, 2016:

 
Nine Months Ended
 
September 28,
2017
 
September 29,
2016
 
($ in millions)
Segment Revenues
 

 
 

Fuselage Systems
$
2,812.1

 
$
2,679.7

Propulsion Systems
1,250.7

 
1,373.3

Wing Systems
1,201.7

 
1,161.5

All Other
3.9

 
8.4

 
$
5,268.4

 
$
5,222.9

Segment Operating Income
 

 
 

Fuselage Systems
$
218.5

 
$
340.9

Propulsion Systems
188.9

 
250.9

Wing Systems
140.2

 
174.7

All Other
(0.5
)
 
2.0

 
547.1

 
768.5

Corporate SG&A
(146.8
)
 
(172.4
)
Research and development
(21.2
)
 
(15.9
)
Unallocated cost of sales (1)
(17.0
)
 
(16.0
)
Total operating income
$
342.2

 
$
564.2

 

(1)
Includes $3.2 million and $12.0 million of warranty expense for the nine months ended September 28, 2017 and September 29, 2016, respectively. Also includes a charge for excess purchases and purchase commitments of $10.6 million for the nine months ended September 28, 2017 and $11.8 million related to early retirement incentives for the nine months ended September 29, 2016.
Fuselage Systems.   Fuselage Systems segment net revenues for the nine months ended September 28, 2017 were $2,812.1 million, an increase of $132.4 million, or 5%, compared to the same period in the prior year. The increase was primarily due to

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increased deliveries on the B737, B787, and A350 XWB programs, increased defense related activities, and higher revenue recognized on certain nonrecurring Boeing programs, partially offset by decreased deliveries on the B777, decreased GCS&S activity, and lower net revenues recognized on the B787 program. Fuselage Systems segment operating margins were 8% for the nine months ended September 28, 2017, compared to 13% for the same period in the prior year. The decrease was primarily driven by the recognition of a $230.5 million reach-forward loss on the B787 program, partially offset by the absence of a $135.7 million net forward loss charge recorded on the A350 XWB fuselage program in the second quarter of 2016. In the first nine months of 2017, the segment recorded net forward loss charges of $238.5 million, slightly offset by favorable cumulative catch-up adjustments of $5.3 million. In comparison, during the first nine months of 2016, the segment recorded net forward loss charges of $133.0 million, slightly offset by favorable cumulative catch-up adjustments of $15.1 million.

Propulsion Systems.   Propulsion Systems segment net revenues for the nine months ended September 28, 2017 were $1,250.7 million, a decrease of $122.6 million, or 9%, compared to the same period in the prior year. The decrease was primarily due to decreased deliveries on the B777 and B747 programs, decreased GCS&S activity, and lower net revenues recognized on the B787 program, partially offset by increased deliveries on the B737 program and higher revenue recognized on certain non-recurring Boeing programs. Propulsion Systems segment operating margins were 15% for the nine months ended September 28, 2017, compared to 18% for the same period in the prior year. The decrease in margins was primarily driven by the recognition of a $48.3 million reach-forward loss charge on the B787 program. In the first nine months of 2017, the segment recorded favorable cumulative catch-up adjustments of $4.3 million and net forward loss charges of $46.7 million. In comparison, during the first nine months of 2016, the segment recorded $6.0 million of favorable change in estimates on loss programs, partially offset by unfavorable cumulative catch-up adjustments of $1.8 million.

Wing Systems.   Wing Systems segment net revenues for the nine months ended September 28, 2017 were $1,201.7 million, an increase of $40.2 million, or 3%, compared to the same period in the prior year. The increase was primarily due to higher production deliveries of the B787, A350 XWB, and A320 programs and higher net revenues recognized on the B787 program, partially offset by lower B777, B747, and A380 wing related activity and the absence of a one-time customer claim settlement recorded in the second quarter of 2016. Wing Systems segment operating margins were 12% for the nine months ended September 28, 2017, compared to 15% for the same period in the prior year, driven primarily by a $74.0 million reach-forward loss charge recognized on the B787 program. In the first nine months of 2017, the segment recorded net forward loss charges of $77.4 million, partially offset by favorable cumulative catch-up adjustments of $19.1 million. In comparison, during the first nine months of 2016, the segment recorded favorable cumulative catch-up adjustments of $18.7 million as well as $5.1 million of favorable changes in estimates on loss programs.

All Other.   All Other segment net revenues consist of sundry sales of miscellaneous services, tooling contracts and natural gas revenues from KIESC. In the nine months ended September 28, 2017, All Other segment net revenues were $3.9 million, a decrease of $4.5 million compared to the same period in the prior year primarily due to lower revenue from tooling contracts. The All Other segment recorded (13)% operating margins for the nine months ended September 28, 2017.

Liquidity and Capital Resources
 
The primary sources of our liquidity include cash on hand, cash flow from operations, which includes receivables from customers, and borrowings available under our A&R Credit Agreement. Additionally, we may receive proceeds from asset sales and may seek to access the credit markets, if needed. Our liquidity requirements are driven by our long-cycle business model. Our business model is comprised of four to six year non-recurring investment periods, which include design and development efforts, followed by recurring production, in most cases, through the life of the contract, which could extend beyond twenty years. The non-recurring investment periods require significant outflows of cash as we design the product, build tooling, purchase equipment, and build initial production inventories. These activities could be funded partially through customer advances and milestone payments, which are offset against revenue as production units are delivered in the case of customer advances, or recognized as revenue as milestones are achieved in the case of milestone payments. The remaining funds needed to support non-recurring programs come from predictable cash inflows from our mature programs that are in the recurring phase of the production cycle. The non-recurring investment period typically ends concurrently with initial deliveries of completed aircraft by our customers, which indicates that a program has entered into the recurring production phase. When a program reaches steady recurring production, it typically results in long-term generation of cash from operations. As part of our business model, we have continuously added new non-recurring programs, which are supported by mature programs that are in the steady recurring phase of the production cycle to promote growth.

As of September 28, 2017 , we had $726.6 million of cash and cash equivalents on the balance sheet and $650.0 million of available borrowing capacity under our A&R Credit Agreement. There were no borrowings or outstanding balances under our Revolver as of September 28, 2017 . Based on our planned levels of operations and our strong liquidity position, we currently

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expect that our cash on hand, cash flow from operations, and borrowings available under our Revolver will be sufficient to fund our operations, inventory growth, planned capital investments, quarterly dividends, research and development expenditures, and scheduled debt service payments for at least the next twelve months.

Cash Flows
 
The following table provides a summary of our cash flows for the three months ended September 28, 2017 and September 29, 2016 :
 
 
For the nine months ended
 
September 28, 2017
 
September 29, 2016
 
($ in millions)
Net cash provided by operating activities
$
624.6

 
$
574.4

Net cash used in investing activities
(138.4
)
 
(156.2
)
Net cash used in financing activities
(462.9
)
 
(699.0
)
Effect of exchange rate change on cash and cash equivalents
5.6

 
(6.1
)
Net decrease in cash and cash equivalents for the period
28.9

 
(286.9
)
Cash and cash equivalents, beginning of period
697.7

 
957.3

Cash and cash equivalents, end of period
$
726.6

 
$
670.4

 
Nine Months Ended September 28, 2017 as Compared to Nine Months Ended September 29, 2016
 
Operating Activities. For the nine months ended September 28, 2017 , we had a net cash inflow of $624.6 million from operating activities, an increase of $50.2 million compared to a net cash inflow of $574.4 million for the same period in the prior year. The increase in net cash provided by operating activities was primarily due to timing of customer payments, partially offset by higher payments of annual employee bonuses and lower receipts of deferred revenue and advance payments from customers.

Investing Activities. For the nine months ended September 28, 2017, we had a net cash outflow of $138.4 million for investing activities, a decrease in outflow of $17.8 million compared to a net cash outflow of $156.2 million for the same period in the prior year. The decrease in cash outflow is due to a decrease in capital expenditures during the first nine months of 2017.
 
Financing Activities. For the nine months ended September 28, 2017, we had a net cash outflow of $462.9 million for financing activities, a decrease in outflow of $236.1 million, compared to a net cash outflow of $699.0 million for the same period in the prior year. During the nine months ended September 28, 2017, the Company repurchased 6,337,741 shares of its class A common stock for $402.1 million , compared to 14,244,227 shares repurchased for $649.6 million during the same period in the prior year. Additionally, during the nine months ended September 28, 2017, the Company paid cash dividends totaling $35.7 million to its stockholders of record.
Future Cash Needs and Capital Spending
Our primary future cash needs will consist of working capital, debt service, research and development, capital expenditures, potential share repurchases, dividend payments, and merger and acquisition or disposition activities. We expend significant capital as we undertake new programs, which begin in the non-recurring investment phase of our business model. In addition, we expend significant capital to meet increased production rates on certain mature and maturing programs, including the B737, B787, A320, and A350 XWB programs. In response to announced Boeing and Airbus production rate increases, we are evaluating various plans to relieve capacity constraints. We may also require capital to develop new technologies for the next generation of aircraft, which may not be funded by our customers. Capital expenditures for the nine months ended September 28, 2017 totaled $138.7 million , as compared to $156.8 million for the same period in 2016. We plan to fund future capital expenditures and cash requirements from cash on hand, cash generated by operations, customer cash advances, borrowings available under our Revolver or from capital markets transactions, and proceeds from asset sales, if any.
 
Pension and Other Post Retirement Benefit Obligations
 
Our U.S. pension plan remained fully funded at September 28, 2017 and we anticipate non-cash pension income for 2017 to remain at or near the same level as 2016. Our plan investments are broadly diversified and we do not anticipate a near-term

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requirement to make cash contributions to our U.S. pension plan. See Note 13, Pension and Other Post-Retirement Benefits, to our condensed consolidated financial statements for more information on the Company’s pension plans.
 
Interest Rate Swaps
 
On March 15, 2017, the Company entered into an interest rate swap agreement, with an effective date of March 31, 2017. The swaps have a notional value of $250.0 million and fix the variable portion of the Company’s floating rate debt at 1.815%. The fair value of the interest rate swaps was a liability of $1.9 million as of September 28, 2017. For the nine months ended September 28, 2017, the Company recorded a loss related to swap activity of $1.9 million.

Debt and Other Financing Arrangements

On September 22, 2017, the Company, the lenders, and the administrative agent entered into Amendment No. 1 to the A&R Credit Agreement, which made certain minor administrative changes to the A&R Credit Agreement to account for the Company’s upcoming adoption of ASU 2014-09, among other things. As of September 28, 2017, the outstanding balance of the Term Loan was $475.0 million and the carrying value was $473.1 million.

The carrying value of the 2022 Notes was $294.5 million as of September 28, 2017.

The carrying value of the 2026 Notes was $297.2 million as of September 28, 2017.

See Note 12, Debt, to our condensed consolidated financial statements for more information.

Advances on the B787 Program.  Boeing has made advance payments to Spirit under the B787 Supply Agreement, which are required to be repaid to Boeing by way of offset against the purchase price for future shipset deliveries. Advance repayments were scheduled to be spread evenly over the remainder of the first 1,000 B787 shipsets delivered to Boeing. In April 2014, the Company signed a memorandum of agreement with Boeing which suspended advance repayments related to the B787 program for a period of twelve months beginning April 1, 2014. Repayment recommenced on April 1, 2015 and any repayments which otherwise would have become due during such twelve-month period will offset the purchase price for shipsets 1001 through 1120. In the event Boeing does not take delivery of a sufficient number of shipsets to repay the full amount of advances prior to the termination of the B787 program or the B787 Supply Agreement, any advances not then repaid will be applied against any outstanding payments then due by Boeing to us, and any remaining balance will be repaid in annual installments of $42.0 million due on December 15th of each year until the advance payments have been fully recovered by Boeing. As of September 28, 2017 , the amount of advance payments received by us from Boeing under the B787 Supply Agreement and not yet repaid was approximately $353.9 million.
 
Advances on the A350 Fuselage Program.   In March 2012, we signed a Memorandum of Agreement with Airbus providing for Airbus to make advance payments to us in 2012. The advance payments are offset against the recurring price of A350 XWB shipsets invoiced by Spirit, at a rate of $1.25 million per shipset. As of September 28, 2017 , the amount of advance payments received and not yet repaid was approximately $32.5 million.
 


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Item 3.  Quantitative and Qualitative Disclosures About Market Risk
 
As a result of our operating and financing activities, we are exposed to various market risks that may affect our consolidated results of operations and financial position. These market risks include fluctuations in interest rates, which impact the amount of interest we must pay on our variable rate debt. In addition to other information set forth in this report, you should carefully consider the factors discussed in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our 2016 Form 10-K which could materially affect our business, financial condition or results of operations. There have been no material changes in our market risk since the filing of our 2016 Form 10-K.
 
Item 4. Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
 
Our President and Chief Executive Officer and Executive Vice President and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of September 28, 2017 and have concluded that these disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, as amended, is recorded, processed, summarized, and reported within the time period specified in the SEC rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management of the Company, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
  
Changes in Internal Control over Financial Reporting
 
There were no changes in our internal control over financial reporting that occurred during the third quarter of 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Table of Contents

PART II — OTHER INFORMATION
 
Item 1. Legal Proceedings
 
Information regarding any recent material development relating to our legal proceedings since the filing of our 2016 Form 10-K is included in Note 17, Commitments, Contingencies and Guarantees, to our condensed consolidated financial statements included in Part I of this Quarterly Report and incorporated herein by reference.
 
Item 1A. Risk Factors
 
In addition to other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors,” in our 2016 Form 10-K, as updated in our Form 10-Q for the quarters ended March 30, 2017 and June 29, 2017, which could materially affect our business, financial condition, or results of operations. There have been no material changes to the Company’s risk factors previously disclosed in our 2016 Form 10-K, as updated in our Form 10-Qs for the quarters ended March 30, 2017 and June 29, 2017.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales of unregistered equity securities during the three months ended September 28, 2017 .

The following table provides information about our repurchases during the three months ended September 28, 2017 of our class A common stock that is registered pursuant to Section 12 of the Exchange Act.

ISSUER PURCHASES OF EQUITY SECURITIES
Period (1)
Total Number of Shares Purchased
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Approximate Dollar Value of Shares that May Yet be Repurchased Under the Plans or Programs (2)
 
($ in millions other than per share amounts)
 
 
 
 
 
 
 
 
June 30, 2017 - August 3, 2017
—

 
—

 
—

 

$792.4

August 4, 2017 - August 31, 2017
1,644,018

 

$70.3359

 
1,644,018

 

$676.8

September 1, 2017 - September 28, 2017
1,048,833

 

$75.2049

 
1,048,833

 

$597.9

Total
2,692,851

 

$72.2323

 
2,692,851

 

$597.9


(1)
Our fiscal months often differ from the calendar months except for the month of December, as our fiscal year ends on December 31. For example, August 3, 2017 was the last day of our July 2017 fiscal month.

(2)
On November 1, 2016, the Company announced that our Board of Directors authorized a new share repurchase program for the purchase of up to $600.0 million of our class A common stock. On July 25, 2017, the Company increased the existing share repurchase program by up to an additional $400.0 million of our class A common stock, resulting in a total program authorization of $1.0 billion.


46

Item 6.   Exhibits  
Article I.
Exhibit
Number
 
Section 1.01 Exhibit
10.1 *
 
 
 
 
10.2†*
 
 
 
 
10.3†*
 
 
 
 
10.4†*
 
 
 
 
10.5†*
 
 
 
 
10.6†*
 
 
 
 
10.7†*
 
 
 
 
10.8†*
 
 
 
 
10.9†*
 
 
 
 
10.10†*
 
 
 
 
10.11††
 
 
 
 
31.1 *
 
 
 
 
31.2 *
 
 
 
 
32.1 **
 
 
 
 
32.2 **
 
 
 
 
101.INS@ *
 
XBRL Instance Document.
 
 
 
101.SCH@ *
 
XBRL Taxonomy Extension Schema Document.

47
Table of Contents

 
 
 
101.CAL@ *
 
XBRL Taxonomy Extension Calculation Linkbase Document.
 
 
 
101.DEF@ *
 
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
 
101.LAB@ *
 
XBRL Taxonomy Extension Label Linkbase Document.
 
 
 
101.PRE@ *
 
XBRL Taxonomy Extension Presentation Linkbase Document.
 
 
 
†

 
Indicates that portions of the exhibit have been omitted and separately filed with the Securities and Exchange Commission pursuant to a request for confidential treatment.
 
 
 
††
 
Indicates that confidential treatment for certain portions of the exhibit was granted by the Securities and Exchange Commission on September 8, 2017.
 
 
 
*
 
Filed herewith.
 
 
 
**
 
Furnished herewith.


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Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
SPIRIT AEROSYSTEMS HOLDINGS, INC.
 
Signature
 
Title
 
Date
 
 
 
 
 
/s/ Sanjay Kapoor
 
Executive Vice President and Chief Financial
 
November 3, 2017
     Sanjay Kapoor
 
Officer (Principal Financial Officer)
 
 




Signature
 
Title
 
Date
 
 
 
 
 
/s/ Mark J. Suchinski
 
Vice President and Corporate Controller (Principal Accounting Officer)
 
November 3, 2017
     Mark J. Suchinski
 
 
 
 


49
EXHIBIT 10.1

EXECUTION VERSION


AMENDMENT NO. 1
TO
CREDIT AGREEMENT

This Amendment No. 1, dated September 22, 2017 (this “ Amendment ”), is entered into among SPIRIT AEROSYSTEMS, INC., a Delaware corporation (the “ Borrower ”), SPIRIT AEROSYSTEMS HOLDINGS, INC., a Delaware corporation (the “ Parent Guarantor ”), the Lenders party hereto and Bank of America, N.A., as Administrative Agent, a Swing Line Lender and an L/C Issuer. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, the Borrower, the Parent Guarantor, the Lenders and Bank of America, N.A., as Administrative Agent, a Swing Line Lender and an L/C Issuer, entered into that certain Credit Agreement dated as of June 6, 2016 (as amended, modified, extended, restated or otherwise modified prior to the date hereof, the “ Credit Agreement ”); and

WHEREAS, the Borrower has requested certain amendments to the Credit Agreement, and the Lenders have agreed to such amendments subject to the terms and conditions set forth herein.
Now, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto hereby agree as follows:

Section 1. Amendments to Credit Agreement

1.1      The definition of “Priority Debt” in Section 1.01 of the Credit Agreement is amended as follow:

Replacing “(other than any unsecured Indebtedness of any Subsidiary owing to the Borrower or to a Wholly Owned Subsidiary)” with “(other than any unsecured Indebtedness of any Subsidiary owing to the Parent Guarantor or the Borrower or to a Wholly Owned Subsidiary)”.

1.2      The definition of “Permitted Acquisition” in Section 1.01 of the Credit Agreement is amended and restated in its entirety to read as follow:

“ Permitted Acquisition ” means any acquisition, whether by purchase, merger, consolidation or otherwise, by the Parent Guarantor, the Borrower or any of their respective Subsidiaries of all or substantially all the assets of, or all the Equity Interests in, a Person or a division, line of business or other business unit of a Person so long as (a) the Board of Directors of such Person shall not have indicated publicly its opposition to the consummation of such acquisition (which opposition has not been publicly withdrawn), (b) such assets are to be used in, or such Person so acquired is engaged in, as the case may be, a business of the type permitted under Section 8.03(c) and (c) immediately after giving effect thereto, (i) no Default has occurred and is continuing or would result therefrom (except, in the case of an acquisition subject to the Incremental Funds Certain Provision, in which case there is no Default immediately before or immediately after execution and delivery of the applicable Acquisition Agreement and there is no Specified Event of Default at the date the applicable Permitted Acquisition is consummated), (ii) all transactions related thereto are consummated in all material respects in accordance with applicable laws, (iii) the Borrower and its Subsidiaries are in compliance, on a Pro Forma Basis after giving effect to such acquisition, with the Financial Covenants recomputed as at the date of the last ended Test Period, as if such acquisition (and any related incurrence or repayment of Indebtedness) had occurred on the first day of the relevant Test Period (except, in the case of an acquisition

                         1




subject to the Incremental Funds Certain Provision, in which case, the date of determination of the Financial Covenants on a Pro Forma Basis shall, at the option of the Borrower, be the date of execution of the applicable Acquisition Agreement, and such determination shall be made after giving effect to such acquisition (and the other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof)) on a Pro Forma Basis), and (iv) any Indebtedness or any Preferred Stock that is incurred, acquired or assumed in connection with such acquisition shall be in compliance with Section 8.02 .
1.3      Section 1.03(b) of the Credit Agreement is amended and restated in its entirety to read as follow:

(b)      Changes in GAAP . The Borrower will provide a written summary of material changes in GAAP and in the consistent application thereof with each annual and quarterly Compliance Certificate delivered in accordance with Section 7.01(b) or (c) . If at any time any change in GAAP (including the adoption of IFRS) would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Requisite Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Requisite Lenders); provided that , until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) to the extent requested by the Administrative Agent, the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding anything to the contrary in the foregoing, for all purposes of this Agreement (including, without limitation, the provisions of Article VII (including, without limitation, the Financial Covenants)) (x) leases shall continue to be classified and accounted for on a basis consistent with that reflected in the Audited Financial Statements for all purposes of this Agreement, notwithstanding any change in GAAP relating thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above and (y) the revenue recognition requirements of Accounting Standards Update (ASU) 2014-9, Revenue from Contracts with Customers (“Topic 606”) (which is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017) shall be adopted by the Borrower and reflected in the financial statements and financial reporting of the Borrower without any amendment or other modification to this Agreement, the Financial Covenants or other provision contained herein and without the approval of the Administrative Agent, Requisite Lenders or any Lender; provided that , to the extent requested by the Administrative Agent for the fiscal year ended December 31, 2018, the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to the revenue recognition requirements of Topic 606.
1.4      Section 8.01 of the Credit Agreement is amended as follow:

Removing “and” after clause (q), replacing “.” with “; and” after clause (r) and adding the following as a new clause (s) thereof:

“(s) Liens arising from sales, transfers or other dispositions of accounts receivable to the extent permitted by Section 8.05(m) .”

1.5      Section 8.04(c) of the Credit Agreement is amended and restated in its entirety to read as follow:

(c) Investments (i) by the Parent Guarantor in any Subsidiary of the Parent Guarantor and (ii) by any Subsidiary of the Parent Guarantor in the Parent Guarantor or any other Subsidiary of the Parent Guarantor;

                         2




1.6      Section 8.05(e) of the Credit Agreement is amended and restated in its entirety to read as follow:

(e) sales, transfers and other dispositions of property by any Subsidiary of the Parent Guarantor to the Borrower or another Subsidiary of the Parent Guarantor;
1.7      Section 8.05(i) of the Credit Agreement is amended and restated in its entirety to read as follow:

(i) issuances of Equity Interests in a Subsidiary of the Parent Guarantor to the Parent Guarantor or to another Subsidiary of the Parent Guarantor;
1.8      Section 8.05 of the Credit Agreement is amended as follow:

Removing “and” after clause (l), changing clause (m) into clause (n), and adding the following as a new clause (m) thereof:

“(m) sales, transfers or other dispositions of accounts receivable, so long as there shall be no credit recourse to the Parent Guarantor, the Borrower or any of their respective Subsidiaries with respect to such accounts receivable after such sales, transfers or other dispositions; and”

1.9      Section 8.06(f) of the Credit Agreement is amended and restated in its entirety to read as follow:

(f) so long as no Default or Event of Default then exists or would arise therefrom and the Borrower and its Subsidiaries shall be in compliance with all Financial Covenants on a Pro Forma Basis after giving effect thereto, (i) the Borrower may pay cash dividends to the Parent Guarantor to enable the Parent Guarantor to repurchase, redeem or otherwise acquire its Equity Interests and/or to declare and pay cash dividends to the holders of its Equity Interests and (ii) the Parent Guarantor may repurchase, redeem or otherwise acquire its Equity Interests and/or declare and pay cash dividends to the holders of its Equity Interests.
1.10      Section 8.07(a) of the Credit Agreement is amended and restated in its entirety to read as follow:

(a) (i) transactions between or among the Parent Guarantor and any of its Subsidiaries and (ii) transactions among Subsidiaries of the Parent Guarantor not involving any Loan Party, in each case to the extent such transaction is an Investment permitted under Section 8.04 ;
1.11      Section 8.07(c) of the Credit Agreement is amended and restated in its entirety to read as follow:
(c) fees and compensation, benefits and incentive arrangements paid or provided to, and any indemnity provided on behalf of, officers, directors or employees of the Parent Guarantor or any Subsidiary of the Parent Guarantor in the ordinary course of business;
1.12      Section 8.09 of the Credit Agreement is amended in its entirety to read as follows:

8.09      [Reserved] .
1.13      Section 9.01(d) of the Credit Agreement is amended as follow:

Replacing “the date of such default” with “the earlier of (x) the date such default became known to a Responsible Officer of the Parent Guarantor or the Borrower and (y) delivery of notice thereof to the Parent Guarantor or Borrower from the Administrative Agent (which notice will be given at the request of any Lender)”


                         3




Section 2. Conditions Precedent This Amendment shall be effective upon receipt by the Administrative Agent of a counterpart of this Amendment signed by the Administrative Agent, the Requisite Lenders, the Requisite Revolving Lenders, the Borrower and the Parent Guarantor.

Section 3. Representations and Warranties

On and as of the date hereof, after giving effect to this Amendment, the Loan Parties hereby represent and warrant to the Administrative Agent and each Lender as follows:

3.1      this Amendment has been duly authorized, executed and delivered by each Loan Party and, assuming the due execution and delivery of this Amendment by each of the other parties hereto, constitutes the legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally;

3.2      each of the representations and warranties contained in Article VI of the Credit Agreement and in each other Loan Document is true and correct in all material respects (except that any representation or warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) with the same effect as if then made (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that any representation or warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) as of such earlier date);

3.3      no Default or Event of Default has occurred and is continuing; and

3.4      after giving effect to this Amendment, neither the modification of the Credit Agreement affected pursuant to this Amendment nor the execution, delivery, performance or effectiveness of this Amendment (a) impairs the validity, effectiveness or priority of the Liens granted pursuant to any Loan Document, and such Liens continue unimpaired with the same priority to secure repayment of all Obligations, whether heretofore or hereafter incurred; or (b) requires that any new filings be made or other action taken to perfect or to maintain the perfection of such Liens.

Section 4. Fees and Expenses

The Borrower agrees to pay promptly after presentation of an invoice therefor all reasonable and documented out-of-pocket fees and expenses of MLPFS (including the reasonable and documented fees and out-of-pocket expenses of Moore & Van Allen, PLLC) in connection with the preparation, negotiation, execution and delivery of this Amendment.

Section 5. Reference to the Effect on the Loan Documents

5.1      As of the date hereof, each reference in the Credit Agreement to “ this Agreement ”, “ hereunder ”, “ hereof ”, “ herein ”, or words of like import, and each reference in the other Loan Documents to the Credit Agreement (including, without limitation, by means of words like “ thereunder ”, “ thereof ” and words of like import), shall mean and be a reference to the Credit Agreement, as amended hereby, and this Amendment and the Credit Agreement shall be read together and construed as a single instrument;

5.2      Except as expressly amended hereby or specifically waived above, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed;

5.3      The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders, the Borrower, Lead Arranger or the

                         4




Administrative Agent under any of the Loan Documents, nor constitute a waiver or amendment of any other provision of any of the Loan Documents or for any purpose except as expressly set forth herein; and

5.4      This Amendment is a Loan Document.

Section 6. Execution in Counterparts

This Amendment may be executed by the parties hereto in several counterparts (including by facsimile or other electronic imaging means (e.g., “.pdf” or “.tif”)), each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

Section 7. Governing Law

THIS AMENDMENT and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this AMENDMENT and the transactions contemplated hereby shall be governed by, and construed in accordance with, the law of the State of NEW yORK.

Section 8. Headings

The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof.

Section 9. Notices

All communications and notices hereunder shall be given as provided in the Credit Agreement.

Section 10 . Severability

The fact that any term or provision of this Amendment is held invalid, illegal or unenforceable as to any person in any situation in any jurisdiction shall not affect the validity, enforceability or legality of the remaining terms or provisions hereof or the validity, enforceability or legality of such offending term or provision in any other situation or jurisdiction or as applied to any person.

Section 11. Successors

The terms of this Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

Section 12. Cross-References

References in this Amendment to any Section are, unless otherwise specified or otherwise required by the context, to such Section of this Amendment.

Section 13. Affirmations

13.1      Each Loan Party signatory hereto hereby (a) ratifies and affirms its obligations under the Loan Documents (including guarantees and security agreements) executed by the undersigned and (b) acknowledges, renews and extends its continued liability under all such Loan Documents and agrees such Loan Documents remain in full force and effect, in each case, as modified by this Amendment.


                         5




13.2      Each Loan Party signatory hereto hereby reaffirms, as of the date hereof, (a) the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Amendment and the transactions contemplated thereby, and (b) its guarantee of payment of the Obligations pursuant to the Guaranty and the Lien on the Collateral securing payment of the Obligations pursuant to the Security Documents.

13.3      Each Loan Party signatory hereto hereby acknowledges and agrees that the acceptance by the Administrative Agent and each Lender shall not be construed in any manner to establish any course of dealing on the Administrative Agent’s or Lender’s part, including the providing of any notice or the requesting of any acknowledgment not otherwise expressly provided for in any Loan Document with respect to any future amendment, waiver, supplement or other modification to any Loan Document or any arrangement contemplated by any Loan Document.

13.4      Each Loan Party signatory hereto hereby represents and warrants that, immediately after giving effect to this Amendment, each Loan Document, in each case as modified by this Amendment (where applicable), to which it is a party, assuming the due execution and delivery of such Loan Document as modified (where applicable) by each of the other parties thereto, continues to be a legal, valid and binding obligation of the undersigned, enforceable against such party in accordance with its terms (except, in any case, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by principles of equity).

[SIGNATURE PAGES FOLLOW]


                         6

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

BORROWER:
SPIRIT AEROSYSTEMS, INC.
 
By: /s/ Rhonda Harkins

 
Name: Rhonda Harkins
 
Title: Treasurer
 
 
PARENT GUARANTOR:
SPIRIT AEROSYSTEMS HOLDINGS, INC.
 
By: /s/ Rhonda Harkins
 
Name: Rhonda Harkins
 
Title: Treasurer
 
 












































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT



ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A.,
 
as Administrative Agent
 
By: /s/ Gerund Diamond
 
Name: Gerund Diamond
 
Title: Assistant Vice-President
 
 



















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


LENDERS:
BANK OF AMERICA, N.A.,
 
as a Lender, Swing Line Lender and an L/C Issuer
 
By: /s/ Prathamesh Kshirsagar
 
Name: Prathamesh Kshirsagar
 
Title: Vice-President
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
MIZUHO BANK, LTD.,
 
as a Lender and an L/C Issuer
 
By: /s/ Donna DeMagistris
 
Name: Donna DeMagistris
 
Title: Authorized Signatory
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
THE BANK OF NOVA SCOTIA,
 
as a Lender
 
By: /s/ Mauricio Saishio
 
Name: Mauricio Saishio
 
Title: Director
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
CITIBANK, N.A.,
 
as a Lender
 
By: /s/ Brian Reed
 
Name: Brian Reed
 
Title: Vice President
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
MORGAN STANLEY BANK, N.A.,
 
as a Lender
 
By: /s/ Manish Desai
 
Name: Manish Desai
 
Title: Authorized Signatory
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
ROYAL BANK OF CANADA,
 
as a Lender
 
By: /s/ Richard C. Smith
 
Name: Richard C. Smith
 
Title: Managing Director
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
THE BANK OF TOKYO-MITSUBISHI UFJ,LTS.,
 
as a Lender
 
By: /s/ Thomas J. Sterr
 
Name: Thomas J. Sterr
 
Title: Authorized Signatory
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
COMPASS BANK,
 
as a Lender
 
By: /s/ Daniel Feldman
 
Name: Daniel Feldman
 
Title: Vice President
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
U.S. BANK NATIOANL ASSOCIATION
 
as a Lender
 
By: /s/ Tim Landro
 
Name: Tim Landro
 
Title: Vice President
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
WELLS FARGO BANK, N.A.,
 
as a Lender
 
By: /s/ Adam Spreyer
 
Name: Adam Spreyer
 
Title: Director
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
FIFTH THIRD BANK, an Ohio Banking corporation,
 
as a Lender
 
By: /s/ Lafayette J. Ford
 
Name: Lafayette J. Ford
 
Title: SVP and Director
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
BRANCH BANKING AND TRUST COMPANY,
 
as a Lender
 
By: /s/ Tevor H. Williams
 
Name: Tevor H. Williams
 
Title: Assistant Vice President
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
PNC BANK, NATIONAL ASSOCIATION,
 
as a Lender
 
By: /s/ Michael L. Monniger
 
Name: Michael L. Monniger
 
Title: Senior Vice President
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
SUNTRUST BANK,
 
as a Lender
 
By: /s/ Justin Lien
 
Name: Justin Lien
 
Title: Director
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
THE BANK OF NEW YORK MELLON,
 
as a Lender
 
By: /s/ John T. Smathers
 
Name: John T. Smathers
 
Title: Director
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
COMERICA BANK,
 
as a Lender
 
By: /s/ Eric Hendrickson
 
Name: Eric Hendrickson
 
Title: Relationship Manager
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
INTRUST BANK, N.A.,
 
as a Lender
 
By: /s/ Bruce A Long
 
Name: Bruce A Long
 
Title: Managing Director
 
 




















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
 
as a Lender
 
By: /s/ Nupur Kumar
 
Name: Nupur Kumar
 
Title: Authorized Signatory
 
 
 
By: /s/ Lea Baerlocher
 
Name: Lea Baerlocher
 
Title: Authorized Signatory

















































SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT


 
SCOTIABANK (IRELAND) DESIGNATED ACTIVITY COMPANY
 
as a Lender
 
By: /s/ David Muldoon
 
Name: David Muldoon
 
Title: Managing Director & Senior Risk Officer
 
 
 
By: /s/ Mary Theresa Mulvany
 
Name: Mary Theresa Mulvany
 
Title: Associate Director
 
Corporate Banking
 
Scotiabank (Ireland) Designated Activity Company







SPIRIT AEROSYSTEMS, INC.
AMENDMENT NO. 1 TO CREDIT AGREEEMENT

Exhibit 10.2
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


AMENDMENT NUMBER 30

TO

SPECIAL BUSINESS PROVISIONS (SBP) MS-65530-0016

BETWEEN

THE BOEING COMPANY

AND

SPIRIT AEROSYSTEMS, INC.

THIS AMENDMENT NUMBER 30 (“Amendment No. 30”) to Special Business Provisions MS-65530-0016 is made as of the last date executed below (the “Effective Date”) by and between Spirit AeroSystems, Inc., a Delaware corporation having its principal office in Wichita, Kansas (“Seller”) and The Boeing Company, a Delaware corporation, acting by and through its division, Boeing Commercial Airplanes (“Boeing”). Hereinafter, Seller and Boeing may be referred to individually as “Party” or jointly as the “Parties”.
RECITALS
 
A.
Boeing and Seller are parties to the Special Business Provisions MS-65530-0016, dated June 16, 2005, (the “SBP”) and the General Terms Agreement BCA-65530-0016, dated June 17, 2005, (the “GTA”), and including any Amendments to the SBP and GTA (collectively the “Sustaining Agreement”).

B.
The Parties now seek to amend the SBP to incorporate the agreements set forth in the Collective Resolution Memorandum of Understanding executed by the Parties on August 1, 2017.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the value, receipt, and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:





Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 1 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30




1.
The list of “Amendments” within the Sustaining SBP is hereby deleted and replaced in its entirety as follows:

AMENDMENTS
Amend Number
Description
Effective Date
Approval
1
Revise Company name from Mid-Western Aircraft Systems Incorporated to Spirit AeroSystems throughout document. Update Attachments 1, 2, 4, 14 and 16.
2/23/2006
H. McCormick
R. Stone
 
 
 
 
2
Incorporate CCNs as listed in Amendment 2 Attachment A, includes addition of new section 12.19, modification to sections 3.4.9, 12.16 and 32.0, updates to Attachments 1, 2, 6, 7, 15, 16, 19 and 20.
4/11/2007
H. McCormick
J. Edwards
 
 
 
 
3
Incorporate CCNs as listed in Amendment 3 Attachment A, updates to Attachments 1, 2, 7, 14, 15, 16 and 22.
11/28/2007
H. McCormick
J. Edwards
 
 
 
 
4
Incorporate CCNs as listed in Amendment 4 Attachment A. Updates to Attachments 1, 2, 7, 14, 15, 16. Incorporate Attachment 1A per CCN 508, 1328.
7/8/2008
S.Hu
W. Wallace
 
 
 
 
5
Incorporate CCNs as listed in Amendment 5 Attachment A, includes addition of new section 12.3.1.1 Updates to Attachments 1, 2, 7, 14, 15, 16, 20.
6/22/2009
S. Hu
R. Stone
 
 
 
 
6
Incorporate CCNs as listed in Amendment 6 Attachment A. Updates to Attachments 1, 2, 4, 7, 9, 10, 14, 16.
Incorporate Attachment 9 per CCN 2385.
11/23/2010
S.   Hu
M. Milan
 
 
 
 
7
Incorporate CCNs as listed in Amendment 7 Attachment A, includes addition of new section 12.13.3.1. Updates to Attachments 1, 2, 4, 7, 9, 14, 16. Incorporate Attachment 1B per CCN 4212 and Attachment 23 per the 767-2C MOA.
 7/29/2011
S.   Hu
M. Milan
 
 
 
 
8
Incorporate CCNs as listed in Amendment 8 Attachment A, includes revisions to section 7.9 and 12.13.1.1. Updates to Attachments 1, 2, 4, 7, 9, 14, 15, 16.
2/6/2013
C. Howell
M. Milan
 
 
 
 
9
Incorporate Attachment 25 - 737 Max Titanium Inner Wall Agreement.
9/4/2014
E. Flagel
M. Milan
 
 
 
 

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 2 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


10
Incorporate Attachment 26-737 Derailment.
9/2/2014
B. Folden
R. Ast
 
 
 
 
11
Incorporate Attachment 27 -737-MAX Non Recurring Agreement, and Attachment 28 737/747/767/777 Pricing Agreement. Updates Section 4.1, Attachment 4 Section B.1., Attachments 9 and 15.
3/10/2015
C.Howell
R. Ast
 
 
 
 
12
Delete and replace Attachment 25 Section 3.0
4/9/2015
K. Drawsky
R. Ast
 
 
 
 
13
Incorporate CCNs as listed in Amendment 13 Attachment A, updates to Attachments 1, 2, 7, 9, 14, and 16.
1/4/2016
L. Taylor
K. Leyba
 
 
 
 
14
Incorporate Attachment 25, Addendum 1.
4/21/2015
D. Blaylock
R. Grant
 
 
 
 
15
NULL
 
 
16
NULL
 
 
 
 
 
 
17
Incorporate Attachment 29, 777X Non-Recurring Agreement
12/23/2015
A. Lucker
E. Bauer
 
 
 
 
18
NULL
 
 
19
NULL
 
 
 
 
 
 
20
737 MAX Inner Wall
12/17/2015
S. Garcia-Deleone
J.Reed
 
 
 
 
21
Revisions to Attachment 27, 737 MAX Non-Recurring Agreement
5/9/2016
D. Blaylock
R.Grant
 
 
 
 
22
737 MAX Composite Inner Wall Line Movement
11/2/2016
D. Blaylock
E. Bossler
 
 
 
 
23
737 MAX 9 INITIAL and CIW Line [*****] Tooling Incentive AGREEMENT
12/16/2016
D. Blaylock
E. Bossler
 
 
 
 
24
Incorporate CCNs as listed in Amendment 23 Attachment A, updates to Attachments 1, 2, 7, 9, and 14.
12/20/2016
L. Taylor
K. Leyba
 
 
 
 
25
Revisions to Attachment 27, 737 MAX Non-Recurring Agreement
3/17/2017
D. Blaylock
E. Bossler
 
26
Revisions to Attachment 27, 737 MAX Non-Recurring Agreement
 3/23/2017
D. Blaylock
E. Bossler
27
Incorporate Attachment 30, 737 NG / MAX Vapor Barrier Agreement, updates to Attachments 1 and 9
3/31/2017
B. Edwards
K. Clark
 
 
 
 
 
 
 
 

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 3 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


28
Revisions to Attachment 29, 777X NRE Agreement
6/22/2017
K. O'Connell
C. Green
 
 
 
 
29
Revisions to Attachment 27, 737 MAX Non-Recurring Agreement
7/20/2017
D. Blaylock
E. Bossler
 
 
 
 
30
Collective Resolution Sustaining Pricing and Provisions Agreement (Delete and Replace SBP Sections 4.1, 4.1.1, 5.1.1, 5.2, 5.2.1, 7.2, 8.0, 12.11, and 12.13.1.1 and SBP Attachments 1, 1B, 10 Section A10.2.10, 15, 16, 22, 27, and 29. Delete and Reserve SBP Attachments 1C, 20, and 28. Incorporate SBP Attachment 1D and 31.)
9/22/2017
B. Edwards
B. Wilson
 
 
 
 

2.
The SBP is hereby amended by deleting the list of “Attachments” within the Sustaining SBP and replacing it in its entirety with a new SBP list of Attachments as follows:
ATTACHMENTS

Attachment 1          Work Statement and Pricing
Attachment 1A      737 AOE door SOW
Attachment 1B      747-8 Nacelle SOW
Attachment 1C      Reserved
Attachment 1D
MAX Composite Inner Wall SOW
Attachment 2          Production Article Definition and Contract Change Notices
Attachment 3          Reserved
Attachment 4          Additional Statement of Work
Attachment 5          Rates and Factors
Attachment 6          Lead Time Matrix (Accel/Decel)
Attachment 7          Indentured Priced Parts List and POA Pricing
Attachment 8          Seller Data Submittals
Attachment 9          Non-Recurring Agreements
Attachment 10      Quality Assurance Requirements
Attachment 11      Second Tier Support
Attachment 12      Non-U.S. Procurement Report Form
Attachment 13      Reserved
Attachment 14      Production Article Delivery Schedule
Attachment 15      Model Mix Constraint Matrix
Attachment 16      Boeing Furnished Material/Boeing Provided Details
Attachment 17      Reserved
Attachment 18      Reserved










Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 4 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 19      Reserved
Attachment 20      Reserved
Attachment 21      Commodity Listing and Terms of Sale
Attachment 22      Abnormal Escalation
Attachment 23
767-2C SOW
Attachment 24
Anti-Lobbying Certificate
Attachment 25
737 Max Titanium Inner-Wall Work Transfer SOW
Attachment 26
737 Derailment
Attachment 27
737 MAX Non-Recurring Agreement
Attachment 28
Reserved
Attachment 29
777X Non-Recurring Agreement
Attachment 30
737 NG / MAX Vapor Barrier Agreement
Attachment 31
Annual Shipset Production Rate-Based Adjustment     


3.
The SBP is hereby amended by deleting SBP Section 4.1 “Recurring Price” and replacing it in its entirety as follows:
4.1       Recurring Price     
The Price of Recurring Products is set forth in SBP Attachment 1 and includes the total price for all work under this SBP, subject to any applicable adjustment under SBP Section 7.0. Prices shall be firm fixed priced through the end of the Pricing Period as defined in SBP Attachment 1. In addition, SBP Attachment 1 pricing is subject to adjustment for Abnormal Escalation as provided in SBP Attachment 22.
Follow-on pricing subsequent to the Pricing Period will be negotiated in accordance with the terms set forth in SBP Attachment 1 and applicable provisions of the SBP and GTA.  The Parties will negotiate pricing in good faith based on then-prevailing domestic market conditions for 41 sections (all programs), 737 fuselage, 737/777 struts & nacelles and then-prevailing global market conditions for all other Products.
4.
The SBP is hereby amended by deleting SBP Section 4.1.1 “Interim Extension Pricing” and replacing it in its entirety as follows:

4.1.1       Interim Extension Pricing Indices






Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 5 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


The following indices shall be used in establishing interim pricing for Seller’s current work and future Derivatives under this SBP (except for [a] the work covered by Attachment 1B 747-8 Nacelle SOW, and [b] the work covered by Attachment 1D MAX Composite Inner Wall SOW, both of which shall be governed by the respective composite percentages and indices specified therein).
A.        Material - [*****]
B.        Labor - [*****]
In the event the U.S. Bureau of Labor Statistics discontinues or alters its current method of calculating the indices specified above, Boeing and Seller shall agree upon an appropriate substitution for or adjustment to the indices to be employed herein.
Approximately forty-five days before the end of the Pricing Period and on approximately the same date of each year thereafter until such time as a resolution on pricing has been achieved, Boeing will use the above referenced indices to calculate the appropriate escalation factor based on actual index growth for the previous twelve (12) months using a composite of [*****].  Then current SBP Attachment 1 pricing will be revised to include this escalation factor for deliveries in the following year. 

5.
The SBP is hereby amended by deleting SBP Section 5.1.1 “Invoicing Requirements” and replacing it in its entirety as follows:
5.1.1      Invoicing Requirements
Seller shall submit separate invoices for items other than Pay from Receipt items (as defined in Section 5.1.5) for each applicable Order.
Materials purchased by Seller from Boeing shall be satisfied by Boeing issuing a debit against Seller's account as follows:
In the case of Boeing Provided Details (as defined in Attachment 16), debits will be issued by Boeing to Seller.
For all other materials, including materials purchased from Boeing’s Accommodation Sales group, debits will be issued by Boeing on the (net) fifteenth (15 th ) day from the scheduled delivery date. If the debit amount exceeds the amount outstanding on the Seller’s account, Boeing will notify Seller and Seller will pay such amount upon receipt of such notification.

6.
The SBP is hereby amended by deleting SBP Section 5.2 “Recurring Payment” and replacing it in its entirety as follows:


Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 6 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


5.2      Recurring Payment
Unless otherwise provided under written agreement between the Parties, payments shall be paid in immediately available funds net [*****] calendar days after the shipment date (the date items are received by the carrier from Seller) for all shipments prior to [*****]. Payment for all subsequent shipments, unless otherwise provided under written agreement between the Parties, shall be paid in immediately available funds net [*****] calendar days after the shipment date (the date items are received by the carrier from Seller).  In the event the Seller is able to implement net [*****] payment terms prior to [*****], Seller shall notify Boeing and Boeing shall make such change. Except in the case of an Order requiring Pay-From Receipt, the date of payment is calculated from the later of (a) the date the items are delivered to Boeing at its manufacturing site, (b) the date of receipt of a correct and valid invoice or (c) the scheduled delivery date of such Product.  Payment shall be done electronically as mutually agreed.  Boeing agrees to promptly notify Seller if it receives an invoice Boeing believes to be incorrect.
All Payments are subject to adjustment for shortages, credits and rejections.

7.
The SBP is hereby amended by deleting SBP Section 5.2.1 “Non-Recurring Payment” and replacing it in its entirety as follows:

5.2.1 Non-Recurring Payment
Except as otherwise agreed to in writing by the Parties, Non-Recurring Non-Tooling payments shall be paid in immediately available funds net [*****] calendar days after receipt by Boeing of a correct and valid invoice prior to [*****]. Payment for all subsequent Non-Recurring Non-Tooling payments, unless otherwise provided under written agreement between the Parties, shall be paid in immediately available funds net [*****] calendar days after receipt by Boeing of a correct and valid invoice. In the event the Seller is able to implement net [*****] payment terms prior to [*****], Seller shall notify Boeing and Boeing shall make such change.









Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 7 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Non-Recurring Tooling payments shall be paid in immediately available funds net  [*****] calendar days after receipt by Boeing of both a correct and valid invoice and, where required, a completed and approved certified tool list (CTL), (whichever is later) prior to [*****]. Payment for all subsequent Non-Recurring Tooling payments, unless otherwise provided under written agreement between the Parties, shall be paid in immediately available funds net [*****] calendar days after receipt by Boeing of a correct and valid invoice and, where required, a completed and approved certified tool list (CTL), (whichever is later). In the event Seller is able to implement net [*****] payment terms prior to [*****], Seller shall notify Boeing and Boeing shall make such change.
Timing for non-recurring engineering, product development and test payments for Derivatives shall be tied to specific events as non-recurring effort progresses, which events shall not be limited to first shipset delivery and receipt by Boeing. Schedule of specific events to be mutually agreed upon for each engineering development effort (i.e. 25%, 50%, and 90% engineering release).

Future Product Development Projects will be supported up to forty (40) hours (includes technical consultation and the development of ROM work statement and schedules as required) before Seller is eligible for compensation under the Technical Services Agreement (TSA) or this SBP.

Attachment 4 contains the Engineering Delegation requirements for sustaining products that are part of this SBP and included in the part pricing in Attachment 1. All costs associated with Seller Engineering responsibility are included within Attachment 1 pricing for sustaining programs and will not be subject to additional payment from Boeing.

To maintain, repair, sustain, and replace Boeing’s Tooling and to provide certain capital property, plant, and equipment (excluding leasehold improvements and real property) required to support Seller’s activities under this Agreement, Boeing shall pay to Seller forty five million five hundred thousand dollars ($45,500,000) in 2007, an additional one hundred and sixteen million one hundred thousand dollars ($116,100,000) in 2008, and an additional one hundred and fifteen million four hundred thousand dollars ($115,400,000) in 2009 for such Tooling and property, plant, and equipment costs. Within each such year, the payments are to be made in equal quarterly installments within 15 days following each Invoice Date (as defined below) and shall not be affected by the amount of costs set forth in the written list of costs delivered to Boeing on such Invoice Date pursuant to the following paragraph.





Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 8 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


By March 15, June 15, September 15, and December 15 (each an “Invoice Date”) of each of 2007, 2008, and 2009, Seller will deliver to Boeing a written list of any Tooling and capital property, plant, and equipment (excluding leasehold improvements and real property) acquired after the Effective Date and prior to such Invoice Date (and not previously paid for by Boeing under this provision), and the costs thereof, the aggregate amount of which costs does not exceed the amount of the payment due within 15 days following such Invoice Date . Pursuant to the terms of Section 3.3.4.6, upon payment by Boeing, Boeing will acquire title to and ownership of the Tooling and property, plant and equipment described in such list free of liens, claims or rights of any third party.
In the event Boeing acquires title to and ownership of any property, plant and equipment from Seller pursuant to this Section 5.2.1, Seller shall continue to have the right to use such property, plant and equipment to the same extent it had such right prior to such acquisition by Boeing, without paying any additional consideration to Boeing, and the Parties shall undertake in good faith to enter into any documentation necessary to evidence such right. In addition, to the extent movable, any such property, plant and equipment acquired by Boeing shall remain at Seller's facility subject to the terms of the Agreement, including Boeing’s rights under GTA sections 12.0 and 13.0 and SBP section 34.0, and Seller shall have the right to move any such movable property, plant and equipment in accordance with its use thereof and with the terms of the Agreement.
If Boeing acquires title to and ownership of any property, plant and equipment pursuant to this Section 5.2.1, then paragraphs (1) and (2) are also applicable.
(1)
Seller shall bear the risk of loss and shall provide at no cost to Boeing on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, and insurance for such property, plant and equipment to the same extent Seller generally provides such services with respect to property, plant and equipment owned by Seller; it being understood, however, that Boeing as the owner thereof bears the economic burden of any applicable depreciation and obsolescence for such property, plant and equipment;







Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 9 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


(2)
Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any property, plant and equipment, to which Boeing acquires title to and ownership of pursuant to this Section 5.2.1.

To the extent Seller did not incur Tooling or capital property, plant, and equipment (excluding leasehold improvements and real property) costs prior to any Invoice Date which were not previously paid for by Boeing under this provision, in an amount equivalent to the amount paid by Boeing within 15 days following such Invoice Date, the excess amount shall be allocated to other assets not owned by Boeing, in a manner to be mutually determined by Buyer and Seller at that time. For the avoidance of doubt, Boeing will acquire title to and ownership of the other assets to which the excess amounts are allocated free of liens, claims or rights of any third party, provided that such excess amounts allocated are equal to the book value of such other assets.

8.
The SBP is hereby amended by deleting SBP Section 7.2 “Change Pricing Criteria” and replacing it in its entirety as follows:
7.2
Change Pricing Criteria

The following Change pricing thresholds will apply to all Changes:
Recurring Price :
An equitable adjustment (either debit or credit) shall be negotiated and incorporated into the applicable SBP Attachment 1 recurring Non-Discounted Price and all pricing within the respective SBP Attachment 1 columns as shown in the 737 NG / MAX Change Pricing Criteria Table listed below (as applicable) if both of the following conditions are met:
a.
For Engineering Changes, the recurring price impact to the Attachment 1 part Price for each individual Change exceeds [*****] of the then current Price for that part or for Statement of Work allocation Changes, the recurring price impact to the Attachment 1 part Price for each individual Change exceeds [*****] of the then current Price for that part (see note 1 below), and











Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


b.
The recurring price impact for each individual Change exceeds [*****] per year based on then current requirements forecasted for the following calendar year.

Note 1: For Statement of Work allocation changes only there is an annual cumulative cap of [*****]. The annual cumulative cap will begin January 1 st of each year and end December 31 st of each year. This cap will re-set to zero at the beginning of each year and only new Statement of Work allocation changes falling below the [*****] threshold will be applied against this cap. The value attributable to each change will be as negotiated by the Parties and Seller agrees to provide information to Boeing for these Change proposals consistent with the terms of this SBP for any and all assertions believed to contribute towards the [*****] cap.
For clarity, negotiated changes to Attachment 1 737 NG / MAX recurring pricing will be applied to the Attachment 1 Non-Discounted Prices and all columns will be adjusted as shown in the Table below.

737 NG / MAX Change Pricing Criteria Table:

Non-Discounted Price (Post Change)
Column D
Column E
Y+X
(Y+X)*(1-Z)
(Y+X)*(1-Z)
(Y+X)*(1-Z)
(Y+X)*(1-Z)
(Y+X)*(1-Z)

X = Change Value
Y = Non-Discounted Price (Pre Change)
Z = Applicable columns on Attachment 1 Table 1: 737 NG / MAX Discount Structure











Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


Non-Recurring
An equitable adjustment will be made by Boeing to Seller for non-recurring if both of the following conditions are met:
a.
The non-recurring price impact for each individual Change exceeds [*****], and

b.
The non-recurring Change is associated with a new statement of work (not for current configuration of parts defined in Attachment 1 as of June 16, 2005.

9.
The SBP is hereby amended by adding a new SBP Section 7.5.2 “737 Rate [*****]” as follows:
7.5.2      737 RATE [*****]
Seller will increase its production rate on the 737 Program to [*****] and then [*****] APM in accordance with Boeing’s direction and in accordance with SBP Section 7.5.

10.
The SBP is hereby amended by deleting SBP Section 8.0 “Governing Quality Assurance Requirements” and replacing it in its entirety as follows:
8.0      GOVERNING QUALITY ASSURANCE REQUIREMENTS
In addition to those general quality assurance requirements set forth in the GTA, the work performed under this SBP shall be in accordance with the requirements set forth in SBP Attachment 10.
Seller agrees to work with Boeing to align on information required to support Boeing’s obligations to the FAA with respect to work transfers and implement an appropriate periodic review cadence.


11.
The SBP is hereby amended by deleting SBP Section 12.11 “Subcontracting” and replacing it in its entirety as follows:







Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


12.11      SUBCONTRACTING
During the term of this SBP, Seller agrees to work with Boeing to identify and implement opportunities to introduce into its sub-contract base substantial changes in manufacturing procedures, manufacturing technology, process specifications, and alternate sourcing to lower cost subcontractors. Seller and Boeing shall periodically review the implementation of these opportunities and evaluate the sharing of cost savings in accordance with SBP Section 7.6.
In addition to the provisions of GTA Section 28.1, for subcontracts in excess of [*****] in value, subcontracting activities are subject to Boeing review and approval. Boeing approval is not to be unreasonably withheld, conditioned, or delayed.
This SBP Section 12.11 shall apply in lieu of the first sentence of the 2 nd paragraph of GTA Section 28.0.
12.
The SBP is hereby amended by deleting SBP Section 12.13.1.1 “ATA Stringers” and replacing it in its entirety as follows:

12.13.1.1 ATA Stringers
Pricing for ATA Stringer parts are [*****] priced through the pricing period as defined in SBP Attachment 16. The pricing for ATA Stringers in SBP Attachment 16 reflects production pricing only and is not applicable for replacement of parts damaged by Seller.
The Parties mutually agree that equitable compensation may be recovered for [*****].
Boeing is responsible for all [*****] associated with Boeing Airplane Program changes including Derivatives and Boeing initiated production changes that lead to new [*****].
Seller is responsible for all Non-recurring and Recurring costs associated with Seller dictated changes, including part numbers or configurations generated to support Seller unique requirements, those not dictated by Boeing, e.g. modification work, rejections or any SP (special part). One-time non-recurring lot charge of [*****] will apply to each Seller SP. Non-recurring tooling costs associated with SP will be included in the SP recurring price.
Boeing is not liable for costs incurred by Seller as a result of Boeing MRB actions related to BPD ATA Stringers or Seller rejections of Boeing produced BPD ATA Stringers.

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


Pricing for ATA Stringer parts, during the Pricing Period and the Interim Pricing Period, shall be reduced by (and to the same extent as) those Price adjustments and discounts applicable to any Products identified in SBP Attachment 1 which utilize ATA Stringer parts.

13.
The SBP is hereby amended by deleting SBP Attachment 1 “Work Statement and Pricing” and replacing it in its entirety with a new SBP Attachment 1, attached hereto as Exhibit A.

14.
The SBP is hereby amended by deleting SBP Attachment 1B and replacing it in its entirety with a new SBP Attachment 1B, attached hereto as Exhibit B.
    
15.
The SBP is hereby amended by deleting SBP Attachment 1C “Model 777-200LRF (Freighter) Rigid Cargo Barrier” in its entirety and replacing it with a new SBP Attachment 1C denoted as “Reserved”, attached hereto as Exhibit C.

16.
The SBP is hereby amended by deleting SBP Attachment 1C “MAX Composite Inner Wall SOW 1C”, and replacing it in its entirety as a new SBP Attachment 1D “MAX Composite Inner Wall SOW”, attached hereto as Exhibit D.

17.
The SBP is hereby amended by deleting SBP Attachment 10 Section A10.2.10 “Relocation/Subcontract Notification (Puget Sound only)” and replacing it in its entirety with a new SBP Attachment 10 Section A10.2.10, attached hereto as Exhibit E.

18.
The SBP is hereby amended by deleting the 737 Maximum Production Rate and Model Mix Constraint matrix contained in SBP Attachment 15 “Maximum Production Rate and Model Mix Constraint Matrix” and replacing it in its entirety with a new SBP Attachment 15 737 Maximum Production Rate and Model Mix Constraint Matrix, attached hereto as Exhibit F.

19.
The SBP is hereby amended by deleting SBP Attachment 16 “Boeing Provided Details (BPD) and Supplier Banked Material (SBM)” and replacing it in its entirety with a new SBP Attachment 16, attached hereto as Exhibit G.








Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


20.
The SBP is hereby amended by deleting SBP Attachment 20 “Quantity Based Price Adjustment Formula” and replacing it in its entirety with a new SBP Attachment 20 denoted as “Reserved”, attached hereto as Exhibit H.

21.
The SBP is hereby amended by deleting SBP Attachment 22 “Abnormal Escalation” and replacing it in its entirety with a new SBP Attachment 22, attached hereto as Exhibit I.

22.
The SBP is hereby amended by deleting SBP Attachment 27 “737 MAX Non-Recurring Agreement” and replacing it in its entirety with a new SBP Attachment 27, attached hereto as Exhibit J.

23.
The SBP is hereby amended by deleting SBP Attachment 28 “737/747/7671[sic]777 Pricing Agreement through 2015” and replacing it in its entirety with a new SBP Attachment 28 denoted as “Reserved”, attached hereto as Exhibit K.

24.
The SBP is hereby amended by deleting SBP Attachment 29 “777X NON-RECURRING AGREEMENT” and replacing it in its entirety with a new SBP Attachment 29, attached hereto as Exhibit L.

25.
The SBP is hereby amended by adding a new SBP Attachment 31 “Annual Shipset Production Rate-Based Adjustment”, attached hereto as Exhibit M.

26.
Entire Agreement. Except as otherwise indicated, all terms defined in the GTA or SBP shall have the same meanings when used in this Amendment No. 30. This Amendment No. 30 constitutes the complete and exclusive agreement between the Parties with respect to the subject matter of this Amendment No. 30, and this Amendment No. 30 supersedes all previous agreements, including, but not limited to, the Collective Resolution Memorandum of Understanding, dated August 1, 2017, between the Parties relating to the subject matter of Amendment No. 30, whether written or oral. The GTA and SBP shall remain in full force and effect and are not modified, revoked, or superseded except as specifically stated in this Amendment No. 30.

27.
No Admission of Liability. No Precedential Value. The Parties acknowledge that this Amendment No. 30 reflects a compromise resolution by the Parties of certain claims and that nothing contained in this Amendment No. 30 constitutes or will be construed as an acknowledgement or admission of liability or absence of liability in any way on the part of the Parties, each of which expressly denies any liability or wrongdoing in connection with such claims, and the Parties agree not to issue any public statement or comment to the contrary. The Parties agree that this Amendment No. 30, and the terms and conditions hereof, including without limitation the figures used to reach all pricing and payment figures herein, will have no precedential value and therefore will not be used in support or defense of any other claim arising from the Parties’ contracts.

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30



28.
Governing Law. This Amendment No. 30 will be governed by the laws of the state of Washington exclusive of Washington’s conflict of laws principles.

29.
Order of Precedence. In the event of a conflict between the terms of this Amendment No. 30 and either the SBP or GTA, the terms of this Amendment No. 30 shall have precedence with respect to the subject matter of this Amendment No. 30.

























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


IN WITNESS WHEREOF, the duly authorized representatives of the Parties have executed this Amendment No. 30 as of the last date of execution set forth below.

The Boeing Company
 
 
 Spirit AeroSystems Inc.

Acting by and through its division

 
 
 
Boeing Commercial Airplanes

 
 
 
 
 
 
 
 
By:
/s/ Breanna Edwards

 
By:
/s/ William Wilson
 
 
 
 
 
Name:
Breanna Edwards

 
Name:
William Wilson
 
 
 
 
 
Title:
Procurement Agent    

 
Title:
Senior Manager
 
 
 
 
 
Date:
9-22-2017
 
Date:
9-22-2017



















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


EXHIBIT A TO SBP AMENDMENT NO. 30
SBP ATTACHMENT 1
WORK STATEMENT AND PRICING
(Reference SBP Sections 3.2.1, 3.3.4.1, 3.4.4, 4.1, 4.1.1, 4.8.2, 7.2, 7.2.1, 7.10.1, 12.6.1, 12.13.1.1, 18.0, Attachment 31)

1.
RECURRING PRICING PERIOD

a)
Non-Discounted Price means the pricing prior to application of production rate-based discounts, if such discounts are applicable. Non-Discounted Prices are subject to Changes in accordance with SBP Section 7.0. Non-Discounted Prices are listed in SBP Attachment 1 Exhibit(s) B.1, B.2, C.1, C.2, D.1, D.2, F.1 and F.2.

i.
In the event there is an error in the calculation of Prices contained in this SBP Attachment 1, the Parties shall correct said Prices.

b)
The pricing as set forth in sections 2 through 5 and section 7 below are for the pricing period January 1, 2016 through December 31, 2022 (the “Pricing Period”).

c)
The pricing on and after January 1, 2023 will be negotiated by the Parties, and the Parties will begin negotiating twenty-four (24) months prior to January 1, 2023.

i.
Pricing on and after January 1, 2023 for 737 NG / MAX will take into account market dynamics, productivity improvements and other cost reductions resulting from increases in rates above [*****] APM, if Boeing is then producing at such rates.

d)
In the event the Parties are unable to agree on follow-on pricing prior to the end of the Pricing Period, interim pricing will take effect and continue thereafter until the earlier of such time as: (i) the Parties agree to follow-on pricing; or (ii) pricing is established in accordance with GTA Section 33.0 and this SBP Attachment 1. The period between the end of the Pricing Period and the establishment of follow-on pricing shall be defined as the “Interim Pricing Period”.

e)
Interim Pricing Reconciliation:
The Parties agree to reconcile the pricing set forth in this SBP Attachment 1 for the Pricing Period with the interim pricing paid by Boeing to Seller from January 1, 2016 to December 31, 2017 in two phases:

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


i.
Boeing and Seller will validate and agree on phase i amounts for Seller shipments from January 1, 2016 through October 1, 2017. The applicable Party shall make payment within [*****] days of validating the reconciled amount.

ii.
Boeing and Seller will validate and agree on phase ii amounts for Seller shipments from October 2, 2017 through December 31, 2017. The applicable Party shall make payment within [*****] days of validating the reconciled amount.

f)
Annual Shipset Production Rate-Based Adjustment:

i.
All Shipsets (excluding 767-2C) delivered by Seller to Boeing during the Pricing Period and any subsequent Interim Pricing Period shall be subject to the calculation set forth in SBP Attachment 31.

2.
737 NG / MAX and P-8 RECURRING PRICING
737 NG / MAX and P-8 pricing for the Pricing Period is listed in SBP Attachment 1 Exhibit B.1 (737 NG / MAX and P-8 Detailed Part List Pricing excluding Loose Ship Parts and VSA Wing Kits) and Exhibit B.2 (737 NG / MAX and P-8 Loose Ship Parts and VSA Wing Kits Pricing). Exhibit B (737 NG / MAX and P-8 Product Pricing Roll Up) is an accurate summary of Exhibit B.1 for Boeing internal forecasting purposes only. For the avoidance of doubt, Exhibit B shall not be used for placing orders or calculating thresholds. Exhibit B shall be updated concurrently with any updates to Exhibit B.1.

a)
737 NG / MAX and P8 Pricing
Table 1 - 737 NG / MAX Discount Structure
Column A
Column B
Column C
Column D
Column E
[*****]% discount*
[*****]% discount*
[*****]% discount*
[*****]% discount*
[*****]% discount*
*discount applicable to Non-Discounted Price









Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 19 of 145


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Amendment No. 30


For the avoidance of doubt, pricing in SBP Attachment 1 Exhibit B.1 (737 NG / MAX and P-8 Detailed Part List Pricing excluding Loose Ship Parts and VSA Wing Kits) and Exhibit B.2 (737 NG / MAX and P-8 Loose Ship Parts and VSA Wing Kits Pricing) includes the applicable production rate-based discounts referenced in the above Table 1 - 737 NG / MAX Discount Structure.
For clarity, the 737 P-8 will be used to calculate 737 production rates; however, the production rate-based discounts specified in SBP Attachment 1 Table 1 above do not apply to the 737 P-8 Products. In addition, the production rate-based discounts specified in SBP Attachment 1 Table 1 above do not apply to the 737 MAX Composite Inner Wall (CIW; reference SBP Attachment 1D), which is included within the 737 MAX Thrust Reverser Prices listed in SBP Attachment 1 Exhibit B.1.

Table 2 - 737 Pricing Reference Table
Production Rate
2016
2017
2018
2019
2020
2021
2022
[*****]
Col A
Col A
Col B
Col C
Col D
Col E
Col E
[*****] through [*****]
Col A
Col A
Col B
Col C
Col D
Col E
Col E
Less than [*****]
Col A
Col A
Col B
Col B
Col B
Col B
Col B

i.
The pricing referenced in Table 2 (737 Pricing Reference Table) shall take effect for deliveries on and after January 1 st of each year following the year in which the applicable rate is achieved and held, except as noted in sections 2.a)vi and 2.a)vii below.
ii.
In the event Boeing does not achieve and hold rate [*****] in 2018, pricing listed in Column B of SBP Attachment 1 Exhibit B.1 and B.2 shall apply for the remainder of the Pricing Period (starting January 1, 2018) until Boeing does so.
iii.
In the event Boeing achieves and holds rate [*****] but does not achieve and hold rate [*****], pricing in Column C of SBP Attachment 1 Exhibit B.1 and B.2 shall apply for the remainder of the Pricing Period until Boeing does so; provided, if rates drop below rate [*****], pricing in Column B of SBP Attachment 1 Exhibit B.1 and B.2 shall apply until such time as rate [*****] is achieved again and held. Further, if rates drop to between rate [*****] and rate [*****], after initially achieving rate [*****], pricing in Column C of SBP Attachment 1 Exhibit B.1 and B.2 shall apply until such time as rate [*****] is achieved again and held.
iv.
In the event a new or adjusted Master Schedule is released in accordance with the SBP, which slides implementation of production rate [*****] beyond 2018 or production rate of [*****] beyond 2019 or requires any production rate reductions, the Parties agree to update SBP Attachment 1 Exhibit A and determine applicable Prices.
v.
Should an update to Prices be required as set forth in the preceding clause (iv), the Parties shall use the appropriate pricing column from SBP Attachment 1 Table 2 to determine the correct Price within [*****] calendar days of when an update is determined to be necessary. In the event reconciliation is required, the Parties will

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


reconcile to the applicable Pricing for that given year and an applicable retroactive payment will be made within [*****] days after the end of the then current calendar year.
vi.
In the event 737 production rates increase to [*****] after calendar year 2018, the pricing for 737 Products will be the pricing referenced in SBP Attachment 1 Exhibit B.1 and B.2 Column B until the month after rate [*****] is achieved. At that time, the pricing for 737 Products will be the pricing referenced in SBP Attachment 1 Exhibit B.1 and B.2 Column C, except as provided in SBP Attachment 1 Section 2.a)iii.
vii.
In the event 737 production rates increase to [*****] after calendar year 2019, the pricing for 737 Products will be the pricing referenced in SBP Attachment 1 Exhibit B.1 and B.2 Column C until the month after rate [*****] is achieved. At that time, the pricing for 737 Products will be the pricing referenced in SBP Attachment 1 Exhibit B.1 and B.2 Column D (if the then current year is 2020) or SBP Attachment 1 Exhibit B.1 and B.2 Column E (if the then current year is 2021 or 2022), except as provided in SBP Attachment 1 Section 2.a)iii.
viii.
Examples:

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


 
2019
Achieving rate [*****] in 2019
 
 
 
 
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
737 Fuselage Deliveries
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Column
C
C
C
C
C
C
C
C
C
C
C
C
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020
Holding rate [*****] throughout 2020 (assumes rate [*****] achieved in 2019)
 
 
 
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
737 Fuselage Deliveries
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Column
D
D
D
D
D
D
D
D
D
D
D
D
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020
Reducing from rate [*****] to rate [*****] after rate [*****] is achieved
(assumes rate [*****] achieved in 2019)
 
 
 
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
737 Fuselage Deliveries
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Column
D
D
D
D
D
C
C
C
C
C
C
C
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2021
Holding rate [*****] throughout 2021 (assumes rate [*****] achieved in 2019 or 2020)
 
 
 
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
737 Fuselage Deliveries
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Column
E
E
E
E
E
E
E
E
E
E
E
E
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2022
Assumes ramp to rate [*****] in 2022 or re-achieving rate [*****] in 2022 after a decrease to [*****] prior to 2022
 
 
 
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
737 Fuselage Deliveries
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Column
C
C
C
C
C
C
C
C
E
E
E
E








Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


b)
737 Interim Pricing
i.
If the Parties are unable to reach agreement on follow-on pricing before January 1, 2023, Boeing will pay interim pricing from January 1, 2023 as defined within Table 3 737 Interim Pricing Reference Table. The Non-Discounted Price and the Prices in columns A, B, and C in SBP Attachment 1 Exhibits B.1 and B.2 shall be escalated or de-escalated using the indices and methodology provided in SBP Section 4.1.1 (for clarity, columns D and E of said Exhibits are not applicable during the Interim Pricing Period). The 737 P-8 will be included in 737 production rates, however, Table 3 below does not apply to the 737 P-8 Products (reference SBP Attachment 1 Section 3) or 737 MAX CIW (reference SBP Attachment 1D), which is included within the 737 MAX Thrust Reverser Prices listed in SBP Attachment 1 Exhibit B.1.
Table 3 - 737 Interim Pricing Reference Table
737 Production Rate
2023
2024
Less than [*****] APM
Col A
Col A
[*****] - [*****] APM
Col B
Col A
[*****] APM and Above
Col C
Col B

ii.
In addition, Boeing agrees to pay Seller $[*****] per year escalated or de-escalated according to the indices with a base year of 2017 (including the weighting and timing of the indices) provided in SBP Section 4.1.1. This payment shall be made annually on [*****], starting the first year of interim pricing, or a pro rata portion of this payment will be made on or about the date of determination of pricing. These payments will not be subject to any reconciliation or retroactive adjustment.
iii.
Notwithstanding the interim pricing set forth in this Section, the Parties will use the dispute resolution process in GTA Section 33.0 to determine reasonable pricing if pricing is not agreed upon by December 31, 2023.
iv.
At the earlier of such time as: (i) the Parties agree to follow-on pricing; or (ii) pricing is established in accordance with GTA Section 33.0 and this SBP Attachment 1, the Parties will reconcile interim pricing with the follow-on pricing and a corresponding debit or credit as applicable will be made retroactive to the day after the end of the Pricing Period.












Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 23 of 145


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Amendment No. 30


c)
Additional 737 MAX Pricing:

i.
The Parties agree to negotiate a delta price for the 737-8200 MAX based on the 737-8 MAX configuration through Post Rev [*****] as defined in SBP Attachment 1 Section 2.d)i and 2.d)ii, and the Prices listed in Attachment 1 Exhibit(s) B.1 and B.2 . Until such price is negotiated, the agreed interim pricing is the then current pricing for the 737-8 MAX. The Parties agree pricing will be negotiated and agreed upon within [*****] days after the first Seller delivery of the 737-8200 fuselage to Boeing. At such time as a subsequent pricing agreement has been achieved, the Parties will reconcile interim pricing with the agreed-upon pricing, and a corresponding debit or credit as applicable will be made.

i.
The Parties agree to negotiate a delta price for the 737-10 MAX based on the 737-9 MAX configuration through 737-9 Post Rev [*****] as defined in SBP Attachment 1 Section 2.d)iii and 2.d)iv below and the Prices listed in Attachment 1 Exhibit B.1 and B.2. Until such price is negotiated, the agreed interim pricing is the then current pricing for the 737-9 MAX. The Parties agree pricing will be negotiated and agreed upon within [*****] days after the first Seller delivery of the 737-10 fuselage to Boeing. At such time as a subsequent pricing agreement has been achieved, the Parties will reconcile interim pricing with the agreed-upon pricing, and a corresponding debit or credit as applicable will be made.

ii.
The Parties agree, pricing for all 737 MAX minor models shall utilize the same production rate-based discount methodology as described in SBP Attachment 1 Section 2.a) and 2.b).


d)
Changes to 737 MAX Pricing prior to respective ATCs:

i.
737-8 Pricing:

Pricing for the 737-8 Products listed in SBP Attachment 1 Exhibit(s) B.1 and B.2 reflect configuration “IWS Revision [*****]”. Seller shall provide a recurring pricing change proposal for the collective MAX Changes in configuration from IWS Revision [*****] to the configuration incorporating all Changes directed prior to [*****]. The recurring pricing change proposal, to be known as “Post Rev [*****]”, shall be submitted no later than [*****] and shall be negotiated by the Parties no later than [*****]. The Parties agree that SBP Attachment 27 is still in effect and is not impacted by this Section. For the avoidance of doubt, all Changes directed prior to ATC for the 737-8 are not subject to thresholds as described in SBP Section 7.2.

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 24 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



ii.
Post Rev [*****]:

The Post Rev [*****] recurring settlement contemplated in Section 2.d)i above, will be applied to MAX Product Pricing listed in this SBP Attachment 1 Exhibit(s) B.1 and B.2 for the 737-8.


iii.
737-9 Pricing:

After Post Rev [*****] has been settled above in 2.d)i, the Parties agree to apply such amount to the 737-9 MAX Attachment 1 Exhibit(s) B.1 and B.2 pricing reflecting all Changes directed up to [*****]. Seller shall provide a recurring pricing change proposal collectively for all Changes in configuration from [*****] to the configuration incorporating all Changes directed prior to 737-9 ATC. The recurring pricing change proposal, to be known as “737-9 Post Rev [*****]”, shall be submitted no later than [*****] days after 737-9 ATC is achieved and shall be negotiated by the Parties no later than [*****] days after 737-9 ATC. The Parties agree that SBP Attachment 27 is still in effect and is not impacted by this Section. For the avoidance of doubt, all Changes directed prior to ATC for the 737-9 are not subject to thresholds as described in SBP Section 7.2.

iv.
737-9 Post Rev [*****]:

The 737-9 Post Rev [*****] recurring settlement contemplated in Section 2.d)iii above will be applied to 737-9 MAX Product pricing listed in this SBP Attachment 1 Exhibit(s) B.1 and B.2.

v.
737-7 (7150) Pricing:

After Post Rev [*****] has been settled above in 2.d)i, the Parties agree to apply such amount to the 737-7 (7150) MAX SBP Attachment 1 Exhibit(s) B.1 and B.2 pricing reflecting all Changes directed up to [*****]. Seller shall provide a recurring pricing change proposal collectively for all Changes in configuration from [*****] to the configuration incorporating all Changes directed prior to 737-7 (7150) ATC. The recurring pricing change proposal, to be known as “737-7 Post Rev [*****]”, shall be submitted no later than [*****] days after 737-7 (7150) ATC is achieved and shall be negotiated by the Parties no later than [*****] days after 737-7 (7150) ATC. The Parties agree that SBP Attachment 27 is still in effect and is not impacted by this

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 25 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Section. For the avoidance of doubt, all Changes directed prior to ATC for the 737-7 (7150) are not subject to thresholds as described in SBP Section 7.2.

vi.
737-7 Post Rev [*****]:

The 737-7 Post Rev [*****] recurring settlement contemplated in Section 2.d)v above will be applied to 737-7 (7150) MAX Product pricing listed in this SBP Attachment 1 Exhibit(s) B.1 and B.2.

vii.
Any other 737 MAX minor models will follow the same approach as specified in this Section 2.d) and added to SBP Attachment 1 Exhibit(s) B.1 and B.2.

e)
Changes to 737 MAX Pricing Post ATC

i.
737-8 Pricing
a.
Seller will submit a separate change proposal for Changes directed subsequent to 737-8 ATC through [*****] by no later than [*****]. The Parties agree to negotiate the proposal within [*****] days of submittal.
b.
The Parties agree SBP Attachment 27 shall not apply to Changes directed post ATC for the 737-8.
c.
The Parties agree all Changes directed post 737-8 ATC will be in accordance with SBP Section 7.0.

ii.
737-9 Pricing
a.
The Parties agree SBP Attachment 27 shall not apply for 737-9 Changes directed post ATC for the 737-9.
b.
The Parties agree all Changes directed post 737-9 ATC will be in accordance with SBP Section 7.0.

iii.
737-7 (7150) Pricing
a.
The Parties agree SBP Attachment 27 shall not apply for 737-7 (7150) Changes directed post ATC for the 737-7 (7150).
b.
The Parties agree all Changes directed post 737-7 (7150) ATC will be in accordance with SBP Section 7.0.

iv.
Any other 737 MAX minor models will follow the same approach as specified in this Section and added to SBP Attachment 1 Exhibit(s) B.1 and B.2.




Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 26 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


3.
737 P-8 INTERIM PRICING
During the Interim Pricing Period, interim pricing for 737 P-8 shall be determined using the last buy pricing in 2022 as the baseline, and escalated or de-escalated using the indices and methodology provided in SBP Section 4.1.1.
Notwithstanding the interim pricing set forth in this Section 3, the Parties will use the dispute resolution process in GTA Section 33.0 to determine reasonable pricing if pricing is not agreed upon by December 31, 2023.
At the earlier of such time as: (i) the Parties agree to follow-on pricing; or (ii) pricing is established in accordance with GTA Section 33.0 and this SBP Attachment 1, the Parties will reconcile interim pricing with the follow-on pricing and a corresponding debit or credit as applicable will be made retroactive to the day after the end of the Pricing Period.


4.
747 RECURRING PRICING

a)
747 Pricing Period

747 Product pricing for the Pricing Period is listed in SBP Attachment 1 Exhibit C.1 (747 Detailed Part List Pricing excluding Loose Ship Parts, Section 44 Lower Lobe, and Fixed Leading Edge (FLE)) and Exhibit C.2 (747 Loose Ship Parts, Section 44 Lower Lobe, and FLE Pricing). Exhibit C (747 Product Pricing Roll Up) is an accurate summary of Exhibit C.1 for Boeing internal forecasting purposes only. For the avoidance of doubt, Exhibit C shall not be used for placing orders or calculating thresholds. Exhibit C shall be updated concurrently with any updates to Exhibit C.1.








b) 747 Interim Pricing Period
During the Interim Pricing Period, interim pricing for 747 shall be determined using the last buy pricing in 2022 as the baseline, and escalated or de-escalated using the indices and methodology provided in SBP Section 4.1.1.

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 27 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Notwithstanding the interim pricing set forth in this Section 4.b), the Parties will use the dispute resolution process in GTA Section 33.0 to determine reasonable pricing if pricing is not agreed upon by December 31, 2023.
At the earlier of such time as: (i) the Parties agree to follow-on pricing; or (ii) pricing is established in accordance with GTA Section 33.0 and this SBP Attachment 1, the Parties will reconcile interim pricing with the follow-on pricing and a corresponding debit or credit as applicable will be made retroactive to the day after the end of the Pricing Period.

5.
767 RECURRING PRICING (EXCLUDING 767-2C)
 
a)
767 Pricing Period

767 Product pricing for the Pricing Period is listed in SBP Attachment 1 Exhibit D.1 (767 Detailed Part List excluding Loose Ship Parts) and Exhibit D.2 (767 Loose Ship Parts). Exhibit D (767 Product Pricing Roll Up) is an accurate summary of Exhibit D.1 for Boeing internal forecasting purposes only. For the avoidance of doubt, Exhibit D shall not be used for placing orders or calculating thresholds. Exhibit D shall be updated concurrently with any updates to Exhibit D.1.

b) 767 Interim Pricing Period (Excluding 767-2C)
During the Interim Pricing Period, interim pricing for 767 shall be determined for the applicable 767 minor models (excluding 767-2C) using the last buy pricing in 2022 as the baseline, and escalated or de-escalated using the indices and methodology provided in SBP Section 4.1.1.
Notwithstanding the interim pricing set forth in this Section 5.b), the Parties will use the dispute resolution process in GTA Section 33.0 to determine reasonable pricing if pricing is not agreed upon by December 31, 2023.
At the earlier of such time as: (i) the Parties agree to follow-on pricing; or (ii) pricing is established in accordance with GTA Section 33.0 and this SBP Attachment 1, the Parties will reconcile interim pricing with the follow-on pricing and a corresponding debit or credit as applicable will be made retroactive to the day after the end of the Pricing Period.






Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 28 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



6.
767-2C RECURRING PRICING

Pricing for the 767-2C (Tanker) Products is listed in SBP Attachment 1 Exhibit(s) E.1 (767-2C Propulsion Product Pricing) and E.2 (767-2C Section 41 Product Pricing). The pricing period and other terms and conditions unique to 767-2C statement of work are defined in SBP Attachment 23.


7.
777 RECURRING PRICING (EXCLUDES 777X)

a)
777 Pricing Period

777 Product pricing (excluding 777X) for the Pricing Period is listed in SBP Attachment 1 Exhibit F.1 (777 Detailed Part List Pricing excluding Loose Ship Parts and Floor Beams (excludes 777X)), and Exhibit F.2 (777 Loose Ship Parts and Floor Beams Pricing (excludes 777X)). Exhibit F (777 Product Pricing Roll Up (excludes 777X)) is an accurate summary of Exhibit F.1 for Boeing internal forecasting purposes only. For the avoidance of doubt, Exhibit F shall not be used for placing orders or calculating thresholds. Exhibit F shall be updated concurrently with any updates to Exhibit F.1.

For clarity, pricing excludes 777X. The Parties agree 777X pricing will be agreed to and incorporated via separate amendment.

b) 777 Discount for 777 300ER, 200LR, and 200F Aircraft
To assist Boeing in its marketing and sales opportunities for units unsold as of [*****], Seller will provide a discount of [*****] on each of Boeing’s unsold 777 300ER, 200LR, and 200F aircraft to be built and delivered by Seller to Boeing. The aggregate discount shall not exceed [*****]. For the purpose of administrative convenience, the discount of [*****] shall be paid in increments as defined below:
•
[*****] to be paid on or about [*****]*
•
[*****] to be paid on or about [*****]**
•
[*****] to be paid on or about [*****]**
•
[*****] to be paid on or about [*****]**
•
[*****] to be paid on or about [*****]**
•
[*****] to be paid on or about [*****]**
•
[*****] to be paid on or about [*****]**
•
[*****] to be paid on or about [*****]**

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 29 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


•
[*****] to be paid on or about [*****]**
•
[*****] to be paid on or about [*****]**
•
[*****] to be paid on or about [*****]**
•
[*****] to be paid on or about [*****]***

*Representing the last [*****] applicable Shipsets shipped by Seller in the [*****]
**Representing the last [*****] applicable Shipsets shipped by Seller in the [*****]
***Representing the last [*****] applicable Shipsets shipped by Seller in the [*****]
In the event that the 777 production rate is reduced below [*****] APM, the Parties will review and modify the payments set forth above as appropriate. For the avoidance of doubt, no discounts shall be applied prior to [*****] or later than [*****]. At such time as the full [*****] is recovered by Boeing or at the end of the Pricing Period, the Parties shall jointly review this discount concept and potential future applicability.



c) 777 Interim Pricing Period
During the Interim Pricing Period, interim pricing for 777 shall be determined using the last buy pricing in 2022 as the baseline, and escalated or de-escalated using the indices and methodology provided in SBP Section 4.1.1. For clarity, the baseline for which the interim pricing will be calculated for 777 shall not include the [*****] discount per aircraft as described in Section 7.b) above.
Notwithstanding the interim pricing set forth in this Section 7.c), the Parties will use the dispute resolution process in GTA Section 33.0 to determine reasonable pricing if pricing is not agreed upon by December 31, 2023.
At the earlier of such time as: (i) the Parties agree to follow-on pricing; or (ii) pricing is established in accordance with GTA Section 33.0 and this SBP Attachment 1, the Parties will reconcile interim pricing with the follow-on pricing and a corresponding debit or credit as applicable will be made retroactive to the day after the end of the Pricing Period.

8.
NON-RECURRING PRICING:






Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 30 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



a)
Boeing agrees to pay Seller a fixed sum of $[*****] to support 737 rate [*****] APM [*****] expenditures by Seller, as follows:
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
i.
Boeing shall issue purchase orders no later than [*****] days prior to the above dates.

ii.
Payment will be made by Boeing to Seller in accordance with SBP Section 5.2.1.

b)
Boeing agrees to pay Seller a fixed sum of $[*****] to support 737 rate [*****] APM [*****] expenditures, which the Parties agree includes 737-8 rate tooling* (only from rate [*****] up to and including [*****]), 737-9 rate tooling* (only from rate [*****] up to and including [*****]), 737 CIW rate tooling* (only from rate [*****] up to and including [*****]), 737-8200 rate tooling* (only up to and including rate [*****]), 737-7 (7150) rate tooling* (only up to and including rate [*****]), and 737-10 rate tooling* (only up to and including rate [*****]). Payments shall be made as follows:
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]
•
[*****] paid no later than [*****]

* Based on SBP Attachment 15 “Maximum Production Rate and Model Mix Constraint Matrix” as of the Effective Date of SBP Amendment No. 30.

i.
Boeing shall issue purchase orders no later than [*****] days prior to the above dates.

ii.
Seller will submit CTLs for rate [*****] tooling, starting [*****]. The above payments in this section are not contingent upon CTL submittal by Seller or approval by Boeing.

iii.
Payment will be made by Boeing to Seller in accordance with SBP Section 5.2.1.
iv.


Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 31 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


v.
Upon completion of all CTLs, Seller will notify Boeing that all CTLs have been submitted.

vi.
SBP Attachment 1 Exhibit G identifies the rate tooling settlements that are and are not included within the $[*****] fixed sum payment set forth in this Section 8.b). For the avoidance of doubt, SBP Attachment 27 does not apply to the $[*****] fixed sum payment set forth in this Section 8.b).












































Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 32 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


SBP Attachment 1 Exhibit A

Based on 737 Master Schedule [*****]
 
 
 
 
 
 
 
C/L
 
Exhibit B.1 and B.2 Pricing Column
Fuselage FOB
[*****]

[39 Pages Omitted]


Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 33 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit B
737 NG / MAX and P-8 Product Pricing Roll Up
Product
Model
MMC
Non - Discounted Pricing
Column A
Column B
Column C
Column D
Column E
737 Fuselage
P8
[*****]
 
737-700, -700ER IGW
 
737-700BBJ, AEW&C IGW
 
737-700C, -700BBJ Convertible
 
737-800, -800BBJ
 
737-900ER, -900BBJ
 
737-7, -7BBJ
 
737-8, -8BBJ
 
737-9, -9BBJ
737 Strut
737 Strut P8
 
737 Strut NG
 
737 Strut MAX
737 Nacelle
737 TR P8
 
737 TR NG
 
737 TR MAX with CIW
 
737 TR MAX CIW







Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 34 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit B.1
737 NG / MAX and P-8 Detailed Part List Pricing
Excludes Loose Ship Parts and VSA Wing Kits
Model
End Item Number
Description
MMC
Non-Discounted Price
Column A
Column B
Column C
Column D
Column E
[*****]

[5 Pages Omitted]





Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 35 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



Attachment 1 Exhibit B.2
737 NG / MAX and P-8 Loose Ship Parts and VSA Kit Pricing
Model
End Item Number
Description
Non-Discounted Price
Column A
Column B
Column C
Column D
Column E
[*****]

[60 Pages Omitted]











Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 36 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit C
747 Product Pricing      Roll Up
Excludes Loose Ship, Section 44 Lower Lobe, and Fixed Leading Edge (FLE) Parts

Product
Model
MMC
Non-Discounted Price
 
 
 
 
 
747 S41
747-8P
[*****]
[*****]
 
 
 
 
 
 
747-8F
[*****]
[*****]
 
 
 
 
 
747 Strut
747-8 Strut
[*****]
[*****]
 
 
 
 
 
















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 37 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit C.1
747 Detailed Part List Pricing
Excludes Loose Ship Parts
Model
End Item Number
Description
MMC
Non-Discounted Price
[*****]

[2 Pages Omitted]










Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 38 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit C.2
747 Loose Ship Parts, Section 44 Lower Lobe, and FLE Pricing
Model
End Item Number
Description
MMC
Non-Discounted Price
[*****]

[33 Pages Omitted]










Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 39 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit D
767 Product Pricing Roll Up
Excludes Loose Ship Parts
Product
Model
MMC
Non-Discounted Price
 
 
 
 
 
767 S41
767F
[*****]
[*****]
 
 
 
 
 
767 Strut
767 Strut GE
[*****]
[*****]
 
 
 
 
 


















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 40 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit D.1
767 Detailed Part List Pricing (Excludes Loose Ship Parts)
Model
End Item Number
Description
MMC
Non-Discounted Price
[*****]









Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 41 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit D.2
767 Loose Ship Parts Pricing
Model
End Item Number
Description
MMC
Non-Discounted Price
[*****]

[7 Pages Omitted]









Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 42 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit E.1
767-2C Propulsion Product Pricing
(Reference SBP Attachment 23)
End Item Number
End Item Description
CCN 6650 (Units 1-3)
CCN 6650 Unit 4
CCN 6650 (Units 5-23)
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
[*****]








Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 43 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit E.2
767-2C Section 41 Product Pricing
(Reference SBP Attachment 23)
End Item Number
End Item Description
 (Units 1-4)
(Units 5-23)
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
[*****]









Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 44 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit F
777 Product Pricing Roll Up (excludes 777X)
Excludes Loose Ship Parts and Floor

Model
MMC
Non-Discounted Pricing
 
 
 
 
 
777-300ER
[*****]
[*****]
 
 
 
 
 
777-200LR
[*****]
[*****]
 
 
 
 
 
777F
[*****]
[*****]
 
 
 
 
 
777 Strut GE115
[*****]
[*****]
 
 
 
 
 
777 Nacelle GE115
[*****]
[*****]
 
 
 
 
 
300ER-200LR-200F Slats
 
[*****]
 
 
 
 
 
















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 45 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Attachment 1 Exhibit F.1
777 Detailed Part List Pricing ( excludes 777X )
Excludes Loose Ship Parts and Floor Beams
Model
End Item Number
Description
MMC
Non-Discounted Price
[*****]

[3 Pages Omitted]







Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 46 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



Attachment 1 Exhibit F.2
777 Loose Ship Parts and Floor Beams Pricing (excludes 777X)
Model
End Item Number
Description
MMC
Non-Discounted Price
[*****]

[11 Pages Omitted]


Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 47 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


SBP Attachment 1 Exhibit G
737 MAX Rate Tooling Settlements ([*****] to [*****] APM)
 
737-8
Fuselage, Wing, and Propulsion End Items
(All SOW excluding CIW)
Rate Tooling to support up to and including [*****] APM
Reference SBP Attachment 27
Rate Tooling to support above [*****] APM up to and including [*****] APM
Reference Pricing Settlement CCN 10657 dated 02/06/2017
Rate Tooling to support above [*****] APM up to and including [*****] APM
Reference SBP Attachment 1 section 8.b)

737-9
Fuselage, Wing, and Propulsion End Items
(All SOW excluding CIW)
Rate Tooling to support up to and including [*****] APM
Reference SBP Attachment 27
Rate Tooling to support above [*****] APM up to and including [*****] APM
Reference SBP Attachment 1 section 8.b)













Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 48 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


737-7 (7150) and 737-8200
Fuselage, Wing, and Propulsion End Items
 (All SOW excluding CIW)
737-7 (7150) Rate Tooling to support up to and including [*****] APM
 Reference SBP Attachment 1 Section 8.b)
737-8200 Rate Tooling to support up to and including [*****] APM
Reference SBP Attachment 1 Section 8.b)

737 MAX CIW
Composite Inner Wall (CIW)
Rate Tooling to support up to and including [*****] APM
Reference SBP Attachment 27
Rate Tooling to support above [*****] APM up to and including [*****] APM
Reference Pricing Settlement CCN 10657 dated 02/06/2017
Rate Tooling to support above [*****] APM up to and including [*****] APM
Reference SBP Attachment 1 Section 8.b)

737-10
Fuselage, Wing, and Propulsion End Items (All SOW excluding CIW)
Rate Tooling to support up to and including [*****] APM
Reference SBP Attachment 1 Section 8.b)



















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 49 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


EXHIBIT B TO SBP AMENDMENT NO. 30

SBP Attachment 1B

Recitals

WHEREAS, Boeing and Seller entered into a Memorandum of Agreement dated August 28, 2007 (“MOA” for purposes of this SBP Attachment 1B) for the model 747-8 propulsion work;

WHEREAS, the Parties intended, and established within the MOA, that the nacelle portion of the statement of work in the MOA would be governed by the prospective agreement Special Business Provisions MS-65520-0049;

AND

WHEREAS, the Parties never completed negotiation of or executed MS-65520-0049;
 
NOW, therefore, the Parties wish to establish terms and conditions by which certain 747-8 nacelle work will be governed by SBP MS-65530-0016.

The statement of work for 747-8 Nacelle listed in this SBP Attachment 1B (Nacelle SOW 1B) is subject to all terms and conditions of SBP MS-65530-0016 and Amendment 5 thereto, except as otherwise specified in this SBP Attachment 1B.

As of the effective date of SBP Attachment 1B, one Non-Recurring milestone payment remains as agreed in MOA 6-5630-MEG07-003, Attachment 2. The remaining milestone payment for [*****] has not been paid and is due at first aircraft delivery to the Customer.

Nacelle SOW 1B
[*****]

[*****]

[*****]

[*****]

Any reference to SBP Attachment 1 Work Statement and Pricing in this SBP is applicable to the Nacelle SOW 1B with the following exceptions:








Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 50 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


1.
With reference to SBP Section 3.2 Period of Performance, the wording in section 3.2 is superseded in its entirety by the following for the parts listed in this SBP Attachment 1B:

The period of performance for this work statement is [*****] through [*****] at which time Boeing has no further obligation to procure Attachment 1B statement of work from Seller. If a new 747 derivative airplane program is launched during this Period of Performance, Seller shall retain all rights included in this SBP Attachment 1B for that derivative airplane program.

[*****] prior to the end of the [*****] period of performance, Buyer will notify Seller of Buyers intent to either competitively bid the SBP Attachment 1B statement of work or negotiate pricing with Seller as a single source supplier.

2.
With reference to SBP Section 4.1 Recurring Price, wording in section 4.1 is superseded in its entirety by the following for the statement of work listed in this Attachment 1B:

The Price of Recurring Products is set forth in Attachment 1B of the SBP and includes the total Price for all baseline statement of work under this Attachment 1B, subject to any applicable adjustments under SBP Section 7.0. Change Provisions, pricing shall be included as an update to SBP Attachment 1 and SBP Attachment 7 Indentured Parts List and POA Pricing upon execution of this Amendment 1B.


747-8 Nacelle Shipset Pricing

The Nacelle shipset consists of [*****] Inlet, [*****] Fan Cowl and [*****] Exhaust Nozzle / Plug Kits. The [*****] Nacelle shipset baseline pricing shall be [*****]. Individual component pricing shall be [*****] for the Inlet, [*****] for the Fan Cowls and [*****] for the Exhaust Nozzle/Plug Kits. Per part Prices are contained in Exhibit A to this SBP Attachment 1B. For the avoidance of doubt, Exhibit A to SBP Attachment 1B will be used for the purposes of ordering and calculating thresholds.

For clarification purposes, the Pricing in the MOA in August 2007 is for the baseline statement of work, 314U800-01 Rev New dated December 6, 2006, and all Changes subsequent to the baseline statement of work are not included in the SBP Attachment 1B pricing set forth above.
     
If Buyer, [*****] prior to the [*****] Period of Performance end date has notified Seller of its intent to contract with Seller as a single source supplier, then [*****] prior to the end of the [*****] period of performance, Seller will propose pricing for the following [*****] or a period agreed upon by the Parties. The Parties will negotiate pricing in good faith based on then-prevailing market conditions for 747-8 Nacelle hardware.



Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 51 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


3.
With reference to SBP Section 4.1.1 Interim Extension Pricing, wording in section 4.1.1 is superseded in its entirety by the following for the statement of work listed in this SBP Attachment 1B:

If the Parties are unable to reach agreement on pricing by the date which is [*****] prior to [*****], then such matter shall be resolved pursuant to GTA Section 33.0. If any dispute for pricing continues after the period of performance then interim pricing shall be established. Interim pricing shall be the then current Attachment 1B Exhibit A Non-Discounted Price escalated annually using the indices outlined below. At such time as a resolution on pricing has been achieved, an appropriate debit or credit will be made retroactive to the day after the expiration of the period of performance of this Attachment 1B of the SBP.
A.
Material - [*****].
B.
Labor - [*****].
In the event the U.S. Bureau of Labor Statistics discontinues or alters its current method of calculating the indices specified above, Boeing and Seller shall agree upon an appropriate substitution for or adjustment to the indices to be employed herein.
Boeing will use the above referenced indices to calculate the appropriate escalation factor based on actual index growth for the previous twelve (12) months using a composite of [*****]. Then current SBP Attachment 1 pricing will be revised to include this escalation factor for deliveries in the following year. 
4.
Unless otherwise provided under written agreement between the Parties, payments shall be paid in accordance with SBP Section 5.2.
5.
Non-Recurring Tooling payment shall be paid in accordance with SBP Section 5.2.1.
6.
With reference to SBP Section 7.5 Schedule Acceleration/Deceleration and SBP Attachment 6 Lead Time Matrix, the 747-8 Nacelle Hardware listed in this Attachment 1B will be subject to the same 747 Strut / Nacelle (S/N) Lead Times, as outlined in Amendment 5 of SBP MS-65530-0016 Attachment 6, column 747.
7.
With reference to SBP Attachment 16 Boeing Provided Details and Supplier Banked Material, Attachment 16 will be updated to reflect the current GE115 Boeing Provided Details for installation on the Inlet.









Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 52 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


8.
With reference to SBP Attachment 20 Quantity Based Price Adjustment Formula, Attachment 20 is deleted in its entirety and not applicable for the statement of work listed in this Attachment 1B.

9.
With reference to SBP Attachment 22 Abnormal Escalation, Attachment 22 is deleted in its entirety and not applicable for the statement of work listed in this Attachment 1B.

The Parties acknowledge and agree that those provisions that have been amended in this Attachment 1B do not amend the same provisions for the rest of the Contract.














































Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 53 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


SBP Attachment 1B Exhibit A
Major Model
End Item Number
Description
MMC
Non-Discounted Price
Comments
CCN
[*****]



















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 54 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Exhibit C to SBP Amendment NO. 30
Attachment 1C

RESERVED


























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 55 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


EXHIBIT D TO SBP AMENDMENT NO. 30
SBP Attachment 1D

Recitals

The statement of work for 737 MAX Composite Inner Wall listed in this SBP Attachment 1D (MAX Composite Inner Wall SOW 1D) is subject to all terms and conditions of SBP MS-65530-0016 as amended.

MAX Composite Inner Wall SOW

Part Numbers for this SOW will be defined by [*****], which is due to be published on [*****]. The content of [*****] is subject to mutual agreement of the Parties and will not represent any material change impacting Price to the unpublished version reviewed by both Parties that is dated [*****]. SOW represents Composite Inner Wall Panels, a Thermal Protection System, and changes to the interface and surrounding structure to accommodate installation to MAX Thrust Reverser based on IWS Rev [*****].
The Price shall be $[*****] per shipset and not subject to the [*****] set forth in SBP Attachment [*****] Section [*****] beginning with incorporation of the above-defined SOW at MAX line unit [*****] per Master [*****] [*****] and [*****]. Pricing is firm fixed through [*****], subject to adjustment beginning [*****]as defined herein.
Adjustment shall be calculated based on the actual index change for the previous twelve (12) months using a composite of [*****]. The indices to be used are as follows: [*****]. In the event the U.S. Bureau of Labor Statistics discontinues or alters its current method of calculating the indices specified above, Boeing and Seller shall agree upon an appropriate substitution for or adjustment to the indices to be employed herein.
Any reference to SBP Attachment 1 Work Statement and Pricing in this SBP is applicable to the MAX Inner Wall SOW 1D with the following exceptions:

1.
With reference to SBP Section 4.1 Recurring Price, Section 4.1 is replaced by the following only for the statement of work listed in this SBP Attachment 1D:

The Price of Recurring Products is set forth in SBP Attachment 1D includes the total Price for all baseline statement of work under this SBP Attachment 1D, subject to any applicable adjustments under SBP Section 7.0 Change Provisions. Pricing shall be included as an update to SBP Attachment 1 and SBP Attachment 7 Indentured Parts List and POA Pricing upon execution of this SBP Attachment 1D.

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 56 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



The Parties acknowledge and agree that those provisions that have been amended in this SBP Attachment 1D do not amend the same provisions with regard to the rest of the Statement of Work under the SBP.






























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 57 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


EXHIBIT E TO SBP AMENDMENT NO. 30
A10.2.10      Relocation/Subcontract Notification (Puget Sound only)
The Seller shall not relocate or subcontract any Category I or II work outside the U.S. without written Boeing acceptance. Boeing acceptance is not to be unreasonably withheld, conditioned, or delayed. Notification to Boeing should be made to the Procurement Agent who manages the Seller's contract and shall contain the subcontractor name, address, telephone number, QA manager name, applicable part numbers, and part descriptions. Category I and II work is defined in FAA Order 8120.2, Appendix 4.
    






















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 58 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


EXHIBIT F TO SBP AMENDMENT NO. 30 (NON-737 CONSTRAINTS UNCHANGED)
SBP Attachment 15
MAXIMUM PRODUCTION RATE
And MODEL MIX CONSTRAINT MAT RIX
(Reference SBP Section 7.5.1)
737: Applicable [*****] Maximum Production Rates until rate [*****] implementation

 Attachment 15
MODELS
Monthly
Wichita
STRUCTURES
 
Engines
 
Production Protection Rate
Capacity
MIX
Units Separation
Skin Polish
 
PSD
Protection
WCH Capacity
737
[*****] Units
[*****] Units
 
 
 
 
[*****]
[*****]
 
 
MAXIMUM Output @ [*****] /mo
 
 
 
 
 
[*****]
 
 





Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 59 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Applicable [*****] Maximum Production Rates until rate [*****] implementation (continued)
NOTES: The number of [*****], and [*****] airplanes shown above reflect a total capability of [*****]. The number of [*****] airplanes shown above reflect a total capability of [*****]. The number of [*****] model airplanes which can be manufactured with a corresponding reduction in the number of [*****] models is [*****] with [*****] of separation between [*****] model units. Production capacity and combinations of [*****] and [*****] models are limited to a total of [*****] with [*****] of separation . The combinations in the matrix above reflect the number of [*****] airplanes that can be produced with a corresponding reduction in [*****] models.
 
 
 
 
 
 
 
 
 
 
NOTES: The maximum [*****] deliveries shown above reflect a total capability of [*****] with the following limitations:
Combined [*****] deliveries will never exceed a total [*****] and will be reduced inline with the [*****] implementation
Maximum combined [*****] deliveries shall not exceed [*****]
A minimum of [*****] of Separation [*****] between any [*****] deliveries of any [*****] will result in a corresponding reduction in the number of other [*****]
deliveries
[*****] deliveries are limited to [*****],
[*****] deliveries of [*****] and [*****] models are limited to a total of [*****] with at least [*****] of separation
The [*****] deliveries include all models of the [*****] aircraft (i.e. [*****])
Maximum Protection Rate will not go above [*****] to  [*****] before [*****] (All dates below are Spirit FOB dates)
Combined Maximum Protection Rate for [*****]will not exceed [*****]prior to [*****]
Combined Maximum Protection Rate for [*****]will not go above [*****]to [*****]prior to [*****]
Combined Maximum Protection Rate for [*****]will not go above [*****]to [*****]prior to [*****]
Combined Maximum Protection Rate for [*****]will not go above [*****]to [*****]prior to [*****]
Combined Maximum Protection Rate for [*****]will not go above [*****]to [*****]prior to [*****]
Combined Maximum Protection Rate for [*****]will not go above [*****]to [*****]prior to [*****]
Combined Maximum Protection Rate for [*****] models will not go above [*****]to [*****]prior to [*****]


















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 60 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Applicable [*****] Maximum Production Rates until rate [*****] implementation
MAXIMUM PRODUCTION RATE
Models
Monthly Production Protection Rate
Units/M-Days Separation
[*****]
*   Monthly Production Protection Rates are based on [*****] .
**Subject to below model mix constraints [*****] deliveries of any [*****] will result in a corresponding reduction in the number of other models [*****]
     Table “[*****] MODEL MIX CONSTRAINTS (Airplanes with [*****])”
     Table “[*****] MODEL MIX CONSTRAINTS ([*****])”
 
[*****] MODEL MIX CONSTRAINTS (Airplanes with [*****])
Capacity
[*****]
[*****]
[*****]
[*****]
 
 
 
 
[*****] MODEL MIX CONSTRAINTS ([*****])
Capacity
[*****]
[*****]
[*****]
[*****]


Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 61 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Applicable [*****] Maximum Production Rates until rate [*****] implementation (continued)
NOTES:
The maximum [*****] deliveries shown above reflect a total capability of [*****] with the following limitations:
•
Maximum combined [*****] deliveries shall not exceed [*****]
•
A minimum of [*****]of Separation ([*****]) between any [*****]
•
[*****]must utilize the [*****] or [*****]
•
[*****]must utilize the [*****]
•
[*****]deliveries are limited to [*****]
•
At rate [*****]- [*****]of separation on [*****]between [*****]
•
[*****] deliveries of [*****]and [*****]models are limited to a total of [*****]
•
The [*****] deliveries include all models of the [*****] aircraft (i.e. [*****])
•
Maximum [*****] Protection Rate will not go above [*****]to [*****]before [*****] (Spirit FOB)
•
Combined Maximum Protection Rate for [*****]will not go above [*****]to [*****] prior to [*****](Spirit FOB)
•
Combined Maximum Protection Rate for [*****]will not go above [*****]to [*****] prior to [*****](Spirit FOB)
•
Combined Maximum Protection Rate for [*****]will not go above [*****]to [*****] prior to [*****](Spirit FOB)
•
Combined Maximum Protection Rate for [*****]will not go above [*****]to [*****] prior to [*****](Spirit FOB)
•
Combined Maximum Protection Rate for [*****]will not go above [*****]prior to [*****](Spirit FOB for rate [*****])










Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 62 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Applicable Maximum Production Rates at rate [*****]

MAXIMUM PRODUCTION RATE
Models
Monthly Production Protection Rate
Units/M-Days Separation
[*****]
*[*****] and [*****] not available once [*****] is implemented
**Subject to below model mix constraint tables - [*****] deliveries of any [*****] will result in a corresponding reduction in the number of other models [*****]
         Table “[*****]MODEL MIX CONSTRAINTS (Airplanes with [*****])”
         Table “[*****]MODEL MIX CONSTRAINTS ([*****])”
 








Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 63 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Applicable Maximum Production Rates at rate [*****] (continued)

 [*****] MODEL MIX CONSTRAINTS (Airplanes with [*****])
Capacity
[*****]
[*****]
[*****]
[*****]
 
 
 
 
 [*****] MODEL MIX CONSTRAINTS ([*****])
Capacity
[*****]
[*****]
[*****]
[*****]







Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 64 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Applicable Maximum Production Rates at rate [*****] (continued)

[*****] Constraint Matrix; if rates drop below [*****] the constraints associated with [*****] still apply in the same fashion as if Boeing was still producing at [*****] (i.e., [*****]), and [*****], or [*****]) are available to be built in [*****] .

NOTES:
The maximum [*****] deliveries shown above reflect a total capability of [*****] with the following limitations:

•
Maximum combined [*****] deliveries shall not exceed [*****]
•
A minimum of [*****] of Separation [*****] between any [*****]
•
Maximum combined [*****] deliveries shall not exceed [*****]
•
[*****] must utilize the [*****]
•
[*****] cannot have more than [*****] scheduled on [*****] and cannot have more than [*****] in a consecutive [*****] span
•
[*****] must utilize the [*****]
•
[*****] deliveries are limited to [*****]
•
At rate [*****]-[*****] of separation on [*****] between [*****] and/or [*****]
•
[*****]deliveries of [*****] and [*****] models are limited to a total of [*****]
•
The [*****] deliveries include all models of the [*****] aircraft (i.e., [*****])
•
Maximum [*****] Protection Rate will not go above [*****] to [*****] before [*****] (Spirit FOB) unless otherwise agreed by both Parties
•
Combined Maximum Protection Rate for [*****] will not exceed [*****]prior to [*****] (Spirit FOB)
•
Combined Maximum Protection Rate for [*****] will not go above [*****] to [*****] prior to [*****] (Spirit FOB)
•
Combined Maximum Protection Rate for [*****] will not go above [*****] to [*****] prior to [*****] (Spirit FOB)
•
Combined Maximum Protection Rate for [*****] will not go above [*****] to [*****] prior to [*****] (Spirit FOB)
•
Combined Maximum Protection Rate for [*****] will not go above [*****] to [*****] prior to [*****] (Spirit FOB)
•
Combined Maximum Protection Rate for [*****] will not go above [*****] to [*****] prior to [*****] (Spirit FOB)






Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 65 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



EXHIBIT G TO SBP AMENDMENT NO. 30

SBP ATTACHMENT 16
BOEING PROVIDED DETAILS (BPD)
AND SUPPLIER BANKED MATERIAL (SBM )
(Reference clause 12.13.1)
ATA Stringers Pricing Period of Performance

a)
Boeing Provided Details (BPD)
This SBP Attachment 16 identifies Boeing Provided Details (parts) and their associated purchase price which are currently being provided to Seller.
Seller shall provide Boeing with discrete schedules (lead-time away) which depicts Seller’s requirements for these parts.
Attachment 16 will continue to be updated / revised to reflect any additional identified BPD or work transfer activity.
b)
ATA Stringers Pricing
The pricing set forth in this Attachment 16 for ATA Stringers is from January 1, 2016 through December 31, 2022. For the purpose of this SBP Attachment 16, Non-Discounted ATA Stringer Price means the pricing prior to application of production rate-based discounts as described in SBP Attachment 1 Table 1. Non-Discounted ATA Stringer Prices are listed in SBP Attachment 16 Exhibit A.
The Parties agree the SBP Attachment 1 Table 2 (737 Pricing Reference Table) shall be utilized for ATA Stringers throughout the pricing period. Column pricing for ATA Stringer prices are identified in Attachment 16 Exhibit A.
For the avoidance of doubt, ATA Stringer pricing from January 1, 2016 through December 31, 2022 shall be subject to the same discount methodology as set forth in SBP Attachment 1 Section 2.a). Such ATA Stringer prices are reflected in SBP Attachment 16 Exhibit A.
c)
ATA Stringers Interim Pricing
ATA Stringer pricing on and after January 1, 2023 shall be subject to the same interim pricing methodology as set forth in SBP Attachment 1 Section 2.b), excluding 2.b)ii.

d)
737 ATA Stringer POA Pricing
The price for POA ATA Stinger requirements shall be the price for such products listed in this SBP Attachment 16 multiplied by a factor of [*****].

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 66 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



e)
Supplier Banked Material (SBM):
Requirements managed per Bonded Stores Agreement (BSA) dated
February 1, 2006.

 
 
SUPPLIER BANK MATERIAL (SBM)
 
Product Number
Program
Description
Quantity per S/S
[*****]

[4 Pages Omitted]
 





















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 67 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


SBP Attachment 16 Exhibit A
ATA Stringer Pricing
Part Number
Description
Non-Discounted ATA Stringer Price
Column A
Column B
Column C
Column D
Column E
[*****]

[78 Pages Omitted]














Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 68 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


EXHIBIT H to SBP AMENDMENT NO. 30

SBP Attachment 20

RESERVED

























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 69 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


EXHIBIT I TO SBP AMENDMENT NO. 30
SBP ATTACHMENT 22
ABNORMAL ESCALATION
(Reference SBP 4.1)

1.
Prices for Recurring Products will be adjusted for Abnormal Escalation as provided below. In the event that escalation, as forecast by a composite of the identified below indices, exceeds [*****] for any given calendar year (“Abnormal Escalation”), the Prices for Recurring Products for the subsequent calendar year shall be adjusted by that percentage value which exceeds [*****]. Abnormal Escalation is calculated each year against the Prices for Recurring Products effective for that year and is not cumulative. The adjusted Prices for Recurring Products will revert back to the SBP Attachment 1 Prices for Recurring Products at the beginning of the subsequent calendar year.
Any prolonged extraordinary inflation would be considered by the Parties to determine any mutually agreeable proper actions to be taken.
2.
Adjustments to the Prices for Recurring Products will be determined by the following economic indices:
A.      Material - [*****].
B.      Labor - [*****].
Composite - [*****].
3.
Special Notes:
In the event the U.S. Bureau of Labor Statistics discontinues or alters its current method of calculating the indices specified above, Boeing and Seller shall agree upon an appropriate substitution for or adjustment to the indices to be employed herein.
All calculations will be held to a six (6) decimal place level of precision.
Indices shall be pulled on [November 15 th ] of each year.
4.
Abnormal Escalation Formula:
Adjustments to the Prices for Recurring Products, if any, for the Pricing Period and any Interim Pricing Period shall be calculated as follows:
[*****]





Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 70 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


Where [*****]
A = Adjusted Prices for Recurring Products (20X2 Price)
B = Then current applicable pricing per SBP Attachment 1
IP = Percentage of composite index as compared to the previous year
MC = Current material index value (September 20X1)
MP = Previous year material index value (September 20X0)
LC = Current labor index value (3 rd quarter 20X1)
LP = Previous year labor index value (3 rd quarter 20X0)

5.
Example: Abnormal Escalation Price Increase
B = $2,000,000
MC = September 2008 material index value = [*****]
MP = September 2007 material index value = [*****]
LC = 3 rd quarter 2008 labor index value = [*****]
LP = 3 rd quarter 2007 labor index value = [*****]

IP = [*****]
Since IP > [*****], clause is triggered

2009 Adjusted Price = [*****]
6. Example: Abnormal Escalation Clause Not Triggered
B = $2,000,000
MC = September 2008 material index value = [*****]
MP = September 2007 material index value = [*****]
LC = 3 rd quarter 2008 labor index value = [*****]
LP = 3 rd quarter 2007 labor index value = [*****]





Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 71 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


IP = [*****]
Clause not triggered because (IP < [*****])




























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


EXHIBIT J TO SBP AMENDMENT NO. 30

SBP ATTACHMENT 27

737 MAX Non-Recurring Agreement
This SBP Attachment 27 incorporates the Memorandum of Agreement (“MOA”) that was entered into as of April 7, 2014 (the “Effective Date”) by and between Spirit AeroSystems, Inc., a Delaware corporation, with its principal office in Wichita, Kansas (“Seller”), and The Boeing Company, a Delaware Corporation with an office in Seattle, Washington ("Boeing") , acting by and through the Boeing Commercial Airplane business unit . Hereinafter, the Seller and Boeing may be referred to individually as a Party or jointly as Parties hereto.
RECITALS
A.
Boeing and Seller have entered into an agreement SBP-MS-65530-0016 (SBP), GTA-BCA-65530-0016 (“GTA”) and AA-65530-0016 (AA) and all attachments and amendments thereto “Sustaining Contract" for Seller to provide product for current model aircraft and derivatives of those models.
B.
Seller currently supplies Products to Boeing under the Sustaining Contract in support of the current production 737 model aircraft.
C.
Boeing is seeking to develop, design and manufacture an aircraft currently designated as the 737 MAX to be sold under the 737-7 (7150), 737-8, 737-9, 737-8200, and 737-10 designations (the “737 MAX Program”).
D.
Boeing and Seller entered into interim pricing agreements documented under Contract Change Notice(s) (CCN) 6818 and 8015 against the Sustaining Contract for a portion of the costs incurred for design, stress and manufacturing engineering for fuselage, wing, thrust reverser and pylon Statements of Work (SOW) through December 31, 2013, the remainder of such costs the parties wish to account for in Section 2.2 of this SBP Attachment 27.
E.
Boeing and Seller entered into an interim pricing agreement documented under CCN 7586 against the Sustaining Contract for a portion of the costs incurred for the [*****] Thrust Reverser Statement of Work, the remainder of such costs the Parties wish to account for in Sections 2.2 and 10.0 of this SBP Attachment 27.
F.
Boeing and Seller wish to establish non-recurring pricing based upon the provisions of the Sustaining Contract and this SBP Attachment 27 in support of Boeing’s 737 MAX Program for the 737-7 (7150), 737-8,737-9, 737-8200, and 737-10 MAX models.




Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


Now, therefore, in consideration of the mutual covenants set forth herein, the Parties agree as follows:
1.0
Applicability and Definitions     
1.1
Applicability
1.1.1
This SBP Attachment 27 pertains only to the 737 MAX Program and does not alter any existing agreements relating to other items in the Sustaining Contract.
1.1.2
This SBP Attachment 27 only pertains to the non-recurring pricing for the 737 MAX Program.
1.1.3
Capitalized terms used herein but not otherwise defined shall have the meaning set forth in the Sustaining Contract.
1.2
Definitions
1.2.1
“Amended Type Certification” (ATC) means the date upon which type certificate amendment is received from the applicable regulatory body for the modified aircraft design.
1.2.2
“Baseline Statement of Work (BSOW)”: The total requirements set forth in Section 3.0 and Section 4.0 including any referenced Boeing specifications, documents, designs or manuals.
1.2.3
“[*****]”: The statement of work relating the titanium inner-wall for the aircraft described in the BSOW, which the Parties anticipate at this time to be performed by [*****].
1.2.4
“Initial Tooling”: All Tooling required for the first 737-8 Shipset unit and/or Engine Development Program (EDP) hardware, and such term shall subsequently apply to the 737-9, 737-7 (7150), 737-8200, 737-10 and the CIW.
1.2.5
“Non-Recurring-Non-Tooling Work”: Any Nonrecurring Work relating to the BSOW, other than Non-Recurring Tooling Work, including, but not limited to, design engineering, stress engineering, project manufacturing engineering, process manufacturing engineering, First Article Inspection, other IPT, and NC programming.








Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


1.2.6
“Non-Recurring Tooling Work”: Any Nonrecurring Work relating to Tooling under the BSOW, including, but not limited to, tool design, tool fabrication, assembly tooling, integration tooling, detail tooling, and rotable tooling, but replacement of Tooling at end of useful life is not included and is not dispositioned as part of this SBP Attachment 27. Non-Recurring Tooling Work includes Tooling work performed by Seller’s vendors.
1.2.7
[*****]: As applicable, the Initial Tooling [*****] Amount or the Rate Tooling [*****] Amount, in each case as set forth in Exhibit A.
1.2.8
“Rate Tooling”: All Tooling, other than the Initial Tooling, required to support the build rate for the 737-8, 737-9, 737-7 (7150), 737-8200, 737-10, and the CIW.
1.2.9
“Pre-Implementation Tooling”: Any tooling identified in Section 4.0 of Attachment 27 Baseline Statement of Work that is required prior to [*****] settlement for initial tools. CTLs for pre-implementation tooling will be included with initial tooling CTLs when they are submitted. Incentive [*****] calculations outlined in section 6.4 of this SBP Attachment 27 are not applicable to Pre-Implementation tooling until the final CTL for initial tooling is submitted.

2.0      Term and CCN Reconciliation
2.1
Effectiveness
This SBP Attachment 27 shall become effective on the Effective Date.
2.2
CCN Reconciliation
Within five (5) days of the Effective Date, Boeing will issue to Seller a Purchase Order to enable payment for the work performed by Seller in support of the 737-8 Aircraft during the period from [*****] through [*****], inclusive of [*****], in the amount of $[*****] and will pay such amount within net [*****] calendar days from receipt of invoice.
   

3.0
non-recurring-non-tooling Statement of Work
3.1
In performance of the BSOW, Seller shall perform to the applicable requirements and obligations set forth in the following documents in accordance with the delegated engineering requirements contained in the Sustaining Contract:
3.1.1
The work depicted in the current revision of the 737 MAX Configuration Control Document (CCD) [*****]for 737-8, [*****] and [*****] for 737-7, [*****] for 737-9, [*****] for MAX 200, [*****] for MAX BBJ8, [*****] for MAX BBJ7, and [*****] for BBJ9 for Fuselage, Propulsion, and Wing Statements of Work.


Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


3.1.1.1
Fuselage Structures Design Decision Memo [*****] for 737-7 (7150) Tailskid design and build on the first 737-7 (7150) MAX shipset (currently planned to be line unit [*****]).
3.1.2
Fuselage Structures System Requirements and Objectives (SR&O) 737 MAX Document [*****], Structures Fuselage Criteria Document [*****], Propulsion Specification Documents [*****], [*****], [*****];
3.1.3
The 737-8 Engineering Bill of Material (BOM) submitted by Seller, and listed in Exhibit [B] to this Attachment 27.
3.1.4
[*****], which is due to be published on [*****]. The content of [*****] is subject to mutual agreement of the Parties and will not represent any material change impacting Price to the unpublished version reviewed by both Parties that is dated [*****].
3.1.5 In the event Seller is unable to comply with any requirement, Boeing and Seller’s engineering representatives will work together to define a mutually agreeable solution.
3.2
Program Schedule Baseline: Program baseline schedules as contained in Exhibit D to this Attachment 27.
3.3
The Parties agree the documents set forth in this Section 3 are the versions existing as of the date of SBP Amendment No. 30 .

4.0
non-recurring tooling Statement of Work
In performance of the BSOW, Seller shall perform to the requirements and obligations set forth in the following documents and in accordance with the tooling requirements contained in the Sustaining Contract:
4.1
The Tooling Baseline consists of:
4.1.1
CCD [*****], with proposed revisions, submitted with letter [*****];











Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Special Business Provisions
MS-65530-0016
Amendment No. 30


4.1.2
The 737-8 Engineering Bill of Material (BOM) submitted by Seller, associated with CCD [*****], as set forth in Exhibit [B] to this Attachment 27;

4.1.3
The Tooling List submitted by Seller, associated with CCD [*****] as set forth in Exhibit [C] to this Attachment 27;

4.1.4 The August 1, 2013 version of the 737MAX Baseline Master Phasing Plan MPP, [*****], initially dated [*****], as set forth in Exhibit [D] to this Attachment 27;

4.1.5
[*****], which is due to be published on [*****]. The content of [*****] is subject to mutual agreement of the Parties and will not represent any material change impacting price to the unpublished version reviewed by both Parties that is dated [*****]; and,

4.1.6 Modification of [*****] required to support Initial Tooling requirements for the 737MAX-10X Fuselage (“Pre-Implementation Tooling”).

4.2
For the avoidance of doubt, the BSOW referenced here is for the 737 MAX -8 Non-Recurring Work. Pricing, ground rules, statements of work, unique terms and non-recurring price for the other 737 MAX minor models will be subsequently agreed and incorporated into this SBP Attachment 27 at a later date.

5.0
PAYMENT FOR Non-Recurring Non-Tooling WORK

In consideration for Seller’s performance of the Non-Recurring Non-Tooling statement of work identified in Section 3.0 and other mutual covenants set forth herein, the Parties agree to the following.
5.1
Payment
5.1.1
Boeing will re i mburse Seller for all costs incurred less any rebates and discounts in performance of the Non - Recurr i ng Non - Tooling Work up to [*****], including , but not li mited to , [*****] , all as set forth in Exhibit [E] to this Attachment 27 .

5.1.2
Seller will invoice its costs incurred less any r ebates and d i scounts i n performance of the Non- Recurring Non-Tooling Work up to Amended Type Certification for 737-7 (7150), 737-8, 737-9, 737-8200, 737-10, BBJ8, BBJ7, and BBJ9 [*****], for the [*****] period preceding the month of invoice , and for other agreed to costs that

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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MS-65530-0016
Amendment No. 30


have not been previous l y invoiced . ( [*****] invoice to be subm i tted upon s i gnat u re of the MOA that is now this SBP Attachment 27).
P u rchase orders will be released in t h e fo ll owing manner to enab l e invoic i ng of the Non - Recurring Non-Tooling Define statements of work .
▪
737 - 8 Fuselage Non - Recurring Non-Tooling Define PO 843948 item 05
▪
737-8 Wing Non-Recurring Non-Tooling Define PO 843951 item 03
▪
737-8 Pylon Non-Recurring Non - Tooling Define PO 849241 item 11
▪
737-8 Thrust Reverser Non-Recurr i ng Non - Tooling Define PO 849241 item 08

▪
737 - 9 Fuselage Non-Recurring Non-Too l ing Define PO 843948 item 06
▪
737-9 Wing Non-Recurring Non-Tooling Define PO 843951 item 04
▪
737 - 9 Pylon Non - Recurring Non-Tooling Define PO 849241 item 12
▪
737-9 Thrust Reverser Non-Recurring Non-Tooling Define PO 849241 item 09

▪
737-7 (7150) Fuselage Non - Recurring Non-Tooling Define PO 843948 item 07
▪
737-7 (7150) Wing Non-Recurring Non-Tooling Define PO 843951 i tem 05
▪
737-7 (7150) Pylon Non-Recurring Non-Tooling Define PO 849241 item 13
▪
737-7 (7150) Thrust Reverser Non-Recurring Non-Tooling Define PO 849241 item 10

▪
737-8200 Fuselage Non - Recurring Non-Tooling Define PO 843948 item 08
▪
737-8200 Wing Non-Recurring Non-Tooling Define PO XXXXXX i tem XX
▪
737-8200 Pylon Non-Recurring Non-Tooling Define PO XXXXXX item XX
▪
737-8200 Thrust Reverser Non-Recurring Non-Tooling Define PO XXXXXX item XX




















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Special Business Provisions
MS-65530-0016
Amendment No. 30


▪
MAX BBJ8 Fuselage Non - Recurring Non-Tooling Define PO 843948 item 09
▪
MAX BBJ8 Wing Non-Recurring Non-Tooling Define PO XXXXXX i tem XX
▪
MAX BBJ8 Pylon Non-Recurring Non-Tooling Define PO XXXXXX item XX
▪
MAX BBJ8 Thrust Reverser Non-Recurring Non-Tooling Define PO XXXXXX item XX

▪
MAX BBJ7 Fuselage Non - Recurring Non-Tooling Define PO 843948 item 13

▪
MAX BBJ7 Wing Non-Recurring Non-Tooling Define PO XXXXXX i tem XX
▪
MAX BBJ7 Pylon Non-Recurring Non-Tooling Define PO XXXXXX item XX
▪
MAX BBJ7 Thrust Reverser Non-Recurring Non-Tooling Define PO XXXXXX item XX

▪
MAX BBJ9 Fuselage Non - Recurring Non-Tooling Define PO 843948 item 12
▪
MAX BBJ9 Wing Non-Recurring Non-Tooling Define PO XXXXXX i tem XX
▪
MAX BBJ9 Pylon Non-Recurring Non-Tooling Define PO XXXXXX item XX
▪
MAX BBJ9 Thrust Reverser Non-Recurring Non-Tooling Define PO XXXXXX item XX

▪
737 MAX CIW Non-Recurring Non-Tooling Define and Build PO 218899 item 01

Purchase orders will be released in the following manner to enable invoicing of the Non-Recurring Non-Tooling Bu i ld statements of work.
▪
737-8 Fuselage Non-Recurring Non-Tooling Build PO 843949 item 01
▪
737-8 Wing Non-Recurring Non-Tooling Build PO 843952 item 01
▪
737-8 Pylon Non-Recurring Non-Tooling Build PO 843942 item 04
▪
737-8 Thrust Reverser Non-Recurring Non-Tooling Build PO 843942 item 01

▪
737-9 Fuselage Non-Recurring Non-Tooling Build PO 843949 item 02
▪
737-9 Wing Non-Recurring Non-Tooling Build PO 843952 item 02
▪
737-9 Pylon Non-Recurring Non-Tooling Build PO 843942 item 05
▪
737-9 Thrust Reverser Non-Recurring Non-Tooling Build PO 843942 item 02

▪
737-7 (7150) Fuselage Non-Recurring Non-Tooling Build PO 843949 item 03
▪
737-7 (7150) Wing Non-Recurring Non-Tooling Build PO 843952 item 03
▪
737-7 (7150) Pylon Non-Recurring Non-Tooling Build PO 843942 item 06
▪
737-7 (7150) Thrust Reverser Non-Recurring Non-Tooling Build PO 843942 item 03

▪
737-8200 Fuselage Non-Recurring Non-Tooling Build PO 843949 item 04

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 79 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


▪
737-8200 Wing Non-Recurring Non-Tooling Build PO XXXXXX item XX
▪
737-8200 Pylon Non-Recurring Non-Tooling Build PO XXXXXX item XX
▪
737-8200 Thrust Reverser Non-Recurring Non-Tooling Build PO XXXXXX item XX”

5.1.3
Boeing will pay such invoices in accordance with SBP Section 5.2.1 after receipt of valid invoice and supporting data as defined in Exhibit [E] to this Attachment 27 along with a monthly description of significant accomplishments and work completed for the fuselage, wing, thrust reverser, pylon, and CIW statements of work. Seller will provide separate invoices for Fuselage, Wing, Thrust Reverser, Pylon, and CIW.

5.2
Rates
For clarification purposes, the rates described in Attachment 5 of the SBP do not apply.
5.3
Cost Allocation
Seller agrees that the cost allocation methodology utilized to derive costs incurred as of the Effective Date of this SBP Attachment 27 will not change without prior review and concurrence from Boeing. In the event public accounting requirements change Seller’s cost allocation methodology the Parties will work together to resolve impacts.


















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Special Business Provisions
MS-65530-0016
Amendment No. 30


6.0
PAYMENT FOR Non-Recurring Tooling WORK
In consideration for Seller’s performance of the Non-Recurring Tooling statements of work identified in Section 4.0 and other mutual covenants set forth herein, the Parties agree to the following.
6.1
Payment
6.1.1
Boeing will reimburse Seller for all actual costs incurred less any rebates and discounts in performance of the Non-Recurring Tooling Work including, but not limited to, [*****] as set forth in Exhibit [F] submittal form]; up to the [*****] values identified in Exhibit [A] for Initial Tooling and Rate Tooling by applicable minor model. The [*****] Amount in Exhibit [A] shall be deemed to be reduced by [*****] respectively until all Certified Tool Lists (CTLs) are submitted and approved. Upon submittal of all CTL records associated with each [*****] Amount, such deemed reduction shall no longer apply, and Boeing will pay Seller any remaining amount due for tooling costs incurred up to the [*****] Amount as set forth in Exhibit [A] to this Attachment 27.

6.1.2
Seller will invoice its costs for the Non-Recurring Tooling Work, [*****], for the [*****] period preceding the month of invoice, and for other agreed to costs that have not been previously invoiced.

6.1.3
Boeing will pay such invoices in accordance with SBP Section 5.2.1 after receipt of valid invoice and supporting data as defined in Exhibit [F] to this Attachment 27, Seller will provide separate invoices for Fuselage, Wing, Thrust Reverser, Pylon, and CIW work.

6.2
Rates
For clarification purposes, the rates described in Attachment 5 of the SBP do not apply.
6.3
Invoicing Requirements for Non-Recurring Tooling Work and Tooling Incentives
Seller will invoice Tooling separately by program (Fuselage, Wing, Thrust Reverser, Pylon) and by Initial Tooling and Rate Tooling, as applicable per Exhibit A to this Attachment 27, by 737-8, 737-9, 737-7 (7150), 737-8200, 737-10, and the CIW.






Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Special Business Provisions
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Amendment No. 30



Purchase orders will be released in the following manner to enable invoicing of the Non-Recurring Tooling statements of work.
▪
737-8 Fuselage Initial Tools PO 843950X item 01
▪
737-8 Fuselage Rate Tools PO 860487 item 02
▪
737-8 Wing Initial Tools PO 843953 item 01
▪
737-8 Wing Rate Tools PO 860488 item 01
▪
737-8 Pylon Initial Tools PO 849243 item 03
▪
737-8 Pylon Rate Tools PO 860489 item 06
▪
737-8 Thrust Reverser Initial tools PO 849243 item 01
▪
737-8 Thrust Reverser Rate Tools PO 860489 item 05

▪
737-7 (7150) Fuselage Initial Tools PO XXXXXX item XX
▪
737-7 (7150) Thrust Reverser Initial Tools PO XXXXXX item XX
▪
737-7 (7150) Pylon Initial Tools PO XXXXXX item XX
▪
737-7 (7150) Wing Initial Tools PO XXXXXX item XX

▪
737-8200 Fuselage Initial Tools PO XXXXXX item XX
▪
737-8200 Thrust Reverser Initial Tools PO XXXXXX item XX
▪
737-8200 Pylon Initial Tools PO XXXXXX item XX
▪
737-8200 Wing Initial Tools PO XXXXXX item XX

▪
737-10 Fuselage Initial Tools PO XXXXXX item XX
▪
737-10 Thrust Reverser Initial Tools PO XXXXXX item XX
▪
737-10 Pylon Initial Tools PO XXXXXX item XX
▪
737-10 Wing Initial Tools PO XXXXXX item XX

▪
737-9 Fuselage Initial Tools PO 843950 item 05
▪
737-9 Thrust Reverser Initial Tools PO 849243 item 10

▪
737 MAX CIW Line unit [*****] Initial Tools PO 860489 item 04

▪
737-9 Initial Tool 2016 Incentive Payment PO 843950 item 06
▪
737 CIW line [*****] 2016 Incentive Payment PO 860489 item 07
▪
737-9 Initial Tool 2017 Incentive Payment PO 843950 item 07
▪
737 CIW line [*****] 2017 Incentive Payment PO 860489 item 08

▪
737-10X Fuselage Pre-Implementation Tools PO 218902 item 01

The Parties shall negotiate [*****] Amounts for Initial Tooling and Rate Tooling as applicable within [*****] from receipt of Seller’s fully supported proposal. Upon settlement the Parties will amend Exhibits A and C within [*****] to reflect the agreed pricing.


Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Special Business Provisions
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Amendment No. 30


6.4
Incentive Fee
6.4.1
Upon submittal of all CTL’s associated with each [*****] Amount set forth in Exhibit A ([*****]), if Seller’s actual costs incurred in the completion of such work are less than the [*****] Amount, and taking into account any adjustments to such [*****] Amount pursuant to Section 8.0 (Changes), then Boeing shall pay to Seller, in addition to the amounts due under Section 6.1 (Payment), an incentive fee equal to [*****] as amended from time to time and agreed to between the parties per section 6.7 ([*****]).
6.4.2
If an incentive is earned in accordance with 6.4.1, Boeing will provide a purchase order within [*****]. Upon receipt of valid invoice from Seller, Boeing will pay such invoices in accordance with SBP 5.2.1.

6.4.3
For the purposes of the [*****]Initial Tooling and the MAX CIW Line Unit [*****]tooling, Boeing shall pay to Seller an incentive fee of no more than [*****]. The total incentives will be calculated in accordance with Section 6.4.1 of this SBP Attachment 27, subject to the caps described above. The Parties agree that nothing in this Section 6.4.3 shall have the effect of establishing any precedent with respect to the calculation of any future incentive fee, whether via this SBP Attachment 27 or otherwise.

6.4.4
For the purposes of the [*****] Initial Tooling, Boeing shall not pay to Seller an incentive fee. The Parties agree that nothing in this Section 6.4.4 shall have the effect of establishing any precedent with respect to the calculation of any future incentive fee.

6.4.5
For the purposes of the [*****] and [*****] Initial Tooling, Boeing shall pay to Seller an incentive fee of no more than $[*****] in total. The total incentive will be calculated in accordance with Section 6.4.1 of this SBP Attachment 27, subject to the caps described herein. The Parties agree that nothing in this Section 6.4.5 shall have the effect of establishing any precedent with respect to the calculation of any future incentive fee, whether via this SBP Attachment 27 or otherwise.

6.5
Schedule
The implementation schedule for the Non-Recurring Tooling Work will be provided on Exhibit [C].
6.6      Capacity
The pricing applicable to the Non-Recurring Tooling Work described herein, as set forth in Exhibit [A] hereto, is based upon supporting a maximum quantity of [*****] Shipsets for the 737 aircraft per month in any of the specified combinations: [*****] per the agreed to transition plan Exhibit [H]. Nothing herein affects the downside rate protection concerning minimum

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


production rates set forth in Section IV c. (“Failure to Maintain Rate after FOB Dates”) of the Boeing - Seller Memorandum of Agreement dated March 9, 2012.
This SBP Attachment 27 does not govern 737-8 MAX Rate Tooling for rates above [*****], 737-9 MAX Rate Tooling for rates above [*****], CIW MAX Rate Tooling for rates above [*****], 737-7 (7150) MAX Rate Tooling up to and including rate [*****], 737-8200 MAX Rate Tooling up to and including rate [*****], and 737-10 MAX Rate Tooling up to and including rate [*****].
6.7     [*****] Amount Adjustments
6.7.1   If it is determined additional Tooling that is not driven by BSOW Change is required in excess of that set forth in the BSOW, all additional Tooling costs incurred to meet the requirements of initial build and rate, for the minor models and rates identified within Exhibit [A] to this SBP Attachment 27, will be assumed by Seller and the [*****] Amount shall not be adjusted.
6.7.2   If it is determined Seller can accomplish the requirements with less Tooling than that set forth in the BSOW, the [*****] Amount shall not be adjusted and the cost savings shall be administered in accordance with Section 6.4 (Incentive Fee).
6.7.3   For the sake of clarity, any Change from BSOW requested or driven by Boeing during the duration defined for Initial Changes shall constitute an Initial Change resulting in a commensurate adjustment to the [*****] Amount in accordance with Section 8.0. (Changes).

7.0
BUDGET TRACKING, MONTHLY ACTUALS, AND INVOICE RECONCILIATION
7.1
Monthly Actuals
Seller will provide monthly costs incurred less any rebates and discounts in performance of the Non-Recurring-Non-Tooling Work up to Amended Type Certification for 737-7 (7150), 737-8, 737-9, 737-8200, 737-10, BBJ7, BBJ8, BBJ9, and the CIW including, but not limited to, [*****], as set forth in Exhibit [E] along with a description of significant accomplishments and work completed for the fuselage, wing, thrust reverser and pylon statements of work.






  

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Special Business Provisions
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Amendment No. 30


7.2      Budget Tracking
7.2.1
In conjunction with submittals of costs incurred, Seller will provide to Boeing its projected expenditures in connection with the performance of the Non-Recurring Non-Tooling Work for the succeeding [*****] period, in the form of the template set forth in Exhibit [E].
7.2.2
At the end of [*****], Boeing will issue its budget forecast for the Non-Recurring Non-Tooling Work for the succeeding [*****] period.
7.2.3
The Parties agree that regardless of any variances between such budgets and Seller’s costs, Boeing will continue to pay Seller in accordance with Section 5.1.
7.2.4
Weekly reporting requirements
If requested, Seller will provide incurred weekly headcount information by IPT and Job function for Non-Recurring Non-Tooling.
7.2.5
Budget Management
Boeing and Seller will utilize the [*****] and [*****], if applicable, forecast and actual information to manage the program budget.
Boeing and Seller will work together to jointly manage the Boeing budget through the identification and implementation of forecasted spend reduction opportunities.
7.3      Schedule Performance Monitoring
7.3.1
Boeing and Seller will utilize the Event Tracking And Control (“ETAC”) reporting system to track design/stress engineering performance.
7.3.2   Boeing and Seller will utilize the Spirit Compliance And Tracking (“SCAT”) system to track non-define performance.
7.4
Invoice Reconciliation
7.4.1
In the event that Boeing disputes any Seller invoice, including without limitation, the invoice set forth in Section 2.2 above, Boeing will pay Seller the invoiced amount by the applicable deadline, in accordance with Section 5.1 or 6.1 (Payment), as applicable, but may review Seller’s books, records and documentation relating to the disputed amounts, provided that such review is conducted at reasonable times at Seller’s facility and that the scope of such review will not extend to any books, records, documentation or other information that is not necessary to support such disputed amounts. As a result of such review, any mutually agreed payment adjustments will be made in [*****]. Should the Parties fail to come to mutual agreement within [*****] of notification pursuant to Section 7.4.3, the Parties will resolve such disputes per GTA section 33.0.
7.4.2
The Parties recognize that Seller may in some instances have confidentiality obligations to third parties which limit the amount or nature of data that can be provided in invoice reconciliation. In such event, the Parties shall work together to determine

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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a mutually agreeable solution which enables the provision of supporting data in Section 7.4.1 in a manner that is in compliance with Seller’s confidentiality obligations to third parties.
7.4.3
Boeing will have [*****]from the date the invoice is received to notify Seller of any exception to the actual costs listed in such invoice, otherwise the invoice will be deemed accepted.

8.0
Changes
8.1
In the event of any Change to the BSOW, directed by Boeing prior to Amended Type Certification as applicable to each MAX minor model (an “Initial Change”):
8.1.1 The Parties will negotiate a schedule adjustment and any applicable adjustment to an [*****] Amount in accordance with Section 8.3 of this SBP Attachment 27.
8.1.2
Costs associated with any revisions to the BSOWs that constitute a Change under Section 6 of the SBP and fall within the time period designated for Initial Changes, shall be addressed in accordance with 5.1.1 of this SBP Attachment 27 for Non-Recurring-Non-Tooling Work and 6.1.1 for Non-Recurring Tooling Work.
8.2
For clarification purposes, the change provisions of this SBP Attachment 27, rather than the change provisions in Section 7.0 of the SBP, will govern with respect to Initial Changes (provided, that the term “Change” as used herein, shall have the same meaning as that defined in the SBP, except as modified by this SBP Attachment 27), and equitable price adjustment with respect to Initial Changes will not be subject to the price thresholds described in Section 7.0 of the SBP. For each MAX minor model, Changes following the Initial Change period for such minor model shall be governed by the Sustaining Contract. For the avoidance of doubt Section 6.0 of the SBP shall apply except for the reference to Section 7.0 contained therein.
8.3
Change Negotiation Process
8.3.1
Following receipt of a direction from Boeing that constitutes a Change under this SBP Attachment 27, Seller will provide updated scope of work documents to Boeing, along with pricing submittals, identifying the associated cost and/or schedule impacts.

8.3.2
Within [*****] of receipt of such proposal, Boeing shall make a settlement offer to Seller. Following receipt of Boeing’s settlement offer, if the Parties are unable to reach agreement on an equitable adjustment within [*****], the negotiations shall be elevated to Senior Contracts Management for resolution.

8.3.3
Upon settlement the [*****] Amounts and/or schedule, this SBP Attachment 27 will be adjusted by Contract Change Notice (CCN) for all adjustments agreed in writing between the parties.

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30




9.0
Weight
9.1.
Seller acknowledges the importance of an end item weight for the Products it delivers to Boeing and agrees to follow diligent weight reduction practices during the design process.
9.2
Based on the BSOW, Seller will provide non-binding Advisory Weight Guidelines (AWG) for the Seller provided dry products. No weight requirement, (such as those referenced in any requirement document) other than the AWG are applicable.
9.3
Such AWGs do not constitute a weight requirement, and failure to achieve such AWGs shall not constitute a breach under this SBP Attachment 27 or the SBP
9.4
These AWGs are for the end item level and are for production units only.
9.5
In addition, the above AWGs require that adjustments to AWG values be assessed in conjunction with Initial Changes having a weight impact.
9.6
Seller will provide Status Weight reporting and Actual Weight reporting once monthly via agreed to format.

















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30



10.0      [*****] STATEMENT OF WORK

10.1
The Parties continue to evaluate the transfer of the [*****] Statement of Work from Seller to Boeing. 

10.2
Until such time as the transfer agreement has been executed, Seller will invoice Boeing [*****] for payments made to [*****] pursuant to the [*****]Statement of Work, and Boeing will pay such invoices net [*****] days after receipt thereof. For the avoidance of doubt, Seller will not duplicate such amounts in any invoice submitted pursuant to Section 5.1 or 6.1.

10.3
In the event the Parties are unable to reach a transfer agreement by [*****] Boeing and Seller will negotiate additional payment provisions or inclusion of the [*****] Statement of Work into this SBP Attachment 27.


11.0
propulsion Engine Development Plan (EDP) and test hardware
11.1
The parties will negotiate pricing for EDP Hardware and test hardware by [*****].

12.0
INCENTIVES: NON-RECURRING-NON-TOOLING
Boeing and Seller agree to the inclusion of an Award Fee program for the Non-Recurring Non-Tooling Work based on schedule, quality, and cost performance in accordance with terms set forth in Exhibit G.
Boeing and Seller agree to work together to develop a design for cost incentive plan. This plan will be in addition to the incentives identified on Exhibit G.

13.0
MISCELLANEOUS
13.1
This SBP Attachment 27 including all Exhibits and Attachments contain the entire agreement between Seller and Boeing about the subject matter hereof and supersedes all previous proposals, understandings, commitments, or representations whatsoever, oral or written for said effort. This SBP Attachment 27 may be changed only in writing by authorized representatives of Seller and Boeing. Except as specified herein, all other terms of the Sustaining Contract apply. In the event of a conflict between the terms of this SBP Attachment 27 and the Sustaining Contract, the terms of this SBP Attachment 27 will have precedence.


Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


13.2
Reserved

13.3
The Parties will amend the Product Support and Assurance Document (PSAD) D6-83315 to incorporate the 737-7 (7150), 737-8, 737-9, 737-8200, 737-10, BBJ7, BBJ8, and BBJ9 models in Section 8.3.1 (a) “Warranty for Products”.
13.4
The D6-83323 Document denoting the 737 NG roles, responsibilities, and accountability for the 737 NG will apply to Seller’s engineering responsibility for the 737 MAX Products and nothing contained herein is intended to modify such allocation of roles, responsibilities and accountability for 737 MAX Products. For the avoidance of doubt, and despite reference to D6-83323 herein, the D6-83323 shall remain of lower precedence to the SBP, GTA, Purchase contract, and Order as specified in Section 13 (Order of Precedence) of the SBP.






















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


List of Exhibits

Exhibit A: Tooling [*****] Amounts
Exhibit B: Engineering Bill of Material
Exhibit C: Tooling Bill of Material
Exhibit D: Master Phasing Plan and Tier II Schedules
Exhibit E: Non-Recurring-Non-Tooling Cost Submittal Form
Exhibit F: Non-Recurring Tooling Cost Submittal Form
Exhibit G: Award Fee
Exhibit H: MAX Transition Plan
Exhibit I: 737-10 Rev [*****] Non-Recurring ROM estimates (Ref 3.1.5)






















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Seller Initials: Boeing Initials:
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Amendment No. 30


Exhibit A: Tooling [*****] Amounts
 
737-8 [*****] Amounts
Fuselage, Wing, and Propulsion End Items
(All SOW excluding CIW)
Initial Tooling [*****] Amount
$[*****]
Rate Tooling [*****] Amount to support up to and including [*****] APM
$[*****]

737-9 [*****] Amounts
Fuselage, Wing, and Propulsion End Items
(All SOW excluding CIW)
Initial Tooling [*****] Amount
$[*****]
Rate Tooling [*****] Amount to support up to and including [*****]APM
To be negotiated per SBP Attachment 27 Section 6.3

737-7 (7150) and 737-8200 [*****] Amounts
Fuselage, Wing, and Propulsion End Items
(All SOW excluding CIW)
Combined 737-7 (7150) and 737-8200 Initial Tooling [*****]Amount
$[*****]

737 MAX CIW [*****]
Composite Inner Wall (CIW)
Line Unit [*****] Amount
$[*****]
Rate Tooling [*****] Amount to support up to and including [*****] APM
To be negotiated per SBP Attachment 27 Section 6.3








Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


737-10 [*****] Amounts
Fuselage, Wing, and Propulsion End Items
(All SOW excluding CIW)
Pre-Implementation - Fuselage Integration [*****]
$[*****]
Initial Tooling [*****] Amount
$[*****]





























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


Exhibit B: Engineering Bill of Material


Engineering Bill of Material (E-BOM) for Fuselage, Pylon, Thrust Reverser, Flap, Fixed Leading Edge, Fixed Trailing Edge, Slat and K-Flap used for Non-Recurring Tooling base pricing is contained in file 737-8_E-BOM_CCD_Rev_F_Plus_Dated_January_2013.xlsx embedded below and attached to this Exhibit as a separate file due to the size of the file.

Embedded copy of CCD Rev F Plus E-BOM file
737-8_E-BOM_CCD_Rev_F_Plus_Dated_J





















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


Exhibit C: Tooling List

Tooling List for Fuselage, Pylon, Thrust Reverser, Flap, Fixed Leading Edge, Fixed Trailing Edge, Slat and K-Flap is contained in file 737_MAX_8_Rev_F_Tooling_Lists_GS.XLSX embedded below and attached to this Exhibit as a separate file due to the size of the file.


Embedded copy of MAX 8 Rev F Tooling List files
737_MAX_8_Rev_F-_Tooling_Lists_GS.XLS
Exhibit D: Master Phasing Plan and Tier II Schedules





































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Seller Initials: Boeing Initials:
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Amendment No. 30



IMG1A03.JPG





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Seller Initials: Boeing Initials:
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Amendment No. 30


IMG2A03.JPG






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Seller Initials: Boeing Initials:
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Amendment No. 30


IMG3A03.JPG

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Seller Initials: Boeing Initials:
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Amendment No. 30



IMG4A03.JPG

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Amendment No. 30


IMG5A03.JPG

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Seller Initials: Boeing Initials:
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Amendment No. 30


Exhibit E: Non-Recurring-Non-Tooling Cost Submittal Form
Summary Totals Page

737 MAX Non-Recurring Actuals
 
 
 
Cumulative through Date Month/Year
 
 
 
 
 
 
 
 
 
Hours
Fuselage
Pylon
TR
Wing
Total
Design Eng
 
 
 
 
 
Stress Eng
 
 
 
 
 
Project ME
 
 
 
 
 
Design Eng - Subcontract
 
 
 
 
 
Stress Eng - Subcontract
 
 
 
 
 
Process ME
 
 
 
 
 
NC
 
 
 
 
 
IPT
 
 
 
 
 
QA
 
 
 
 
 
Total Hours
 
 
 
 
 
 
 
 
 
 
 
Avg Rate
Fuselage
Pylon
TR
Wing
Total
Design Eng
 
 
 
 
 
Stress Eng
 
 
 
 
 
Project ME
 
 
 
 
 
Eng - Subcontract
 
 
 
 
 
Process ME
 
 
 
 
 
NC
 
 
 
 
 
IPT
 
 
 
 
 
QA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost
Fuselage
Pylon
TR
Wing
Total
Design Eng
 
 
 
 
 
Stress Eng
 
 
 
 
 
Project ME
 
 
 
 
 
Eng - Subcontract
 
 
 
 
 
Process ME
 
 
 
 
 
NC
 
 
 
 
 
IPT
 
 
 
 
 
QA
 
 
 
 
 
Total Cost
 
 
 
 
 



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Seller Initials: Boeing Initials:
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Amendment No. 30


Totals by Month

737 MAX Non-Recurring Actuals - Totals
 
 
 
Date (Month/Year)
 
 
 
 
 
 
 
 
 
Hours
Month
Month
Month
Month
Month
Design Eng
 
 
 
 
 
Stress Eng
 
 
 
 
 
Project ME
 
 
 
 
 
Design Eng - Subcontract
 
 
 
 
 
Stress Eng - Subcontract
 
 
 
 
 
Process ME
 
 
 
 
 
NC
 
 
 
 
 
IPT
 
 
 
 
 
QA
 
 
 
 
 
Total Hours
 
 
 
 
 
 
 
 
 
 
 
Avg Rate
Month
Month
Month
Month
Month
Design Eng
 
 
 
 
 
Stress Eng
 
 
 
 
 
Project ME
 
 
 
 
 
Eng - Subcontract
 
 
 
 
 
Process ME
 
 
 
 
 
NC
 
 
 
 
 
IPT
 
 
 
 
 
QA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost
Month
Month
Month
Month
Month
Design Eng
 
 
 
 
 
Stress Eng
 
 
 
 
 
Project ME
 
 
 
 
 
Eng - Subcontract
 
 
 
 
 
Process ME
 
 
 
 
 
NC
 
 
 
 
 
IPT
 
 
 
 
 
QA
 
 
 
 
 
Total Cost
 
 
 
 
 




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Seller Initials: Boeing Initials:
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Amendment No. 30


Totals by IPT

737 MAX Non-Recurring Actuals - (BY IPT)
 
 
 
Month, Year
 
 
 
 
 
 
 
 
 
Hours
Month
Month
Month
Month
Month
Design Eng
 
 
 
 
 
Stress Eng
 
 
 
 
 
Project ME
 
 
 
 
 
Design Eng - Subcontract
 
 
 
 
 
Stress Eng - Subcontract
 
 
 
 
 
Process ME
 
 
 
 
 
NC
 
 
 
 
 
IPT
 
 
 
 
 
QA
 
 
 
 
 
Total Hours
 
 
 
 
 
 
 
 
 
 
 
Avg Rate
Month
Month
Month
Month
Month
Design Eng
 
 
 
 
 
Stress Eng
 
 
 
 
 
Project ME
 
 
 
 
 
Eng - Subcontract
 
 
 
 
 
Process ME
 
 
 
 
 
NC
 
 
 
 
 
IPT
 
 
 
 
 
QA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost
Month
Month
Month
Month
Month
Design Eng
 
 
 
 
 
Stress Eng
 
 
 
 
 
Project ME
 
 
 
 
 
Eng - Subcontract
 
 
 
 
 
Process ME
 
 
 
 
 
NC
 
 
 
 
 
IPT
 
 
 
 
 
QA
 
 
 
 
 
Total Cost
 
 
 
 
 



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Seller Initials: Boeing Initials:
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MS-65530-0016
Amendment No. 30


Actuals by IPT
Actuals by IP
 
 
Date Month/Year
 
 
 
 
 
 
 
Hours
Month
Month
Month
Month
Design Eng
 
 
 
 
Stress Eng
 
 
 
 
Project ME
 
 
 
 
Offload DE
 
 
 
 
Offload SE
 
 
 
 
Process ME
 
 
 
 
NC
 
 
 
 
IPT
 
 
 
 
Tool Design
 
 
 
 
Tool Fab
 
 
 
 
Total Fuselage Hours
 
 
 
 
 
 
 
 
 
Dollars
Month
Month
Month
Month
Design Eng
 
 
 
 
Stress Eng
 
 
 
 
Project ME
 
 
 
 
Define Offload
 
 
 
 
Process ME
 
 
 
 
NC
 
 
 
 
IPT
 
 
 
 
Tool Design
 
 
 
 
Tool Fab
 
 
 
 
Total Fuselage Dollars
[*****]
[*****]
[*****]
[*****]
 
 
 
 
 
Dollars with G&A
Month
Month
Month
Month
Design Eng
—

—

—

—

Stress Eng
—

—

—

—

Project ME
—

—

—

—

Define Offload
—

—

—

—

Process ME
—

—

—

—

NC
—

—

—

—

IPT
—

—

—

—

Tool Design
—

—

—

—

Tool Fab
—

—

—

—

Total Fuselage Dollars
[*****]
[*****]
[*****]
[*****]
 
 
 
 
 

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Seller Initials: Boeing Initials:
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MS-65530-0016
Amendment No. 30




Exhibit F: Non-Recurring Tooling Cost Submittal Form

MAX In-house tooling template

737 MAX Nacelle Quarterly Analysis - SAMPLE
737 MAX Nacelle Tools Actuals as of the close of business month of January (2/6/2014) (SAMPLE)
 
 
 
 
 
IN-HOUSE HOURS
DOLLARS
 
TOTAL DOLLARS
Tool Number
Unit Number
Serial Number
TCS Order Status
EST Committed/Closed Date
FAB
DESIGN
TOTAL HOURS
FAB
DSN
SUBCONTRACT
FACILITIES ASSIST
MATERIAL
TOTAL DOLLARS
 
CUM-TO-DATE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


MAX Supplier tooling template
737 MAX STRUT SUPPLIER ACCOUNTABLE TOOLS - SAMPLE
Tool Number
Unit
Lifetime Serial
Open/Closed
Estimated Close Date
Cost
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 







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Seller Initials: Boeing Initials:
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MS-65530-0016
Amendment No. 30



EXHIBIT G: AWARD FEE
A.      Award Fee Plan
An Award Fee plan is provided to improve and assure the execution of the BSOW on Boeing products for the 737 MAX program. ("Award Fee” or “Award Fee Plan").
The Award Fee Plan establishes the basis for providing incentives to Seller, to improve in targeted areas of performance for the 737 MAX program under this SBP Attachment 27. This Award Fee Plan provides the means by which Seller’s performance evaluation will be conducted and amounts to be paid will be determined.

B.      Award Fee Pool
The available Award Fee amount (Award Fee Pool) is [*****].
The Award Fee Pool is allocated between Cost, Quality and Delivery as follows.
Cost: Total [*****]award fee
•
[*****] payable if [*****] Non-Recurring-Non-Tooling cost target is met, [*****] through [*****] of [*****]
•
[*****] payable if overall Non-Recurring-Non-Tooling cost target is achieved through 737-7 ATC. Value to be provided after [*****]
Quality: Up to [*****] if first pass release quality through CMA is in excess of [*****] and less than [*****] second effort driven by drawing error. Reference chart below for payment timing

Schedule: Up to [*****] if ETAC milestone completion is in excess of [*****] for 737-7, 737-8, and 737-9 ETAC performance. Reference chart below for payment timing
•
[*****] payable for ETAC releases [*****] on time
•
[*****] payable for ETAC releases [*****] on time

This value of the Award Fee Pool will be allocated by performance period and area of performance as per Section F (Award Fee Allocation and Payment Record). The actual Award Fees paid will be determined in accordance with the criteria contained in the table included in Section F (Award Fees Allocation and Payment Record). In no event does the Award Fee Plan affect other payments owed to Seller under this SBP Attachment 27.

C.      Award Fee Plan Changes
Changes to the Award Fee Plan affecting any current evaluation period may only be implemented upon mutual agreement of both parties. Boeing will notify Seller in writing of any change(s) to the Award Fee Plan.

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 105 of 145


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MS-65530-0016
Amendment No. 30



D.      Contract Termination
If this SBP Attachment 27 is terminated in accordance with the termination terms set forth under the Sustaining Contract and such termination is after the start of an Award Fee evaluation period, the Award Fee deemed earned for that period shall be determined by Boeing using the normal Award Fee evaluation process, provided that the Award Fee amounts earned will be pro-rated based on the time period this SBP Attachment 27 is in effect during the evaluation period. After termination, the remaining Award Fee amounts allocated to all subsequent Award Fee evaluation periods cannot be earned by Seller and, therefore, shall not be paid.

E.      Award Fee Allocation and Payment Record
The Award Fee earned by Seller will be determined at the completion of the evaluation periods shown in the Award Fee tables below. The total dollars shown corresponding to each period is the maximum available Award Fee amount that can be earned during that particular period. The Schedule and Quality categories are to be evaluated based on the individual models. The Cost category is to be evaluated based on the combined performance of all models (737-7 (7150), 737-8, and 737-9).

F.      Payment of Award Fee
Payment of the Award Fee shall be paid in accordance of SBP Attachment 5.2.1 after receipt of Seller's invoice.

Award Fee tables: Record of the total amount of Award Fee available and actual payments made.




















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 106 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


737-MAX Incentive Payment Plan Schedule for Schedule and Quality Incentive
Payment to be based on completion of schedules and meeting quality requirements by model (737-7)
Category
Performance Period Beginning Milestone
Performance Period Ending Milestone
Payment Trigger
Amount Available
Award Amount Calculation
Schedule
[*****]
Quality












Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 107 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


737-MAX Incentive Payment Plan Schedule for Schedule and Quality Incentive
Payment to be based on completion of schedules and meeting quality requirements by model (737-8)
Category
Performance Period Beginning Milestone
Performance Period Ending Milestone
Payment Trigger
Amount Available
Award Amount Calculation
Schedule
[*****]
Quality











Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 108 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30


737-MAX Incentive Payment Plan Schedule for Schedule and Quality Incentive
Payment to be based on completion of schedules and meeting quality requirements by model (737-9)
Category
Performance Period Beginning Milestone
Performance Period Ending Milestone
Payment Trigger
Amount Available
Award Amount Calculation
Schedule
[*****]
Quality




737-MAX Incentive Payment Plan Schedule for Cost Incentive
Payment to be based on meeting or exceeding Boeing cost targets for ll models (737-7,-8,-9)
Category
Performance Period Beginning Milestone
Performance Period Ending Milestone
Payment Trigger
Amount Available
Award Amount Calculation
Cost applies to 737-7, -8, -9 models only
[*****]
Cost applies to 737-7, -8, -9 models only







Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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MS-65530-0016
Amendment No. 30


EXHIBIT H - MAX Transition Plan IMG6A03.JPG EXHIBIT K TO SBP AMENDMENT NO. 30

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


SBP Attachment 28

RESERVED

















































Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


EXHIBIT L TO SBP AMENDMENT NO. 30
SBP ATTACHMENT 29
777X NON-RECURRING AGREEMENT
RECITALS     
A.      Boeing and Seller are parties to the Special Business Provisions SBP-MS      65530-0016 (the “ SBP ”); the General Terms Agreement GTA-BCA-65530      0016 (the “ GTA ”); and the Administrative Agreement AA-65530-0010 (AA)      and all attachments and amendments (collectively referred to as the      “Sustaining Contract”) for Seller to provide Product for current model      aircraft and Derivatives of those models.
B.      Seller currently supplies Products to Boeing under the Sustaining Contract      in support of the current production 777 model aircraft.
C.      Boeing is seeking to develop, design, and manufacture an aircraft      currently designated as the 777X to be sold under the 777-9 and 777-8      designations (the “777X Program”) and Boeing and Seller have agreed to      the 777X Statement of Work under 6-5A1-BOD-14-011R2, Amendment 1.
D.      Boeing and Seller wish to establish this amendment (“Amendment”) for      non-recurring effort in support of the Sustaining Contract for Boeing’s      777X Program for the 777-9 and 777-8 models.
NOW, THEREFORE, in consideration of the mutual promises and agreements herein, the Parties hereby agree as follows:

1.0
APPLICABILITY AND DEFINITIONS

1.1
Applicability

1.1.1
This Amendment pertains only to the 777X Program and does not alter any existing agreements relating to other items in the Sustaining Contract.

1.1.2
This Amendment pertains only to the non-recurring effort for the 777X Program.

1.1.3
Capitalized terms used herein but not otherwise defined shall have the meaning set forth in the Sustaining Contract.








Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


1.2    Definitions

1.2.1
“Amended Type Certification (ATC)”: means the date upon which type certificate amendment is received from the applicable regulatory body for the modified aircraft design.

1.2.2
“Baseline Statement of Work (BSOW)”: The total requirements set forth in Section 2.0 and Section 3.0 (including the referenced Boeing specifications, documents, designs or manuals therein).

1.2.3
“Initial Tooling”: All Tooling required for the first 777-9 Shipset unit and/or Engine Development Plan (EDP) hardware, and such term shall subsequently apply to the 777-8.

1.2.4
“Non-Recurring Non-Tooling Work”: Any Non-Recurring Work relating to the BSOW, other than Non-Recurring Tooling Work, including, but not limited to, design engineering, stress engineering, project manufacturing engineering, process manufacturing engineering, First Article Inspection, other IPT (Integrated Product Team), and NC (Numerical Control) programming.

1.2.5
“Non-Recurring Tooling Work”: Any Non-Recurring Work relating to Tooling under the BSOW, including, but not limited to, tool design, tool fabrication, assembly tooling, integration tooling, detail tooling, and rotable tooling, but replacement of Tooling at end of useful life is not included and is not dispositioned as part of this Amendment. Non-Recurring Tooling Work includes Tooling work performed by Seller’s vendors.

1.2.6
“Not To Exceed Amount (NTE Amount)”: As applicable, the Initial Tooling NTE Amount or the Rate Tooling NTE Amount, in each case as set forth in Exhibit A.

1.2.7
“Rate Tooling”: All Tooling, other than the Initial Tooling, required to support the build rate for the 777-9 aircraft.

1.2.8 “Overtime”: Overtime shall mean those hours worked in excess of forty (40) hours during Seller's standard work week.

1.2.9 “Initial Change”: Any change to the BSOW directed prior to Amended Type Certification.

1.2.10 “Quarter(s)”: Seller’s accounting quarters

1.2.11
“Major Change”: a change that is 1) equal to or greater than [*****]Seller estimated hours directed within the first [*****]months after [*****]is achieved or 2) a change that is equal to or greater than [*****]hours directed
subsequent to [*****]months after [*****]is achieved but no longer than [*****]months after [*****]is achieved. (See 777X ATC Process Flow, Exhibit I). Hours are determined based on all Non-Recurring activity.

1.2.12
“Accounting Year”: is based on Seller’s accounting year January 1 -December 31.

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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1.2.13
“Engineering Billing Rate”: The labor rate that Seller will submit to Boeing for the labor category of Engineering on a monthly basis.

1.2.14
“Engineering Cap Rate”: The maximum labor rate seller will submit to Boeing for the labor category of Engineering based on the annual true-up value. The true-up delta will be applied to all hours accumulated during the Seller’s Accounting Year.

1.2.15
“Engineering”: This term encompasses Seller’s Define Engineering, Stress Engineering, and Systems Engineering functions.     


2.0
NON-RECURRING NON-TOOLING STATEMENT OF WORK

2.1
In performance of the BSOW for the 777-9, Seller shall perform to the applicable requirements and obligations set forth in the documents identified in 2.1.1 through 2.1.10, all in accordance with the delegated engineering responsibilities contained in: (i) the letter agreement 6-5A1C-BOD-14-011R2, Amendment 1 (Attachment 2) between Boeing and Seller dated 2-20-2014; and (ii) that version of D6-83323 as ultimately revised subsequent to execution of this Amendment to specifically address 777X engineering delegation responsibilities. The 777X Baseline Requirements Documents Structure is as set forth in Exhibit [J].

2.1.1
The work depicted in the current revision of the 777X Configuration Control Document Rev. [*****], Configuration Description, Model 792-487, dated [*****] for 777-9X Fuselage, Propulsion, and Wing Statements of Work.
2.1.2
777X S41 Fuselage Work Package Handbook, September 23, 2015.
2.1.3
Structures Fuselage Criteria Document [*****], dated February 15, 2015.
2.1.4
777X Fuselage Structural Design Criteria Supplemental Sec 41 Document [*****], dated May 1, 2015.
2.1.5
     Reserved.
2.1.6
[*****], 777X Inlet Requirements and Criteria; dated June 26, 2015.
2.1.7
[*****], Specification for Thrust Reversers, dated June 29, 2015.
2.1.8
[*****], Requirements for Engine Pylon Structure 777X Aircraft, dated April 30, 2015.
2.1.9
[*****], 777X Nacelle Structural Analysis Criteria, dated June 10, 2015.






Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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2.1.10
The Engineering Bill of Material (BOM) submitted by Seller, and listed in Exhibit [B].
    
2.1.10.1 777-9 Engineering BOM, anticipated as follows:


 
 
Seller estimated completion
Boeing estimated completion
Propulsion
The propulsion BOM includes the EDP BOM and the Recurring BOM. Deltas between these BOMs will be covered under Section 7.1.
EDP BOM: See Attached Schedule [K].
Recurring BOM: estimated to be available in [*****].
Fuselage
Sec 41
[*****]
[*****]
 
Floor Beams
[*****]
[*****]
 
Seat Tracks
[*****]
[*****]
Wing
 
[*****]
[*****]


2.1.11 Program Schedule Baseline: Program baseline schedules as contained in Exhibit [D].

2.2
In the event Seller is unable to comply with any requirement, Boeing and Seller’s engineering representatives will work together to define a mutually agreeable solution.

2.3
For the avoidance of doubt, the BSOW referenced here is for the 777-9 Non-Recurring Work. Pricing, ground rules, statements of work, unique terms, and non-recurring price for the 777-8 will be subsequently agreed and incorporated into this Amendment at a later date.
        



















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Seller Initials: Boeing Initials:
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Amendment No. 30


3.0
NON-RECURRING TOOLING STATEMENT OF WORK

In performance of the BSOW for 777-9, Seller shall perform to the requirements and obligations set forth in the following documents and in accordance with the Tooling requirements contained in the Sustaining Contract:

3.1
The Tooling Baseline consists of:

3.1.1
All documents cited in Paragraph 2.1;

3.1.2 The Initial and Rate Tooling List submitted by Seller as set forth in Exhibit [C].

3.2
For the avoidance of doubt, the BSOW referenced here is for the 777-9 Non-Recurring Work. Pricing, ground rules, statements of work, unique terms, and non-recurring price for the 777-8 will be subsequently agreed and incorporated into this Amendment at a later date.


4.0
BUDGET TRACKING, MONTHLY ACTUALS, AND ACTUALS RECONCILIATION
4.1
Non-Recurring Non-Tooling Work and Non-Recurring Tooling Work
Seller will provide weekly and monthly actuals information in performance of the Non-Recurring Non-Tooling and Tooling work, including, but not limited to, [*****] expense, and supporting documentation as set forth in Exhibit [E], with a correlation between Seller’s ETAC/SCAT and hours claimed in Seller’s submitted actuals for Fuselage, Wing, Thrust Reverser, Inlet, Fan Cowl, and Pylon statements of work.
4.2      Budget Tracking
4.2.1
Seller will provide to Boeing its projected expenditures in connection with the performance of the Non-Recurring Non-Tooling and Tooling Work every [*****]months in [*****]and [*****]of each year for the 777X Non-Recurring Program [*****]. This will include monthly spend, headcount, and a correlation between Seller’s ETAC/SCAT and hours forecasted in the form of the template set forth in Exhibit [E].

4.2.2
[*****], in [*****]and [*****]of each year, Boeing will provide Seller a plan, including but not limited to budget forecast, documenting Seller’s Non-Recurring Non-Tooling performance of the BSOW (the “Non-Tooling Plan”). The Non-Tooling Plan shall include [*****]month plan by commodity (e.g. fuselage, floorbeams, wing, etc.).





Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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4.2.3
Seller will submit the attached risk and opportunity template Exhibit [E] each month to identify technical, schedule and cost risks to both the Non-Recurring and recurring statements of work.
For risks and opportunities to the Non-Recurring cost baseline, any items identified will be included in the monthly risk and opportunity submittal. Items will be tracked in the risk and opportunity submittal until implemented or mitigated. If implemented, the risks and opportunities will be incorporated into the next [*****] Non-Recurring update in accordance with 4.2.1.
4.2.4
Budget Management
Boeing and Seller will work together to jointly manage the Boeing budget through the identification and implementation of forecasted spending reduction opportunities when agreed upon.
4.3      Schedule Performance Monitoring
Seller will provide the following information in a format as detailed in Exhibit [E]:
4.3.1
Boeing and Seller will utilize the Event Tracking And Control (“ETAC”) reporting system to track design/stress engineering performance.
4.3.2   Boeing and Seller will utilize the Spirit Compliance And Tracking (“SCAT”) system to track non-define performance.
4.4
Actuals Reconciliation
4.4.1   Boeing will have [*****] business days from the date the  documents required by Exhibit [E] #3, 4, 5, and 10 are submitted to notify Seller of any disputes in such submittal, otherwise the actuals and true up will be deemed accepted.
4.4.2
In the event that Boeing disputes Seller’s monthly actuals hours or annual true-up provided under 4.1, Boeing will issue Seller a purchase order for the undisputed hours and dollars by the applicable deadline in accordance with 5.1.2 or 5.2.2. Should the Parties fail to come to mutual agreement within [*****]business days of Boeing dispute notification, the Parties will resolve such disputes per GTA Section 33.0. Boeing shall have the right to visit Seller’s facility for the purpose of validating the number and type of disputed direct hours and true-up rate. During the course of such visit, Boeing may review Seller’s records and documents relating to the disputed hours, provided that such review is conducted at a reasonable time at Seller’s facility and that the scope of such review will only extend to any books, records, documentation or other information that is necessary to support such disputed hours and true-up rate. As a result of such review, any mutually agreed payment adjustments will be made in the payment [*****]months following the resolution of the disputed hours. If the dispute resolution is not satisfied within [*****]months from dispute notification, Boeing will issue Seller a PO for half the disputed value and work toward closure on the remaining amount. Any amounts due to Seller or Boeing will be paid in accordance with SBP Section 5.2.1 upon settlement of the disputed value.

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


4.4.3
The Parties recognize that Seller may in some instances have confidentiality obligations to third parties, which limit the amount or nature of data that can be provided in invoice reconciliation. In such event, the Parties shall work together to determine a mutually agreeable solution which enables the provision of supporting data in Section 4.1 in a manner that is in compliance with Seller’s confidentiality obligations to third parties.

5.0      INVOICE AND PAYMENT
As compensation for Seller’s performance of the BSOW and upon receipt of valid and correct invoices Boeing will reimburse Seller as follows:
5.1 Non-Recurring Non-Tooling Work
5.1.1
Boeing will reimburse Seller for validated costs incurred in performance of the Non-Recurring Non-Tooling Work including, but not limited to, [*****] expense, all as set forth in Exhibit [E]. Labor will be priced in accordance with the labor rates in Section 5.3.
5.1.1.1
Offload engineering labor dollars expended in the performance of the Non-Recurring Work performed during such month will be invoiced by Seller and paid by Boeing as invoiced by the subcontractor to Seller with the addition of Seller G&A.
5.1.2
Seller will invoice its costs incurred less any rebates and discounts in performance of the Non-Recurring Non-Tooling Work on a [*****]basis.
Purchase orders will be released once validation of hours, true-up rates, and direct purchased services as provided by Exhibit [E] #3, 4, and 5, are completed and approved by Boeing leadership. This process is not to exceed [*****]business days. PO’s will be released in the following manner to enable invoicing of the Non-Recurring Non-Tooling Define and Build statement of work.










Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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Amendment No. 30


•
Fuselage Non-Recurring Non-Tooling Define PO XXXXXX item XX
•
Fuselage Non-Recurring Non-Tooling Build PO XXXXXX item XX

•
Floorbeams Non-Recurring Non-Tooling Define PO XXXXXX item XX
•
Floorbeams Non-Recurring Non-Tooling Build PO XXXXXX item XX

•
Wing Non-Recurring Non-Tooling Define PO XXXXXX item XX
•
Wing Non-Recurring Non-Tooling Build PO XXXXXX item XX

•
Pylon Non-Recurring Non-Tooling Define PO XXXXXX item XX
•
Pylon Non-Recurring Non-Tooling Build PO XXXXXX item XX

•
Thrust Reverser Non-Recurring Non-Tooling Define PO XXXXXX item XX
•
Thrust Reverser Non-Recurring Non-Tooling Build PO XXXXXX item XX

•
Inlet Non-Recurring Non-Tooling Define PO XXXXXX item XX
•
Inlet Non-Recurring Non-Tooling Build PO XXXXXX item XX

•
Fan Cowl Non-Recurring Non-Tooling Define PO XXXXXX item XX     
•
Fan Cowl Non-Recurring Non-Tooling Build PO XXXXXX item XX
5.1.3
Boeing will pay such invoices in accordance with SBP Section 5.2.1 after receipt of correct invoices.
5.1.4 Work performed in support of Damage Tolerance and Structural Repair Manual (SRM) will be performed prior to and following Amended Type Certification. Both work statements are covered under this Amendment as Baseline Statement of Work (BSOW). The Damage Tolerance and SRM work performed prior to and following Amended Type Certification shall be invoiced per Section 5.1.2 and paid under this Amendment.
5.2
Non-Recurring Tooling Work
5.2.1
The Parties shall negotiate NTE amounts for Tooling within a reasonable amount of time after 777X Firm Configuration is complete. Upon agreement of NTE amount for Tooling, the Parties will amend Exhibit [A] and Exhibit [C] within thirty (30) days to reflect the agreed NTE amount.
5.2.2
Boeing will reimburse Seller for validated costs incurred in performance of the Non-Recurring Tooling Work including, but not limited to, [*****] expense as set forth in Exhibit [E] submittal form. Labor will be priced in accordance with the labor rates in Section 5.3. Each individual Initial Tooling and Rate Tooling NTE Amount as identified in Exhibit [A] is deemed to be reduced by [*****] respectively until all Certified Tool Lists (CTLs) pertaining to the particular NTE Amount at issue are submitted and approved by Boeing. Upon submittal of all CTL records associated with each Tooling

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Seller Initials: Boeing Initials:
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Amendment No. 30


NTE Amount, such deemed reduction shall no longer apply, and Boeing will pay Seller any remaining amount due for tooling costs incurred up to the Tooling NTE Amount as set forth in Exhibit [A].
5.2.3      Invoicing Requirements for Non-Recurring Tooling Work
Purchase orders will be released once validation of hours and direct purchased services as provided by Exhibit [E] #3, 4, and 5, are completed and approved by Boeing leadership. This process is not to exceed [*****]business days. PO’s will be released in the following manner to enable invoicing of the Non-Recurring Tooling statement of work.
•
Fuselage Initial Tools PO XXXXXX item XX
•
Fuselage Rate Tools PO XXXXX item XX

•
Floorbeam Initial Tools PO XXXXXX item XX
•
Floorbeam Rate Tools PO XXXXX item XX

•
Wing Initial Tools PO XXXXXX item XX
•
Wing Rate Tools PO XXXXXX item XX

•
Pylon Initial Tools PO XXXXXX item XX
•
Pylon Rate Tools PO XXXXXX item XX

•
Thrust Reverser Initial Tools PO XXXXXX item XX
•
Thrust Reverser Rate Tools PO XXXXXX item XX

•
Inlet Initial Tools PO XXXXXX item XX
•
Inlet Rate Tools PO XXXXXX item XX

•
Fan Cowl Initial Tools PO XXXXXX item XX
















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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•
Fan Cowl Rate Tools PO XXXXXX item XX
5.2.4
Boeing will pay such invoices in accordance with SBP Section 5.2.1 after receipt of correct invoices.
5.2.6      Capacity
The pricing applicable to the Non-Recurring Tooling Work described herein is based upon supporting a maximum quantity of [*****]Shipsets for the 777 aircraft per month per the agreed to transition plan Exhibit [H]. The Parties agree to update the SBP Attachment 15 to include the 777X and to reflect the foregoing. Nothing herein affects the downside rate protection concerning minimum production rates set forth in Section IV c. (“Failure to Maintain Rate after FOB Dates”) of the Boeing - Seller Memorandum of Agreement dated March 9, 2012.
5.2.7
Notwithstanding any other provisions of this Amendment, Boeing shall not be obligated to pay to Seller any amount in excess of the Tooling NTE Amount, provided however, that this sum may be adjusted in accordance with 5.2.8.
5.2.8       NTE Amount Adjustments
5.2.8.1
 If it is determined additional Tooling that is not driven by BSOW Change is required in excess of that set forth in the BSOW, all additional Tooling costs incurred to meet the requirements of initial build and rate to [*****] APM will be assumed by Seller and the Tooling NTE Amount shall not be adjusted.
5.2.8.2 
If it is determined Seller can accomplish the requirements with less Tooling than that set forth in the BSOW, the Tooling NTE Amount shall not be adjusted and the cost savings shall be administered in accordance with Section 10.1 (Tooling Incentive).
5.2.8.3
For the sake of clarity, any Initial Change or Major Change shall result in a commensurate adjustment to the Tooling NTE Amount in accordance with Section 7.0 (Initial Changes & Major Changes).
5.3      Labor Rates
The rates described in Attachment 5 of the SBP do not apply.
5.3.1      Seller shall invoice for and Boeing shall reimburse to Seller, on a [*****]basis, an amount calculated by multiplying the rate as defined below (the billing rate) by the number of actual validated labor hours (“Spirit labor hours”) expended for Non-Recurring Non-Tooling and Non-Recurring Tooling work. Rates below do not include G&A of [*****]%. Seller will add the agreed to [*****]% G&A to the rates below for invoicing and payment.






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Seller Initials: Boeing Initials:
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Process Code
Rate Type
2015*
2016
2017
Rate 2018 and beyond
Define
Engineering
[*****]
To be negotiated in July of the previous year (Sec 4.4).
 
Billing Rate
Define
Engineering Cap
Build
Proj./Proc. ME
Build
NC
Build
QA
Build
IPT
Build
Other Engr
Define
Tool Design
Build
Tool Fab

*2015 Engineering will be billed at [*****] will apply to Define Engineering, NTE Engineering Cap of $[*****] All other rate types above for November and December will be billed at 2015 rates above.
Rates above do not include [*****] G&A

Rate Categories
Payment Elements
Proposal Elements
Design Eng
Engineering
Stress Eng
Engineering
System Eng
Engineering
Project ME
Proj./Proc. ME
Process ME
Proj./Proc. ME
IPT
IPT
QA
QA
Test Lab
Other Engineering
Test Comp Fab Labor
Other Engineering
MR&D
Other Engineering
Tooling Design/IPT
Tool Design
Tool Fab
Tool Fab.

5.3.1.1      In the event that Seller experiences a labor rate true-up that results in the 777X “Engineering” labor rate being greater than the agreed-to billing rate, Seller will submit to Boeing by the end of February of the following year the actual accounting rates for the “Engineering” labor rate category only. The labor rate with true up will be calculated based on the yearly total 777X Engineering dollars as




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Seller Initials: Boeing Initials:
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determined by Seller’s financial system divided by the yearly total 777X Engineering hours billed.  The December actuals submittal will include a separate tab showing a calculation of the true up delta and an explanation of the delta dollars applied ( For example: Engineering rate base dollars were underran. The amount to be allocated to the 777X program is $XX ). Seller will support the labor rate true up as stated in GTA section 9.0 (Examination of Records) .
5.3.1.2           Boeing agrees to pay the validated labor rate delta as long as the labor rate is at the capped amount or below. In the event that the true up delta exceeds the capped amount, Boeing agrees to pay the delta at the capped amount. Payments owed by Boeing for rate true-up will be due with the December payment for each year as referenced in 4.4.2 and 5.1.2.
5.4      Labor Rate Renegotiation
The Parties agree to renegotiate labor rates for 2018 and beyond, as detailed in the above table, beginning in July of the year prior to expiration. Seller will supply Boeing with proposed rates and Boeing will respond in a timely manner with a counter offer. If rates are not resolved prior to the last day of the 4th Quarter of the expiring year, Seller shall continue to invoice and Boeing shall continue to pay at the previously negotiated year’s rate. Upon rate agreement, Seller and Boeing shall retroactively reconcile the rate delta.

6.0
ON-SITE BUYER PROGRAM MANAGEMENT
In accordance with GTA section 5.2, Boeing may, in its sole discretion and in coordination with Seller, locate resident personnel at Seller’s facility in support of the 777X Program.
  
7.0
INITIAL CHANGES AND MAJOR CHANGES
7.1
In the event of any Initial Change or Major Change,
7.1.1 The Parties will negotiate a schedule adjustment and any applicable adjustment to the Tooling NTE Amount in accordance with Section 7.3 of this Amendment.
7.1.2
Costs associated with any revisions to the BSOWs that constitute an Initial Change or Major Change, shall be addressed in accordance with 5.1 of this Amendment for Non-Recurring-Non-Tooling Work and 5.2 for Non-Recurring Tooling Work.





Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
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7.2
For clarification purposes, the change provisions in 7.0 of this Amendment, rather than the Change provisions in Section 7.0 of the SBP, will govern with respect to Initial Changes or Major Changes, and equitable price adjustment with respect to Initial Changes or Major Changes will not be subject to the price thresholds described in Section 7.0 of the SBP.
7.3
Initial Change and Major Change Negotiation Process
7.3.1
Following receipt of a direction from Boeing that constitutes an Initial Change or Major Change under this Amendment, Seller will provide updated scope of work documents to Boeing, along with the associated Tooling NTE impacts, cost impacts, and/or schedule impacts.
7.3.2
For Tooling Not To Exceed (NTE) amounts within [*****]calendar days of receipt of such proposal, Boeing shall make a settlement offer to Seller. Following receipt of Boeing’s settlement offer, if the Parties are unable to reach agreement on an equitable adjustment within [*****]calendar days, the negotiations shall be elevated to Senior Contracts Management for resolution.
7.3.3
Upon settlement of the Tooling NTE Amounts and/or schedule, this Amendment will be updated and revised to include all adjustments agreed upon in writing between the Parties.
7.3.4 Non-Recurring Non-Tooling adjustments will be included in Seller’s next [*****]month budget submittal as described in paragraph 5.2.1. and as part of Exhibit [E] monthly O&R update and provided in the documentation in 7.3.1.

8.0
WEIGHT
8.1.
Seller acknowledges the importance of an end-item weight for the Products it delivers to Boeing and agrees to follow diligent weight reduction practices during the design process.

8.2
Based on the BSOW, Seller will provide non-binding Advisory Weight Guidelines (AWG) for the Seller-provided dry products. No weight requirement, (such as those referenced in any requirement document) other than the AWG are applicable.
8.3
Such AWGs do not constitute a weight requirement, and failure to achieve such AWGs shall not constitute a breach under this Amendment or the SBP.







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Seller Initials: Boeing Initials:
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8.4
These AWGs are for the end-item level and are for production units only.
8.5
In addition, the above AWGs require that adjustments to AWG values be assessed in conjunction with Initial Changes having a weight impact.
8.6
Seller will provide status weight reporting and actual weight reporting once monthly through ATC in a format to be agreed to by the Parties.

9.0
PROPULSION ENGINE DEVELOPMENT PLAN (EDP) AND TEST HARDWARE
9.1
The Parties will negotiate pricing for EDP and test hardware in accordance with the schedule below. Anticipated EDP and Test hardware is identified on Exhibit [K]. To be clear, EDP and Test Hardware is not included in section 2.0 of this Amendment, however EDP Tooling is included in section 3.0 of this Amendment. EDP and test hardware are not subject to the invoicing requirements listed under Exhibit [E]. PO’s will be released to Seller for ROM values and reconciled once firm fixed pricing is established. Below is the planned EDP negotiation schedule.


 
[*****]
 
 
 
 
 
 
 
 
 

10.0
INCENTIVES
Boeing and Seller agree to the inclusion of a 777-9 award fee program for the Non-Recurring Non-Tooling work based on schedule and quality performance and a Non-Recurring Tooling incentive. A review of the schedule and quality award fees will take place [*****] during the EPMR (if no EPMR, a telecon will be held no later than [*****] weeks after submittal) for the Non-Recurring Non-Tooling Performance incentive by the Fee Determining Board made up of 777X Boeing and Seller key stakeholders, per Exhibit [G].
10.1      Tooling Incentive
Upon submittal of all CTL’s associated with each individual Tooling NTE Amount as set forth in Exhibit [A], if Seller’s actual costs incurred in the completion of such work are less than such individual Tooling NTE Amount (taking into account any adjustments to such NTE Amount pursuant to Section 7.0 (Initial Changes and Major Changes) then Boeing shall pay

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 125 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30


to Seller, in addition to the amounts due under Section 5.2.1, an incentive fee equal to [*****] percent ([*****]%) of the difference between Seller’s actual incurred costs for such work and the NTE Amounts as amended from time to time and agreed to between the parties per section 5.2.8 (NTE Amount Adjustments). For purposes of this paragraph, actuals cost is calculated as follows: ((Billed Hours * Defined Labor Rate) + (Materials * (1+G&A)).     
If an incentive is earned, Boeing will provide a purchase order within [*****] business days. Upon receipt of valid invoice from Seller, Boeing will pay such invoices in accordance with SBP Section 5.2.1.
Sample Incentive Calculation : All CTL’s Fuselage Initial Tooling are submitted at a total value of $[*****]. The NTE for Fuselage is $[*****]. The incentive to be paid to Seller will be $[*****]. Calculated as: [*****]
10.1.1 Initial Tooling Incentive
Upon submittal of all CTLs associated with the Initial Tooling [*****] Amount as set forth in Exhibit [A], if Seller’s actual costs incurred in the completion of such work are less than such individual Tooling [*****] Amount (taking into account any adjustments to such [*****] Amount pursuant to Section 7.0 (Initial Changes and Major Changes) then Boeing shall pay to Seller, in addition to the amounts due under Section 5.2.1, an incentive fee equal to [*****] percent ([*****]%) of the difference between Seller’s actual incurred costs for such work and the Initial Tooling NTE Amount as amended from time to time and agreed to between the parties per section 5.2.8 ([*****] Amount Adjustments), up to a maximum of [*****]dollars ($[*****]). For purposes of this paragraph, actuals cost is calculated as follows: [*****]
If an incentive is earned, Boeing will provide a purchase order within [*****] business days of Seller’s submittal of all CTLs associated with each individual Tooling [*****] Amount. Upon receipt of valid invoice from Seller, Boeing will pay such invoices per the terms of the Sustaining Contract.

Sample Incentive Calculations:

If Initial Tooling Actuals Cost = [*****]
If Initial Tooling Actuals Cost = [*****]
If Initial Tooling Actuals Cost = [*****]
If Initial Tooling Actuals Cost = [*****]





Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 126 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30


10.1.2 Rate Tooling Incentive
Upon submittal of all CTLs associated with each individual Rate Tooling [*****] Amount as set forth in Exhibit [A], if Seller’s actual costs incurred in the completion of such work are less than such individual Tooling [*****] Amount (taking into account any adjustments to such [*****] Amount pursuant to Section 7.0 (Initial Changes and Major Changes) then Boeing shall pay to Seller, in addition to the amounts due under Section 5.2.1, an incentive fee equal to [*****] and agreed to between the parties per section 5.2.8 ([*****] Amount Adjustments). For purposes of this paragraph, actuals cost is calculated as follows: [*****]
If an incentive is earned, Boeing will provide a purchase order within [*****] business days of Seller’s submittal of all CTLs associated with each individual Tooling [*****] Amount. Upon receipt of valid invoice from Seller, Boeing will pay such invoices per the terms of the Sustaining Contract.

Sample Incentive Calculation:

All CTL’s Fuselage Rate Tooling are submitted at a total value of $[*****]. The [*****] for Fuselage is $[*****]. The incentive to be paid to Seller will be $[*****]. Calculated as: [*****]
10.2      Quality and Schedule Performance Award Fee
The available quality and schedule performance award fee amount is [*****]dollars ($[*****]).
The award fee pool is allocated between quality and schedule as follows.
Quality: Up to [*****] Dollars ($[*****]) based on the following criteria:
•
$[*****] - First pass release quality through CMA is in excess of [*****]%, and
•
$[*****] - Less than [*****]% second effort driven by engineering and drafting error.

Schedule: Up to [*****]Dollars ($[*****]) based on Seller responsible      releases meeting or exceeding the following:     
ETAC milestone completion is in excess of      [*****]% for ETAC performance. Subsequent updates to the ETAC baseline list will be made on a [*****]basis with agreements from both parties. Any ETAC closure date issues will be resolved during the [*****]updates.
•
[*****]% payable for ETAC releases [*****]%-[*****]% on time
•
[*****]% payable for ETAC releases [*****]%-[*****]% on time


Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 127 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30


This value of the award fee pool will be allocated by performance period and area of performance as per section 10.6 (Award Fee Allocation and Payment Record). The actual award fees paid will be determined in accordance with the criteria contained in the table included in section 10.6 (Award Fees Allocation and Payment Record). In no event does the award fee plan affect other payments owed to Seller under this Amendment.
The incentive award amount for [*****]is earned when the cumulative performance percentage at the end of that [*****]is at or above the target levels. If the cumulative performance at the end of the [*****]is below the target, the incentive award for that [*****]is forfeited. For purposes of this paragraph, “Cumulative” means from program initiation through the end of the award fee period. Program initiation is represented by letter [*****](Dated: [*****]).
10.4      Award Fee Plan Changes
Changes to the award fee plan affecting any current evaluation period may only be implemented upon mutual agreement of both parties.
10.5      Contract Termination
If this Amendment is terminated in accordance with the termination terms set forth under the Sustaining Contract and such termination is after the start of an award fee evaluation period, the award fee deemed earned for that period shall be determined by Boeing using the normal award fee evaluation process, provided that the award fee amounts earned will be pro-rated based on the time period the Amendment is in effect during the evaluation period. After termination, the remaining award fee amounts allocated to all subsequent award fee evaluation periods cannot be earned by Seller and, therefore, shall not be paid.
10.6      Award Fee Allocation and Payment Record
The award fee earned by Seller will be determined at the completion of the evaluation periods shown in the table below. The total dollars corresponding to each period is the maximum available award fee amount that can be earned during that particular period.
















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 128 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30


Quarter
Schedule Incentive
Quality Incentive
CMA Release
2nd Effort
4Q15
[*****]
1Q16
2Q16
3Q16
4Q16
Q17
2Q17
3Q17
4Q17
1Q18
2Q18
Total


10.7      Payment of Award Fee
A Purchase Order will be issued within one week of agreement on the award fee. Seller will submit an invoice. Payment of the award fee shall be made in accordance with SBP Section 5.2.1 after receipt of a correct invoice.

11.0
MISCELLANEOUS
11.1
This Amendment, including all Exhibits and Attachments, contains the entire agreement between Seller and Boeing about the subject matter hereof and supersedes all previous proposals, understandings, commitments, or representations whatsoever, oral or written for said effort. This Amendment may be changed only in writing by authorized representatives of Seller and Boeing. Except as specified herein, all other terms of the Sustaining Contract apply. In the event of a conflict between the terms of this Amendment and the Sustaining Contract, the terms of this Amendment will have precedence.
11.2
The Parties will amend SBP Attachment 9 to include the 777-9 and 777-8, and SBP Attachment 4 to include the 777-9 and 777-8 under Section B.1.
11.3
The D6-83323 document shall be revised to denote the engineering delegation pertaining to the 777X Nacelle, Pylon, S41, LE Slats, Floor Beams, and Seat Tracks. For the avoidance of doubt, and despite reference to D6-83323 herein, D6-83323 shall remain of lower precedence to the SBP, GTA, Purchase contract, and Order as specified in Section 13 (Order of Precedence) of the SBP.



Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 129 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]



























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 130 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30



LIST OF EXHIBITS

Exhibit A: Non-recurring Tooling [*****] Amount
Exhibit B: Engineering Bill of Material
Exhibit C: Tooling Bill of Material
Exhibit D: Master Phasing Plan and Tier II Schedules
Exhibit E: Non-Recurring-Non-Tooling Cost Submittal Form
Exhibit F: Non-Recurring Tooling Cost Submittal Form
Exhibit G: Fee Determining Board
Exhibit H: 777X Transition Plan
Exhibit I: Initial and Major Change Process Flow
Exhibit J: 777X Baseline Requirements Structure
Exhibit K: EDP and Test Hardware


















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 131 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30


Exhibit A: Tooling [*****] Amount
777X [*****]Tooling Amounts
[*****]
IDAS Configuration
Initial Tooling [*****] (Fuselage, Wing, and Propulsion) Amount
$[*****]
[*****]
Fuselage Rate Tooling [*****]Amount
Value will be [*****]
 
Propulsion Rate Tooling [*****]Amount
Value will be [*****]
 
Wing Rate Tooling [*****] Amount
Value will be [*****]
 

























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 132 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30


Exhibit B: Engineering Bill of Material
(Submitted by Seller)

Consolidated Pylon DWSs.xls
Consolidate Nacelle NWSs.xls

        


























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 133 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30


Exhibit C: Tooling Bill of Material
(Submitted by Seller)

777X INITIAL [*****] PRICED TOOL LIST





























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 134 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30




Exhibit D: Master Phasing Plan and Tier II Schedules
IMG7.JPG

















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 135 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30




Exhibit E: Non-Recurring Non-Tooling Cost Submittal Form

A.
The following data and information (as specified in Paragraphs 1 through 9 below) necessary to substantiate Seller’s efforts, are to be provided by Seller at the time of its cost submittals. Additional information and data may be requested by Boeing to the extent reasonably required to substantiate Seller’s efforts and Seller will (if Seller concurs that such additional information is necessary) endeavor to supply such requested information within one week following such request. Failure to provide required information could delay payment for that questioned item until information is provided and validated.
1.
Weekly: For each IPT head count & hours by manager name

IPT
Manager Name
Non-Overtime Hours
Overtime Hours
SOW Description
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2.
Weekly: SCAT and ETAC Data
a.
See Attached Examples

SCAT example.pptx

ETAC_IVX_2015_07_31.pptx
    
3.
Monthly: Copy of detailed invoices for the following, but not limited to:
a.
Material & equipment (material for tooling excluded from invoicing requirement),
b.
Engineering offload - total hours and applicable labor rates (Infosys or other job shop), and
c.
Any other purchased services (consulting engineering (non-job shop), target analysis, lab tests, etc.)

4.
Monthly: Information from table below






Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 136 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30



Microsoft Excel 97-2003 Worksheet
5.
Monthly: List of justification to substantiate hours submitted by commodity

6.
Semi-annual: Projected Expenditures will be provided in accordance with 4.2.1.

7.
Annually: Seller will provide a schedule of submittals for items 3, 4, 5, and 8.

8.
Monthly: Seller to provide O’s and R’s for ongoing changes and all risk and opportunities with estimated values impacting the 777X Program.

Microsoft Excel 97-2003 Worksheet
9.
Integrated Master Schedule (IMS) Submission:
Fuselage: Seller will provide IMS Updates on the 1 st and 3 rd Tuesday of each month.

Propulsion: Seller will provide IMS updates weekly by COB Tuesday.

10.
Annual True-Up Validation Table



IMG8.JPG


Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 137 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30





Exhibit F: Non-Recurring Tooling Cost Submittal Form
( Will be mutually agreed to at a later date along with Exhibit A )

Exhibit F Tooling Cost Form Template



























Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 138 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



Exhibit G: Fee Determining Board

Cadence: [*****]

Participants:
Fee Determining Executives: Boeing Program Leader, Seller Program Leader

Review Board Team and Area Owners:
Boeing and Seller IPT Leaders

Roles & responsibilities:

Boeing will review [*****] data and provide final approval of award fee

Seller will provide [*****] data with an award fee recommendation and support reviews















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 139 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



Exhibit H: 777X Transition Plan

777-777X Planning Scenario 4.pdf
IMG9.JPG















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 140 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30






Exhibit I: 777X ATC Flow Diagram
IMG10.JPG






















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 141 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30





Exhibit J: 777X Baseline Requirements Structure

IMG66.JPG






















Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 142 of 145


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
Special Business Provisions
MS-65530-0016
Amendment No. 30



Exhibit K: EDP Schedule
IMG12.JPG










Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 143 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30


EXHIBIT M TO SBP AMENDMENT NO. 30
SBP ATTACHMENT 31
ANNUAL SHIPSET PRODUCTION RATE-BASED ADJUSTMENT

1.
This Attachment sets forth the methodology used to calculate the annual Shipset production rate-based adjustment for all Program Airplanes Products for the Pricing Period and any Interim Pricing Period as defined in SBP Attachment 1 Section 1. All Shipsets (excluding 767-2C) delivered by Seller to Boeing shall be used for determining total annual Shipset production rate quantities.

2.
If the total Shipset production quantities delivered is less than [*****]total Shipsets for any calendar year, Seller shall be entitled to compensation equal to [*****]per Shipset below [*****], multiplied by the total value of delivered Shipsets in the calendar year, calculated using the Prices identified in SBP Attachment 1 (excluding 767-2C pricing, SBP Attachment 1B SOW pricing, SBP Attachment 1D SOW pricing, and P-8 Fuselage pricing).

3.
Within [*****] of the end of each calendar year, the Parties will identify the Shipsets delivered in the prior year to determine total Shipset quantity. In the event Seller is entitled to compensation as defined above, Boeing shall issue a Purchase Order and issue payment in accordance with SBP Section 5.2.1.

4.
For clarity, this Annual Shipset Production Rate-Based Adjustment is not a Price adjustment. It is a mechanism for compensation to Seller if combined annual Shipset deliveries decrease below [*****].

Example:

1.
If Shipset production quantities delivered in a year (excluding 767-2C) is greater than or equal to [*****]in a calendar year, no additional compensation will be made.

Airplane Program
Annual Shipset Deliveries
737
[*****]
747
[*****]
767
[*****]
777
[*****]
Total
[*****]

Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 144 of 145


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Special Business Provisions
MS-65530-0016
Amendment No. 30


2.
If Shipset production quantities delivered (excluding 767-2C) is [*****]in a calendar year, the annual Shipset production rate based adjustment would be computed as follows:

a.
The annual value (i.e., the total value, using SBP Attachment 1 Prices, of delivered Shipsets in the calendar year) of the affected programs equals [*****].

b.
Compensation to Seller will be [*****].

Airplane Program
Annual Shipset Deliveries
737
[*****]
747
[*****]
767
[*****]
777
[*****]
Total
[*****]



Seller Name: Spirit AeroSystems Inc.
Seller Initials: Boeing Initials:
Page 145 of 145

EXHIBIT 10.3
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


GENERAL TERMS AGREEMENT

between


THE BOEING COMPANY

and

SPIRIT AEROSYSTEMS, INC.





BCA-65520-0032
































Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



TABLE OF CONTENTS
TITLE PAGE
TABLE OF CONTENTS
AMENDMENT PAGE

1.0
DEFINITIONS
1
2.0
ORDERING
3
2.1
Issuance of Orders
3
2.2
Acceptance of Orders
3
3.0
NOTICE OF LABOR NEGOTIATIONS
4
4.0
CREDIT OFFICE VISIBILITY
4
5.0
COST DATA AND ASSISTANCE
4
6.0
GENERAL & INTERNATIONAL REQUIREMENTS
4
6.1
Language
4
6.2
Currency
5
7.0
TERMINATION FOR CONVENIENCE
5
7.1
Basis for Termination; Notice
5
7.2
Termination Instructions
5
7.3
Termination Claim
6
7.4
Failure to Submit a Claim
8
7.5
Partial Termination
8
7.6
Product Price
8
7.7
Exclusions or Deductions
8
7.8
Payments
9
7.9
Accounting Practices
9
7.1
Records
9
8.0
EVENTS OF DEFAULT AND REMEDIES
9
8.1
Events of Default
9
8.2
Boeing Remedies
10
8.3
Spirit Remedies
13
8.4
Boeing and Spirit Remedies
14
9.0
TERMINATION OF AIRPLANE PROGRAM
14
9.1
Program Termination
14
9.2
Termination Liability
15
9.3
Transfer of Certain Property
15
10.0
DELAYS
15
10.1
Excusable Delay
15
10.2
Delays Attributable to Boeing
17
11.0
SUSPENSION OF WORK
17
 
 
 
 
- i -
 

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



13.0
ASSURANCE OF PERFORMANCE
18
14.0
LIMITATION OF SPIRIT'S RIGHT TO ENCUMBER ASSETS
19
15.0
COMPLIANCE
19
15.1
Compliance With Laws
19
15.2
Import/Export
19
15.3
Government Requirements
20
15.4
Ethic Requirements/Code of Conduct
21
16.0
INTEGRITY IN PROCUREMENT
21
17.0
APPLICABLE LAW
21
18.0
SURVIVAL
21
19.0
PUBLICITY AND CONFIDENTIALITY
22
19.1
Publicity
22
19.2
Confidentiality
22
20.0
RESPONSIBILITY FOR PERFORMANCE
23
20.1
Responsibilities of Spirit
23
20.2
Subcontracting
24
20.3
Reliance
24
20.4
Assignment
24
20.5
Relationship of Parties
26
20.6
Successors and Assigns
26
21.0
STRATEGIC ALIGNMENT
26
22.0
NON-WAIVER/PARTIAL INVALIDITY
27
23.0
HEADINGS
27
24.0
PRODUCT LIABILITY CLAIMS
27
25.0
DISPUTES
27
25.1
Obligations to Negotiate
27
25.2
Resolution of Disputes
27
26.0
TAXES AND DUTIES
28
26.1
Inclusion of Taxes in Price
28
26.2
Litigation
28
26.3
Rebates
28
27.0
COUNTERPARTS
28
28.0
AMENDMENTS
29







- ii -

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




AMENDMENTS

Amend
Number
Description
Date
Approval

1



2
































Spirit name change - All references to Mid-Western Aircraft Systems Inc. are changed to Spirit AeroSystems Inc. or Spirit

8.1.A: Deleted reference to SBP Section 3.4.2.3 to conform with SBP Amendment 17

06/19/09



05/12/11

J. Loomis
M. Kurimsky


R. Parks
M. Kurimsky















- iii -

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].





GENERAL TERMS AGREEMENT



THIS GENERAL TERMS AGREEMENT (this “Agreement” or “GTA”) was entered into as of June 16, 2005, by and between Spirit AeroSystems, Inc., a Delaware corporation, with its principal office in ( Wichita, Kansas ) ("Spirit"), and The Boeing Company, a Delaware corporation acting by and through Boeing Commercial Airplanes ("Boeing"). Hereinafter, Spirit and Boeing may be referred to jointly as the “Parties”. The GTA, which is amended from time to time, is amended to incorporate Amendment 2 and conformed to incorporate Amendment 1 on May 12, 2011.   The conformed GTA is for administrative convenience only and is not intended to change the meaning of Amendments 1 and 2.

In consideration of the mutual covenants set forth herein, the Parties agree as follows:

AGREEMENTS
1.0          DEFINITIONS
The definitions set forth below and elsewhere within this Agreement shall apply to this Agreement, any Order and the Special Business Provisions (SBP MS-65530-0019) dated as of the date hereof in which this Agreement is incorporated by reference. Certain additional terms used herein are defined in the SBP and when used herein shall have the same meanings as in the SBP. Words importing the singular shall also include the plural and vice versa.
A.
“Aircraft” means the Program Airplane and/or any Derivative thereof, as the context may require.
B.
"Customer" means any owner, lessee or operator of an aircraft or commodity, or designee of such owner, lessee or operator.
C.
“Derivative” means any model airplane designated by Boeing as a derivative of the Program Airplane and which includes all of the following conditions: (1) has the same number of engines as the Program Airplane; (2) utilizes essentially the same aerodynamic and propulsion design, major assembly components, and systems as the Program Airplane; (3) achieves other payload/range combinations by changes in body length, engine thrust, or variations in certified gross weight; (4) has the same body cross-section as the Program Airplane; and (5) is designated as a “derivative” to the FAA by Boeing. A Derivative shall not include any aircraft which has been or currently is in production as of the date of this Agreement.






- 1 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



D.
“Event of Default” shall have the meaning set forth in GTA Section 8.1.
E.
“Excusable Delay” shall have the meaning set forth in GTA Section 10.1.
F.
"FAA" means the United States Federal Aviation Administration or any successor agency thereto.
G.
"FAR" means the Federal Acquisition Regulations in effect on the date of this Agreement.
H.
Reserved
I.
"Order" means each purchase order and purchase contract, if any, (as generated in Boeing’s Enterprise Resource Planning (ERP) system or its equivalent) issued by Boeing and either accepted by Spirit under the terms of this Agreement and the SBP or issued by Boeing in accordance with this Agreement and the SBP.
J.
“Order Termination Notice” shall have the meaning set forth in GTA Section 7.1.
K.
“Person” means any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof, or any other entity.
L.
"Procurement Representative" means the individual designated by Boeing as being primarily responsible for interacting with Spirit regarding this Agreement, the SBP and any Order.
M.
"Product" means goods (including Production Articles), including components and parts thereof, services, documents, data, software, software documentation and other information or items furnished or to be furnished to Boeing under any Order, including Tooling, except for Rotating Use Tooling (as defined in Boeing Document D33200). In addition "Product" has the meaning of "Product Definition" as defined in the SBP.
N.
“Production Articles” means those completed assemblies, defined and configured as set forth in SBP Attachment 2 “Production Article Definition and Contract Change Notices” as such Attachment may be amended from time to time in accordance with this Agreement and the SBP, for the Program Airplane and any Derivative.
O.
“Program” means the design, development, marketing, manufacture, sales and customer support of Program Airplanes, Derivatives and Products.
P.
“Program Airplane” means a commercial transport aircraft incorporating advanced technology and having a current model designation of 787, for which the configuration as of the date of this Agreement is defined in SBP Attachment 1 “Work Statement and Pricing”, SBP Attachment 2 “Production Article Definition and Contract Change Notices”, and SBP Attachment 4 “Work Statement Documents”. The attachments defining the Program Airplane may be amended from time to time in accordance with this Agreement and the SBP.












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787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



Q.
“Program Termination Notice” shall have the meaning set forth in GTA Section 9.1 “Program Termination”.
R.
Reserved
S.
“Shipset” means the total set of Production Articles to be provided by Spirit that is necessary for production of one Program Airplane or Derivative.
T.
"Tooling" means all tooling, used in production or inspection of Products, either provided to Spirit or supplied by Spirit whereby Boeing agrees to pay Spirit for the manufacture of the tooling. “Tooling” also includes Contractor-Use Tooling, Common-Use Tooling and Boeing-Use Tooling as defined in the SBP.
2.0          ORDERING
2.1          Issuance of Orders
Boeing may issue Orders to Spirit from time to time. Each Order shall contain a description of the Products ordered, a reference to the applicable specifications, drawings or supplier part numbers, the quantities and prices, the delivery schedule, the terms and place of delivery and any special conditions. Boeing and Spirit will consult and mutually agree as necessary regarding the establishment of reasonable leadtimes for the issuance of Orders and the establishment of a commercially reasonable incremental release plan.
Each Order shall be governed by and be deemed to include the provisions of this Agreement and the SBP. Purchase Order Terms and Conditions, Form D1-4100-4045, 49-5700, GP1, DAC Form 26-915, DAC Form 26-916 or Form P252T shall not apply. Any Order terms and conditions, which conflict with this Agreement or the SBP, shall not apply unless specifically agreed to in writing by the Parties.
2.2          Acceptance of Orders
Each Order is Boeing's offer to Spirit and acceptance is strictly limited to its terms. Unless specifically agreed to in writing by the Procurement Representative, Boeing objects to, and shall not be bound by, any term or condition that differs from or adds to any Order. Subject to the last sentence of GTA Section 2.1 “Issuance of Orders”, Spirit's commencement of performance or acceptance of any Order in writing shall conclusively evidence Spirit's acceptance of such Order as written. If any term or condition of any Order is considered by Spirit to constitute a change within the general scope of the SBP, (i) Spirit shall notify Boeing's Procurement Representative in a timely manner in writing as to the nature of such change and its effect (or anticipated effect) upon Spirit's performance and (ii) the provisions of SBP Sections 6.0 and 7.0 shall be applied, if applicable, to determine whether or not Spirit is entitled to an equitable Price adjustment on account of such change.
Any rejection by Spirit of an Order shall specify the reasons for rejection and any changes or additions that would make the Order acceptable to Spirit; provided, however, that Spirit may not reject any Order for reasons inconsistent with the provisions of this Agreement or the SBP.

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787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



3.0          NOTICE OF LABOR NEGOTIATIONS
When requested by Boeing, Spirit will provide to the best of its ability, the effective dates of labor contracts, scheduled negotiations and its assessment of potential labor disruptions or strikes including that of Spirit’s subcontractors or suppliers. Spirit shall provide additional information reasonably requested by Boeing except as may be prohibited by law or by contract.
4.0          CREDIT OFFICE VISIBILITY
Spirit will cooperate with Boeing's Corporate Credit Office in response to reasonable requests for financial data in a timely manner. If trends remain stable, the data provided will be limited to financial statements in accordance with past practice. In the event of material deterioration in financial condition or performance, Boeing may reasonably request additional data to assess potential contract performance risk. Data requested by Boeing may include if reasonable in the circumstances, but may not be limited to, trade account agings, banking agreements and financial projections. All such information will be treated as confidential and shall be used only for the limited purpose of verifying Spirit’s financial status and capability to perform to contract terms.
5.0          COST DATA AND ASSISTANCE
For the purpose of the negotiation of equitable adjustments for changes or for the purpose of termination and obsolescence claims, Spirit will provide adequate data and records to support its positions for any cost related issue. Spirit shall provide assistance to evaluate and interpret such data if requested by Boeing. Such assistance shall provide Boeing with adequate information regarding Spirit's proposal. Boeing shall treat all information disclosed under this GTA Section 5.0 as confidential, unless required by U.S. Government contracting regulation(s).
6.0          GENERAL & INTERNATIONAL REQUIREMENTS
6.1          Language
The Parties have agreed that this Agreement and the SBP be written in English only. All contractual documents and all correspondence, invoices, notices and other written communications between the Parties shall be submitted in English. Any necessary conversations shall be held in English. Boeing shall determine whether measurements will be in the English or Metric system or a combination of the two systems. When furnishing documents to Boeing, Spirit shall not convert measurements which Boeing has stated in an English measurement system into the Metric system.





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787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



6.2          Currency
Unless specified elsewhere herein or in the SBP, all prices shall be stated in and all payments shall be made in the currency of the United States of America (U.S. Dollars). No adjustments to any prices shall be made for changes to or fluctuations in currency exchange rates.
7.0          TERMINATION FOR CONVENIENCE
7.1          Basis for Termination; Notice
Boeing may from time to time terminate all or part of any Order issued hereunder, by written notice (an “Order Termination Notice”) to Spirit’s Contract Administrator. Each Order Termination Notice shall specify the effective date and the extent of any such termination. Any such termination shall not affect Boeing's obligation to purchase from Spirit all of Boeing's requirements for Products as provided in SBP Section 3.1.1 “Obligation to Purchase and Sell”.
7.2          Termination Instructions
On receipt of an Order Termination Notice pursuant to GTA Section 7.1 “Basis for Termination; Notice”, unless otherwise directed in writing by Boeing, Spirit shall:
A.
Immediately stop work as specified in the Order Termination Notice;
B.
Immediately terminate its subcontracts and purchase orders relating to the work terminated;
C.
Settle any termination claims made by its subcontractors or suppliers; provided, that Boeing shall have approved the amount of such termination claims in writing prior to such settlement. Boeing shall review and respond to such claims in a timely manner. Spirit shall have the option to settle claims with its subcontractors or suppliers without Boeing’s prior written approval provided that Boeing shall only be obligated to consider amounts included in Spirit’s claim that in Boeing’s reasonable opinion are appropriate;
D.
Take all reasonable steps to preserve and protect all terminated inventory and related Products;
E.
At Boeing's written request (which shall be delivered within twelve (12) months, or at a time reasonably determined by the Parties, after the final settlement of any termination claim), transfer title (to the extent not previously transferred) and deliver to Boeing or Boeing's designee all supplies and materials, work-in-process, Tooling (to the extent not required by Spirit for the performance of any portion of the Order not terminated, this Agreement or the SBP) and manufacturing drawings and data produced or acquired by Spirit for the performance of the Order (to the extent terminated), all in accordance with the terms of such request;









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787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



F.
Be compensated for such items to the extent provided in GTA Section 7.3 “Termination Claim”;
G.
Take all reasonable steps required to return, or at Boeing's option and with prior written approval to destroy, all Proprietary Information and Materials (as defined in SBP Section 17.0 “Proprietary Information and Materials") of Boeing in the possession, custody or control of Spirit or any of its subcontractors or suppliers and relating solely to the work specified in the Order Termination Notice (to the extent such Proprietary Information and Materials are not required to support obligations that have not been terminated, subject to Spirit’s rights with respect to any such Proprietary Information and Materials as provided in SBP Section 15.2 “Rights and Obligations”;
H.
Take such other action as in Boeing's reasonable opinion may be necessary, and as Boeing shall direct in writing, to facilitate termination of the Order; and
I.
If the Order was terminated only in part, continue and complete performance of the work under the portion of the Order not terminated.
7.3          Termination Claim
A.
If Boeing terminates an Order in whole or in part pursuant to GTA Section 7.1 “Basis for Termination Notice”, Spirit shall have the right to submit a written termination claim to Boeing in accordance with the terms of this GTA Section 7.3. A preliminary estimate of such termination claim shall be asserted to Boeing within forty-five (45) days after Spirit’s receipt of the applicable Order Termination Notice, and a final termination claim and all documentation supporting said claim must be provided to Boeing not later than six (6) months after the later of (i) Spirit's receipt of the applicable Order Termination Notice or (ii) completion of all actions required under GTA Section 7.2 “Termination Instructions” (other than Section 7.2.F), and shall be in the form prescribed by Boeing. Such claim shall contain sufficient detail to explain the amount claimed, including detailed inventory schedules and a detailed breakdown of all costs claimed separated into categories (e.g., materials, purchased parts, finished components, labor, burden, general and administrative), and to explain the basis for allocation of all other costs. Except as provided in GTA Section 7.3.E below, in no event shall claims for any Nonrecurring Work or profit be considered or paid by Boeing to Spirit .
B.
Subject to paragraph (A) of this clause, Spirit shall be entitled to compensation for any termination claim with respect to any Order as provided in this paragraph (B) and in paragraph (C) of this clause. Spirit and Boeing may agree upon the whole or any part of the amount to be paid or remaining to be paid because of the termination. The agreed amount, whether under this paragraph (B) or paragraph (C) of this clause, exclusive of costs shown in paragraph (D) of this clause, may not exceed the total price of any Order terminated as reduced by (1) the amount of payments previously made with respect to the Order and (2) the price of any portion of the Order not terminated (for partial termination). and (3) the portion of the contract price reasonably attributable to Spirit’s Nonrecurring Work for that portion of the Order terminated.






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787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



C.
If Spirit and Boeing fail to agree on the whole amount to be paid because of the termination of any Order, Boeing shall pay Spirit the amounts determined by Boeing as follows, but without duplication of any amounts agreed on under paragraph (B) of this clause:
(1)
The contract price for completed supplies or services accepted by Boeing not previously paid for, adjusted for any saving of freight and other charges.
(2)
The total of:
(i)
The costs incurred in the performance of the work terminated, but excluding any costs attributable to supplies or services paid or to be paid by Boeing; and
(ii)
The cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated portion of the Order
(3)
The reasonable costs of settlement of the Order terminated, including-
(i)
Accounting, legal, clerical, and other expenses reasonably necessary for the preparation of termination settlement proposals and supporting data;
(ii)
Costs associated with the termination and settlement of subcontracts (excluding the amounts of such settlements); and
(iii)
Storage, transportation, and other costs incurred, reasonably necessary for the preservation, protection, or disposition of (a) the termination inventory and (b) any items transferred and delivered to Boeing or Boeing’s designee pursuant to GTA Section 7.2.E.

D.
Spirit shall indemnify Boeing and hold Boeing harmless from and against (i) any and all claims, suits and proceedings against Boeing by any subcontractor or supplier of Spirit in respect of any such termination and (ii) all reasonable costs and expenses incurred by Boeing in connection with the defense or settlement of any such claim, suit or proceeding. If Boeing is threatened in writing with any such claim, suit or proceeding, or if any such claim, suit or proceeding is formally commenced against Boeing, which may give rise to a right of indemnification under this GTA Section 7.3, Boeing shall promptly give written notice thereof to Spirit. Spirit may, by delivery of written notice to Boeing within thirty (30) days following its receipt of any such notice from Boeing, elect to contest such claim in such manner as it deems necessary or advisable. If Spirit does not elect to contest any claim, Boeing shall have the exclusive right, but not the obligation, to prosecute, defend, settle or pay such claim, at Spirit's sole expense, provided that such prosecution, defense, settlement or payment is on reasonable terms and at a reasonable cost.











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787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



E.
Notwithstanding anything to the contrary in this GTA Section 7.3, in the event of the termination of a Spare Part Order and only in such event, Spirit’s termination claim for any terminated Spare Part Order will be allowed to include an amount attributable to the specific Nonrecurring Work associated with such terminated Spare Part Order and such amount will not be deducted under GTA Section 7.3.B (3).
7.4          Failure to Submit a Claim
Notwithstanding any other provision of this GTA Section 7.0 “Termination for Convenience”, if Spirit fails to submit a final termination claim within the time period set forth in GTA Section 7.3 “Termination Claim”, Spirit shall be barred from submitting a claim and Boeing shall have no obligation for payment to Spirit under this GTA Section 7.0 except for those Products previously delivered to and accepted by Boeing.
7.5          Partial Termination
Any partial termination of an Order shall not alter or affect the terms and conditions of the Order or any other Order with respect to Products not terminated.
7.6          Product Price
Termination under this GTA Section 7.0 “Termination for Convenience” shall not result in any change to unit prices for Products not terminated.
7.7          Exclusions or Deductions
The following items shall be excluded or deducted from any termination claim submitted by Spirit:
A.
All unliquidated advances or other payments made by Boeing to Spirit pursuant to the terminated portion of any Order (The Parties acknowledge and agree that the total of [*****] in Advance Payments to be made the first and second quarter of 2006 ([*****] on February 15, 2006 and [*****] on May 15, 2006) as noted in SBP, Section 5.5, Advance Payments, is not subject to this exclusion or deduction herein.);
















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787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



B.
Any loss incurred by Boeing with respect to Spirit, reasonably substantiated in good faith, in connection with any commercial airplane program;
C.
The agreed price for scrap allowance; and
D.
Except for normal spoilage and any risk of loss assumed by Boeing, the agreed fair value of property that is lost, destroyed, stolen or damaged.

7.8          Payments
Boeing shall consider any correct (proper) termination claim submitted by Spirit promptly and in good faith per the provisions of GTA Section 7.0 “Termination for Convenience”. Amounts, if any, to be paid by Boeing under GTA Section 7.0 shall be paid within [*****] after settlement between the Parties or as otherwise agreed to between the Parties. Boeing may make partial payments and payments against costs incurred by Spirit for the terminated portion of the Order. If the total payments exceed the final amount determined to be due, Spirit shall repay the excess to Boeing upon demand.
7.9          Accounting Practices
Boeing and Spirit agree that Spirit's "normal accounting practices" used in developing the price of the Product(s) shall also be used in determining the allocable costs upon termination of any Order. For purposes of this GTA Section 7.9, Spirit's "normal accounting practices" refers to Spirit's method of charging costs as either a direct charge, overhead expense, general administrative expense, etc.
7.10          Records
Unless otherwise provided in this Agreement or required by law, Spirit shall maintain all financial records and documents relating to the terminated portion of any Order for [*****] years after final settlement of Spirit's termination claim with respect to such Order.
8.0          EVENTS OF DEFAULT AND REMEDIES
8.1          Events of Default
The occurrence of any one or more of the following events shall constitute an "Event of Default".
A.
Subject to GTA Section 10.0 “Delays”, any failure by Spirit to deliver, when and as required by this Agreement, the SBP or any Order, any Product; or











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787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



B.
Spirit knowingly, willfully, or with gross negligence fails to perform or comply with any material obligation set forth in SBP Section 17.0 “Proprietary Information and Materials”; or
C.
Spirit knowingly, willfully, or with gross negligence has participated in the sale, purchase or manufacture of airplane parts without the required approval of the FAA or appropriate non-U.S. equivalent regulatory agency; or
D.
Boeing reasonably revokes and has not reinstated its determination that Spirit is in compliance to quality management system requirements per Attachment 10, Section A10.2 AS/EN/JISQ 9100 Certification/Registration.
E.
Any failure by Spirit to perform or comply with any obligation (other than as described in GTA Sections 8.1.A, 8.1.B, 8.1.C, 8.1.D, 8.2.F, 8.2.G, and 8.2.H) set forth in this Agreement, the SBP or any Order and such failure shall continue unremedied for a period of fifteen (15) days or more following receipt by Spirit of written notice from Boeing specifying such failure; or
F.
(a) the suspension, dissolution or winding-up of Boeing’s or Spirit's business, (b) Boeing’s or Spirit's inability to pay debts, or its nonpayment of debts, generally as they become due, (c) the institution of reorganization, liquidation or other such proceedings by or against Boeing or Spirit or the appointment of a custodian, trustee, receiver or similar Person for any such company's properties or business, (d) an assignment by Boeing or Spirit for the benefit of its creditors, or (e) any action of Boeing or Spirit for the purpose of effecting or facilitating any of the foregoing; or
G.
Any material failure by Spirit to comply with GTA 15.1 “Compliance with Laws” and GTA 15.2 “Import/Export”,
H.
Any failure by Spirit to comply with GTA 20.4 “Assignment” .
8.2          Boeing Remedies
If any Event of Default by Spirit shall occur:
A.
Cancellation
1.
For any Event of Default specified in Sections 8.1.A and 8.1.E that has a material operational or financial impact on Boeing, Boeing may, by giving written notice (“Order Cancellation Notice”) to Spirit, immediately cancel any Order for Products other than Production Articles, in whole or in part, and Boeing shall not be required after delivery of such Order Cancellation Notice to accept the tender by Spirit of any Products subject to such cancellation.
2.
For any Event of Default specified in Sections 8.1.A and 8.1.E Boeing may, by giving written notice (“Recovery Plan Notice”) to Spirit, give notice of its intent to cancel any Order for Products (including Production Articles), this Agreement or the SBP, in whole or in part, after: (a) repeated Events of Default under Section 8.1.A or 8.1.E, as applicable, occurring within the [*****] prior to the date of such Recovery Plan Notice that have material operational or financial impact on Boeing; and (b) failure by Boeing and Spirit to reach an agreement in good faith on a recovery plan within [*****] days after Spirit’s receipt of such Recovery Plan Notice. Such recovery plan shall reasonably satisfy Boeing that Spirit is able to support Boeing requirements for Products in the amounts and within the delivery schedules Boeing reasonably requires. At the end of such [*****] day period, absent such agreement, if Boeing reasonably determines the Parties are unlikely to reach a mutually agreeable recovery plan, Boeing may, by giving written notice (“Cancellation Notice”) to Spirit, immediately

- 10 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



cancel any Order, including but not limited to Orders for Production Articles, this Agreement or the SBP, in whole or in part, and Boeing shall not be required after delivery of such Cancellation Notice to accept the tender by Spirit of any Products subject to such cancellation.
3.
For any Events of Default specified in Sections 8.1.B, 8.1.C, 8.1.D, 8.1.F , 8.1.G and 8.1. H Boeing may, by giving a Recovery Plan Notice to Spirit, give notice of its intent to cancel any Order, this Agreement or the SBP, in whole or in part, after failure by Boeing and Spirit to reach an agreement in good faith on a recovery plan within [*****] days after Spirit’s receipt of such Recovery Plan Notice. Such recovery plan shall reasonably satisfy Boeing that Spirit is able to remedy the Event of Default or the circumstances that gave rise thereto so that Spirit will be able to comply with its contractual obligations. At the end of such [*****] day period, absent such agreement, if Boeing reasonably determines the Parties are unlikely to reach a mutually agreeable recovery plan, Boeing may, by giving a Cancellation Notice to Spirit, immediately cancel any Order, including but not limited to Orders for Production Articles, this Agreement or the SBP, in whole or in part, and Boeing shall not be required after delivery of such Cancellation Notice to accept the tender by Spirit of any Products subject to such cancellation.
B.
Cover
Boeing may manufacture, produce or provide, or may engage any other Persons to manufacture, produce or provide, any Products in substitution for the Products to be delivered or provided by Spirit which Boeing reasonably believes will be affected by the Event of Default. Boeing may recover from Spirit the difference between the price for each such Product and the reasonable aggregate additional expense paid or incurred by Boeing to manufacture, produce or provide, or engage other persons to manufacture, produce or provide, each such Product; provided , however , that any Tooling and other items transferred by Spirit pursuant to GTA Section 8.2.F shall be taken into consideration when determining the amount of such recovery.
C.
Rework or Repair
Where allowed by the applicable regulatory authority, Boeing or its designee may rework or repair any Product in accordance with SBP Section 8.3 “Boeing’s Inspection and Rejection”

















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787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



D.
Reserved
E.
Reserved
F.
Tooling and Other Materials
Upon the cancellation of any Order, this Agreement or the SBP, in whole or in part, pursuant to Section 8.2.A, or as necessary to exercise the cover remedy under Section 8.2.B, Spirit shall, upon the request of Boeing, transfer title (to the extent not then held by Boeing) and deliver to Boeing or Boeing's designee any or all (i) Tooling, including Transportation Devices (as defined in SBP Section 12.1.12 "Transportation Devices”), (ii) Boeing Furnished Material (as defined in SBP Section 12.8.1 “Boeing Furnished Material; Bonded Stores Requirements”), (iii) raw materials, parts, work-in-process, incomplete or completed assemblies and (iv) Product Proprietary Information (as defined in SBP Section 15.0 “Intellectual Property”) and other Proprietary Information and Materials (as defined in SBP Section 17.0 “Proprietary Information and Materials”) of Boeing in the possession or under the effective control of Spirit or any of its subcontractors or suppliers, in each case free and clear of all liens, claims or other rights of any Person, except as provided in SBP Section 15.2.1 "Product Proprietary Information" and SBP Section 15.2.3 "Joint SBP Activity Proprietary Information and Inventions". Such transfer and delivery with respect to clauses (i)-(iv) above shall apply only to the extent the subject matter thereof (a) is to be used as a result of the cancellation of any Order, this Agreement or the SBP or is otherwise necessary in connection with the exercise by Boeing of its cover remedy, and (b) is not required by Spirit for the performance of any Order that has been terminated only in part; provided however, if such subject matter is required for use by both Spirit and Boeing, the Parties shall confer and reach mutual agreement in a timely manner in order to resolve such issue in a manner that best supports the requirements of the Program.

Spirit shall promptly transfer and deliver, and cause each of its subcontractors to transfer and deliver, any or all of the aforesaid items in accordance with any written notice or notices given hereunder by Boeing to Spirit, notwithstanding any event or circumstance whatsoever, including, without limitation, any claim or dispute Spirit may assert in connection with such cancellation . If Boeing shall require Spirit to transfer and deliver to Boeing or Boeing's designee any of the aforesaid items, Spirit shall cooperate with and shall assist Boeing in developing and implementing plans to transfer the production of Products and provision of services to Boeing, or to any other Person designated by Boeing, in an expeditious and orderly manner and will take such other steps to assist Boeing as Boeing may reasonably request in good faith, all for the purpose of maintaining, or attempting to maintain as nearly as may be possible, production of Program Airplanes and Derivatives in accordance with Boeing's schedule of delivery of Program Airplanes and Derivatives to Customers.

Spirit hereby authorizes Boeing or its representatives to enter upon its or any of Spirit's subcontractors’ premises at any time during regular business hours upon reasonable advance written notice, for the limited purpose of taking physical possession of any or all of the aforesaid items. At the request of Boeing, Spirit shall promptly provide to Boeing a detailed list of such items, including the location thereof, and shall catalog, crate, package,

- 12 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



mark and ship such items expeditiously and in an orderly manner and otherwise in the manner reasonably requested by Boeing, which request may specify incremental or priority shipping of certain items. Spirit shall, if instructed by Boeing, store or dispose of any or all of the aforesaid items in any reasonable manner requested by Boeing.
Such transfer and delivery to Boeing (including transportation costs) of the above shall be at no cost to Boeing except as otherwise provided in this paragraph. Spirit shall be entitled to receive from Boeing reasonable compensation for any item accepted by Boeing which has been transferred to Boeing pursuant to this GTA Section 8.2.F. However, such compensation shall not include (i) Boeing Furnished Equipment, (ii) any item the price of which shall have been paid to Spirit prior to such transfer, and (iii) that portion of Shipset Prices for delivered Shipsets which may be reasonably attributable to Spirit’s recovery of Tooling accepted by Boeing. Spirit shall also be entitled to receive from Boeing reasonable compensation for the Product Definition portion of the Nonrecurring Work costs anticipated by Spirit at the time of the execution of this SBP, except for that portion of Shipset Prices for delivered Shipsets which may be reasonably attributable to Spirit’s recovery of such Product Definition costs. Such compensation hereunder shall not be paid directly to Spirit, but shall be accounted for as a setoff against any damages payable by Spirit to Boeing as a result of any Event of Default except to the extent the amount of such compensation shall exceed the amount of such damages .
8.3
Spirit Remedies
A.    Cancellation
For any Event of Default specified in Section 8.1.F, Spirit may, by giving a Recovery Plan Notice to Boeing, give notice of its intent not to fulfill the Order(s) affected by the Event of Default and to cancel this Agreement and the SBP, in whole or in part, after failure by Spirit and Boeing to reach an agreement in good faith on a recovery plan within [*****] days after Boeing's receipt of such Recovery Plan Notice. Such recovery plan shall reasonably satisfy Spirit that Boeing is able to remedy the Event of Default or the circumstances that gave rise thereto so that Boeing will be able to comply with its contractual obligations. At the end of such [*****] day period, absent such agreement, if Spirit reasonably determines the Parties are unlikely to reach a mutually agreeable recovery plan, Spirit may, by giving a Cancellation Notice to Boeing, immediately cease fulfilling the Order(s) affected by the Event of Default, cancel this Agreement and the SBP, in whole or in part, and Spirit shall not be required after delivery of such Cancellation Notice to deliver to Boeing any Products subject to such cancellation.






- 13 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



8.4          Boeing and Spirit Remedies
A.
Remedies Generally
No failure on the part of either Party in exercising any right or remedy hereunder, or as provided by law or in equity, shall impair, prejudice or constitute a waiver of any such right or remedy, or shall be construed as a waiver of any Event of Default or as acquiescence therein. No single or partial exercise of any such right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. No acceptance of partial payment or performance of the other Party’s obligations hereunder shall constitute a waiver of any Event of Default or a waiver or release of payment or performance in full by the other Party of any such obligation. All rights and remedies of the Parties hereunder and at law and in equity shall be cumulative and not mutually exclusive and the exercise of one shall not be deemed a waiver of the right to exercise any other.
B.
Setoff
The non-defaulting Party shall, at its option, have the right to set off against and apply to the payment of any obligation, sum or amount owing at any time to the other Party hereunder or under any Order, all deposits, amounts or balances held by the non-defaulting Party for the account of the other Party and any amounts owed by the non-defaulting Party to the other Party, regardless of whether any such deposit, amount, balance or other amount is then due and owing. The Parties acknowledge and agree that such set off right shall not be made against the Advance Payments that are scheduled in the first and second quarter of 2006 (([*****] on February 15, 2006 and [*****] on May 15, 2006), in totality of [*****], as noted in the SBP, Section 5.5, Advance Payments. The Parties also acknowledge and agree that Boeing shall not be entitled to set off any such obligation, sum or amount against any Advance Payments or invoices for payments pursuant to Section 5.2.1, in the totality of $277 million, of the Special Business Provisions between Boeing and Spirit (MS-65530-0016). The reference to SBP MS-65530-0016 is for reference purposes only and does not incorporate the terms and conditions of such SBP.

9.0          TERMINATION OF AIRPLANE PROGRAM
9.1          Program Termination
The Parties acknowledge and agree that Boeing may, in its sole discretion, terminate this Agreement and the SBP in whole or in part, including any Orders issued hereunder, by written notice to Spirit (a “Program Termination Notice”) if Boeing decides not to initiate or continue production of the Program Airplane, or not to continue the Program, by reason of Boeing’s determination, after consultation with Spirit, that there is insufficient business basis for such initiation or continuation. In the event of such a termination, Boeing shall have no liability to Spirit except as expressly provided in GTA Section 9.2 “Termination Liability”. As a part of such consultation, Boeing shall provide Spirit with information regarding the basis of Boeing’s determination as Spirit may request, subject to Boeing’s consent. Boeing’s consent shall not be unreasonably withheld.

- 14 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



9.2          Termination Liability
In the event of a termination as described in GTA Section 9.1 “Program Termination”, Boeing shall have no liability whatsoever, including but not limited to Nonrecurring Work, to Spirit, except as set forth in GTA Section 9.3 “Transfer of Certain Property” and except to the extent of any Orders issued prior to the date of Spirit’s receipt of the Program Termination Notice. Termination of such Orders shall be governed by GTA Section 7.0 “Termination for Convenience”, except that each reference in GTA Section 7.0 to an “Order Termination Notice” shall be deemed to refer instead to the Program Termination Notice.
9.3          Transfer of Certain Property
If Boeing delivers a Program Termination Notice pursuant to GTA Section 9.1 “Program Termination”, then Spirit shall, upon the written request of Boeing, transfer title to any or all of the items described in GTA Section 8.2.F.1 “Tooling and Other Materials” and deliver such items to Boeing or its designee in a manner to be mutually agreed by the Parties. Spirit shall be entitled to reasonable compensation for (i) any Tooling transferred to Boeing or its designee, including Transportation Devices (as defined in SBP Section 12.1.12 “Transportation Devices”) except for that portion of Shipset Prices for delivered Shipsets which may be reasonably attributable to Spirit’s recovery of such Tooling accepted by Boeing, and (ii) raw materials, parts, work-in-process, incomplete or completed assemblies in the possession or under the effective control of Spirit or any of its subcontractors or suppliers for all such items that are transferred and delivered to Boeing or its designee. Transportation costs for items transferred shall be at Boeing’s expense.
10.0          DELAYS
10.1          Excusable Delay
A.
If delivery of any Product is delayed by unforeseeable circumstances beyond the control and without the fault or negligence of Spirit or of its suppliers or subcontractors (any such delay being hereinafter referred to as "Excusable Delay"), the delivery date of such Product shall be extended for a period to be determined by Boeing after an assessment by Boeing and Spirit of alternative work methods and consultation by Boeing with Spirit as appropriate. Excusable Delays may include, but are not limited to, acts of God, war, terrorist acts, riots, acts of government, fires, floods, earthquakes, epidemics, quarantine restrictions, freight embargoes, strikes or unusually severe weather, but shall exclude Spirit's noncompliance with any legal requirement as required by GTA Section 15.1 “Compliance with Laws”. However, the above notwithstanding, Boeing expects Spirit to use its best commercially reasonable efforts to continue production, recover lost time and support all schedules as established under this Agreement or any Order. Therefore, it is understood and agreed that (i) delays in delivery of any Product of less than [*****] days duration shall not be considered to be Excusable Delays unless such delays shall occur within [*****] days preceding the scheduled delivery date of any Product and (ii) if delay in delivery of any Product is caused by the default of any of Spirit's subcontractors or suppliers, such delay shall not be considered an Excusable Delay unless the supplies or services to be provided by such subcontractor or supplier are not obtainable from other sources in sufficient time to permit Spirit to meet the applicable delivery schedules.


- 15 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



If delivery of any Product is delayed by any Excusable Delay for more than three (3) months, Boeing may (except in any case where GTA Section 10.2 “Delays Attributable to Boeing” shall apply) at such time or at any time thereafter up to the time such Product is delivered, after consultation with Spirit but without granting any additional extension, cancel all or part of any Order with respect to the delayed Products. In such event, Boeing may, in its reasonable discretion, also cancel this Agreement and the SBP in whole or in part, provided however, that prior to any such cancellation, Boeing shall have first consulted with Spirit and Boeing shall have reasonably determined that the anticipated future duration of such Excusable Delay would be longer than the time it will take to develop, and obtain Production Articles from, an alternate source. In connection with such consultation, Boeing agrees to share the basis for such determination with Spirit .
B.
[Reserved].
C.
If an Excusable Delay lasts more than three (3) months and Boeing cancels this Agreement and the SBP or any Order, in whole or in part, Boeing may exercise its rights and remedies of cover in respect of such Products in accordance with GTA Section 8.2.B. However, subsequent to any such cancellation of this Agreement and the SBP or any Order, in whole or in part, Spirit shall, upon the written request of Boeing, transfer title to any or all of the items described in GTA Section 8.2.F.1 “Tooling and Other Materials” and deliver such items to Boeing or its designee in a manner to be mutually agreed by the Parties. Spirit shall be entitled to reasonable compensation for (i) any such Tooling transferred to Boeing or its designee pursuant to the preceding sentence, including Transportation Devices, less that portion of Shipset Prices for delivered Shipsets which may be reasonably attributable to Spirit’s recovery of such Tooling accepted by Boeing; and (ii) raw materials, parts, work-in-process, incomplete or completed assemblies in the possession or under the effective control of Spirit or any of its subcontractors or suppliers that are transferred and delivered to Boeing or its designee. Transportation costs for items transferred shall be at Boeing’s expense.
If Boeing cancels this Agreement and the SBP in whole pursuant to this GTA Section 10.1, Spirit shall also be entitled to receive from Boeing reasonable compensation for the Nonrecurring Work costs (other than Tooling, except as provided above) anticipated by Spirit at the time of the execution of this Agreement, except for that portion of Shipset Prices for delivered Shipsets which may be reasonably attributable to Spirit’s recovery of such other Nonrecurring Work costs or such costs as may have otherwise been specifically recovered from a Third Party as a result of the occurrence of the Excusable Delay .







- 16 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



If Boeing cancels this Agreement and the SBP in part (including any associated Order in whole or in part) pursuant to this GTA Section 10.1 with respect to a major component, Spirit shall also be entitled to receive from Boeing reasonable compensation for the Nonrecurring Work costs related to such major component (other than Tooling, except as provided above) anticipated by Spirit at the time of the execution of this Agreement, except for that portion of Shipset Prices for delivered Shipsets which may be reasonably attributable to Spirit’s recovery of such other Nonrecurring Work or such costs as may have otherwise been specifically recovered from a Third Party as a result of the occurrence of the Excusable Delay .

D.
No delay in performance by Spirit due to an Excusable Delay shall constitute an Event of Default or be construed in any way as a default by Spirit under this Agreement, the SBP or any Order.
10.2          Delays Attributable to Boeing
In the event of any delay caused by Boeing affecting Spirit’s delivery schedule, Boeing and Spirit shall seek commercially practical solutions to assure Boeing maintains on-schedule delivery of the Aircraft to its Customers. If such solutions cause additional cost impact to Spirit, Boeing will compensate Spirit for the reasonable costs of such impact. To the extent any delay is foreseeable, Boeing shall notify Spirit as soon as practicable. In no event shall any such delay affecting Spirit’s delivery schedule constitute an Event of Default by Spirit.
11.0          SUSPENSION OF WORK
Boeing may in its reasonable discretion at any time, by written order to Spirit (hereinafter referred to as a “Stop Work Order”), require Spirit to stop all or any part of the work called for by any Order for up to [*****] except as provided in the following paragraph. On receipt of a Stop Work Order, Spirit shall promptly comply with its terms and the Parties shall collaborate to minimize the disruption and cost to both Parties arising from the Stop Work Order during the period of work stoppage. Within the period covered by the Stop Work Order (including any extension thereof) Boeing shall either (i) cancel the Stop Work Order or (ii) terminate or cancel the work covered by the Stop Work Order in accordance with the provisions of GTA Section 7.0 “Termination for Convenience” or if an Event of Default by Spirit, GTA Section 8.0 “Events of Default and Remedies”. In the event the Stop Work Order is canceled by Boeing or the period of the Stop Work Order (including any extension thereof) expires, Spirit shall resume the work covered by the Stop Work Order as soon as practicable, and Spirit and Boeing shall consult regarding the impact of the period of the Stop Work Order on any delivery schedules or other requirements under the terms of this Agreement, the SBP and the applicable Order. In no event shall the period covered by any Stop Work Order (including any extensions thereof), or by any series of Stop Work Orders relating to the same work, exceed in the aggregate [*****] without the written consent of Spirit except as provided in the following paragraph .



- 17 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



In the event SBP Section 3.4.2.3 “First Shipset Master Phasing Plan” shall become applicable under the SBP of any third party, the [*****] time period referred to in this Section shall not apply with respect to such circumstances. In such case, Spirit acknowledges and agrees that Boeing may establish a period of the Stop Work Order of any duration as reasonably determined by Boeing after consultation with Spirit .
12.0      RESERVED
13.0          ASSURANCE OF PERFORMANCE
A.
Spirit to Provide Assurance
If Boeing determines reasonably and in good faith, at any time or from time to time, that it is not sufficiently assured of Spirit's full, timely and continuing performance hereunder, Boeing may request, by written notice to Spirit, written assurance (hereinafter an "Assurance of Performance") that Spirit is able to perform all of its obligations under any Order when and as specified herein. Each Assurance of Performance shall be delivered by Spirit to Boeing as promptly as possible, but in any event no later than [*****] following Spirit’s receipt of Boeing's request therefore, and each Assurance of Performance shall be accompanied by any information, reports or other materials, prepared by Spirit, as Boeing may reasonably request. Boeing shall give consideration to Spirit’s customary business practices when requesting such information, reports or other materials. Except as to payment for accepted goods. Boeing may suspend all or any part of Boeing's performance hereunder until Boeing receives an Assurance of Performance from Spirit reasonably satisfactory in form and substance to Boeing.
B.
Meetings
Boeing may request one or more meetings with senior management or other employees of Spirit for the purpose of discussing any request by Boeing for an Assurance of Performance or any Assurance of Performance provided by Spirit. Spirit shall make such persons available to meet with representatives of Boeing as soon as may be practicable following a request for any such meeting by Boeing.

















- 18 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



14.0          LIMITATION OF SPIRIT'S RIGHT TO ENCUMBER ASSETS
Spirit warrants to Boeing that it has or will have good title to all inventory, work-in-process, tooling and materials to be supplied by Spirit in the performance of its obligations under any Order. Pursuant to the provisions of such Order, Spirit will transfer to Boeing title to such inventory, work-in-process, tooling and materials, whether transferred separately or as part of any Product delivered under the Order, free of any liens, charges, encumbrances or rights of others.
15.0          COMPLIANCE
15.1          Compliance With Laws
Spirit shall be responsible for complying with all laws, including, but not limited to, any statute, rule, regulation, judgment, decree, order, or permit applicable to its performance under this Agreement and the SBP, including those pertaining to United States export controls. Spirit shall notify Boeing at the earliest practicable opportunity of any aspect of its performance which becomes subject to additional regulation after the date of execution of this Agreement or which Spirit reasonably believes will become subject to additional regulation during the term of this Agreement, in each case if such additional regulation could reasonably be expected to materially affect Spirit’s or Boeing’s performance under this Agreement or the SBP.
Boeing shall be responsible for complying with all laws, including, but not limited to, any statute, rule, regulation, judgment, decree, order, or permit applicable to its performance under this Agreement and the SBP, including those pertaining to United States export controls.
15.2          Import/Export

(a)
In performing their respective obligations under this Agreement and the SBP, both Parties will comply with United States export control and sanctions laws, regulations, and orders, as they may be amended from time to time, applicable to the export and re-export of goods, software, technology, or technical data (“Items”) or services, including without limitation the Export Administration Regulations (“EAR”), International Traffic in Arms Regulations (“ITAR”), and regulations and orders administered by the Treasury Department’s Office of Foreign Assets Control (collectively, “Export Control Laws”).

(b)
The Party conducting the export shall be responsible for obtaining the required authorizations. The Party conducting the re-export shall be responsible for obtaining the required authorizations. Each Party shall reasonably cooperate with, and exercise reasonable efforts to support, the other Party in obtaining any necessary licenses or authorizations required to perform its obligations under this Agreement and the SBP.







- 19 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



(c)
The Party providing any Items under this Agreement or the SBP shall, upon written request of the other Party, notify the other Party of the Items’ Export Control Classification Numbers (“ECCNs”) as well as the ECCNs of any components or parts thereof if they are different from the ECCN of the Item at issue. If requested by Spirit, Boeing will consider providing assistance to enable Spirit to comply with the requirements of this paragraph.

(d)
Each Party represents that (i) the Items, and the parts and components thereof, it is providing under this Agreement and the SBP are not “defense articles” as that term is defined in 22 C.F.R. § 120.6 of the ITAR and (ii) the services it is providing under this Agreement and the SBP are not “defense services” as that term is defined in 22 C.F.R. § 120.9 of the ITAR. The Parties acknowledge that this representation means that an official capable of binding the Party providing such Items knows or has otherwise determined that such Items, and the parts and components thereof, are not on the ITAR’s Munitions List at 22 C.F.R. §121.1. Each Party agrees to reasonably cooperate with the other in providing, upon written request of the other Party, documentation or other information that supports or confirms this representation.

(e)
To the extent that such Items, or any parts or components thereof, were specifically designed or modified for a military end use or end user, the Party providing such Items shall notify the other Party of this fact and shall also provide the other Party with written confirmation from the United States Department of State that such Items, and all such parts or components thereof, are not subject to the jurisdiction of the ITAR.
15.3
Government Requirements
If any of the work to be performed under this Agreement or the SBP with respect to any Order is performed in the United States, Spirit shall, via invoice or other form reasonably satisfactory to Boeing, certify that the Products covered by the Order were produced in compliance with Sections 6, 7 and 12 of the Fair Labor Standards Act (29 U.S.C. 201-291), as amended, and the regulations and orders of the U.S. Department of Labor issued thereunder. In addition, the following Federal Acquisition Regulations are incorporated herein by this reference except "Contractor" shall mean "Spirit". Other Government clauses, if any, are incorporated herein either by attachment to this document or by some other means of reference.
FAR 52.222-26    "Equal Opportunity"
FAR 52.222-35
"Affirmative Action for Disabled Veterans and Veterans of the Vietnam Era”
FAR 52.222-36    "Affirmative Action for Workers with Disabilities”
FAR 52.247-64
“Preference for Privately Owned U.S.-Flagged Commercial Vessels”






- 20 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



15.4          Ethic Requirements/Code of Conduct
Boeing is committed to conducting its business fairly, impartially, and in an ethical and proper manner. Boeing’s expectation is that Spirit will also conduct its business fairly, impartially and in an ethical and proper manner. Boeing further expects that Spirit will have (or will develop) and adhere to a code of ethical standards. If Spirit has cause to believe that Boeing or any employee or agent of Boeing has behaved improperly or unethically under this Agreement or the SBP, Spirit shall report such conduct to The Boeing Company Ethics hotline. Copies of The Boeing Company Code of Conduct and contacts for such reports are available on www.boeing.com under "Ethics and Business Conduct". Although Boeing will not use the failure to report improper or unethical behavior as a basis for claiming breach of contract by Spirit, Spirit is encouraged to exert reasonable efforts to report such behavior when warranted.
16.0          INTEGRITY IN PROCUREMENT
Spirit warrants that neither it nor any of its employees, agents or representatives have offered or given, or will offer or give, any gratuities to Boeing’s employees, agents or representatives for the purpose of securing any Order or securing favorable treatment under any Order.
17.0          APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Washington. No consideration shall be given to Washington’s conflict of law rules. This Agreement excludes the application of the 1980 United Nations Convention on Contracts for the International Sale of Goods.
Spirit hereby irrevocably consents to and submits itself exclusively to the jurisdiction of the applicable courts of King County, Washington and the federal courts of Washington State for the purpose of any suit, action or other judicial proceeding arising out of or connected with any Order or the performance or subject matter thereof. Spirit hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that (a) Spirit is not personally subject to the jurisdiction of the above-named courts, (b) the suit, action or proceeding is brought in an inconvenient forum or (c) the venue of the suit, action or proceeding is improper.
18.0          SURVIVAL
Without limiting any other survival provision contained herein and notwithstanding any other provision of this Agreement or the SBP to the contrary, the representations, covenants, agreements and obligations of the Parties set forth in GTA Section 7.3 “Termination Claim”, GTA Section 7.8 “Payments”, GTA Section 8.0 “Events of Default and Remedies”, GTA Section 9.0 “Termination of Airplane Program”, GTA Section 10.0 “Delays”, GTA Section 17.0 “Applicable Law”, GTA Section 19.2 “Confidentiality”, GTA Section 22.0 “Non-Waiver/Partial Invalidity”, GTA Section 24.0 “Product Liability Claims”, GTA Section 25.0 “Disputes“, and this GTA Section 18.0 shall survive any cancellation, termination or expiration of this Agreement, any assignment of this Agreement or any payment and performance of any or all of the other obligations of the Parties hereunder. Termination or cancellation of any part of this Agreement shall not alter or affect any part of this Agreement, which has not been terminated or cancelled. It is the intention of the Parties that this Agreement and the SBP shall terminate or expire at the same time and,

- 21 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



accordingly, this Agreement shall not survive (except as provided in this GTA Section 18.0) following the expiration or termination of the SBP.
19.0          PUBLICITY AND CONFIDENTIALITY
19.1          Publicity
Without Boeing’s prior written approval, Spirit shall not, and shall require that its subcontractors or suppliers shall not, release any publicity, advertisement, news release or denial or confirmation of the same, regarding any Order or Products, or the Program; provided, however, that the foregoing shall not preclude communications or disclosures regarding the provisions of this Agreement, the SBP or the AA between Spirit and Boeing solely and as necessary to comply with any accounting or Securities and Exchange Commission or Canadian securities disclosure obligations (including in connection with registering securities) or rules of any stock exchange or national market system. Spirit shall be liable to Boeing for any breach of such obligation by any such subcontractor or supplier.
19.2          Confidentiality
Each Party shall treat the terms of this Agreement and the SBP as confidential, subject to applicable legal and governmental requirements, and no public release or announcement concerning this Agreement or the SBP or their specific terms shall be made without the prior consent of both Parties; provided, however, that the foregoing shall not preclude communications or disclosures regarding the provisions of this Agreement, the SBP or the AA between Spirit and Boeing solely and as necessary to comply with any accounting or Securities and Exchange Commission or Canadian securities disclosure obligations (including in connection with registering securities) or rules of any stock exchange or national market system. Each Party shall request and shall use its best reasonable efforts to obtain confidential treatment of, and shall cooperate with the other Party in any efforts it may make to obtain confidential treatment of, any documentation or information regarding this Agreement or the SBP disclosed to any governmental agency or other entity as a result of applicable legal or governmental requirements.







- 22 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



20.0          RESPONSIBILITY FOR PERFORMANCE
20.1          Responsibilities of Spirit

Spirit shall be responsible for performance of its obligations under this Agreement and the SBP and any Order referencing this Agreement and the SBP. Subject to GTA Section 10.1 “Excusable Delay” and SBP Section 12.3 “Compatibility with Engineering, Business and Production Systems”, (i) Spirit shall bear all risks of providing adequate facilities and equipment to perform each Order in accordance with the terms thereof and (ii) Spirit may use its facilities and equipment (which shall not include any of Boeing’s Proprietary Information and Materials) for any lawful purposes in addition to performing Orders and (iii) if any use of any facilities or equipment contemplated by Spirit for use in performing Orders will not be available for any reason, Spirit shall be responsible for arranging for similar facilities and equipment at no cost to Boeing, and any failure to do so shall not relieve Spirit from its obligations.
Spirit shall notify and obtain written approval (not to be unreasonably withheld or delayed) from Boeing prior to moving work to be performed under this Agreement or the SBP between Spirit’s various facilities. Spirit shall include as part of its subcontracts the right of entry provisions, proprietary information and rights provisions and quality control provisions, compliance with laws provisions (GTA Section 15.1), environmental and safety and health provisions (SBP Section 13.0), insurance provisions, and customer contact provisions contained in this Agreement and the SBP and shall use its best commercially reasonable efforts to also include other elements of this Agreement and the SBP that protect Boeing’s rights as reasonably applicable. In addition, Spirit shall provide to its subcontractors sufficient information to document clearly that the work being performed by Spirit's subcontractors is to facilitate performance under this Agreement, the SBP or any Order. Sufficient information may include but is not limited to Order number, GTA or SBP number or the name of Boeing's Procurement Representative.

Spirit’s relationship to Boeing in the performance of this Agreement or any Order is that of an independent contractor. Spirit’s employees, agents, subcontractors or representatives (“Employees”) involved in such performance shall at all times be under Spirit’s direction, management authority and control. Without limiting the foregoing, Spirit shall have sole direction, management, authority and control over: its management and policies; its Employees, including corporate executive officers or board executives, plant management, and workforce; its facilities and equipment and activities thereon, and its compliance with all legal requirements. Spirit shall pay all wages, salaries and other amounts due its Employees in connection with such performance and shall be responsible for all obligations and administrative functions with respect to them including without limitation payroll activities, social security, income tax withholding, unemployment compensation, worker’s compensation, employee benefits (such as health plans, retirement plans, and insurance plans); provided, that Boeing may provide certain of such services to Spirit pursuant to the Transition Services Agreement dated as of the date hereof by and between Boeing and Spirit.



- 23 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



20.2          Subcontracting
Spirit shall maintain complete and accurate records regarding all subcontracted items and/or processes in accordance with its customary business practices. Spirit’s use of subcontractors or suppliers shall comply with Spirit’s quality assurance system approval for said subcontractors or suppliers. Unless Boeing’s prior written authorization or approval is obtained, Spirit may not purchase completed or substantially completed Products. For purposes of this GTA Section 20.2 only, completed or substantially completed Products shall not include components of assemblies or subassemblies. No subcontracting by Spirit shall relieve Spirit of its obligation under the applicable Order. Utilization of a Boeing-approved source shall not constitute a waiver of Spirit's responsibility to meet all specification requirements.
20.3          Reliance
Entering into this Agreement is in part based upon Boeing's reliance on Spirit's ability, expertise and awareness of the intended use of the Products. Spirit agrees that Boeing and Boeing's Customers may rely on Spirit as an expert, and Spirit will not deny any responsibility or obligation hereunder to Boeing or Boeing's Customers on the grounds that Boeing or Boeing's Customers provided recommendations or assistance in any phase of the work involved in producing or supporting the Products, including but not limited to Boeing's acceptance of specifications, test data or the Products.
20.4          Assignment
Seller shall not assign any of its rights or interest in this Agreement or any Order, or subcontract all or substantially all of its performance of this Agreement or any Order, without Boeing’s prior written consent, which shall not be unreasonably withheld, except that Boeing may withhold its consent to an assignment to a Disqualified Person (as defined below) for any reason and at its sole discretion. Seller shall provide Boeing with thirty (30) days notice prior to any proposed assignment. Seller shall not delegate any of its duties or obligations under this Agreement; provided that this shall not prohibit Seller from subcontracting as permitted pursuant to the applicable SBP. Seller may assign its right to monies due or to become due. No assignment, delegation or subcontracting by Seller, with or without Boeing’s consent, shall relieve Seller of any of its obligations under this Agreement or Order or prejudice any rights of Boeing against Seller whether arising before or after the date of any assignment. This article does not limit Seller’s ability to purchase standard commercial supplies or raw material.

- 24 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



The prohibition set forth in this GTA Section 20.4 includes, without limitation (and the following shall, subject to the immediately following sentence, be deemed to be "assignments"): (i) a consolidation or merger of Seller in which a Disqualified Person directly or indirectly holds, immediately after consummation of the transaction more than fifty percent (50%) of the voting power of the issued and outstanding voting stock of the corporation resulting from or surviving such transaction; (ii) the acquisition directly or indirectly by a Disqualified Person of voting stock of any corporate Seller having more than fifty percent (50%) of the voting power of the issued and outstanding voting stock of Seller; (iii) the sale, assignment or transfer of all or substantially all of the assets of Seller to a Disqualified Person; and (iv) where Seller is a partnership, acquisition of control of such partnership by a Disqualified Person. Any consolidation, merger, acquisition of voting stock or sale, assignment or transfer of all or substantially all of the assets of Seller that is not prohibited by the immediately preceding sentence shall not constitute an “assignment” for purposes of this GTA and shall not be prohibited by, or require Boeing’s consent under, this Section 20.4.


A Disqualified Person is:
(i)
a Person, a principal business of which is as an original equipment manufacturer of commercial aircraft, defense systems, satellites, space launch vehicles or space vehicles;
(ii)
a Person that Boeing reasonably believes is unable to perform this Agreement, for reasons, including but not limited to, financial viability, export and import laws, and demonstrated past performance failures;
(iii)
a Person, that after giving effect to the transaction , would be the supplier of more than forty percent (40%) by value of the major structural components of any model of Boeing aircraft then in production, unless it is mutually agreed that significant identifiable benefits will accrue to Boeing as a result of the transaction; or;
(iv)
a Person who is one of the following companies or a parent, subsidiary or affiliate of one of the following companies: Lufthansa Technique; Israeli Aircraft Industries; HAECO; PEMCO Aeroplex, EADS/Airbus, or who is an airline or an operator of commercial aircraft in revenue service or a parent, subsidiary or affiliate of an airline or an operator of commercial aircraft in revenue service..




- 25 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



Seller shall not permit any Person described in clause (iv) of the definition of Disqualified Person to hold any voting stock of Seller at any time that Seller is not a Public Company. Seller shall not enter into any agreement under which any Person described in clause (iv) of the definition of Disqualified Person is entitled to designate one or more members of Seller’s board of directors at any time that Seller is a Public Company. A Public Company is any Person (i) with equity securities registered under Section 12 of the Securities Exchange Act of 1934 or which is subject to the reporting requirements of Section 15(d) of the Securities Exchange Act of 1934 or (ii) with equity securities traded or quoted in a domestic or foreign securities exchange or market.
For the avoidance of doubt, Boeing and Seller agree that HMSGTA MWS and Supplemental License Agreements WS-001/-002/-003 and -004 may be assigned to the third party receiving assignment of this GTA and its corresponding SBP’s. Any other Supplemental License Agreement between Boeing and Seller will be subject to the assignment terms of HMSGTA MWS.

20.5          Relationship of Parties
No provision of this Agreement or the SBP, and no course of dealing or performance between Boeing and Spirit, shall in any event or circumstance be construed as constituting, creating, giving effect to or otherwise recognizing a joint venture, partnership or other similar arrangement; and each Party is and shall remain an independent contractor as to the other Party with respect to all activities, obligations, liabilities and other matters contemplated by this Agreement and the SBP. Neither Party shall have any authority to act in the name of, bind or obligate the other Party in any manner whatsoever, and neither Party shall hold itself out to have such authority or to be the agent, joint venturer or partner of the other Party; and each Party hereby irrevocably waives, and agrees not to assert at any time, any claim that such Party may now or hereafter have that it is the agent, joint venturer or partner of the other Party.
20.6          Successors and Assigns
This Agreement and the SBP shall inure to the benefit of and be binding upon each of the Parties and their respective successors and permitted assigns.
21.0          STRATEGIC ALIGNMENT
With the prior written consent of Spirit (which shall not be unreasonably withheld), Boeing may assign any Order, in whole or in part, to a third party who is under an obligation to supply Boeing with components, kits, assemblies or systems that require Products. At the time of such assignment, Boeing will require that its assignee expressly assume all obligations and perform all duties owed to Spirit under the assigned Order; provided , however , that no such assignment or assumption shall relieve Boeing of any of its obligations under this Agreement, the SBP or the assigned Order . Promptly after any such assignment, Boeing will notify Spirit of the assignment and its effective date.



- 26 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



22.0          NON-WAIVER/PARTIAL INVALIDITY
Any failures, delays or forbearances of either Party in insisting upon or enforcing any provisions of any Order, or in exercising any rights or remedies under this Agreement, shall not be construed as a waiver or relinquishment of any such provisions, rights or remedies; rather, the same shall remain in full force and effect. If any provision of this Agreement or any Order is or becomes void or unenforceable by law, then, to the fullest extent permitted by law, the remainder shall remain valid and enforceable.
23.0          HEADINGS
Section headings used in this Agreement are for convenient reference only and shall not affect the interpretation of this Agreement.
24.0          PRODUCT LIABILITY CLAIMS

Boeing and Spirit shall cooperate with each other in connection with any product liability claims made by Boeing's Customers or other third parties, and neither Party shall have an express contractual right to indemnity from the other in respect of any such claim. Each Party shall retain the right to seek contribution or indemnity, to the extent provided by applicable law, in respect of its payment of any such claim.
25.0          DISPUTES
25.1          Obligations to Negotiate
Boeing and Spirit shall use their best reasonable efforts to resolve any and all disputes, controversies, claims or differences between Boeing and Spirit arising out of or relating in any way to this Agreement, the SBP or any Order, or their performance, including, but not limited to, any questions regarding the existence, validity or termination hereof or thereof ("Disputes"), through negotiation. If a Dispute cannot be resolved by the functional representatives of Boeing and Spirit, it shall be referred up through management channels of the Parties, or their respective designees, for further negotiation. If, and only if, the Parties fail to resolve the Dispute through such negotiation, either Party may initiate an arbitration proceeding in accordance with GTA Section 25.2 “Resolution of Disputes”.
25.2          Resolution of Disputes
Unless otherwise provided herein, each Party may pursue any remedy it has under law or equity should any Dispute not be settled by mutual agreement. However, upon written agreement of both Parties, any such Dispute may be submitted to arbitration or mediation.




- 27 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



Pending final resolution of any Dispute, the Parties shall proceed with performance of this Agreement, the SBP or any Order so long as Boeing continues to pay amounts not in dispute.
26.0          TAXES AND DUTIES
26.1          Inclusion of Taxes in Price
Unless this Agreement specifies otherwise, the price of the Products includes, and Spirit is liable for and shall pay, all taxes, impositions, charges, exactions and duties imposed on Spirit that are measured by this Agreement and the Orders issued hereunder or are otherwise assessed against Spirit in connection with the performance by Spirit of this Agreement or such Orders, except for United States customs duties and sales or use taxes assessed by any United States governmental authority or subdivision thereof on sales to Boeing ("Sales Taxes") for which Boeing has specifically agreed to pay. Sales Taxes shall be separately stated on Spirit’s invoices. Prices shall not include any taxes, impositions, charges, exactions or duties for which Boeing has furnished a valid exemption certificate or other evidence of exemption.
26.2          Litigation
In the event that any taxing authority has claimed or does claim payment for Sales Taxes, Spirit shall promptly notify Boeing, and Spirit shall take such action as Boeing may reasonably request to pay or protest such taxes or to defend against such claim. The actual and direct expenses, without the addition of profit and overhead, of such defense and the amount of such taxes as ultimately determined as due and payable shall be paid directly by Boeing or reimbursed to Spirit promptly following Spirit’s request. If Spirit or Boeing is successful in defending such claim, the amount of such taxes recovered by Spirit, which had previously been paid by Spirit and reimbursed by Boeing or paid directly by Boeing, shall be promptly refunded to Boeing.
26.3          Rebates
If any taxes paid by Boeing are subject to rebate or reimbursement, Spirit shall take such actions as Boeing may reasonably request to secure such rebates or reimbursement and shall promptly refund to Boeing any amount recovered.
27.0          COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.





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787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



28.0
AMENDMENTS
Except as otherwise expressly provided herein, the terms of this Agreement shall not be amended, or deemed amended, except by a written instrument signed by the duly authorized representatives of both Parties.

EXECUTED in duplicate as of the date and year first written above by the duly authorized representatives of the Parties.
    

    





BOEING
Spirit AeroSystems, Inc.

 
 
THE BOEING COMPANY
Spirit   AeroSystems, Inc.

Acting By and Through    

 
Boeing Commercial Airplanes

 
 
 
/s/ Randall L. Parks
/s/ M. J. Kurimsky
Name: Randall L. Parks
Name: M. J. Kurimsky
Title: Procurement Manager
Title: Contracts Manager
Date: May 12, 2011
Date: May 12, 2011




- 29 -
787 GTA between Boeing and Spirit
Conformed GTA BCA-65520-0032, May 12, 2011

EXHIBIT 10.4
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].












SPECIAL BUSINESS PROVISIONS

between

THE BOEING COMPANY

and

SPIRIT AEROSYSTEMS, INC.

BCA-MS-65530-0019


787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



TABLE OF CONTENTS

TITLE PAGE
TABLE OF CONTENTS
AMENDMENT PAGE
1.0
DEFINITIONS
1
2.0
CONTRACT FORMATION
7
2.1
Order
7
2.2
Entire Agreement
7
2.3
Incorporated by Reference
7
2.4
Supporting Documentation
7
2.4.1
Supporting Documentation and Priority
7
2.4.2
Revision of Documents
8
2.4.3
Compliance
9
2.5
Administrative Authority and Agreement
9
2.5.1
Administrative Authority
9
2.5.2
Administrative Agreement
9
2.6
Written Authorization to Proceed
9
2.7
Order of Precedence
10
2.8.
Certain Remedies
10
3.0
SUBJECT MATTER OF SALE
11
3.1
Obligation to Purchase and Sell
11
3.1.1
Obligation to Purchase and Sell
11
3.1.2
Support of Delivery Schedule
11
3.1.3
Standard Parts and Multiple Source Parts
11
3.1.4
Period of Performance and Support
12
3.2
Subject Matter of Sale
12
3.2.1
Production Rates
12
3.3
Nonrecurring Work
13
3.3.1
Engineering Services
13
3.3.2
Product Development and Testing
13
3.3.2.1
Product Development and Test Activities
13
3.3.2.2
Static and Fatigue Test Articles
13
3.3.2.3
Second Fatigue Unit
13
3.3.3
Certification Support
15
3.3.4
Tooling
15
3.3.4.1
Tooling - General
15
3.3.4.2
Title to Tooling
15
3.3.4.3
Responsible Party
15
3.3.4.4
Common-Use Tooling
15
3.3.4.5
Use of Casting, Forging and Extrusion Tooling
16
3.3.4.6
Initial Planning
16
3.3.4.7
Accountability for Tooling
16
 
 
 
 
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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


3.3.4.8
Certified Tool Lists
16
3.3.4.9
Boeing Furnished Tooling
16
3.3.5
Life Cycle Product Teams
17
3.3.6
Weight Management and Reporting
17
3.3.7
Derivatives and Mission Improvement
17
3.3.7.1
Nonrecurring Work for D&MI
17
3.3.7.2
Research and Development
17
3.3.7.3
Other D&MI Nonrecurring Work
17
3.4
Recurring Work
18
3.4.1
Production Articles
18
3.4.2
Delivery Point and Schedule
18
3.4.2.1
General Delivery Provisions
18
3.4.2.2
Delivery Point
18
3.4.2.3
[Reserved]
19
3.4.2.4
Production Planning
19
3.4.3
Delivery - Title and Risk of Loss
19
3.4.4
Transportation Routing Instructions
19
3.4.5
Sustaining Product Definition
19
3.4.6
Tooling Maintenance
19
3.4.7
Maintenance of Production Planning
19
3.4.8
Certification Support
20
3.4.9
Systems Integration
20
3.5
Spare Parts
20
3.5.1
Certain Definitions
20
3.5.2
Spare Parts Ordering and Delivery
21
3.5.2.1
Spare Part Stock and Lead Times
22
3.5.2.2
Spare Part Delivery Commitment
22
3.5.2.3
Spares Special Handling
23
3.5.2.4
Integrated Materials Management (IMM) Program and other Boeing Materials Management & Spares Initiatives/Programs
23
3.5.3
Spares Support
24
3.5.4
Reclassification
24
3.5.5
Sale of Boeing Proprietary Spare Parts
24
3.5.6
Initial Provisioning
24
3.5.6.1
Initial Provisioning Spare Part Stocking
24
3.5.6.2
Lead Times for Initial Provisioning Spare Parts
24
3.5.6.3
Delivery of Initial Provisioning Spare Parts
25
3.6
Other Product Support and Miscellaneous Work
25
3.6.1
Product Support and Assurance
25
3.6.2
Miscellaneous Work
25
3.6.3
Program Level Tasks
25
3.6.4
Delivery Schedule of Other Products and Performance of Services
25
 
 
 
 
-ii-
 

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


4.0
PRICING
25
4.1
Shipset Price
25
4.1.1
Nonrecurring Work Recovery
26
4.1.2
Abnormal Escalation
26
4.1.3
Shipset Price for Shipsets [*****] Through Year End [*****]
26
4.2
Derivative Pricing
27
4.3
Spare Parts Pricing
27
4.3.1
Pricing Methodology for In-Production Spare Parts
27
4.3.1.1
[*****] Prices for Spare Parts Not Listed In SPPC
27
4.3.2
Pricing Methodology for Out-of-Production Spare Parts
27
4.3.3
Pricing for Special Configuration Spare Parts
28
4.3.4
Spares Pricing Factors
28
4.3.4.1
Factor for Full Leadtime In-Production Spares
28
4.3.4.2
Factor for AOG, POA and Expedite In-Production Spares
28
4.3.4.3
Factor for Spare POA Production Articles
28
4.4
Prices for Miscellaneous Work
28
4.5
Pricing of Boeing’s Supporting Requirements
28
4.6
Pricing of Requirements for Modification or Retrofit
29
4.6.1
Boeing Responsibility or Regulatory Requirement
29
4.6.2
Contract In-Service Modification or Retrofit Work Performed by Boeing
29
4.7
Pricing for Research and Development
29
4.8
Pricing for Other D&MI Nonrecurring Work
29
4.9
Incentive Payments for D&MI
29
4.10
Risk Sharing
30
4.11
Incentive Payments for Quality
30
5.0
PAYMENT
30
5.1
Invoicing
30
5.1.1
Invoicing Requirements
30
5.1.2
Invoicing Shipset Identification
30
5.1.3
Spares and Miscellaneous Work Invoicing
30
5.1.4
Summary Invoices
31
5.1.5
Mailing Instructions
31
5.2
Payment Due Date
31
5.2.1
Payment Due Date
31
5.2.2
Reserved
32
5.3
Payment Method
32
5.4
Payment Errors
32
5.5
Advance Payments
32
5.6
Performance Based Payments for Research and Development
33
5.7
Payment of Incentive Payment
33
5.8
Performance Based Payments and Performance Based Advance Payments for Other D&MI Nonrecurring Work
33
5.8.1
Advance Payments for the Remaining D&MI Balance
33
 
 
 
 
-iii-
 

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


5.8.2
Remaining Balance
34
6.0
CHANGES
34
6.1
Change Direction
34
6.2
Change Compliance
35
6.3
Change Pricing
35
7.0
CHANGE PROVISIONS
35
7.1
General Change Provisions
35
7.2
Work Statement Changes Subject to Price Adjustment
35
7.2.1
Changes
36
7.2.2
Annual Price Adjustments
36
7.2.3
Substantial Engineering or Manufacturing Changes
36
7.3
Changes Generated by Spirit Affecting Boeing or a Third Party
36
7.4
Schedule Acceleration/Deceleration
37
7.5
Total Cost Management
37
7.5.1
Total Cost Management
37
7.5.2
Relationship to D&MI Nonrecurring Work
37
7.6
Price Adjustments to Maintain Price and Performance Competitiveness
39
7.7
Obsolescence
39
7.8
Price Adjustments and SBP Amendment
39
7.8.1
Price Adjustment
39
7.8.2
SBP Amendment
39
7.9
[Reserved]
39
7.10
[Reserved]
39
8.0
GOVERNING QUALITY ASSURANCE REQUIREMENTS
40
8.1
Quality Assurance Requirements
40
8.2
Spirit’s Disclosure and Acceptance
40
8.2.1
Spirit’s Disclosure
40
8.2.2
Spirit’s Acceptance
40
8.3
Boeing’s Inspection and Rejection
40
8.4
Rights of Boeing’s Customers and Regulators to Perform Inspections, Surveillance, and Testing
41
8.5
Retention of Quality Records
42
8.6
Inspection
42
9.0
STATUS REPORTS/REVIEWS
42
9.1
Notification of Shipment
42
9.2
General Reports / Reviews
43
9.3
Problem Reports
44
9.4
Notice of Delay - Premium Effort
44
9.5
Utilization of Small Business Concerns
44
9.6
Diversity Reporting Format
45
10.0
BOEING ASSISTANCE AND INTERFACE COORDINATION
45
 
 
 
 
-iv-
 

- 5 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


10.1
Boeing Technical / Manufacturing Assistance Regarding Spirit’s Nonperformance
45
10.2
[Reserved]
45
10.3
Interface Coordination
45
11.0
REPAIR AUTHORIZATION
46
11.1
Boeing-Performed Work
46
11.2
Reimbursement for Repairs
46
12.0
OTHER REQUIREMENTS
47
12.1
Packing and Shipping
47
12.1.1
General
47
12.1.2
Product Packaging
47
12.1.3
Packaging - Spares
48
12.1.4
Shipping Documentation
48
12.1.5
Insurance
49
12.1.6
Shipping Container Labels
49
12.1.7
Carrier Selection
49
12.1.8
Invoices
49
12.1.9
Noncompliance
49
12.1.10
Barcode Marking and Shipping
49
12.1.11
Consolidated Shipments and Markings
49
12.1.12
Transportation Devices
50
12.1.13
Disposable Shipping Fixtures
50
12.1.14
Price Inclusive
50
12.2
Cycle Time Requirements
51
12.3
Compatibility with Engineering, Business and Production Systems
51
12.4
Electronic Access, Communications and Data Exchange Via Telecommunications
51
12.5
Program Manager
51
12.6
Source Selection
51
12.7
International Cooperation
52
12.7.1
Market Access and Sales Support
52
12.7.2
Offset Assistance
53
12.8
Supply Chain Integration
53
12.8.1
Boeing Furnished Material; Bonded Stores Requirements
53
12.8.2
Procurement from Boeing or Its Service Providers
54
12.8.3
Third Party Pricing
54
12.8.4
Agency
54
12.8.5
Acceptance of Assignment, Novation, or Agency for Products within Spirit’s Work Statement
54
12.9
Responsibility for Property
54
12.10
Surplus Products
55
12.10.1
Return of Surplus Products
55
12.10.2
Substitution of Surplus Products
55
 
 
 
 
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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


12.11
Compliance and Cooperation Regarding Orders, Permits and Approvals
55
13.0
ENVIRONMENTAL MANAGEMENT SYSTEMS AND HEALTH AND SAFETY MANAGEMENT SYSTEMS
56
14.0
WARRANTY
56
15.0
INTELLECTUAL PROPERTY
56
15.1
Certain Definitions
56
15.2
Rights and Obligations
58
15.2.1
Product Proprietary Information
58
15.2.2
Background Proprietary Information and Inventions
58
15.2.3
Joint SBP Activity Proprietary Information and Inventions
59
15.2.4
Spirit SBP Activity Proprietary Information and Inventions
60
15.2.5
Boeing SBP Activity Proprietary Information and Inventions
61
15.2.6
Third Party Proprietary Information and Inventions
62
15.2.7
Derivative Technology
62
15.3
Works of Authorship and Copyrights
62
15.4
Pre-Existing Inventions and Works of Authorship
62
15.5
Hardware, Materials, and Services General Terms Agreement (HMSGTA) and Supplemental License Agreement (SLA) Requirement
63
16.0
BOEING’S RIGHTS IN SPIRIT’S PATENTS, COPYRIGHTS, TRADE SECRETS, AND TOOLING
63
17.0
PROPRIETARY INFORMATION AND MATERIALS
64
18.0
SOFTWARE PROPRIETARY INFORMATION RIGHTS
65
19.0
INFRINGEMENT
66
20.0
DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS
67
21.0
CONFIGURATION CONTROL
67
22.0
WEIGHT
67
23.0
LIFE CYCLE PRODUCT TEAM
68
23.1
Purpose
68
23.2
Assignment of Personnel
68
23.3
Employment Status
68
23.4
Team Leader
69
23.5
Discipline
69
23.6
Equipment and Supplies
69
23.7
Employment by Boeing of Spirit Personnel
69
24.0
ON-SITE REVIEW AND RESIDENT REPRESENTATIVES
70
24.1
Review
70
24.2
Resident Representatives
70
25.0
ON-SITE SUPPORT REQUIREMENTS
71
25.1
Obligations of Spirit
71
25.1.1
Indemnification for Negligence of Spirit or Subcontractor
71
25.1.2
Commercial General Liability
71
25.1.3
Automobile Liability
71
 
 
 
 
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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


25.1.4
Workers’ Compensation
71
25.1.5
Certificates of Insurance
72
25.1.6
Self-Assumption
72
25.1.7
Protection of Property By Spirit
72
25.1.8
Compliance with Boeing Site Requirements
73
25.2
Obligations of Boeing
73
25.2.1
Indemnification for Negligence of Boeing or Subcontractor
73
25.2.2
Protection of Property By Boeing
73
26.0
PROPERTY INSURANCE
73
26.1
Insurance
73
26.2
Self Insurance
74
26.3
Certificate of Insurance
74
26.4
Notice of Damage or Loss
74
27.0
CUSTOMS-TRADE PARTNERSHIP AGAINST TERRORISM (C-TPAT)
75
28.0
NON-WAIVER/PARTIAL INVALIDITY
75
29.0
HEADINGS
75
30.0
CUSTOMER CONTACT
76
31.0
APPLICABLE LAW
76
32.0
SURVIVAL
76
33.0
INVENTORY AT CONTRACT COMPLETION
77
34.0
DISPOSITION OF TOOLING
77
35.0
COUNTERPARTS
77
36.0
AMENDMENTS
77
37.0
RESTRICTIONS ON LOBBYING
78
37.1
Applicability
78
37.2
Certification
78
37.3
Flow Down
78

















-vii-

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Signature Page

Attachment 1
Work Statement and Pricing
Attachment 2
Production Article Definition and Contract Change Notices
Attachment 3
Price Status and Summary Tables
Attachment 4
Work Statement Documents
Attachment 5
Boeing AOG Coverage
Attachment 6
Boeing AOG Shipping Notification
Attachment 7
Priced Parts List and Spares Pricing
Attachment 8
Spirit Data Submittals
Attachment 9
On-Site Terms and Conditions Supplement
Attachment 10
Quality Assurance Requirements
Attachment 11
Second Tier Report
Attachment 12
Non-U.S. Procurement Report Form
Attachment 13
[Reserved]
Attachment 14
Production Article Delivery Schedule
Attachment 15
Schedule Change Examples
Attachment 16
Pricing Methodologies
Attachment 17
Commercial Invoice Requirements (Customs Invoice) For Imports into the United States
Attachment 18
Abnormal Escalation
Attachment 19
[Reserved]
Attachment 20
Bonded Stores Requirements
Attachment 21
Boeing Furnished Material and Inventory Reporting Form
Attachment 22
Compliance and Cooperation regarding orders, Permits and Approvals
Attachment 23
Derivatives and Mission Improvement Performance to Plan
Attachment 24
Anti-Lobbying Certificate
Attachment 25
Incentive Payment
Attachment 26
Total Cost Management
Attachment 27
Risk Sharing
Attachment 28
Business Case for Rates Greater Than [*****] Shipsets Per Month
Attachment 29
Incentive Payment for Quality














-viii-

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



AMENDMENTS
Page 1
Number

1


2


3


4


5









6






7


8




9




Description

Provisions for addition of second Fatigue Unit


Provisions for COPB5


Revised Payment Terms and Settlement of Claims


A10.3.1 Relocation/Subcontract Notification


D&MI Agreement
Changed all references of Mid-Western Aircraft Systems Inc. to Spirit AeroSystems Inc.
Added additional Section 1.0: definitions
Amended SBP 5.5 in its entirety
Amended SBP 7.1 in its entirety
Added the D&MI One Plan Documents to SBP Attachment 4 table of documents
Added SBP Attachment 23

D&MI Advance Payment for S-41 Pre-Amendment 5 D&MI Nonrecurring Work
Amended SBP 5.5 in its entirety
Amended SBP Attachment 1 in its entirety
Amended SBP Attachment 2 in its entirety
Amended SBP Attachment 3 in its entirety

Restrictions on Lobbying
Added Section 37 to the contract

Pylon Firm Configuration Price Adjustment
Amended SBP Attachment 1 in its entirety
Amended SBP Attachment 2 in its entirety
Amended SBP Attachment 3 in its entirety

D&MI Wing/Pylon Retro Proposal Phase I Advanced Payment
Amended SBP 5.5 in its entirety
Amended SBP Attachment 1 in its entirety
Amended SBP Attachment 2 in its entirety
Amended SBP Attachment 3 in its entirety
Date

09/18/06


10/23/06


03/26/08


03/11/08


06/23/09









07/21/09






09/15/09


11/4/09




11/12/09
Approval

K. O’Brien
M. Kurimsky

T. Pierson
M. Kurimsky

R. Parks
L. McCutchen

J. Loomis
M. Kurimsky

R. Parks
M. Kurimsky








R. Parks
M. Kurimsky





Mario Guillen
W. Davis

Mario Guillen
Alex Webb



Jeff Loomis /
Mike Kurimsky








-ix-

- 10 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



AMENDMENTS
Page 2
Number

10



11






12





13





14





15





16



Description

Quarterly Certified Inventory Reporting Form
1. Amended SBP Attachment 21 in its
entirety

D&MI 3Q09 Advance Payment
Amended SBP 5.5 in its entirety
Amended SBP Attachment 1 in its entirety
Amended SBP Attachment 2 in its entirety
Amended SBP Attachment 3 in its entirety
Amended SBP Attachment 4 in its entirety

D&MI 4Q09 Advance Payment
Amended SBP 5.5 in its entirety
Amended SBP Attachment 1 in its entirety
Amended SBP Attachment 2 in its entirety
Amended SBP Attachment 3 in its entirety

D&MI 1Q10 Advance Payment
Amended SBP 5.5 in its entirety
Amended SBP Attachment 1 in its entirety
Amended SBP Attachment 2 in its entirety
Amended SBP Attachment 3 in its entirety

D&MI 2Q10 Advance Payment
Amended SBP 5.5 in its entirety
Amended SBP Attachment 1 in its entirety
Amended SBP Attachment 2 in its entirety
Amended SBP Attachment 3 in its entirety

D&MI 3Q10 Advance Payment
Amended SBP 5.5 in its entirety
Amended SBP Attachment 1 in its entirety
Amended SBP Attachment 2 in its entirety
Amended SBP Attachment 3 in its entirety

D&MI 4Q10 Advance Payment
Amended SBP 5.5 in its entirety
Amended SBP Attachment 1 in its entirety
Amended SBP Attachment 2 in its entirety
Amended SBP Attachment 3 in its entirety
Date

11/20/09



11/13/09






2/11/10





5/26/10





9/30/10





11/12/10





2/28/11




Approval

Peter Yi
Calleen Green

Jeff Loomis / Mike Kurimsky




Jeff Loomis /
Wade Davis




Jeff Loomis / Wade Davis




Mario Guillen
Wade Davis




Mario Guillen
Wade Davis




Mario Guillen
Wade Davis











-x-

- 11 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


AMENDMENTS
Page 3
Number

17
















18



19
Description

MOA Dated 12-21-10 (Blockpoint 20 Settlement)
Amended or added: SBP Table of Contents, Sections 1.0, 3.1.1, 3.2.1, 3.3.1, 3.3.2.2, 3.3.4.3 and 3.3.4.8, 3.3.7, 3.3.7.1, 3.3.7.2, 3.3.7.3, 3.4.2.1, 3.4.5, 4.1.1, 4.1.3, 4.2, 4.3.1, 4.3.1.1, 4.4, 4.7, 4.8, 4.9, 4.10, 5.5, 5.6, 5.7, 5.8, 5.8.1, 5.8.2, 6.1, 6.2, 6.3, 7.1, 7.2, 7.2.1, 7.2.2, 7.2.3, 7.5, 7.5.1, 7.5.2, 7.8, 7.8.1, 7.8.2, 11.2
Deleted SBP Sections 3.3.2.3.I, 3.4.2.3, 7.9, 7.10
Amended or added SBP Attachments 1, 2, 3, 4, 7, 14, 16, 23, 25, 26, 27, 28
Deleted SBP Attachments 13 and 19
Throughout SBP, various references to: “SBP Attachment 7 Indentured Parts Price List and Spare Parts Pricing” are revised to “the SPPC”.

D&MI One Plan Update
Updated SBP Attachments 1, 3, 23, 25
Amended: SBP Section 7.4 per Amendment 3

D&MI One Plan Update
Updated SBP Attachments 1, 2, 3, 16, 23, 25
Date

5/12/11
















8/24/11



8/20/12
Approval

R. Parks
M. Kurimsky















M. Guillen
M. Kurimsky


A. Mauldin
C. Cotner






























-xi-

- 12 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


THESE SPECIAL BUSINESS PROVISIONS (this “SBP”) were entered into as of June 16, 2005 by and between Spirit AeroSystems, Inc., a Delaware corporation with its principal office in Wichita, Kansas (“Spirit”), and The Boeing Company, a Delaware corporation acting by and through Boeing Commercial Airplanes (“Boeing”). Hereinafter, Spirit and Boeing may be referred to individually as a "Party" or jointly as the “Parties.” The SPB, which is amended from time to time, is conformed to incorporate Amendments 1 through 19 on August 20, 2012. The conformed contract is for administrative convenience only and is not intended to change the meaning of any of the Amendments 1 through 19.
In consideration of the mutual covenants set forth herein, the Parties agree as follows:

SPECIAL BUSINESS PROVISIONS
1.0
DEFINITIONS
The definitions set forth below and elsewhere within this SBP (including, without limitation, in SBP Sections 3.5.1 “Certain Definitions” and 15.1 “Certain Definitions”) shall apply to this SBP, any Order and the General Terms Agreement BCA-65520-0032 (“GTA”) dated as of the date hereof. Certain additional terms used herein are defined in the GTA and when used herein shall have the same meanings as in the GTA. Words imparting the singular shall also include the plural and vice versa.
A.
“Administrative Agreement” shall have the meaning set forth in SBP Section 2.3 “Incorporated by Reference”.

B.
“Basic Factory Labor” means hours associated with direct charge touch labor effort.

C.
"Block Point" means a single Airplane line number where multiple changes are planned for simultaneous incorporation.

D.
“Boeing Furnished Material” shall have the meaning set forth in SBP Section 12.8.1 “Boeing Furnished Material; Bonded Stores Requirements”.

E.
“Boeing-Use Tooling” means certain gauge and interface Tooling (not including Boeing master gauges) manufactured by Spirit in accordance with designs provided by Boeing, to be used exclusively by Boeing.

F.
“Common-Use Tooling” means all Contractor-Use Tooling that enters into a Boeing facility or Boeing designated destination and that is required for use by Boeing and Spirit, and, if applicable, a Third Party.

- 1 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


G.
“Contract Change Notice” or “CCN” means any written notice sent by Boeing to Spirit describing any change to the general scope of this SBP pursuant to SBP Section 6.0 “Changes” and authorizing Spirit to proceed with the performance of work hereunder in accordance with such change description.

H.
“Contractor-Use Tooling” (also sometimes referred to as “Spirit-Use Tooling”) means all Tooling needed to manufacture and deliver Products (including, but not limited to, Supplier-Use Tools, Common-Use Tools, Mechanical Handling Equipment, Rotating Tools, Shipping Equipment, Interface Control Tools and Interface Production Tools as defined in Boeing Document D33200).

I.
“Cost Estimating Relationship” or “CER” means a mathematical expression of varying degrees of complexity expressing cost as a function of one or more variables. The relationship may utilize cost-to-cost variables, such as quality assurance hours to manufacturing hours, cost-to-non-cost variables, such as engineering hours to the number of engineering drawings, or non-cost to non-cost, such as pounds of thrust to weight. Variables can be referred to as, numerator and denominator, dependent and independent, or pool and base.

J.
“Cycle Time” means the period of time that elapses between the dates the Program executes a Customer implementation directive for a Program Airplane or Derivative and delivery of such Program Airplane or Derivative to such Customer

K.
"Derivatives and Mission Improvement", "D&MI" or “D/MI” means certain Nonrecurring Work for the 787-9 Derivative and/or 787-8 Mission Improvement, as described in SBP Section 3.3.7.

L.
“D&MI NR Value” means the agreed value of D&MI Nonrecurring Work as determined pursuant to the Performance to Plan process and modified pursuant to Attachment 23, Section II.B from time to time.
M.
“D&MI SOW” means the statement of work for Derivatives and Mission Improvement program activities.

N.
“Dataset” means any compilation of data or information (including, without limitation, numerical data, geometric definitions, program instructions or coded information) which may be used directly in, integrated with or applied to a computer program for further processing. A Dataset may be a composite of two or more other Datasets or an extract of a larger Dataset.


- 2 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


O.
“Documents” shall have the meaning set forth in SBP Section 2.4.1 “Supporting Documentation and Priority”.

P.
“Drawing” means a computer-based or manual depiction of graphics or technical information representing a Product or any part thereof and which includes the parts list and specifications relating thereto.

Q.
“End Item Assembly” means any Product which is described by a single part number and which is comprised of more than one component part.

R.
“Engineering Release” means engineering Drawings, Datasets or other Documents, that define the design requirements of any Product.

S.
"Incentive Payment" means funds provided by Boeing to Spirit as a performance incentive tied to key schedule, cost/price, technical performance, and risk management elements of Derivatives and Mission Improvement (D&MI).

T.
“LCF” means Large Cargo Freighter, a modified 747.

U.
“Life Cycle Product Team” or “LCPT”, “Integrated Product Team” or “IPT” or “Design Build Team” or “DBT” means a team composed of representatives from engineering, operations, procurement, finance, design-to-cost and other disciplines as Boeing and Spirit shall specify whose objective is to optimize designs for cost, weight, performance and producibility.

V.
“Manufacturing Work Package” or “Work Package” means manufacturing effort that Spirit will provide under this SBP.

W.
"Mission Improvement" or "MI" means a set of activities identified by the Parties and authorized by Boeing as Mission Improvement that are intended to improve the performance of the 787-8 Aircraft. Boeing’s initial MI plan includes efforts to both increase the Maximum Take-off Weight (MTOW) of the 787-8 Aircraft and reduce the Manufacturers’ Empty Weight (MEW) of the 787-8 Aircraft. The first incorporation point for MI changes is Block Point 20, which is Aircraft 20.

X.
"MI Block Point" means a single Airplane line number where multiple MI changes are planned for simultaneous incorporation.

Y.
“Miscellaneous Work” is Spirit performed work or services in connection with the Program not reflected in the Nonrecurring Work component of the pricing set forth in Attachment 1 and includes, but is not limited to,

- 3 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


provision of additional test articles, Boeing-Use Tooling, test support, field support and Boeing-used supplier facilities.

Z.
“Nonconformance EPD” means nonconformance Emergent Process Document which is the documentation of a nonconforming product in Boeing’s quality systems.

AA.
“Nonrecurring Work” is Spirit performed work other than Recurring Work or Spares and Miscellaneous Work, which may include, but is not limited to, Product Definition, product development, Tooling, other tooling produced or utilized by Spirit in performance of this SBP, the Agreement or any Order, static and fatigue test articles, Transportation Devices and planning.

AB.
“Obsolescence” means the discontinuation of the requirement for any Product as a result of engineering or manufacturing change, which has rendered such Product no longer usable in the production of the Program Airplane or any Derivative.

AC.
"One Plan Document" means mutually agreed detailed planning documents containing the configuration D&MI SOW, detailed activities, work share agreements, integrated schedule, Spirit resource plans and other non-labor items (such as sub-contracted tooling) necessary to support the Nonrecurring Work for Derivatives and Mission Improvement statement of work.

AD.
"Other D&MI Nonrecurring Work" shall have the meaning set forth in SBP Section 3.3.7.3 "Other D&MI Nonrecurring Work”.

AE.
"Performance Based Advance Payments" means those D&MI advance payments subject to completion of specific events or performance criteria as provided in SBP Section 5.8 and further described in SBP Attachment 23.

AF.
"Performance Based Payments" means those D&MI payments subject to completion of specific events or performance criteria as provided in SBP Section 5.5 and further described in SBP Attachment 23.

AG.
"Performance to Plan" or "PtP" shall have the meaning set forth in SBP Section 3.3.7.1 "Performance to Plan".

AH.
“Price” means the amount to be paid by Boeing to Spirit for any Product in accordance with the terms of this SBP.


- 4 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


AI.
“Product Definition” means all of Spirit’s design and manufacturing deliverables (excluding Production Articles), including but not limited to layouts, datasets, stress notes and manufacturing plans required to design, build, test, certify, deliver and support the Products.

AJ.
“Product Support” and “Product Assurance” shall have the meaning set forth in the PSAD.

AK.
“Production Life” means, in the case of any Aircraft, the period of time, commencing as of the date hereof, during which (a) Boeing (or its assignees or successors in interest) plans, designs or prepares to produce, or is actually producing, such Aircraft or (b) Boeing (or any such assignee or successor) offers such Aircraft for sale.

AL.
“Program Level Tasks” means certain additional tasks to be mutually defined and agreed as provided in SBP Section 3.6.3 “Program Level Tasks”.

AM.
“Program Life” means the period of time, commencing as of the date hereof and continuing through the Production Life of all Aircraft and through such additional time during which Boeing (or its assignees or successors in interest) provides support to operators or users of any Aircraft.

AN.
“PSAD” means Boeing Document D6-83069-MidWestern Rev.A, “Product Support and Assurance Document for Major Structures for 787 Aircraft,” as amended from time to time in accordance with this SBP.

AO.
“Recurring Work” means sustaining Product Definition and work Spirit performs in producing Production Articles. The cost of Recurring Work can include, but is not limited to, design, tool maintenance, replacement, and storage, packaging, disposable shipping fixtures and maintenance of production planning.

AP.
"Research and Development" or "R&D" shall have the meaning set forth in SBP Section 3.3.7.2, "Research and Development".

AQ.
“Resource Plan” means a committed plan for the resources that will be used to accomplish the D&MI statement of work, including the necessary skill levels.

AR.
“SCD Products” means all goods, including components and parts thereof, designed to a Boeing Specification Control Drawing by Spirit or its subcontractors or suppliers, and provided or manufactured under this SBP.

- 5 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


AS.
“SCD Spare Parts” means Spare Parts that are also SCD Products.

AT.
“Shipset Price” means the Price to be paid for each Shipset.

AU.
“Spare Parts” or “Spares” means Production Articles or components thereof, and materials, assemblies and items of equipment relating thereto, which are intended for Boeing’s use or sale as spare parts or production replacements. The term “Spare Parts” includes, but is not limited to, Boeing Proprietary Spare Parts (as defined in SBP Section 3.5.1 “Certain Definitions”).

AV.
“Spare Parts Price Catalog” or “SPPC” means Spirit’s prices and lead times for Spare Parts.

AW.
“Spirit Personnel” means personnel employed by, or performing on behalf of, Spirit.

AX.
“Spirit Tag” means Spirit’s documentation, associated with a specific Shipset, of a nonconforming product in Spirit’s quality systems.

AY.
“Third Party” means any Person other than the Parties and their respective divisions, affiliates and subsidiaries.

AZ.
“Transportation Devices” shall have the meaning set forth in SBP Section 12.1.12 “Transportation Devices”.

BA.
“Type Certification” means the issuance of the Program Airplane type certificate per CFR (Code of Federal Regulations) Part 21. The type design approves designs on paper.

BB.
“Work Share Agreement” means an agreement between the Parties that defines the detailed D&MI Nonrecurring Work tasks to be accomplished by each Party.









- 6 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


2.0
CONTRACT FORMATION
2.1
Order
Each Order shall include a statement incorporating this SBP and the GTA by reference, except for such provisions as the Parties specifically agree in writing. Each such Order will be governed by and be deemed to include the provisions of this SBP and the GTA. Subject to GTA Section 2.2 “Acceptance of Orders”, each Order also may contain terms and conditions that are in addition to those stated herein or in the GTA.
2.2
Entire Agreement
This SBP and the GTA set forth the entire agreement, and supersede any and all other prior agreements, understandings and communications (whether written or oral), between Boeing and Spirit related to the subject matter of this SBP and the GTA. Each Order (including all agreements and other documents that are incorporated by reference therein or herein as provided in SBP Sections 2.1 “Order” and 2.3 “Incorporated by Reference”) sets forth the entire agreement, and supersedes any and all other prior agreements, understandings and communications, between Boeing and Spirit related to the subject matter of such Order. Subject to SBP Section 2.8 “Certain Remedies”, the rights and remedies afforded to Boeing or Spirit pursuant to any provisions of an Order are in addition to any other rights and remedies afforded by law or otherwise.
2.3
Incorporated by Reference
The GTA is incorporated in and made a part of this SBP by this reference.
The Administrative Agreement (AA-65530-0010) (“Administrative Agreement”) dated June 16, 2005 is incorporated in and made a part of this SBP by this reference.
The Documents set forth in this SBP, or incorporated by reference herein, are incorporated in and made a part of this SBP by this reference, with full force and effect, as if set out in full text.
2.4
Supporting Documentation
2.4.1
Supporting Documentation and Priority
For purposes of this SBP, "Documents" means all specifications, Drawings, Datasets, documents, publications and other similar materials, whether in a tangible or intangible form, released or otherwise made available by Boeing to Spirit, as the same shall be revised from time to time, which relate to the design, manufacture, test, certification, delivery, support and sale of Products or the provision of services to Boeing pursuant to this SBP, including, but not limited to,

- 7 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


documents specifically referred to in this SBP, the GTA and the Administrative Agreement or in such other documents. For the avoidance of doubt, the GTA and the Administrative Agreement are not Documents. Reference in any Document to "Contractor" or "Seller" or "Supplier" or "Partner" or "Program Partner" shall mean Spirit for the purposes of this SBP. In the event of any inconsistency between the terms and conditions of this SBP (not including any Documents) and the terms and conditions of any Document, the terms and conditions of this SBP shall control. In the event any provisions of any Document or Documents conflict among themselves, Boeing will, on its own initiative or at the request of Spirit, resolve such conflict either on its own or, where appropriate in Boeing’s reasonable determination, in consultation with Spirit, revise such Document or Documents accordingly, and so notify Spirit. In resolving any such conflicts, this SBP shall be read as a whole and in a manner most likely to accomplish its purposes in accordance with the intent of the Parties taking into consideration Boeing’s requirements for the Program.

All Documents existing as of the date of this SBP are listed or otherwise referenced within the GTA, this SBP including its attachments (including but not limited to SBP Attachment 4 “Work Statement Documents”: LCPT Work statement Description, Responsibility, Accountability, Authority document, Commonality Matrix document, the Product Support and Assurance Document and the Amendments to 7E7 Spirit Baseline Work Statement), and within the Administrative Agreement. Notwithstanding the foregoing, the Parties acknowledge that there may be Documents existing as of the date of this SBP that have inadvertently not been so listed or otherwise referenced. If either Party learns of the existence of any such Document, such Party shall promptly identify such Document in a written notice to the other Party and the Parties, acting in good faith, shall mutually determine whether such Document should have reasonably been contemplated to have been incorporated, and therefore shall be incorporated, in and made a part of this SBP as of the date of this SBP. The Parties further acknowledge that there may be Documents not existing as of the date of this SBP that are mutually intended to be incorporated in and made a part of this SBP as of the date of this SBP. The Parties, acting in good faith, shall mutually determine whether any such Document shall be incorporated in and made a part of this SBP as of the date of this SBP.
2.4.2
Revision of Documents
Subject to the terms of this SBP Section 2.4, Boeing may at any time revise any, or issue previously unreleased, Documents prepared by Boeing, and Boeing shall provide Spirit with such revised and previously unreleased Documents. Subject to all other applicable provisions of this SBP and the GTA, it is Spirit’s responsibility to comply with the latest revision of such Documents. If any such revised or previously unreleased Document is considered by Spirit to constitute a

- 8 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


change within the general scope of this SBP, (i) Spirit shall notify Boeing’s Procurement Representative in writing as to the nature of such change and its effect (or anticipated effect) upon Spirit’s performance and (ii) the provisions of SBP Sections 6.0 “Changes” and 7.0 “Change Provisions” shall be applied, if applicable, to determine whether or not Spirit is entitled to an equitable Price adjustment on account of such change.
2.4.3
Compliance
Subject to all other applicable provisions of this SBP and the GTA, Spirit shall promptly comply with the provisions of all Documents referenced in this SBP, the GTA, and any Order including any revisions Boeing may make thereto.
2.5
Administrative Authority and Agreement
2.5.1
Administrative Authority
For all matters requiring the approval or consent of either Party under this SBP, the GTA or any Order, such approval or consent shall be requested in writing and shall not be effective until given in writing. With respect to Boeing, authority to grant approval or consent is limited to Boeing's Procurement Representative as provided in the Administrative Agreement. With respect to Spirit, authority to grant approval or consent is limited to Spirit’s Contract Manager as provided in the Administrative Agreement.
2.5.2
Administrative Agreement
The Administrative Agreement is to be used for administrative matters not specifically addressed elsewhere in this SBP, the GTA or any Order and sets forth certain obligations of the Parties relating to the administration of this SBP, the GTA and each Order. Stated addresses and designees for each Party contained therein may be modified unilaterally by such Party, and any modification of the Administrative Agreement shall be reflected by an amendment thereto prepared by Boeing for execution by both Parties.
2.6
Written Authorization to Proceed
Boeing’s Procurement Representative may give written or electronic authorization to Spirit to commence performance before Boeing issues an Order. If Boeing’s authorization specifies that an Order will be issued, Spirit shall be deemed to have received Boeing’s authorization to proceed and Boeing and Spirit shall proceed as if an Order had been issued. If Boeing does not specify in its authorization that an Order shall be issued, Boeing’s obligation shall be strictly limited to the terms of the authorization.

- 9 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Whether or not Boeing’s authorization specifies that an Order will be issued, this SBP, the GTA and the terms stated in the authorization shall be deemed to be a part of Boeing’s offer and the Parties shall promptly and in good faith agree on any open terms. If Spirit commences performance before an Order is issued, such performance shall be at Spirit’s risk and expense to the extent such performance has not been authorized by Boeing as provided above.
2.7
Order of Precedence
In the event of a conflict or inconsistency between any of the terms of the following documents, the following order of precedence shall control:
A.
This SBP including Attachments (excluding all documents listed below), then
B.
The GTA (excluding all documents listed elsewhere in this listing), then
C.
Orders (excluding all documents listed elsewhere on this listing), then
D.
Administrative Agreement, then
E.
All Documents incorporated by reference in SBP Section 2.4 “Supporting Documentation”, then
F.
Any other Boeing generated exhibits, attachments, forms, flysheets, codes or documents that the Parties agree in writing shall be part of this SBP, then
G.
Engineering Drawing by Part Number and, if applicable, related Supplier Specification Plan (SSP), whether Boeing or Spirit generated, and lastly
H.
Any Spirit generated documents that the Parties agree in writing shall be part of this SBP.
The Parties shall promptly report to each other in writing any known inconsistencies in these documents, even if the inconsistency is resolvable using the above rules.
2.8.
Certain Remedies
Nothing contained in this Agreement, the SBP or any Order shall be construed to limit any right or remedy of either Party now or hereafter existing at law or in equity; provided, however, that the right to cancel or terminate any Order, the GTA, or SBP in whole or in part shall be limited to those as expressly provided in GTA Sections 7.0 “Termination for Convenience”, 8.0 “Events of Default and Remedies”, 9.0 “Termination of Airplane Program” and 10.1 “Excusable Delay”, Neither Party shall be entitled to exercise any right or remedy that is contrary to or otherwise inconsistent with any of the terms of this Agreement or the SBP.

- 10 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


3.0
SUBJECT MATTER OF SALE
3.1
Obligation to Purchase and Sell
3.1.1
Obligation to Purchase and Sell
Except as provided in SBP Sections 3.1.2 “Support of Delivery Schedule” and 3.1.3 “Standard Parts and Multiple Source Parts” below, Boeing and Spirit agree that in consideration of the prices set forth in SBP Attachment 1 “Work Statement and Pricing” and the other terms and conditions set forth in this SBP and the GTA, Boeing shall issue Orders from time to time to Spirit for all of Boeing’s requirements for Products, as provided in SBP Section 3.2 “Subject Matter of Sale”, during the Production Life of the Aircraft (and, in the case of all Products other than Production Articles, during the Program Life). Subject to SBP Section 3.2.1 “Production Rates” and all other applicable provisions of this SBP and the GTA, such Products shall be shipped at any scheduled rate of delivery, as determined by Boeing, and Spirit shall sell to Boeing, and Boeing shall purchase from Spirit, all of Boeing’s requirements for such Products during the period of performance for this SBP.
Boeing and Spirit confirm their intention for the Aircraft to remain price and performance (including weight) competitive throughout the life of the Program by incorporating into the Aircraft advances in design, configuration, materials, or manufacturing processes that will benefit the Parties and Boeing’s Customers. Boeing and Spirit further acknowledge and agree that the incorporation of any advances and any associated investment must be based on a business case that is reasonably acceptable to both Boeing and Spirit.
3.1.2
Support of Delivery Schedule
If Spirit can not meet Boeing’s requirement for an AOG, POA or Expedite Spare Part and Boeing reasonably demonstrates to Spirit that such requirement can be satisfied by an alternate source and Spirit does not, or is unable to, accept such requirement (which may include procuring such Spare Part from such alternate source) in a timely manner, Boeing may cancel the Order for such AOG, POA or Expedite Spare Part and may procure such requirement from an alternate source, but only to the extent necessary to satisfy such specific requirement, and only for a limited quantity of parts.
3.1.3
Standard Parts and Multiple Source Parts
Boeing reserves the right to procure any standard parts directly from any source.
A Spare Part that is supplied by Spirit, and other Boeing sources, to Boeing is a “Multiple Source Part”. In the event Boeing has a requirement for a Multiple Source Part (for example, a passenger window) and Boeing is not able to

- 11 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


determine what work package such Spare Part is required for, Boeing may procure such Multiple Source Part from whichever existing source Boeing may determine.
3.1.4
Period of Performance and Support
Except as otherwise provided in this SBP and the GTA, the period of performance for this SBP shall be from the date of this SBP through the Program Life. Spirit agrees to support each Product so long as any Aircraft is using or supported by such Product during the Program Life. However, Spirit is not obligated to produce or deliver Production Articles after expiration of the Production Life.
3.2
Subject Matter of Sale
Subject to the provisions of this SBP, Spirit shall sell to Boeing and Boeing shall purchase from Spirit certain Products as described in this SBP including Production Articles and other recurring Products as described in SBP Section 3.4 “Recurring Work”, and certain Spare Parts and other Miscellaneous Work as described in SBP Sections 3.5 “Spare Parts” and 3.6 “Other Product Support and Miscellaneous Work”. In addition, Spirit shall be responsible for providing engineering services and Nonrecurring Work as described in SBP Section 3.3 “Nonrecurring Work”.
3.2.1
Production Rates
This SBP contains no minimum or maximum production rates. Spirit is responsible for capitalization to support a production rate of [*****] Shipsets per month, and no price adjustment shall be made for any investment required to support a production rate of [*****] Shipsets per month.
For the first occurrence exceeding [*****] Shipsets per month, Spirit acknowledges that production rates can be reached within a commercially reasonable lead time. Boeing will provide market and backlog data to Spirit prior to Boeing’s decision to exceed [*****] Shipsets per month and to assist the Parties in determining Spirit’s overall business case. At the time of the Boeing decision to exceed [*****] Shipsets per month, if Spirit requires capital investments to attain the desired rate, a contribution margin calculation as specified in SBP Attachment shall be utilized to determine if the additional revenue will reasonably recover Spirit’s estimate of its capital investments. In the event this calculation does not project recovery of Spirit’s investments, then Boeing and Spirit will negotiate an equitable price adjustment.
Spares requirements are in addition to production. Spirit shall support all Spares. (For capacity planning purposes only, a reasonable estimate at the time of execution of this SBP is an average of [*****] Shipsets per month.)

- 12 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


For the avoidance of doubt, nothing in this SBP Section 3.2.1 shall affect the provisions of SBP Section 3.3.7 and Attachment 23, “Derivatives and Mission Improvement”.
3.3
Nonrecurring Work
3.3.1
Engineering Services
Spirit is responsible for engineering activities required to design, build, test, deliver, certify, and support Product Definition and other Products as set forth in SBP Attachment 4 “Work Statement Documents”. Boeing’s participation in these activities also is defined in SBP Attachment 4.
Product Definition shall conform to the standards and requirements set forth in SBP Attachment 4. Subject to all other applicable provisions of this SBP and the GTA, it is Spirit’s responsibility to comply with the latest revision of these documents and schedules.
3.3.2
Product Development and Testing
3.3.2.1      Product Development and Test Activities
Spirit is responsible for all product development and test activities required to design, build, test, deliver, certify, and support Products as set forth in SBP Attachment 4 “Work Statement Documents”. Spirit shall also prepare, and Boeing shall have the right to review, initial product development and test planning documentation as necessary to produce Product Definition and Production Articles in accordance with SBP Attachment 2 “Production Article Definition and Contract Change Notices” and Spare Parts listed in the SPPC.
3.3.2.2      Static and Fatigue Test Articles
Spirit will provide Boeing with Products as set forth in SBP Attachment 2 "Production Article Definition and Contract Change Notices" and associated hardware for static and fatigue tests, and as scheduled in SBP Attachment 14 "Production Article Delivery Schedule" or as developed and documented in a Boeing selected scheduling system specified in SBP Attachment 14. As part of Nonrecurring Work, static and fatigue test articles are not Production Articles and therefore shall not be subject to a Shipset Price payment.
3.3.2.3      Second Fatigue Unit
Notwithstanding SBP section 3.3.2.2, Spirit shall provide a second fatigue unit (2 nd Fatigue) subject to the following:
a.
Spirit shall provide the 2 nd Fatigue to Boeing in [*****]
b.
The Parties will work together to mitigate any risk to the [*****] delivery date.

- 13 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


c.
Boeing shall issue a Purchase Order to Spirit by [*****]
d.
The Parties acknowledge that the pricing structure of the 2 nd Fatigue is unique and sets no precedent for future pricing.
e.
Boeing and Spirit shall work together to identify cost reduction opportunities in the 2 nd Fatigue and will negotiate a sharing of any such reductions.
f.
Boeing shall provide Spirit with OLTs for the production of [*****] production units. Once all fabrication of these [*****] units is complete, Spirit shall return the OLTs to Boeing. Spirit shall provide the date the OLTs are needed, and the production line units they will be used for.
g.
Boeing shall provide the necessary M&PT support to qualify Spirit’s “North Clean Room” to production standards. Spirit shall provide the schedule for Boeing M&PT support.
h.
Boeing shall provide the necessary M&PT support to qualify Spirit’s [*****] AFP machine to production standards. Spirit shall provide the schedule for Boeing M&PT support.
i.
Boeing and Spirit shall work together to release deviations to material specifications with regard to exposure limitations for fiberglass and adhesive. Spirit shall provide the specific needed deviations.
j.
Boeing shall work with Spirit to ensure PMI hardware supports Spirit need dates. Spirit shall schedule all PMI requirements to meet the [*****] delivery. Spirit shall provide a discrete list of PMI needed to complete the 2 nd Fatigue, and the dates the PMI is needed. Boeing and Spirit shall work together to mitigate any effects caused by late shipment of PMI.
k.
Boeing and Spirit mutually recognize that the insertion of this additional Fatigue Unit [*****]. As of the time of this Amendment 1, the resulting [*****] ranges from [*****] to [*****] for a period of [*****]. Boeing and Spirit shall use all best commercially reasonable efforts to mitigate any schedule disruption, and, shall work together to mitigate any further schedule disruption to the production articles resulting from production of the 2nd Fatigue Unit. All efforts utilized shall be documented by the parties.
l.
[Reserved]
m.
Boeing shall work with Spirit to ensure Standards (Fasteners, Nuts, Bolts, etc), TMX material (titanium and aluminum), and Toray material supports Spirit need dates. Spirit shall provide a discrete list of these commodities that are needed to complete the 2 nd Fatigue, and the dates the commodities are needed. Boeing and Spirit shall work together to mitigate any effects caused by late delivery of these commodities.
n.
To mitigate impacts to Spirit’s schedule, Boeing may complete some of the 2 nd Fatigue work in its own factory. If Boeing elects to do this, the Parties will negotiate a reduction in the price of the 2 nd Fatigue.
o.
Pricing is contained in Attachment 1.
p.
Documents specific to the Statement of Work for the second 2 nd Fatigue are listed in Attachment 2.

- 14 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


3.3.3
Certification Support
Spirit is responsible for its certification activities as set forth in SBP Attachment 4 “Work Statement Documents”.
3.3.4
Tooling
3.3.4.1      Tooling - General
Spirit is responsible for all Contractor-Use Tooling needed to manufacture and deliver Products as required in the performance of this SBP. Spirit shall plan, design, manufacture or procure, and test all Contractor-Use Tooling. Contractor-Use Tooling shall be in the configuration, quantity and quality required to produce (i) Production Articles in accordance with SBP Attachment 14 “Production Article Delivery Schedule” and (ii) other Products (including, without limitation, Spare Parts) required by Boeing in accordance with this SBP.
All Contractor-Use Tooling produced in performance of this SBP must conform to the provisions of Boeing Document D33200, “Boeing Suppliers’ Tooling Document,” or, subject to Boeing’s review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement document.

3.3.4.2      Title to Tooling
Except as provided in GTA Section 7.2.E “Termination Instructions”, GTA Section 8.2.F “Tooling and Other Materials” and GTA Section 9.3 “Transfer of Certain Property”, Spirit shall retain, and shall cause each of its subcontractors to retain, legal title to all Contractor-Use Tooling, Common-Use Tooling and Boeing-Use Tooling manufactured or procured by Spirit or any of its subcontractors.
3.3.4.3      Responsible Party
Except as provided in SBP Sections 3.3.7 "Derivatives and Mission Improvement” and 4.8 “Pricing for Other D&MI Nonrecurring Work”, Spirit shall absorb all costs associated with Tooling (except Boeing-Use Tooling) manufactured and/or purchased by Spirit necessary for the manufacture and delivery of the Products. Such costs shall also include, but not be limited to, rework, repair, replacement and maintenance of the Tooling.
3.3.4.4      Common-Use Tooling
Except as provided in SBP Section 12.1.12 “Transportation Devices”, Spirit shall design, manufacture or procure, and test all Common-Use Tooling including, without limitation, strongback handling fixtures, rotable shipping fixtures and handling fittings, sufficient to support Program requirements. The requirements for such items will be mutually defined and agreed by the Parties

- 15 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


3.3.4.5      Use of Casting, Forging and Extrusion Tooling
Upon mutual agreement of the Parties, Boeing or its designees may use all Tooling for the production of castings, forgings and extrusions produced at Spirit’s direction for use under this SBP. Such Tooling shall be used by Boeing or its designees only in the performance of this SBP.
3.3.4.6      Initial Planning
Spirit will perform initial Tooling and production planning activities. Spirit shall also prepare, and Boeing shall have the right to review, initial Tooling and production planning documentation as necessary to produce Production Articles in accordance with SBP Attachment 2 “Production Article Definition and Contract Change Notices” and SBP Attachment 4 “Work Statement Documents” and Spare Parts listed in the SPPC.
3.3.4.7      Accountability for Tooling
Spirit shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200, “Boeing Suppliers’ Tooling Document” or, subject to Boeing review and approval, its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing, and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing’s designee pursuant to GTA Section 7.0 “Termination for Convenience”, GTA Section 8.0 “Events of Default and Remedies” or GTA Section 9.3 “Transfer of Certain Property”. Upon request Spirit shall identify all new, reworked and reidentified Tooling.
3.3.4.8      Certified Tool Lists
For Boeing-Use and Boeing Owned Common-Use Tooling and, if necessary to comply with law, for Contractor-use Tooling produced in accordance with SBP Section 3.3.7.3, “Other D&MI Nonrecurring Work”, Spirit shall prepare a list or lists (“Certified Tool List” or “CTL”) in accordance with the D33200, “Boeing Suppliers’ Tooling Document,” or, subject to Boeing review and approval, its equivalent or replacement. Spirit shall prepare a separate Certified Tool List for Tooling produced, procured, or reworked by authority of a Boeing tool purchase order. Spirit shall promptly submit each initial Certified Tool List to Boeing. Spirit shall subsequently submit from time to time as specified by Boeing new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists. Except as provided in this SBP Section 3.3.4.8, no CTL approval by Boeing will be required for Spirit owned Tooling (including Spirit owned Common-Use Tooling).

- 16 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


3.3.4.9      Boeing Furnished Tooling
In the event Boeing furnishes tooling to Spirit, Spirit shall conform to the standards and requirements of the applicable Documents referred to in SBP Section 2.4 “Supporting Documentation”. No repair, replacement, maintenance or rework of such tooling shall be performed without Boeing’s prior written consent, which shall not be unreasonably withheld or delayed. Boeing shall notify Spirit of any action required for discrepant Tooling.
3.3.5
Life Cycle Product Teams
Spirit shall, in accordance with SBP Section 23.0 “Life Cycle Product Team”, locate at Boeing’s facilities key personnel for Life Cycle Product Teams (LCPT’s).
3.3.6
Weight Management and Reporting
Spirit shall report weight information in accordance with Boeing Document D024Z001-01, “787 Weight Engineering Requirements.”
3.3.7
Derivatives and Mission Improvement
3.3.7.1      Nonrecurring Work for D&MI
Certain Nonrecurring Work required for the 787-9 Derivative and 787-8 Mission Improvement shall be subject to the detailed planning and management process set forth in SBP Attachment 23 "Derivatives and Mission Improvement Performance to Plan". This Nonrecurring Work shall be comprised of: 1) Research and Development as specified in SBP Section 3.3.7.2 and 2) Other D&MI Nonrecurring Work required for the 787-9 Derivative and 787-8 Mission Improvement as specified in SBP Section 3.3.7.3.
3.3.7.2      Research and Development
"Research and Development" or "R&D" means specific Product Definition Nonrecurring Work activities relating to the design and development of the 787-9 Derivative and 787-8 Mission Improvement. These activities include but are not limited to: 1) the design and test of the baseline 787-9 configuration set forth in Work Statement Documents in SBP Attachment 4 (including the build of test articles and any dedicated (not used for production) tooling required to build or test the test articles), 2) design of 787-8 Mission Improvement changes, and 3) the support of change refurbishment of 787-9 test airplanes. Only those items specifically identified by Boeing as R&D activities in accordance with SBP Attachment 23 "Derivatives and Mission Improvement Performance to Plan" shall be subject to the provisions of this SBP Section 3.3.7.2 and SBP Section 4.7 "Pricing for Research and Development". For the avoidance of doubt, Product Definition does not include Tooling engineering.

- 17 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


3.3.7.3      Other D&MI Nonrecurring Work
"Other D&MI Nonrecurring Work" means specific Nonrecurring Work activities related to the 787-9 Derivative and 787-8 Mission Improvement that are not included in Research and Development. Other D&MI Nonrecurring Work shall be identified by Boeing in accordance with SBP Attachment 23 “Derivatives and Mission Improvement Performance to Plan” and shall be subject to the provisions of SBP Section 4.8 “Pricing for Other D&MI Nonrecurring Work”.
3.4
Recurring Work
3.4.1
Production Articles
Upon acceptance of the initial and subsequent Orders, Spirit shall provide the Production Articles specified in SBP Attachment 1 “Work Statement and Pricing” and SBP Attachment 2 “Production Article Definition and Contract Change Notices” in accordance with such Orders. All Production Articles will be designed, manufactured, certified, tested, delivered, and supported in accordance with the specifications and schedules set forth in this SBP.
3.4.2
Delivery Point and Schedule
3.4.2.1      General Delivery Provisions
Subject to GTA Section 10.0 “Delays”, Spirit shall strictly adhere to the shipment, delivery or completion schedules specified in: i) each Order, ii) SBP Attachment 14 “Production Article Delivery Schedule”, or, iii) as developed and documented in a Boeing selected scheduling system specified in SBP Attachment 14 “Production Article Delivery Schedule”. Spirit shall immediately notify Boeing in writing of any schedule developed by the selected scheduling system that is less than the lead time notifications specified in SBP Section 7.4 "Schedule Acceleration/Deceleration". In the event of any anticipated or actual delay, including but not limited to delays attributed to labor disputes, that could impact Spirit’s ability to deliver Product Definition or Products on time and otherwise in conformance with the terms of any Order, Spirit shall promptly provide to Boeing a "Problem Report" as provided in SBP Section 9.3 “Problem Reports”. In addition, Boeing may request premium effort as provided in SBP Section 9.4 “Notice of Delay - Premium Effort”. Spirit shall not deliver Products prior to the scheduled delivery dates unless authorized by Boeing.
3.4.2.2      Delivery Point
[For 747 LCF Deliveries]
Free On-Board (FOB) Large Cargo Freighter (LCF) originating Airport at designated loading point

- 18 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


[For Partner to Partner Deliveries]

Free On-Board (FOB) [receiving Partner name and plant name, [city of origin (per INCOTERMS 2000)
3.4.2.3      [Reserved]
3.4.2.4      Production Planning
Boeing and Spirit shall develop and mutually agree upon methods to provide Spirit with advance planning information (which may include planning schedules, forecasts, quantity estimates and delivery plans) solely in order to support Spirit’s production planning activities. Boeing may purchase Products in different quantities and specify different delivery dates as necessary to meet Boeing’s requirements. Information provided pursuant to this Section 3.4.2.4 shall be subject to adjustment from time to time, and such adjustment shall not constitute a change under SBP Section 6.0 “Changes” or a termination under GTA Section 7.0 “Termination for Convenience”.
3.4.3
Delivery - Title and Risk of Loss
Title to and risk of any loss of, or damage to, all Products (except for Common-Use Tooling) shall pass from Spirit to Boeing upon delivery as set forth in SBP Sections 3.4.2 “Delivery Point and Schedule” and 3.5.2 “Spare Parts Ordering and Delivery”, as applicable, except for loss or damage resulting from Spirit’s fault or negligence or failure to comply with the terms of this SBP.
3.4.4
Transportation Routing Instructions
Unless otherwise specified by Boeing, Spirit shall be responsible for transportation of Products, including agents, carriers and routing to the delivery point. Boeing shall have the right to review Spirit’s transportation agents, carriers and routing.
3.4.5
Sustaining Product Definition
Spirit shall provide Product Definition and sustaining engineering in accordance with the documents set forth in SBP Attachment 4 “Work Statement Documents”.
3.4.6
Tooling Maintenance
Spirit shall provide control, accountability, care, storage, maintenance and replacements of all Contractor-Use Tooling and Common-Use Tooling in accordance with Boeing Document D33200, “Boeing Suppliers’ Tooling Document,” or, subject to Boeing review and approval, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products.

- 19 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


3.4.7
Maintenance of Production Planning
Spirit will revise and maintain the production planning as required to support the production and certification of Production Articles and Spare Parts.
3.4.8
Certification Support
Spirit is responsible for its certification activities as set forth in SBP Attachment 4 “Work Statement Documents”.
3.4.9
Systems Integration
All Spirit activities required to incorporate systems into Products, as provided in the documents set forth in SBP Attachment 4 “Work Statement Documents”, are included in Recurring Work.
3.5
Spare Parts
3.5.1
Certain Definitions
For purposes of SBP Section 3.5 and other applicable provisions of this SBP and the GTA, the following requirements and definitions shall apply:
A.
Aircraft on Ground (“AOG”) means the highest Spares priority. Spirit will expend best efforts to provide the earliest possible shipment of any Spare designated AOG by Boeing. Such effort includes but is not limited to working twenty-four (24) hours a day, seven (7) days a week and use of premium transportation. Spirit shall expend best commercially reasonable efforts to specify the delivery date of any such AOG Spare within [*****] hours of receipt of an AOG Spare request, but in no case should Spirit exceed [*****] hours to specify the delivery date.
B.
“Boeing Proprietary Spare Parts” means all Spare Parts which are manufactured (i) by Boeing, (ii) to Boeing’s detailed design with Boeing’s authorization, or (iii) in whole or in part using Boeing Proprietary Information.
C.
“Demand Date” means a date provided to Spirit by Boeing when Boeing wants the Product(s) on dock. Except as otherwise provided in this SBP, Spirit will provide a commitment to Boeing no later than [*****] days from notification of Demand Date.
D.
“Spirit’s Full Lead Time Spare” means a Spare in which the Demand Date is equal to or greater than Spirit’s normal lead time.
E.
“Initial Provisioning” shall have the meaning set forth in the PSAD.
F.
“Less Than Spirit’s Full Lead Time Spare (“Expedite”)” means a Spare in which the Demand Date is less than Spirit’s normal lead time and Spirit’s best effort commitment to meet the Demand Date is less than Spirit’s normal lead time.

- 20 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


G.
Purchased On Assembly (“POA”) - means any detail component needed to replace a component on an End Item Assembly currently in Boeing’s assembly line process. Spirit shall expend best efforts to provide the earliest possible delivery of any Spare designated as POA by Boeing. Such effort includes but is not limited to working twenty-four (24) hours a day, seven (7) days a week and use of premium transportation. Spirit shall expend best commercially reasonable efforts to specify the delivery date of any such POA within [*****] hours of a POA request, but in no case should Spirit exceed [*****] hours to specify the delivery date.
H.
“In-Production” means those Spare Parts that have been or will be manufactured in a configuration substantially the same as that required for the manufacture of any Production Article in production or offered to Customers by Boeing at the time such Spare Parts are ordered.
I.
“Out-of-Production” means those Spare Parts (i) with a configuration that is not substantially the same as the configuration of parts performing a similar function which are being manufactured for any Production Article in production or offered to Customers by Boeing at the time such Spare Parts are ordered or (ii) that require for their manufacture Tooling that is no longer used to manufacture parts for any Production Article.
J.
“Shelf Stock Spare Part” means a Spares Prone Part that has been ordered [*****] or more times by Boeing within the most recent [*****] month period.
K.
“Spare Parts Price Catalog” or “SPPC” means Spirit’s prices and lead times for Spare Parts.
L.
“Spares Prone Part” means a Spare Part that is identified and recommended by Boeing or Spirit in its provisioning data as a part that for the life of an Aircraft can be expected to be replaced during normal aircraft line maintenance or during overhaul of line replaceable units due to failure, wear, deterioration, maintenance, damage, loss, corrosion, vibration or temperature.
M.
“Special Configuration Spare Parts” means those Spare Parts which require both In-Production and Out-of-Production components for their manufacture or require special manufacturing operations applicable only to such Spare Parts.
3.5.2
Spare Parts Ordering and Delivery
In accordance with the Administrative Agreement, Spirit will design, test, manufacture, certify and sell such Spare Parts as Boeing may order from time to time. Spirit shall accept any Order for Spare Parts during the term of this SBP. The delivery point for Spares Parts is as follows: Free On-Board (FOB), Spirit’s Plant. Subject to this SBP Section 3.5.2 and except as provided in SBP Section 3.5.1 “Certain Definitions” with respect to Spares designated AOG or POA by Boeing, the delivery schedule for Spare Parts shall be as specified in the applicable Order.

- 21 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


3.5.2.1      Spare Part Stock and Lead Times
Spirit will maintain an adequate Spare Part stock of Products to support all lead times specified in this SBP and will ship such Products within lead times as follows:
a.
Shelf Stock Spare Parts will ship in not more than [*****] calendar days from receipt of an Order or prior to the applicable Demand Date, whichever is later.
b.
A Spares Prone Part that is not a Shelf Stock Spare Part that is in Spirit’s continuous production at the time of receipt of an Order will ship in not more than [*****] calendar days from receipt of an Order.
c.
Spare Parts that are not designated as Spares Prone Parts and are in Spirit’s continuous production at the time of receipt of an Order will ship [*****] (including AOG and Expedite) or within the [*****] identified in the SPPC from receipt of an Order, including parts that are unique to a single Customer (e.g., interior color coded parts), unless mutually agreed upon by Boeing and Spirit.
d.
Notwithstanding paragraph a above, for Spare Parts not in Spirit’s continuous production at the time of receipt of an Order, Spirit will [*****] to meet Boeing’s delivery requirements.
3.5.2.2      Spare Part Delivery Commitment
Spirit agrees that a Spare Part will be available for shipment to Customer or Boeing within the lead times specified in SBP Section 3.5.2.1 “Spare Part Stock and Leadtimes”. If, following entry in service of the Program Airplane, Spirit is unable to comply with the requirements of Section 3.5.2.1 with respect to any Spare Part, Spirit will perform, at no charge, one or more of the following actions, as necessary to meet Boeing’s requirements:
a. Expend premium time;
b. Remove such Spare Part from a higher assembly in Spirit’s inventory;
c. Provide a loan Spare Part until the Spare Part can be delivered; or
d. Provide reimbursement of Boeing’s reasonable lease charges for a replacement Product.
If Spirit’s actions above still fail to meet Boeing’s requirements, Spirit will provide a credit to Boeing in an amount of [*****] percent ([*****]%), or other mutually acceptable percentage, of Spirit’s Spare Parts Price Catalog (SPPC) price of the Spare Part for [*****] the delivery of the Spare Part is delayed; provided, however, that such credit shall not exceed the lesser of (i) the [*****] price of [*****] or (ii)

- 22 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


the amount, if any, [*****]. Spirit agrees that such credit reflects Boeing’s liquidated damages and is not a penalty.
Unless otherwise agreed between Spirit and Boeing, the delivery date for computation of credit will be the delivery date by which Spirit is committed to deliver the Spare Part in accordance with the requirements of SBP Section 3.5.2.1. Boeing will provide Spirit a request for such credit within [*****] days after delivery of the Spare Part.
3.5.2.3      Spares Special Handling
The price for all effort associated with the handling and delivery of Spare(s) is deemed to be included in the price for such Spare(s). If Boeing directs a Spare Parts delivery point other than as designated in SBP Section 3.5.2 “Spares Parts Ordering and Delivery”, Boeing shall reimburse Spirit for all shipping charges, including insurance and administrative costs, paid by Spirit which exceed the cost of shipping to the designated delivery point as identified in SBP Section 3.5.2. Such charges shall be shown separately on all invoices.
3.5.2.4      Integrated Materials Management (IMM) Program and other              Boeing Materials Management & Spares Initiatives/Programs
If requested by Boeing, Spirit shall participate in and support Boeing’s integrated materials management (IMM) program and other Boeing materials management and spares initiatives/programs pursuant to terms and conditions mutually determined by the Parties, that are intended to achieve an efficient and low cost supply chain infrastructure pursuant to the goals and strategies of Boeing as set forth below:
a.
Provide Boeing integrated solutions for customers’ material management operations and spares support;
b.
Provide guaranteed service levels to customers’ maintenance operations by Spirit holding and forward deploying inventory as deemed appropriate;
c.
Reduce inventory and process costs with better service levels to customers;
d.
Enable supply chain and customers to reduce costs and share benefits.
3.5.3
Spares Support

Spirit shall provide Boeing with a written Spares support plan describing Spirit’s process for supporting AOG commitments, design, manufacturing, testing, and certification support. The plan must provide Boeing with the name and telephone number of a twenty-four (24) hour contact for coordination of AOG requirements.

- 23 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Such contact shall be equivalent to the coverage provided by Boeing to its Customers as outlined in SBP Attachment 5 “Boeing AOG Coverage”.

Spirit shall notify Boeing as soon as possible via fax, telecom, or as otherwise agreed to by the Parties of each AOG requirement shipment using the form identified in SBP Attachment 6 “Boeing AOG Shipping Notification”. Such notification shall include time and date shipped, quantity shipped, Order, pack slip, method of transportation and air bill if applicable. Spirit shall also notify Boeing immediately upon the discovery of any delays in shipment of any requirement and identify the earliest revised shipment possible.
3.5.4
Reclassification
Boeing may instruct Spirit to re-prioritize or reclassify an existing Spares requirement in order to improve or otherwise change the established shipping schedule. Spirit shall expend the effort required to meet the revised requirement in accordance with the requirements of Section 3.5.2.1 “Spare Part Stock and Lead Times”. Spirit’s commitment to a delivery schedule shall be given in accordance with such requirements for the applicable classification but in no case shall it exceed [*****] hours from notification by Boeing.
3.5.5
Sale of Boeing Proprietary Spare Parts
Spirit shall sell Boeing Proprietary Spare Parts to Boeing, or to Third Parties only with Boeing’s prior written approval or at Boeing’s direction. Except as permitted pursuant to a written agreement between Spirit and Boeing, Spirit shall respond to any inquiry from a Third Party concerning Boeing Proprietary Spare Parts in accordance with SBP Section 30.0 “Customer Contact”.
3.5.6
Initial Provisioning
3.5.6.1      Initial Provisioning Spare Part Stocking
Spirit shall maintain adequate Products in stock to support Initial Provisioning requirements and delivery times as provided in this SBP Section 3.5.6.
3.5.6.2      Lead Times for Initial Provisioning Spare Parts
Lead times for notification by Boeing to Spirit of Initial Provisioning Spare Parts requirements will not be less than [*****] calendar days prior to the delivery of any Aircraft to a Customer. Lead times for delivery of Initial Provisioning Spare Parts will not exceed [*****] calendar days prior to the delivery of any Aircraft to a Customer.

- 24 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


3.5.6.3      Delivery of Initial Provisioning Spare Parts
Spirit will deliver Initial Provisioning Spare Parts in accordance with SBP Section 3.5.6.2 “Lead Times for Initial Provisioning Spare Parts.”
3.6
Other Product Support and Miscellaneous Work
3.6.1
Product Support and Assurance
Spirit shall provide Product Support and Product Assurance in accordance with the applicable documents referred to in SBP Attachment 4 “Work Statement Documents” and SBP Section 14.0 “Warranty”. Except as otherwise provided in the PSAD, unless otherwise specified in the applicable Order, no additional payment shall be made by Boeing for any Product Support and Product Assurance performed hereunder.
3.6.2
Miscellaneous Work
Spirit shall provide to Boeing Miscellaneous Work, including, without limitation, Boeing-Use Tooling, field support or other related program support items, as may be mutually agreed by the Parties from time to time. Unless otherwise mutually agreed by the Parties, Boeing shall pay reasonable compensation to Spirit for Miscellaneous Work. Such compensation shall be determined in accordance with SBP Section 4.4 “Prices for Miscellaneous Work”.
3.6.3
Program Level Tasks
Boeing and Spirit intend to have Spirit participate in Program Level Tasks, subject to discussion and mutual agreement of the Parties. The nature and scope of any such participation will be mutually defined and agreed by the Parties.
3.6.4
Delivery Schedule of Other Products and Performance of Services
All deliveries of other Products and performance of services not otherwise specified in this SBP will be as mutually agreed by the Parties.
4.0
PRICING
4.1
Shipset Price
The Shipset Price is set forth in SBP Attachment 1 “Work Statement and Pricing” and is subject to adjustment in accordance with SBP Sections 3.2.1 “Production Rates”, 4.1.2 “Abnormal Escalation”, 4.2 “Derivative Pricing”, 6.0 “Changes” and 7.0 “Change Provisions”.

- 25 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


4.1.1
Nonrecurring Work Recovery
Except as provided in SBP Sections 3.3.7 "Derivatives and Mission Improvement”, 4.7 "Pricing for Research and Development" and 4.8 “Pricing for Other D&MI Nonrecurring Work”, the Shipset Price, as subject to adjustment in accordance with SBP Section 4.1, is inclusive of Spirit’s recovery of its nonrecurring investment including any such investment prior to the execution of this SBP. For the avoidance of doubt, except as provided in SBP Sections 3.3.7. “Derivatives and Mission Improvement”, 4.7 "Pricing for Research and Development" and 4.8 “Pricing for Other D&MI Nonrecurring Work”, Spirit’s nonrecurring investment is inclusive of Nonrecurring Work. Static and fatigue test articles are part of Nonrecurring Work and not subject to payment as Shipsets. Except as provided in SBP Sections 3.2.1 “Production Rates”, 3.3.7 “Derivatives and Mission Improvement”, 4.7 "Pricing for Research and Development", 4.8 “Pricing for Other D&MI Nonrecurring Work, 7.0 "Change Provisions" and 4.2 "Derivative Pricing", no change in the Shipset Price shall be made by Boeing for any Nonrecurring Work performed hereunder.
Spirit waives and agrees not to assert to recover or recoup any costs associated with Nonrecurring Work upon the cancellation or the termination by Boeing, in whole or in part, of any Order, the GTA or this SBP, except as provided in GTA Sections 7.3.E (for Spare Part Orders), 8.2.F “Tooling and Other Materials”, 9.0 “Termination of Airplane Program” and 10.1 “Excusable Delay” and SBP Sections 3.3.7 “Derivatives and Mission Improvement”, 4.7 "Pricing for Research and Development" and 4.8 “Pricing for Other D&MI Nonrecurring Work”.
4.1.2
Abnormal Escalation
The Shipset Price shall be subject to adjustment as provided in Attachment 18 “Abnormal Escalation.”
4.1.3
Shipset Price for Shipsets [*****] Through Year End [*****]
Twenty-four (24) months prior to the scheduled delivery of Shipset [*****] to Boeing by Spirit, the Parties shall mutually agree to the price per Shipset for Shipset [*****] through all other Shipsets delivered through year end [*****]. The Shipset Price for Shipset [*****] through all other Shipsets delivered through year end [*****] will be set at a level to preserve or enhance, if market conditions allow, the anticipated economics of the 787 Program for both Spirit and Boeing. In no event shall the Shipset Price for Shipsets [*****] - year end [*****] exceed a [*****] percent ([*****]%) increase over the average Shipset Price for Shipsets delivered in the year prior to Shipset [*****].

- 26 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


4.2
Derivative Pricing
The pricing of any Derivatives shall be established in accordance with SBP Attachment 16, “Pricing Methodologies”. For the avoidance of doubt, capital equipment and facility sizing investment relating to Derivatives (787-9), as defined in document [*****] dated [*****], are included in the Shipset Price set forth in Attachment 1 “Work Statement and Pricing” as of the date of this SBP.
4.3
Spare Parts Pricing
Spare Parts will be categorized and priced as follows:
4.3.1
Pricing Methodology for In-Production Spare Parts
Boeing and Spirit will develop a [*****] Price for each Spare Part, in which the Price shall be the "indentured" prices of parts as specified in SBP Attachment 7 and the [*****]. The result shall be incorporated into the Spares Parts Price Catalog (SPPC) as described in SBP Section 3.5. The line item prices contained in such "indentured" priced parts list (“IPPL”) shall be adjusted by Spirit, and agreed to by Boeing, each time an adjustment of Prices for Products is made pursuant to SBP Section 7.0 “Change Provisions”, with the effect that the [*****]. Spirit shall update the SPPC to reflect then current pricing not later than [*****] days after completion of any amendment of this SBP as provided in SBP Section 7.0 and the Administrative Agreement. Payment for any Spare Part will be made in accordance with SBP Section 5.0 “Payment”. Separate Indentured Parts Price Lists shall be established for the 787-8 and any derivative configuration.
4.3.1.1      [*****] Prices for Spare Parts Not Listed In SPPC
Spare Parts not yet incorporated into the SPPC shall be priced based on the [*****]. Any Spare Part priced in this manner shall be discretely priced in the next revision of the SPPC. [*****] shall be documented in the SPPC and such [*****] shall be updated each time the SPPC is updated.
Standard parts shall not be discretely listed in the SPPC, however, [*****] pricing for families of standards shall be established and listed in the SPPC to facilitate ordering and payment of such standard parts in the event Boeing should require such standard parts.
4.3.2
Pricing Methodology for Out-of-Production Spare Parts
[*****] prices for Out-of-Production Spare Parts not listed in the SPPC shall be mutually agreed and negotiated in good faith by the Parties on a case-by-case basis prior to the cessation of production of the applicable Spare Parts.

- 27 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


4.3.3
Pricing for Special Configuration Spare Parts
[*****] prices for Special Configuration Spare Parts will be developed by Spirit, subject to Boeing's approval (which shall not be unreasonably withheld). In-Production Spares Prices will be applied to In-Production components and Out-of-Production Spares Prices will be applied to Out-of-Production components. Prices for any component not priced at the time any Special Configuration Spare Part (in which such component will be installed) is ordered shall be priced as if it were an In-Production component if such component is then in production and shall be priced as if it were an Out-of-Production component if such component is not then in production.
4.3.4
Spares Pricing Factors
4.3.4.1      Factor for Full Leadtime In-Production Spares
The price for all In-Production Spares requirements (other than AOG, POA and Expedite In-Production Spares) shall be the [*****] for such Products listed in the SPPC in effect when such Spares are ordered multiplied by a factor of [*****].
4.3.4.2      Factor for AOG, POA and Expedite In-Production Spares
The price for all AOG, POA, and Expedite In-Production Spares requirements shall be the [*****] for such Products listed in the SPPC in effect when such Spares are ordered multiplied by a factor of [*****].
4.3.4.3      Factor for Spare POA Production Articles
The price for any spare POA Production Articles shall be the [*****] for such Production Articles listed on [*****] in effect when such spare POA Production Articles are ordered, multiplied by a factor of [*****].
4.4
Prices for Miscellaneous Work
[*****] prices for Miscellaneous Work will be developed in accordance with SBP Attachment 16.
4.5
Pricing of Boeing’s Supporting Requirements
Any Products required to assist Boeing’s supporting requirements that are in excess of those documented in Attachment 4 “Work Statement Documents”, and Miscellaneous Work, will be provided to Boeing for not more than [*****], and otherwise at a cost to be mutually agreed by the Parties on a case-by-case basis. For the avoidance of doubt such prices shall include the application of the spares pricing factor of [*****].

- 28 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


4.6
Pricing of Requirements for Modification or Retrofit
4.6.1
Boeing Responsibility or Regulatory Requirement
Any Products required by Boeing to support modification or retrofit programs, which results from a regulatory requirement or for which Boeing may be liable for the cost associated with such programs, shall be provided to Boeing not more than for [*****], and otherwise at [*****] to be mutually agreed by the Parties on a case-by-case basis. For the avoidance of doubt such prices shall include the application of the spares pricing factor of [*****].
4.6.2
Contract In-Service Modification or Retrofit Work Performed by Boeing
Any Products required by Boeing to support modification or retrofit programs, which Boeing performs under contract, shall be provided to Boeing for not more than [*****].
4.7
Pricing for Research and Development
The Price for Research and Development activities is set forth in SBP Attachment 1 "Work Statement and Pricing" and is subject to adjustment in accordance with SBP Attachment 23 "Derivatives and Mission Improvement Performance to Plan". Payment for Research and Development activities shall be in accordance with SBP Section 5.6 "Performance Based Payments for Research and Development".
4.8
Pricing for Other D&MI Nonrecurring Work
The Price for Other D&MI Nonrecurring Work is set forth in SBP Attachment 1 "Work Statement and Pricing" and is subject to adjustment in accordance with SBP Attachment 23 "Derivatives and Mission Improvement Performance to Plan". Payment for Other D&MI Nonrecurring Work shall be in accordance with SBP Section 5.8 "Performance Based Payments and Performance Based Advance Payments for Other D&MI Nonrecurring Work".
4.9
Incentive Payments for D&MI
In addition to the Price for Research and Development and Other D&MI Nonrecurring Work activities, an Incentive Payment incentive shall be made available as set forth in SBP Attachment 25 "Incentive Payment" for D&MI activities. The administration of the Incentive Payment plan is established by Boeing as set forth in Document [*****]. Payment of Incentive Payments for D&MI shall be in accordance with SBP Section 5.7 "Payment of Incentive Payment". Total Payments of Incentive Payments shall be documented in SBP Attachment 25 "Incentive Payment". Incentive Payments shall be categorized by

- 29 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Boeing as either for i) Research and Development or ii) Other D&MI Nonrecurring. For the avoidance of doubt, Incentive Payments for Other D&MI Nonrecurring shall not be subject to the incremental payment provisions of SBP Section 5.8.
4.10
Risk Sharing
The Shipset Price shall be subject to a supplemental payment or credit as provided in Attachment 27 “Risk Sharing”. Any resulting payment shall be due upon amendment of the SBP in accordance with SBP Section 7.8.2 and as provided in SBP Section 5.0. For any resulting credit, Boeing shall be entitled to either (a) set off the amount of such credit against any amounts payable to Spirit hereunder or (b) invoice Spirit for the amount of such costs and expenses, and Spirit shall pay the invoiced amount within [*****] days after receipt of a correct (proper) invoice.
4.11
Incentive Payments for Quality
An Incentive Payment incentive shall be made available as set forth in SBP Attachment 29 "Incentive Payment for Quality". Payment of Incentive Payments for Quality shall be in accordance with SBP Section 5.7 "Payment of Incentive Payment". Total Payments of Incentive Payments for Quality shall be documented in SBP Attachment 1 "Work Statement and Pricing. Nothing in this SBP Section 4.11 shall modify or supersede the provisions and obligations of SBP Section 8.0, “Governing Quality Assurance Requirements”, or any other quality provision under this SBP or the GTA or any of Boeing’s remedies under this SBP or the GTA.
5.0
PAYMENT
5.1
Invoicing
5.1.1
Invoicing Requirements
Spirit shall submit separate invoices for payment for each Shipset and each invoice for payment shall be submitted in triplicate.
5.1.2
Invoicing Shipset Identification
Spirit shall indicate on each Shipset invoice the line number of each Shipset included therein.
5.1.3
Spares and Miscellaneous Work Invoicing
Spirit shall prepare and submit an invoice for each shipment of Spare Parts. Miscellaneous Work will be invoiced separately.

- 30 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


5.1.4
Summary Invoices
Spirit shall supply a summary invoice for those shipments that contain multiple-invoiced items, each item in turn having its own invoice. The summary invoice shall be attached along with the paperwork for the shipment and provide total value for the invoices that accompany it as well as specify what invoices are covered.
An acceptable alternative is the use of a single invoice for multiple items, part numbers and purchase order numbers.
All specific questions and concerns on customs invoicing may be addressed to the Boeing Traffic Organization.
5.1.5
Mailing Instructions
All invoices shall be mailed to:
Boeing Commercial Airplanes
P.O. Box [*****]
Seattle, WA 98124-2207
Attention: Payment Services
5.2
Payment Due Date
5.2.1
Payment Due Date
Unless otherwise provided pursuant to a written agreement between the Parties, payment for all shipsets delivered before [*****] shall be [*****] or [*****] days after receipt of a correct (proper) invoice for such Product, whichever is last, and payment for all subsequent shipsets shall be (net) [*****] calendar days.
Except as otherwise provided pursuant to a written agreement between the Parties, payment due dates, including discount periods, shall be computed from (a) the actual date of delivery of the Product, (b) the date of receipt of a correct (proper) invoice for such Product or (c) the scheduled delivery date of such Product, whichever is last. Unless freight and other charges are itemized, any discount shall be taken on the full amount of the invoice. Boeing shall notify Spirit AeroSystems, Inc. in a timely manner if it receives an invoice it believes to be incorrect or improper. All payments are subject to adjustment for shortages, credits and rejections. When practical, Boeing shall consult with Spirit AeroSystems, Inc. regarding any adjustments.

- 31 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


5.2.2
Reserved
5.3
Payment Method
All payments hereunder shall be made by electronic payment per Boeing Payment Services approved process.
5.4
Payment Errors
If an error in payment (over payment or under payment) is discovered by Boeing or Spirit, a written notification will be submitted to the other Party and resolution of the error will occur in a timely manner after discovery of such error.
5.5
Advance Payments
Notwithstanding the payment due dates for Shipsets specified elsewhere in this SBP, Boeing shall make total advance payments to Spirit for Shipsets in the amount of $[*****] (“Advance Payments”). The schedule for Boeing’s Advance Payments shall be as follows: $[*****] shall be due on [*****]; an additional $[*****] shall be due on each of [*****],[*****],[*****] and [*****]; an additional [*****] shall be due on each of [*****], [*****], [*****] and [*****], an additional [*****] shall be Due on [*****] an addition [*****] shall be due on [*****], an additional [*****] shall be due on [*****] and [*****] and an additional [*****] shall be due on [*****]. Excepting the [*****] payment, Spirit shall invoice Boeing [*****] days prior to these dates. These payments are made for the Work Statement set forth in Attachment 1 - “Work Statement and Pricing”. Notwithstanding anything to the contrary contained herein, in the GTA or in any other agreement between Boeing and Spirit, Boeing shall not be entitled to any offset or credit of the Advance Payments for any amounts owed by Spirit to Boeing under this SBP or otherwise.

The Advance Payments shall be applied against payments due by Boeing to Spirit for the first 1000 Shipsets such that the Shipset Price, as set forth in Attachment 1 - “Work Statement and Pricing,” for each of the first 1000 Shipsets shall be decreased as follows: $[*****] for shipsets [*****], $[*****] for Shipsets [*****], $[*****] for Shipsets [*****], $[*****] for shipsets [*****]. $[*****] for Shipsets [*****], and $700,000 for Shipsets 101 - 1000.
  
In the event that Boeing does not take delivery of 1000 Shipsets under the terms of this SBP prior to the termination of the Program or this SBP, the remaining balance of the Advance Payments shall be first applied against any outstanding payments then due by Boeing to Spirit in respect of the 787 program. Finally, any remaining balance shall be prorated at an equivalent rate of [*****] Shipsets per year, beginning in the month following delivery to Boeing of Spirit’s final production Shipset. Spirit shall make a payment to Boeing on December 15 of each year for the payments due on account of such year until any remaining balance of the Advance Payments has been fully recovered.

- 32 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



5.6
Performance Based Payments for Research and Development
Spirit shall be entitled to a Performance Based Payment for Research and Development Nonrecurring Work upon the successful accomplishment of the event or performance criterion ("Performance Event") for which payment is specified, as provided in SBP Attachment 23 “Derivatives and Mission Improvement Performance to Plan”, Section IV.
Upon successful completion of such Performance Event and receipt of Spirit's correct (proper) invoice, payment shall be due (net) [*****] calendar days.
5.7
Payment of Incentive Payment
Upon the granting of an Incentive Payment by Boeing in accordance with SBP Attachment 25 “Incentive Payment” or SBP Attachment 29 “Incentive Payment for Quality” and receipt of Spirit's correct (proper) invoice, payment shall be due (net) [*****] calendar days.
5.8
Performance Based Payments and Performance Based Advance Payments for Other D&MI Nonrecurring Work
The Price for Other D&MI Nonrecurring Work shall be paid in [*****] increments. [*****] percent ([**]%) shall be paid upon the successful accomplishment of the event or performance criterion ("Performance Event") for which payment is specified, as provided in SBP Attachment 23 “Derivatives and Mission Improvement Performance to Plan”, Section IV. [*****] percent ([*****]%) shall be paid upon the delivery of Shipset [*****] by Spirit to Boeing (the “Remaining D&MI Balance”). An advance payment for the Remaining D&MI Balance shall be made in accordance with SBP Section 5.8.1” Advance Payments for the Remaining D&MI Balance". These values shall be recorded in Attachment 1.
5.8.1
Advance Payments for the Remaining D&MI Balance
Spirit shall be entitled to a Performance Based Advance Payment for the Remaining D&MI Balance upon the successful accomplishment of the event or performance criterion ("Performance Event") for which payment is specified, as provided in SBP Attachment 23 “Derivatives and Mission Improvement Performance to Plan”, Section IV.
Upon successful accomplishment of such event or performance criterion and receipt of Spirit's correct (proper) invoice, payment shall be due (net) [*****] calendar days.
The Advance Payment for the Remaining D&MI Balance shall be recovered by Boeing from Spirit upon the delivery by Spirit to Boeing of Shipset [*****]. Upon

- 33 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


receipt of Spirit’s invoice for i) Shipset [*****] and ii) the Remaining D&MI Balance, Boeing shall set off the amount of the Advance Payments against any amounts payable to Spirit hereunder.

5.8.2
Remaining Balance
In the event of Program termination or SBP cancellation, if Boeing has not taken delivery of [*****] Shipsets under the terms of this SBP, the remaining balance of advance payments related to the Remaining D&MI Balance shall be first applied against any outstanding payments due by Boeing to Spirit. The remaining balance of advance payments equals the total Performance Based Advance Payments made by Boeing reduced by the Advance Payment Recovery amounts as reflected in SBP Attachment 1 for each Shipset delivered by Spirit and accepted by Boeing. Finally, any remaining balance shall be prorated at an equivalent rate of [*****] Shipsets [*****] beginning the month following Spirit's final production Shipset delivery to Boeing, but in any event, beginning no sooner than [*****]. Spirit shall make a payment to Boeing [*****] until any remaining balance of such advance payment has been fully recovered.
6.0
CHANGES
6.1
Change Direction
At any time, Boeing may, by written direction to Spirit, pursuant to the Administrative Agreement, or in accordance with SBP Section 2.4.2 “Revision of Documents”, make changes within the general scope of this SBP in: (i) requirements for Product Definition, Drawings, designs, specifications, Datasets or any other Document; (ii) Boeing-Use Tooling and Common‑Use Tooling (including, without limitation, the quantities thereof), services or Spare Parts to be provided by Spirit under this SBP; (iii) the method of shipping or packing; (iv) the place of delivery, inspection or acceptance for all Products; (v) Program schedules, delivery rates and schedules for performance of services; (vi) Products, the Program Airplane and Derivative models and Customer variables; (vii) Boeing Furnished Material; (viii) the allocation of responsibility as between Spirit and Boeing for production of any component of any Product or the provision of any service; (ix) the allocation of responsibility among Spirit and Third Parties; (x) certification requirements; and (xi) description of services to be performed; provided, however, that (a) such changes are made for the purpose of supporting Program requirements as determined by Boeing in good faith and in accordance with SBP Section 3.1.1 "Obligation to Purchase and Sell" and (b) the provisions of this SBP Section 6.1 are subject to SBP Section 2.0 “Contract Formation” and other provisions of SBP Section 6.0.
If Spirit reasonably expects that any change made in accordance with the above shall significantly affect Spirit's cost or schedule performance of any work

- 34 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


hereunder, Spirit shall, without affecting its obligation to comply in accordance with SBP Section 2.4 “Supporting Documentation” and SBP Section 6.2 “Change Compliance” with any such change, so notify Boeing in writing within thirty (30) days of Spirit's receipt of such change in accordance with Section 3.1.1 “Correspondence" of the Administrative Agreement. The absence of Spirit’s notification shall not affect the rights or remedies of the Parties of this SBP.
If Spirit considers Boeing's conduct to be direction other than as provided above, Spirit shall notify Boeing's Procurement Representative in writing, prior to proceeding, as to the nature of such conduct and its effect (or its anticipated effect) upon Spirit's performance. Upon receipt of such notification, Boeing shall provide written direction to Spirit in accordance with this SBP Section 6.1.
6.2
Change Compliance
Spirit shall immediately comply with any written direction from Boeing issued in accordance with SBP Section 6.1 “Change Direction” and Section 6.0 of the Administrative Agreement upon receipt, irrespective of any failure by the Parties to agree that such change shall be subject to Price adjustment in accordance with SBP Section 7.0 Change Provisions” and SBP Section 4.3 “Spare Parts”.
If at any time Spirit has any concerns regarding its ability to implement any such change, the Parties shall consult in good faith regarding such concerns. Spirit shall be deemed to be in full compliance with this SBP so long as it immediately commences substantial efforts to implement each such change and thereafter proceeds diligently and in good faith to implement such change within a reasonable period of time specified by Boeing after consultations with Spirit and taking into account the efforts required by Spirit in connection with such implementation. Notwithstanding anything in the foregoing to the contrary, any change directed by Boeing that impacts Spirit’s ability to meet the delivery schedule will be subject to the mutual agreement of the Parties with respect to any necessary schedule changes. Spirit agrees to use its best commercially reasonable efforts to incorporate such change in accordance with the Boeing desired delivery schedule.
6.3
Change Pricing
If a change is made pursuant to this SBP Section 6.0, and such change meets the applicable criteria for Price adjustment set forth in SBP Section 7.0 “Change Provisions”, then a Price adjustment shall be made in accordance with the provisions set forth in SBP Section 7.0.
7.0
CHANGE PROVISIONS
7.1
General Change Provisions

- 35 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Except as the Parties may otherwise mutually agree, no adjustment will be made to the Price of any Product for any change orders as provided in SBP Section 6.0 issued through the period of performance of this SBP except as provided in this SBP Section 7.0.
7.2
Work Statement Changes Subject to Price Adjustment
7.2.1
Changes
Changes authorized by Boeing on or before [*****] that are first effective at Shipset [*****] or earlier, are hereby incorporated in to the SBP and are not subject to any price adjustment. Changes authorized by Boeing in accordance with SBP Section 6.1 subsequent to [*****], or first effective for Shipsets after Shipset [*****], are subject to Price adjustment in accordance with SBP Section 7.2.2 and 7.2.3.
Only those changes authorized in writing by Boeing as provided in the Administrative Agreement shall be subject to a Price adjustment pursuant to this SBP Section 7.0. In the event Boeing has formally delegated authority to Spirit to issue engineering design changes independently of Boeing, Spirit shall provide a monthly summary to Boeing’s Procurement Representative of such changes and
their anticipated impact to Spirit costs. Provided these conditions are met, such changes shall be considered authorized in writing by Boeing.
When requested by Boeing, Spirit shall participate in and support the evaluation of any change prior to its authorization. This may include, but not be limited to, Spirit cost analysis in a manner that supports timely program decision making, and other processes to be jointly developed by Boeing and Spirit to maintain change visibility by means of tracking and approval processes.
7.2.2
Annual Price Adjustments
An annual adjustment to Shipset Prices for each Shipset (“Annual Shipset Price Adjustment”) shall be developed using the pricing methodology described in SBP Attachment 16 "Pricing Methodologies".
7.2.3
Substantial Engineering or Manufacturing Changes
If the Parties mutually determine that there is a substantial change to any Production Article in manufacturing procedures, or manufacturing technology, or process specifications, or material type that is not addressable by the methodology set forth in SBP Attachment 16, the Parties shall establish additional methodology as necessary.
In the event the Parties are unable to establish additional methodology in time to support a timely Price adjustment as set forth in SBP Section 7.2.2, Boeing will

- 36 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


adjust the then current Prices for such Production Article based on dollars per part card and dollars per pound, and the Prices set forth in SBP Attachment 1 "Work Statement and Pricing" shall be adjusted accordingly.
7.3
Changes Generated by Spirit Affecting Boeing or a Third Party
Spirit may propose changes that have an effect on Boeing or a Third Party. Any such proposal shall include Spirit's business case proposal for such change, including any compensation or payment Spirit may (but shall not be obligated to) offer to Boeing or any Third Party. Any such proposal shall be considered in good faith by Boeing. Boeing shall coordinate with any affected Third Party regarding any change proposed by Spirit and shall have the sole right, after consultation with Spirit, to approve or disapprove any such change. Spirit may not implement any such change without Boeing's prior written approval.
7.4
Schedule Acceleration/Deceleration
Boeing may revise the delivery schedule and/or firing order without additional cost or change to the Shipset Price stated in the applicable Order if Boeing provides Spirit with written notice of such revision; provided, however, that Spirit shall be entitled to payment for schedule accelerations made with less than [*****] [*****] notice for acceleration and less than [*****] notice for
deceleration. In case of shorter notification for acceleration, the Shipset Price for those Shipsets inside the notification period (less than [*****] notification) shall be equitably adjusted as agreed by the Parties subject to schedule feasibility. In case of shorter notification for deceleration, the Shipset Price will be adjusted by [*****] for those Shipsets inside the notification period (less than [*****] notification). Attachment 15 “Schedule Change Examples” provides examples of the above. Except as provided in this SBP Section 7.4 and SBP Section 3.2.1 “Production Rates”, there shall be no other Price adjustment for schedule rate or firing order changes. The resulting payment amount shall be paid in accordance with SBP Section 5.0 “Payment”.
Notwithstanding the paragraph above, Spirit shall not be entitled to payment for an increase in the Shipset Price for any notification of deceleration made with less than [*****] notice for any Shipsets prior to Shipset [*****].
Spirit shall inform Boeing as Spirit deems appropriate of critical lead times and constraints in its production system and Boeing shall reasonably consider such information in making a determination to accelerate production rates.
Boeing agrees to provide Spirit with written notice of any deceleration as soon as reasonably possible. Reasons for decelerations shall include, but not be limited to, rate changes, possible strikes at Boeing or any of its suppliers or subcontractors on the Program or performance issues at Boeing or any of its suppliers or subcontractors on the Program.

- 37 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


7.5
Total Cost Management
7.5.1
Total Cost Management
Boeing and Spirit shall engage in a process herein known as Total Cost Management ("TCM"). Boeing and Spirit shall each identify cost reduction opportunities and work together for implementation. Each Party shall fund and be responsible for those Nonrecurring costs associated with cost reduction activities that are consistent with their RAAs as generally defined by the scope of the SBP and as set forth in SBP Attachment 4 “Work Statement Documents”. Spirit shall provide certain data to Boeing sufficient to guide cost reduction activities, as specified in SBP Attachment 26. Executive reviews will be conducted from time to time to assess progress of cost reduction activities.
The Parties shall utilize the TCM program set forth in SBP Attachment 26, which sets forth the general methodology to be used by the Parties to identify and implement cost reduction opportunities.
7.5.2      Relationship to D&MI Nonrecurring Work
For the avoidance of doubt, nothing in this SBP Section 7.5, including Nonrecurring funding provisions specific to this SBP Section 7.5, shall modify the process for payments for Nonrecurring Work for D&MI activities set forth in Attachment 23 to the SBP.
7.6
Price Adjustments to Maintain Price and Performance Competitiveness
Shipset Prices shall be subject to adjustment in accordance with SBP Section 3.1.1, “Obligation to Purchase and Sell”.
7.7
Obsolescence
Each Party will absorb [*****]% of its obsolescence costs. Obsolescence due to changes originated by either Party that increase the cost or delay the schedule of the other Party shall be subject to an equitable price and schedule adjustment.
7.8
Price Adjustments and SBP Amendment
7.8.1
Price Adjustment
The then current Shipset Price shall be adjusted to reflect those changes that are subject to a Price adjustment as set forth in SBP Section 7.2. Research and Development Prices shall be adjusted to reflect those changes that are subject to a Price adjustment as set forth in SBP Section 4.7 and Other D&MI Nonrecurring Work Prices shall be adjusted to reflect those changes that are subject to a Price adjustment as set forth in SBP Section 4.9.

- 38 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


7.8.2
SBP Amendment
Each adjustment to Shipset Prices, Research and Development Prices and Other D&MI Nonrecurring Work Prices shall be set forth in an amendment to this SBP. Unless the Parties shall agree otherwise, this SBP shall be amended to reflect adjustments to such Prices hereunder twice each calendar year while any work is being performed under the provisions of Attachment 23, or otherwise once each calendar year. The amount of each Price adjustment shall be documented in SBP Attachment 3, “Price Status and Summary Tables.”
7.9      [Reserved]
7.10      [Reserved]

8.0
GOVERNING QUALITY ASSURANCE REQUIREMENTS
8.1
Quality Assurance Requirements
In addition to those general quality assurance requirements set forth below, the work performed under this SBP shall be in accordance with the requirements set forth in SBP Attachment 10 “Quality Assurance Requirements.”
8.2
Spirit’s Disclosure and Acceptance
8.2.1
Spirit’s Disclosure
Spirit shall immediately notify Boeing in writing when it discovers or suspects discrepancies in Spirit’s processes or Products that Spirit has delivered, is delivering, or will deliver under any Order.
8.2.2
Spirit’s Acceptance
Spirit shall provide with all shipments the following evidence of acceptance by its quality assurance department: (a) certified physical and metallurgical or mechanical test reports where required by controlling specifications; or (b) a signed, dated statement on the packing sheet certifying that its quality assurance department has inspected the Products and they adhere to all applicable drawings and/or specifications.
8.3
Boeing’s Inspection and Rejection
Spirit shall achieve and maintain minimum Boeing requirements for delegation in order that Spirit may source inspect, and accept, Products on Boeing’s behalf. If Spirit fails to achieve and maintain delegation status, Products shall be source inspected by Boeing, or Boeing’s designee, at Spirit’s facilities at Spirit’s expense.

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Nothing in this SBP Section 8.3 shall be construed as limiting Boeing’s post acceptance remedies, including the ability to revoke acceptance. No inspection, test delay or failure to inspect or test or failure to discover any defect or other nonconformance shall relieve Spirit of any obligations under any Order or impair any right or remedy of Boeing.
If Spirit delivers non-conforming Products, Boeing may at its option and at Spirit’s expense (except that no cost or expense incurred by Boeing that was directly caused by non-conforming Products supplied by Boeing to Spirit may be recovered from Spirit) (i) return the Products for credit or refund; (ii) require Spirit to promptly correct or replace the Products; (iii) correct the Products; or, (iv) obtain replacement Products per SBP Section 3.1.2 “Support of Delivery Schedule”. These remedies are in addition to any remedies Boeing may have at law or equity. If Spirit so requests and acts promptly, Spirit shall have the right to inspect and test any rejected Product at Boeing’s plant prior to its correction by Boeing or return to Spirit provided it does not cause any delay or cost to Boeing.
Spirit shall not redeliver corrected or rejected goods without disclosing the former rejection or requirement for correction. Spirit shall disclose any corrective action taken. Repair, replacement and other correction and redelivery shall be completed within the original delivery schedule or such later time as the Procurement Representative of Boeing may reasonably direct.
In the event the Parties determine at any time that any Product was improperly rejected, Boeing shall promptly accept such Product and shall be responsible for all repair or rework and associated costs Boeing has incurred with respect to such improper rejection.
Acceptance of any Product by Boeing following any repair or rework pursuant to this SBP Section 8.3 shall not alter or affect the obligations of Spirit or the rights of Boeing under this SBP.
8.4
Rights of Boeing’s Customers and Regulators to Perform Inspections, Surveillance, and Testing
Boeing’s rights to perform inspections, surveillance and tests and to review procedures, practices, processes and related documents related to quality assurance, quality control, flight safety, and configuration control shall extend to the Customers of Boeing that are departments, agencies or instrumentalities of the United States Government and to the FAA and any successor agency or instrumentality of the United States Government. Boeing may also, at Boeing’s option, by prior written notice from Boeing’s Procurement Representative to Spirit’s Contract Administrator, extend such rights to other Customers of Boeing and to agencies or instrumentalities of other governments equivalent in purpose to the FAA. Spirit shall cooperate with any such United States Government or Boeing directed inspection, surveillance, test or review without additional charge

- 40 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


to Boeing. Nothing in any Order shall be interpreted to limit United States Government access to Spirit’s facilities pursuant to law or regulation.
Where Spirit is located in or subcontracts with a supplier or subcontractor located in a country which does not have a bilateral airworthiness agreement with the United States, Spirit will obtain and maintain on file and require its affected supplier(s) or subcontractor(s) to obtain and maintain on file, subject to review by Boeing, a letter from the applicable government where the Product or subcontracted element is to be manufactured stating that Boeing and the FAA will be granted access to perform inspections, surveillance and tests and to review procedures, practices, processes and related documents related to quality assurance, quality control, flight safety, and configuration control.
8.5
Retention of Quality Records
Spirit shall maintain, on file at Spirit’s facility, quality records traceable to the conformance of Products delivered to Boeing. Spirit shall make such records available to regulatory authorities and Boeing’s authorized representatives. Spirit shall retain such records for a period of not less than seven (7) years from the date of shipment under each applicable Order for all Products unless otherwise specified on the Order. Spirit shall maintain all records related to the current first article inspection (“FAI”) for seven (7) years past final delivery of the last Product covered by the FAI.
At the expiration of such period, Boeing reserves the right to request delivery of a copy of such records. In the event Boeing chooses to exercise this right, Spirit shall promptly deliver such copy to Boeing at no additional cost on media agreed to by both Parties.
8.6
Inspection
Without additional charge, Products may be subject to inspection, surveillance and test at reasonable times and places, including Spirit’s subcontractors’ or suppliers’ locations. Boeing will perform inspections, surveillance and tests so as not to unduly delay Spirit’s performance of its tasks hereunder.
If Boeing performs an inspection or test on the premises of Spirit or its subcontractors or suppliers, Spirit shall furnish and require its subcontractors or suppliers to furnish, without additional charge, reasonable facilities and assistance for the safe and convenient performance of these duties.
Spirit’s documentation accompanying the shipment must reflect evidence of this inspection.

- 41 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


9.0
STATUS REPORTS/REVIEWS
9.1
Notification of Shipment
Spirit shall notify the Boeing personnel identified in the Administrative Agreement by email, telephone, facsimile or other electronic means when any shipment has been made. Such notification will include (i) a list of the items and quantities of items shipped, (ii) the Shipset number with respect to any item shipped, (iii) the number and weight of containers shipped, (iv) the shipper or packing sheet number with respect to such shipment, and (v) the date of such shipment. Spirit shall airmail or facsimile copies of shipping manifests for Common-Use Tooling to Boeing. Such manifests shall identify Common-Use Tooling codes and part numbers, unit numbers of Common-Use Tooling and the airplane effectivity of the Production Article contained in such Common-Use Tooling.
9.2
General Reports / Reviews
When requested by Boeing, Spirit shall update and submit, as a minimum, monthly status reports or data reasonably requested by Boeing using a method mutually agreed upon by Boeing and Spirit. Boeing has the right to request more frequent reporting on Spirit to achieve Program objectives, and any such request shall be considered in good faith by Spirit. A general listing of data submittals is provided in SBP Attachment 8 “Spirit Data Submittals,” which is not intended to be comprehensive.
When requested by Boeing, Spirit shall provide to Boeing a Product Definition and manufacturing milestone chart identifying the major engineering, purchasing, planning, tooling and manufacturing operations for the applicable Product(s).
Program reviews will be held at Spirit’s facility or Boeing’s facilities as reasonably requested by Boeing or Spirit. The topics of these reviews may include:
A.
Product Definition maturity, schedule and performance updates;
B.
Delivery schedule updates, written recovery schedules, schedule impact issues and corrective action;
C.
Technical/manufacturing progress since the previous report period, including significant accomplishments, breakthroughs, problems and solutions;
D.
Spirit’s current and future capacity assessments, including Identification of changes to key manpower or staffing levels;
E.
Identification of the critical events/activities and a discussion of potential risk factors;
F.
Progress on open action items, including closure dates;
G.
Boeing supplied components, purchased components and raw material status;
H.
Identification of quality issues and resolutions;
I.
Manufacturing and quality inspection progress of first article Products;

- 42 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


J.
Status on Tooling design and fabrication, as applicable, until completion;
K.
Inventory status of castings and forgings procured by Spirit (if applicable);
L.
Boeing’s requirements, changes, forecasts and other issues pertinent to Spirit’s performance under this SBP; and
M.
Sales and marketing status.
Reviews will allow formal presentations by both Parties and discussion of status reports.
Formal management reviews shall be held periodically by Boeing and Spirit at such times and locations as shall be mutually agreed.
9.3
Problem Reports
In the event of any anticipated or actual delay, including but not limited to delays attributed to labor disputes, that could impact Spirit’s ability to deliver Product Definition or Products on time and otherwise in conformance with the terms of any Order, Spirit shall provide a detailed report, notifying Boeing of problems/issues. The report shall contain a detailed description of the problem, impact on the Program or affected tasks, and corrective/remedial action, with a recovery schedule. Spirit also shall require each of its subcontractors supporting the Order to provide such notification to Spirit concerning any such problems/issues of any subcontracted good or service to Spirit. Submittal of a report in no way relieves Spirit of any obligations under the Order nor does it constitute a waiver of any rights and remedies Boeing may have with respect to any default.
Problem reports shall be promptly submitted to the Boeing Procurement Representative upon a problem becoming known to Spirit.
9.4
Notice of Delay - Premium Effort
Where Spirit has notified Boeing of any anticipated or actual delay pursuant to SBP Section 3.4.2.1 “General Delivery Provisions”, Boeing may, at its sole discretion, after consultation with Spirit, (except in the case of any Excusable Delay in which event the provisions of GTA Section 10.0 “Delays” shall apply as applicable), direct Spirit to use additional effort, including premium effort, and shall ship via air or other expedited routing in order to avoid or minimize delay to the maximum extent possible.
9.5
Utilization of Small Business Concerns
Spirit agrees to actively seek out and provide the maximum practicable opportunities for small businesses, small disadvantaged businesses, women-owned small businesses, minority business enterprises, historically black colleges and universities and minority institutions, historically underutilized business zone small business concerns and U.S. veteran and service-disabled

- 43 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


veteran owned small business concerns to participate in the subcontracts Spirit awards to the fullest extent consistent with the efficient performance of this contract.
9.6
Diversity Reporting Format
Spirit shall report to Boeing on a quarterly basis, starting from the date of this SBP award, all payments to small businesses, small disadvantaged business/minority business enterprises, women-owned small business and historically black colleges and universities and minority institutions in dollars and as a percentage of the contract price paid to Spirit to date, proving the information shown on the Second Tier Report located in SBP Attachment 11 “Second Tier Report”.
10.0
BOEING ASSISTANCE AND INTERFACE COORDINATION
10.1
Boeing Technical / Manufacturing Assistance Regarding Spirit’s Nonperformance
If Boeing determines Spirit’s and/or Spirit’s subcontractors nonperformance requires Boeing technical or manufacturing assistance in order to resolve such nonperformance, Boeing shall determine, subsequent to consultation with Spirit, the extent of such Boeing assistance. Boeing and Spirit shall reach mutual agreement on the amount of compensation Spirit shall provide to Boeing. Spirit shall only be obligated to pay for such assistance as the Parties agree. Such reimbursement may be offset against any pending Spirit invoice relating to any Boeing commercial model or program with the exclusion of the Advance Payments to be made the [*****], in totality of [*****], as noted in this SBP, Section 5.5, Advance Payments, which are not subject to offset. The Parties also acknowledge and agree that Boeing shall not be entitled to set off any such obligation, sum or amount against any Advance Payments or invoices for payments pursuant to Section 5.2.1, in the totality of $277 million, of the Special Business Provisions between Boeing and Spirit (MS-65530-0016). The reference to SBP MS-65530-0016 is for reference purposes only and does not incorporate the terms and conditions of such SBP. Boeing’s rights under this clause are in addition to those available to Boeing for Spirit’s nonperformance issues, including those where a demand for an Assurance of Performance may be made under GTA Section 13.0 “Assurance of Performance”.

- 44 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


10.2
[Reserved]
10.3
Interface Coordination
When an interface problem involving any Product becomes known by Spirit, Spirit shall notify Boeing of the nature of the problem and shall provide all reasonably required information.
Upon receipt of such notice and information, Boeing with the appropriate cooperation from Spirit shall promptly conduct an analysis of the interface problem to determine the cause and any corrective action required. At the conclusion of such analysis, Boeing shall promptly advise Spirit, in writing, identifying the cause and stating any action required to correct the interface problem.
If any Products of Spirit’s design or manufacture are involved, Spirit shall promptly (i) repair or replace any affected Products, (ii) cooperate in the correction or resolution of the problem and (iii) make such changes in such Products as are required to either correct, or to assist in correcting, the problem. The Parties shall cooperate in allocating any cost impacts appropriately to the responsible Party or Parties.
11.0
REPAIR AUTHORIZATION
11.1
Boeing-Performed Work
In the event that any Product is rejected by Boeing pursuant to SBP Section 8.3 “Boeing’s Inspection and Rejection”, Spirit hereby grants to Boeing the right, without prior authorization from Spirit, to repair or rework such Product, or to have such Product repaired or reworked by a third party. Such repair or rework by Boeing or such third party shall be deemed not to be inconsistent with Spirit’s ownership of such Product. Boeing shall notify Spirit before, if practicable, and otherwise as soon as practicable after the commencement of any repair or rework.
Costs and expenses of Boeing relating to such repair or rework, as determined in accordance with SBP Attachment 16 “Pricing Methodologies”, shall be paid by Spirit. These provisions shall also apply to incomplete work shipped to Boeing for completion (traveled work), except to the extent such incomplete work was due to any delay caused by Boeing.
11.2
Reimbursement for Repairs
Pursuant to this SBP Section 11.2, for those costs and expenses for the completion, repair or rework of Products incurred by Boeing after [*****], and not reimbursed as set forth in paragraph 2 of this SBP Section 11.2, Boeing will

- 45 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


either: (1) advise Spirit quarterly, within [*****] days after the end of each calendar quarter, of the total costs and expenses incurred for repair of Products by Line Unit for those Aircraft delivered by Boeing to its Customers in the prior calendar quarter; or (2)  upon implementation by Boeing of automated systems, which shall be coordinated with Spirit prior to implementation, notify Spirit of costs and expenses incurred for each individual repair. Spirit shall notify Boeing within [*****] days after receipt of such advice of any errors detected by Spirit in, or any other disagreements by Spirit with, Boeing’s estimate of costs and expenses. Boeing and Spirit shall promptly resolve such errors in a fair and equitable manner. Furthermore, Boeing agrees to provide any supplemental information related to the statement of work for the repair of Products as reasonably requested by Spirit and Spirit shall have the right to verify such information at Boeing’s facilities. Spirit’s failure to so notify Boeing shall be deemed to be an acceptance of Boeing’s determination of such costs and expenses. Boeing shall be entitled to either (a) set off the amount of such costs and expenses against any amounts payable to Spirit hereunder or (b) invoice Spirit for the amount of such costs and expenses, and Spirit shall pay the invoiced amount within [*****] days after receipt of a correct (proper) invoice.
For those costs and expenses for the completion, repair or rework of Products incurred by Boeing prior to [*****], and for work planned in Boeing’s manufacturing systems prior to [********], the total reimbursement of all Boeing costs and expenses prior to [*****] is [*****] dollars ($[*****]). The full recovery of such Boeing costs and expenses shall be a set off of [*****] dollars ($[*****]) per Shipset for Shipsets [*****]. This recovery schedule is included in SBP Attachment 1. This recovery schedule is exclusive to those costs and expenses for the completion, repair or rework of Products incurred by Boeing prior to [*****], and for work planned in Boeing’s manufacturing systems prior to [*****].
12.0
OTHER REQUIREMENTS
12.1
Packing and Shipping
12.1.1
General
Spirit shall pack the Products to prevent damage and deterioration taking into account method of shipment, location of shipment and destination of receipt, as well as time associated with shipment. Spirit shall comply with carrier tariffs. Unless the Order specifies otherwise, the price for Products sold place of destination shall include shipping charges. Unless otherwise specified in the Order, Products sold place of origin or shipment shall be forwarded collect. For Products shipped domestically, Spirit shall make no declaration concerning the value of the Products shipped, except on the Products where the tariff rating is dependent upon released or declared value. In such event, Spirit shall release or declare such value at the maximum value within the lowest rating. Boeing may charge Spirit for damage to or deterioration of any Products resulting from

- 46 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


improper packing or packaging. Spirit shall comply with any special instructions stated in the applicable Order. Upon Boeing’s request, Spirit will identify packaging charges showing material and labor costs for container fabrication.
12.1.2
Product Packaging
Except as expressly provided otherwise herein, all Products shall be prepared (cleaned, preserved, etc.) and packed for shipment in a manner in accordance with Boeing Document D37520-1, -1A, & -1B, “Supplier’s Part Protection Guide,” to (i) comply with carrier regulations and (ii) prevent damage or deterioration during handling, shipment and outdoor storage at destination for up to ninety (90) days. Packaging design shall be suitable for, and consistent with, the requirements and limitations of the transportation mode specified by Boeing. Boeing specifically reserves the right, at Boeing’s discretion, to direct air shipment from the delivery point specified in SBP Section 3.4.2.2 “Delivery Point” and Spirit shall maintain a capability (where reasonably practicable) for meeting this requirement. Spirit shall submit two (2) copies of its proposed preparation procedure and packaging design to Boeing for approval prior to the first Product delivery, and shall prepare and package each Product in accordance with the procedure and design approved by Boeing (which approval shall not be unreasonably withheld). Notwithstanding any Boeing approval of Spirit’s packaging design, Spirit shall be solely liable for the manufacture of such packaging. Any package (or unitized group of packages) weighing in excess of forty (40) pounds or otherwise not suited to manual handling shall be provided with skids to permit use of mechanical handling equipment.
12.1.3
Packaging - Spares
The Spare Part Prices shown in the SPPC include all packaging costs. Spirit shall package Spares in accordance with the applicable requirements set forth in the Order. In the case of Products to be shipped directly to Customers, A.T.A. Specification 300 “Specification for Packaging of Airline Supplies” shall apply unless otherwise directed by Boeing. Upon Boeing’s request, Spirit will provide discrete packaging costs.
12.1.4
Shipping Documentation
Shipments by Spirit or its subcontractors or suppliers must include packing sheets. Each packing sheet must include at a minimum the following: a) Spirit’s name, address, phone number; and supplier code number; b) Order and item number; c) ship date for the Products; d) total quantity shipped and quantity in each container, if applicable; e) legible packing slip number; f) nomenclature; g) unit of measure; h) ”ship to” information if other than Boeing; i) warranty data and certification, as applicable; j) rejection tag, if applicable; k) Spirit’s certification that Products comply with Order requirements; and, l) identification of optional material used, if applicable. A shipment containing hazardous and non-

- 47 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


hazardous materials must have separate packing sheets for the hazardous and non-hazardous materials. Items shipped on the same day will be consolidated on one bill of lading or airbill, unless Boeing’s Procurement Representative authorizes otherwise. The shipping documents will describe the material according to the applicable classification or tariff rating. The total number of shipping containers will be referenced on all shipping documents. Originals of all government bills of lading will be surrendered to the origin carrier at the time of shipment. In addition, Shipments shall contain any test reports required by the specifications applicable to the Products being shipped.
For Non-United States shipments, prior to exportation of any Product, one (1) copy of the required customs invoice shall be enclosed in a waterproof envelope or wrapper, clearly marked “Customs Invoice,” securely attached to the outside of the No. 1 shipping container of each shipment. Where appropriate, Spirit will provide the necessary information for clearance through customs. Customs invoice requirements are set forth in SBP Attachment 17 “Commercial Invoice Requirements (Customs Invoice) For Import into the United States.”
Additional copies of packing sheets, test reports shall be furnished to Boeing in accordance with Boeing’s written instructions.
12.1.5
Insurance
Spirit will not insure any shipment designated origin or place of shipment unless authorized by Boeing.
12.1.6
Shipping Container Labels
Spirit will label each shipping container with the Order number and the number that each container represents of the total number being shipped (e.g., Box 1 of 2, Box 2 of 2).
12.1.7
Carrier Selection
Boeing will select the carrier and mode of transportation for all shipments where freight costs will be charged to Boeing.
12.1.8
Invoices
Spirit will include copies of documentation supporting prepaid freight charges (e.g., carrier invoices or shipping log/manifest), if any, with its invoices.
12.1.9
Noncompliance
If Spirit is unable to comply with the shipping instructions in an Order, Spirit will contact Boeing’s Traffic Management Department or Boeing’s Procurement Representative.

- 48 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


12.1.10
Barcode Marking and Shipping
For Orders from Boeing locations that have approved Spirit to utilize barcode labeling for shipping and packaging, Spirit shall mark and package such shipments in accordance with the applicable barcode requirements for that location. Where approved and pursuant to applicable specifications, Spirit will utilize barcoding technology for part marking Products.
Product packaging shall be in accordance with Boeing Document D6-81628, “Shipping Label, Barcoded Preparation and Placement”, which is incorporated herein by reference.
12.1.11
Consolidated Shipments and Markings
All shipments of Products (excluding POA, AOG and other Spare Parts), which are forwarded on one day via one routing, shall be consolidated in accordance with Boeing’s instructions. POA, AOG and other Spare Parts shall be packaged separately. Each container shall be consecutively numbered and marked with the relevant Order number and the part number of each enclosed Product. Container and Order numbers shall be indicated on the appropriate bill of lading. Each unit container (individual part box or other innermost package), each intermediate container and each shipping container (shipping box, crate or other outermost package) in each shipment shall be marked in English in accordance with Boeing’s written instructions. For shipments originating outside the United States, Spirit shall identify any Boeing-supplied items and any items purchased from the United States on the packing sheets enclosed in, or attached to, any container.
12.1.12
Transportation Devices
All fixtures necessary for the handling, transportation and loading of Products, including rotable tools, are referred to herein as “Transportation Devices.” Each Party shall be responsible for the cost of all common-use Transportation Devices necessary for the handling, transportation and loading of Products while such fixtures are under the control of such Party in proportion to its use of such Transportation Devices. Boeing and Spirit shall collaborate in the planning, design, manufacture or procurement and test of any such common-use Transportation Devices. For the avoidance of doubt, Transportation Devices required solely for transportation in, or solely for transportation to or from and use in, the LCF shall be Boeing’s responsibility, and all other Transportation Devices (other than common-use Transportation Devices, for which the Parties will share responsibility as provided above) shall be Spirit’s responsibility.

- 49 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


12.1.13
Disposable Shipping Fixtures
Spirit shall design, manufacture or procure, and test disposable shipping fixtures, as reasonably requested by Boeing, to support Orders. The requirements for such items will be defined and identified by Boeing. The design of any disposable shipping fixture shall be approved by Boeing and conform to the standards and requirements of the applicable Documents referred to in SBP Section 2.4 “Supporting Documentation”.
12.1.14
Price Inclusive
Unless otherwise specified in this SBP (including the Attachments hereto and any documents incorporated by reference herein), the Prices for Products stated in this SBP include the cost with respect to such Products of preparation, packaging, crating, shipping fixtures and containers, container marking, furnishing of packing sheets and test reports and delivery, in accordance with this SBP, in each case (where applicable) to their designated delivery points or as otherwise required by this SBP, the GTA or any Order.
12.2
Cycle Time Requirements
Boeing and Spirit acknowledge that Boeing is committed to reduce Cycle Time. Spirit agrees to support Boeing in its commitment and to take all commercially reasonable actions to support Cycle Time requirements as specified by Boeing to support the Program Airplane and any Derivative. Upon Boeing’s request Spirit shall submit to Boeing a written plan describing how Spirit will comply with the Cycle Time schedules, as specified by Boeing.
12.3
Compatibility with Engineering, Business and Production Systems
Subject to the following paragraph, Spirit shall implement and maintain systems as required to ensure: (i) compatibility with Boeing systems; and (ii) Spirit’s performance under this SBP, including, but not limited to, business, manufacturing and engineering systems as defined in the RAA document and Commonality Matrix set forth in SBP Attachment 4 “Work Statement Documents”.
Boeing shall make all applicable Boeing-directed application systems provided for in the Commonality Matrix as defined in SBP Attachment 4 available to Spirit in a manner that will not have an adverse effect on Spirit’s timely delivery of Products or Spirit’s business case. In the event of an adverse effect, Boeing and Spirit will work together to mitigate the cost and schedule impact.

- 50 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


12.4
Electronic Access, Communications and Data Exchange Via Telecommunications
Any electronic communications and data exchange via telecommunications between the Parties shall be pursuant to an electronic access agreement between the Parties; provided, that any amendments to any Order, change authorizations and any other matter requiring written authorization shall be communicated in writing and not solely by electronic communication.
Any electronic access to Boeing by Spirit or to Spirit by Boeing shall be pursuant to an electronic access agreement or other agreements as the Parties shall determine.
12.5
Program Manager
Spirit will assign a full-time program manager whose exclusive responsibility will be to oversee and manage Spirit’s performance hereunder. The assignment of such program manager will be subject to Spirit’s prior notification to Boeing.
12.6
Source Selection
During the term of this SBP, Spirit agrees to work with Boeing to identify and implement opportunities to introduce into its sub-contract base substantial changes in manufacturing procedures, manufacturing technology, process specifications, and alternate sourcing to lower cost subcontractors. Spirit and Boeing shall periodically review the implementation of these opportunities and evaluate the sharing of cost savings in accordance with SBP Section 7.5 “Total Cost Management”. Notwithstanding the foregoing, Spirit shall retain the right to select all subcontractors in its sole discretion, except as otherwise provided in the following paragraph.
In addition to the provisions of GTA Section 20.2 “Subcontracting”, Boeing may at any time during the performance of this SBP review Spirit’s make-or-buy plan and source selection for Products and Tooling considered critical by Boeing because of process requirements or manufacturing complexity; provided, that any subcontract by Spirit for the procurement of goods or services in excess of $[*****] U.S. Dollars from any source shall be subject to Boeing’s prior written approval. Boeing’s approval shall not be unreasonably withheld or delayed. Spirit shall in a timely manner submit to Boeing its proposed make-or-buy plan and proposed source selection before awarding any subcontract or purchase order with respect to any Products or Tooling. Boeing shall have the right to determine whether the proposed subcontractors are technically qualified to manufacture Products and Tooling in accordance with Boeing processes; provided, however, that Spirit may accompany Boeing when Boeing is investigating the qualifications of proposed subcontractors, and Boeing shall give Spirit reasonable notice of any such investigation. Any action taken by Boeing in

- 51 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


connection with the approval, disapproval or qualification of subcontractors shall not be construed as relieving Spirit of any of its obligations under this SBP.
12.7
International Cooperation
12.7.1
Market Access and Sales Support
With respect to work covered by this SBP, and if requested by Boeing, Spirit will make commercially reasonable efforts to procure from subcontractors, in countries where Boeing sells products, goods and services having a value up to [*****] percent ([*****]%) of Spirit’s Work Package. Spirit may satisfy its obligations hereunder by any appropriate manner. Boeing will attempt to minimize such obligations hereunder and under SBP Section 12.7.2 “Offset Assistance” to the extent practicable and will consider in good faith Spirit’s capabilities and desires. Boeing and Spirit acknowledge that Spirit shall not be required to satisfy its obligations hereunder (or under SBP Section 12.7.2 below) if and to the extent that doing so would violate any governmental statute or regulation. Issues of potential conflict with governmental policy arising hereunder or under SBP Section 12.7.2 below will be discussed and resolved in good faith by Boeing and Spirit after taking into account any interpretation of governmental policy made in good faith and with a reasonable basis. If Spirit is requested by Boeing to subcontract any part of its Work Package and Spirit anticipates a cost increase as a result of such request, Spirit shall promptly notify Boeing in writing. Boeing shall respond within [*****] on whether Spirit is to proceed. In such cases should Boeing direct Spirit to proceed, an equitable adjustment shall be mutually agreed to by the Parties. Spirit shall provide to Boeing with an updated copy of SBP Attachment 12 “Non-U.S. Procurement Report Form” for the six-month periods ending June 30 and December 31 of each year or as otherwise agreed by the Parties.
12.7.2
Offset Assistance
Spirit shall use its commercially reasonable efforts to cooperate with Boeing in the fulfillment of any non-United States offset program obligation that Boeing may have accepted as a condition of the sale of a Boeing product. Spirit’s obligations hereunder and under SBP Section 12.7.1 “Market Access and Sales Support” above shall not exceed, in the aggregate, [*****] percent ([*****]%) in value of Spirit’s Work Package. In the event that Spirit is either requested by Boeing, or on its own solicits bids and/or proposals for, or procures or offers to procure any goods or services relating to, the work covered by this SBP from any source outside of the United States, Boeing shall be entitled, to the exclusion of all others, to all industrial benefits, countertrade, and other “offset” credits which may result from such solicitations, procurements or offers to procure. Spirit shall take any actions that may be reasonably requested by Boeing and required on its part to assist Boeing in receiving such credits. If Spirit is requested by Boeing to subcontract any part of its Product(s) to a country in which Boeing has an offset

- 52 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


obligation and Spirit anticipates a cost increase as a result of such request, Spirit shall promptly notify Boeing in writing. Boeing shall respond within [*****] days on whether Spirit is to proceed. In such cases should Boeing direct Spirit to proceed, an equitable adjustment shall be mutually agreed to by the Parties. The execution of any offset shall be subject to all governmental requirements. Spirit shall document on SBP Attachment 12 “Non-U.S. Procurement Report Form” all offers to contract and executed contracts with such subcontractors including the dollars contracted. Spirit shall provide to Boeing with an updated copy of SBP Attachment 12 for the six-month periods ending June 30 and December 31 of each year. The reports shall be submitted on the next 1st of August and the 1st of February respectively or as otherwise agreed by the Parties.
12.8
Supply Chain Integration
12.8.1
Boeing Furnished Material; Bonded Stores Requirements
Material, including but not limited to raw material, standards, detail components, systems components and major assemblies, furnished to Spirit by Boeing (“Boeing Furnished Material”) shall be administered in accordance with and subject to the provisions of SBP Attachment 20 “Bonded Stores Requirements”.
Spirit and Boeing shall cooperate in the development of processes for the efficient management of Boeing Furnished Material. Spirit shall provide notice to Boeing and to the sources of Boeing Furnished Material of the required on-dock dates for all such material. Boeing and Spirit shall work together to establish reasonable lead times to permit Spirit to provide such sources with sufficient time to provide the material. Spirit shall notify Boeing, as necessary, in the event of schedule conflicts between Spirit and Boeing sources of Boeing Furnished Material. All Boeing Furnished Material shall be provided to Spirit FOB [Spirit designated facility]
12.8.2
Procurement from Boeing or Its Service Providers
Boeing may at any time identify products or services, to be incorporated into the Products that Spirit may procure from Boeing (or its designated service providers who will act on behalf of Boeing).
12.8.3
Third Party Pricing
Boeing may at any time identify products or services, to be incorporated into the Products, for which Boeing has established a contract that allows Spirit to purchase directly from Boeing’s subcontractor under the terms of Boeing’s subcontract (“Third Party Price Contract”). Pricing for products under a Third Party Price Contract is only available for Products to be delivered under this SBP. Notwithstanding the foregoing, Spirit is free to negotiate and enter into contracts with any such subcontractor or any other Person.

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


12.8.4
Agency
From time to time, Boeing may require Spirit to act as Boeing’s agent with respect to certain contracts Boeing has with other suppliers. Details of this agency agreement shall be defined and documented as necessary and mutually agreed.
If required by the agency agreement, Boeing shall reimburse Spirit for the Boeing subcontracted price of such products. Boeing shall make no additional payment to Spirit for acting as Boeing’s agent.
12.8.5
Acceptance of Assignment, Novation, or Agency for Products within Spirit’s Work Statement
Boeing may at any time identify raw materials and finished parts, used in the manufacture of the Products, for which Boeing has subcontracted with other suppliers. Boeing may at any time request Spirit’s consent to assign or novate to Spirit all or part of Boeing’s subcontracts with such suppliers or designate Spirit as Boeing’s agent. Spirit may, in its sole discretion, accept any such assignment, novation or agency when requested by Boeing on such terms as the Parties may agree.
12.9
Responsibility for Property
While in Spirit’s or its subcontractors’ or suppliers’ possession, custody or control, Spirit shall clearly mark, maintain an inventory of, and keep segregated or identifiable, all of Boeing's tangible property and all tangible property in which Boeing has acquired an interest. Spirit assumes all risk of loss, destruction or damage of such property while in Spirit’s or its subcontractors’ or suppliers’ possession, custody or control. Spirit shall not use such property other than in performance of this SBP or any Order without prior written consent from Boeing. As directed by Boeing, upon completion, termination or cancellation of this SBP or any Order, Spirit shall deliver, as and to the extent provided elsewhere in this SBP and the GTA, as the case may be, such property, to the extent not incorporated in delivered end products, to Boeing in good condition subject to ordinary wear and tear and normal manufacturing losses. Nothing in this SBP Section 12.9 limits Spirit's use, in its direct contracts with the U.S. Government, of property in which the U.S. Government has an interest.
12.10
Surplus Products
12.10.1
Return of Surplus Products
Boeing shall be entitled to return to Spirit, at Boeing’s expense, any Product that has been delivered to Boeing in accordance with this SBP and that is surplus to Boeing’s then current requirements (including, without limitation, any Products

- 54 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


returned to Boeing by any Customer); provided that (i) any such Product may only be returned to Spirit if agreed by Spirit, and such agreement shall not be unreasonably withheld, and (ii) such Product is in a current production configuration or can be, in Boeing’s determination, economically changed to such a configuration. On receipt of any such Product, Spirit shall credit Boeing’s account with [*****]. If instructed by Boeing, Spirit shall rework any such returned Product to put such Product in a current configuration. Such rework shall be considered Miscellaneous Work and shall be priced in accordance with SBP Attachment 16 “Pricing Methodologies” or as may be otherwise mutually agreed between the Parties.
12.10.2
Substitution of Surplus Products
In its sole discretion, Boeing may, upon providing written notice to Spirit at least [*****] prior to the scheduled delivery date for any Production Article, elect to use any Product in inventory or any Product returned to Boeing by any Customer in the place of such Production Article. Boeing’s notice shall include the cumulative line number of the Program Airplane or Derivative on which Boeing intends to incorporate such Product. Spirit shall not deliver such Production Article to Boeing and shall not invoice Boeing for the Price of such undelivered Production Article.

12.11
Compliance and Cooperation Regarding Orders, Permits and Approvals

GTA Section 15.1 “Compliance with Laws” is hereby supplemented with the additional terms and conditions contained in SBP Attachment 22 that shall apply in the event that any operation of Spirit used in the performance of this SBP, the GTA or any Order is or will be located on, or within 20 miles of, any property owned, operated, leased or controlled by Boeing:

13.0
ENVIRONMENTAL MANAGEMENT SYSTEMS AND HEALTH AND SAFETY MANAGEMENT SYSTEMS
Spirit shall implement an environmental management system (“EMS”) and health and safety management system (“HSMS”) with respect to its performance under this SBP. In no event shall this SBP Section 13.0 be construed to grant Boeing the power to direct or cause the direction of management or the policies of Spirit.
14.0
WARRANTY
The following provisions, including documents, if any, set forth below are incorporated herein and made a part hereof:

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Except as provided below, Spirit shall support Boeing’s administration of the warranty as provided in document D6-83069-MidWestern Rev. A, “Product Support and Assurance Document”.
i.
The warranty period will expire upon the earlier of [*****] after delivery of the Aircraft to a Customer or [*****] after delivery of the Product to Boeing. Service life policy for primary structure will be [*****] pro-rata reimbursement after delivery of aircraft.
ii.
The warranty period will expire [*****] for flight test aircraft after delivery of the Product to Boeing
Upon the incorporation of the above provisions into the PSAD, this paragraph shall be amended to remove the applicable language and to insert a reference to the PSAD.
15.0
INTELLECTUAL PROPERTY
15.1
Certain Definitions
For purposes of SBP Section 15.0 “Intellectual Property” and other applicable provisions of this SBP and the GTA, the following definitions shall apply:

A.
“Proprietary Information” means all proprietary, confidential and/or trade secret information relating to the subject matter of the Aircraft and disclosed by one Party to the other, or developed, during the SBP Activity.
B.
“Product Proprietary Information” means all Proprietary Information related to the configuration or certification of the Aircraft that is developed or reduced to writing or electronic format (including, but not limited to, all technical data, calculations and manufacturing data sets that disclose explicit Aircraft configuration (expressly excluded from this definition are technical data, calculations, and manufacturing data sets where explicit Aircraft configuration data has been removed or otherwise modified so that such information cannot be used to replicate or disclose explicit Aircraft configuration), engineering design data including assembly requirement models, engineering intent objects, detail part model based definition, digital mock up solids, and bill of material data, analytical data and Boeing developed analytical tools, common architecture documentation, developmental test data, configuration memos and documentation, and coordination memos) for preliminary and final designs, analyses in support thereof and trade studies for configuration and certification.
C.
“Invention” means subject matter that is or becomes covered by an issued patent anywhere in the world or by any application pending in any patent office anywhere in the world. If and to the extent an

- 56 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Invention is embodied in an unpublished patent application, then it shall be treated as Proprietary Information for the purposes of this SBP.
D.
“Background Proprietary Information” means any Proprietary Information belonging to a Party which was developed prior to or outside of the SBP Activity.
E.
“Background Invention(s)” means any Invention(s) conceived by a Party prior to or outside of the SBP Activity.
F.
“Joint SBP Activity Proprietary Information” means any Proprietary Information jointly developed by the Parties, or developed through the use or application of funds provided jointly by the Parties, during the SBP Activity.
G.
“Joint SBP Activity Invention(s)” means any Invention(s) conceived jointly by the Parties, or conceived through the use or application of funds provided jointly by the Parties, during the SBP Activity.
H.
“Spirit SBP Activity Proprietary Information” means any Proprietary Information solely developed by Spirit, or developed through the use or application of funds provided solely by Spirit, during the SBP Activity.
I.
“Spirit SBP Activity Invention(s)” means any Invention(s) solely conceived by Spirit, or conceived through the use or application of funds provided solely by Spirit, during the SBP Activity.
J.
“Boeing SBP Activity Proprietary Information” means any Proprietary Information developed during the SBP Activity, other than Joint SBP Activity Proprietary Information and Spirit SBP Activity Proprietary Information.
K.
“Boeing SBP Activity Invention(s)” means any Invention(s) conceived during the SBP Activity, other than Joint SBP Activity Inventions and Spirit SBP Activity Inventions.
L.
“SBP Activity” means all work conducted pursuant to this SBP, the GTA or any Order. Strictly for purposes of SBP Section 15.0 “Intellectual Property”, SBP Activity also includes “MOA Activity” as defined in 787 Program Memorandum Of Agreement dated , it being the intent of the Parties that the provisions of this Section 15.0 “Intellectual Property” shall retroactively apply to Proprietary Information and Inventions subject to such prior MOA’s.
M.
“Derivative Technology” means any Proprietary Information or Invention that is developed and brought to the point of practical application solely by either Party during or after the SBP Activity and is derived, in substantial part, (i) from any Background Proprietary Information of the other Party or any Proprietary Information solely developed by the other Party during the SBP Activity, or from any Joint SBP Activity Proprietary Information, and/or (ii) from any Background Invention(s) of the other Party or any Invention(s) solely conceived by the other Party during the SBP Activity, or from any Joint SBP Activity Invention(s).

- 57 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


15.2
Rights and Obligations
15.2.1
Product Proprietary Information
Notwithstanding any other provision in the GTA or SBP to the contrary, Product Proprietary Information shall be deemed to be Background Proprietary Information or Background Inventions of Boeing and be delivered to Boeing promptly upon request; provided, however, that all Background Proprietary Information and Background Inventions of Spirit, Joint SBP Activity Proprietary Information, Joint SBP Activity Inventions, Spirit SBP Activity Proprietary Information and Spirit SBP Activity Inventions that are contained in any Product Proprietary Information, or from which any portion of any Product Proprietary Information is derived, shall continue to be treated as Background Proprietary Information and Background Inventions of Spirit, Joint SBP Activity Proprietary Information, Joint SBP Activity Inventions, Spirit SBP Activity Proprietary Information or Spirit SBP Activity Inventions, respectively, and Spirit shall retain all of its right, title and interest in and to such Proprietary Information and Inventions under the GTA and this SBP, separate and apart from Product Proprietary Information.
15.2.2
Background Proprietary Information and Inventions
Each Party shall retain all rights in its own Background Proprietary Information and Background Inventions, which shall be subject to the following:
a)
Each Party shall not disclose the other Party’s Background Proprietary Information to any Third Party without the prior written consent of the other Party, which shall not be unreasonably withheld if such disclosure is in connection with the Program and otherwise may be withheld in the other Party’s sole and absolute discretion. Any disclosure by either Party to any Third Party of the other Party’s Background Proprietary Information also shall be subject to the previous execution by such Third Party of a written agreement (which shall be reasonably satisfactory to, and enforceable by, such other Party) to protect such Background Proprietary Information under terms no less restrictive than those set forth herein.
b)
Boeing agrees to grant and hereby grants Spirit a royalty free license to use Boeing Background Proprietary Information and/or Boeing Background Inventions for work under the Program.
c)
Spirit agrees to grant and hereby grants a royalty free license to Boeing and a royalty free license on reasonable terms and conditions to any Third Party to use Spirit Background Proprietary Information or Spirit Background Inventions for work under the Program, subject in each case to Spirit’s Government approval, if required.

- 58 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


15.2.3
Joint SBP Activity Proprietary Information and Inventions
All Joint SBP Activity Proprietary Information and Joint SBP Activity Inventions shall be jointly owned by the Parties and shall be subject to the following:
a)
Each Party may disclose any Joint SBP Activity Proprietary Information to any Third Party for work under the Program; provided that the Third Party shall have entered into a written agreement (which shall be reasonably satisfactory to, and enforceable by, each of Boeing and Spirit) to protect such Joint SBP Activity Proprietary Information under terms no less restrictive than those set forth herein. Any other disclosure by either Party to any Third Party shall require the prior written consent of the other Party, which shall not be unreasonably withheld.
b)
Each Party shall be free to use Joint SBP Activity Proprietary Information and Joint SBP Activity Inventions for work under (i) the Program, (ii) any other aerospace programs of Boeing (“Other Boeing Programs”). Any other use by either Party of Joint SBP Activity Proprietary Information or Joint SBP Activity Inventions shall require the prior written consent of the other Party, which may include a reasonable royalty, which license shall not be unreasonably withheld.
c)
Spirit and Boeing agree to grant any Third Party a royalty free license on reasonable terms and conditions to use Joint SBP Activity Proprietary Information and Joint SBP Activity Inventions for work under the Program.
d)
Any disclosure to or use by a Third Party of any Joint SBP Activity Proprietary Information or Joint SBP Activity Inventions for any Other Boeing Programs shall require a license from both Parties, which may include a reasonable royalty payable to Spirit when such use is for any Other Boeing Program and a reasonable royalty payable to Boeing when such use is for any Spirit Own Program. Approval by the Parties of any such license shall not be unreasonably withheld; provided that Spirit shall have been offered an opportunity, to the extent commercially feasible, to perform work (to which such Joint SBP Activity Proprietary Information or Joint SBP Activity Inventions is or are applicable) for such Other Boeing Program, but only if such Other Boeing Program is a commercial airplane program.
e)
The Parties shall decide on a case-by-case basis which Party will take the lead role in the preparation, filing, prosecution and maintenance (including with respect to fee payments) of Joint SBP Activity Inventions. The costs associated with the preparation, filing, prosecution and maintenance of Joint SBP Activity Inventions shall be shared equally by the Parties. If either Party declines to share the costs associated with the preparation, filing, prosecution or maintenance of any Joint SBP Activity Invention in any country, the declining Party shall retain the right to use such Joint SBP Activity Invention in such country, but shall thereafter have no right to grant or approve licenses of such Joint SBP Activity Invention to Third Parties in such country.

- 59 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


15.2.4
Spirit SBP Activity Proprietary Information and Inventions
Spirit SBP Activity Proprietary Information and Spirit SBP Activity Inventions shall be owned by Spirit and shall be subject to the following:
a)
Boeing may disclose any Spirit SBP Activity Proprietary Information and Spirit SBP Activity Inventions to any Third Party for work under the Program; provided that the Third Party shall have entered into a written agreement (which shall be reasonably satisfactory to, and enforceable by, Spirit) to protect such Spirit SBP Activity Proprietary Information and Spirit SBP Activity Inventions under terms no less restrictive than those set forth herein. Any other disclosure by Boeing to any Third Party shall require the prior written consent of Spirit, which shall not be unreasonably withheld if such disclosure is in connection with any Other Boeing Program and otherwise may be withheld at Spirit’s sole and absolute discretion.
b)
Spirit agrees to grant and hereby grants Boeing a royalty free license to use Spirit SBP Activity Proprietary Information and Spirit SBP Activity Inventions for work under the Program, subject to Spirit’s Government approval, if required.
c)
Any use by Boeing of any Spirit SBP Activity Proprietary Information or Spirit SBP Activity Inventions for any Other Boeing Program shall be subject to a license from Spirit (which shall be on reasonable terms and conditions and may include a reasonable royalty), and subject to Spirit’s Government approval, if required. Approval by Spirit of any such license shall not be unreasonably withheld; provided that Spirit shall have been offered an opportunity, to the extent commercially feasible, to perform work (to which such Spirit SBP Activity Proprietary Information or Spirit SBP Activity Inventions is or are applicable) for such Other Boeing Program, but only if such Other Boeing Program is a commercial airplane program.
d)
Any other use by Boeing of Spirit SBP Activity Proprietary Information and SBP Activity Inventions shall be subject to a license (which may include a reasonable royalty) from Spirit, which shall be at Spirit’s sole and absolute discretion.
e)
Spirit agrees to grant any Third Party a royalty free license on reasonable terms and conditions to use any Spirit SBP Activity Proprietary Information or Spirit SBP Activity Inventions for work under the Program, subject to Spirit’s Government approval, if required.
f)
Any use by a Third Party of any Spirit SBP Activity Proprietary Information or Spirit SBP Activity Inventions for any Other Boeing Program shall be subject to a license from Spirit (which shall be on reasonable terms and conditions and may include a reasonable royalty), and subject to Spirit’s Government approval, if required. Approval by Spirit of any such license shall not be unreasonably withheld; provided that Spirit shall have been offered an opportunity, to the extent commercially feasible to perform

- 60 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


work (to which such Spirit SBP Activity Proprietary Information or Spirit SBP Activity Inventions is or are applicable) for such Other Boeing Program, but only if such Other Boeing Program is a commercial airplane program.
15.2.5
Boeing SBP Activity Proprietary Information and Inventions
Boeing SBP Activity Proprietary Information and Boeing SBP Activity Inventions shall be owned by Boeing and shall be subject to the following:
a)
Spirit may disclose any Boeing SBP Activity Proprietary Information and Boeing SBP Activity Inventions to any Third Party for work under the Program; provided that the Third Party shall have entered into a written agreement (which shall be reasonably satisfactory to, and enforceable by, Boeing) to protect such Boeing SBP Activity Proprietary Information and Boeing SBP Activity Inventions under terms no less restrictive than those set forth herein. Any other disclosure by Spirit to any Third Party shall require the prior written consent of Boeing, which shall not be unreasonably withheld if such disclosure is in connection with any Other Boeing Program, and otherwise may be withheld at Boeing’s sole and absolute discretion.
b)
Boeing agrees to grant and hereby grants Spirit a royalty free license to use Boeing SBP Activity Proprietary Information and Boeing SBP Activity Inventions for work under the Program.
c)
Any other use by Spirit of Boeing SBP Activity Proprietary Information and Boeing SBP Activity Inventions shall be subject to a license (which may include a reasonable royalty) from Boeing, which shall be at Boeing’s sole and absolute discretion.
15.2.6
Third Party Proprietary Information and Inventions
In case either Party discloses any proprietary information or invention of a Third Party to the other Party during the SBP Activity, such proprietary information or invention shall be treated as though it were the Background Proprietary Information or Background Invention, as the case may be, of the disclosing Party and also shall be subject to all restrictions imposed by such Third Party of which the receiving Party has received written notice from the disclosing Party.
15.2.7
Derivative Technology
Notwithstanding any other provision of SBP Section 15.2 “Rights and Obligations”, all Derivative Technology (other than Product Proprietary Information) shall be considered to be Joint SBP Activity Proprietary Information or Joint SBP Activity Inventions, as the case may be.

- 61 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


15.3
Works of Authorship and Copyrights     
Except as otherwise provided in SBP Section 15.2.1 “Product Proprietary Information”, all works of authorship (including, but not limited to, documents, drawings, software, software documentation, software tools, photographs, video tapes, sound recordings and images) created by or for Spirit, either alone or with others, constituting Product Proprietary Information, together with all copyrights subsisting therein, will be the sole property of Boeing. To the extent permitted under United States copyright law, all such works will be works made for hire, with the copyrights therein vesting in Boeing. The copyrights in all other such works, including all of the exclusive rights therein, will be promptly transferred and formally assigned free of charge to Boeing.
15.4
Pre-Existing Inventions and Works of Authorship
Spirit grants to Boeing, and to Boeing’s subcontractors, suppliers, and customers in connection with Products or work being performed for Boeing, an irrevocable, nonexclusive, paid-up, worldwide license under any patents, copyrights, industrial designs and mask works (whether domestic or foreign) owned or controlled by Spirit at any time and existing prior to or during the term of this SBP, but only to the extent that such patents or copyrights would otherwise interfere with Boeing’s or Boeing’s subcontractors’, suppliers’, or customers’ use or enjoyment of Products or the work product, inventions, or works of authorship belonging to Boeing under this SBP.
15.5
Hardware, Materials, and Services General Terms Agreement (HMSGTA) and Supplemental License Agreement (SLA) Requirement
In recognition of the Boeing Proprietary Information and Materials being utilized for the Program, and in consideration of the business roles contemplated for the Parties, Boeing and Spirit agree that any sales directly to Boeing of Products manufactured by Spirit shall not require execution of a Supplemental License Agreement (SLA) between Boeing and Spirit. However, Spirit agrees that prior to any manufacture for, use by, offer of sale or sale to any entity other than Boeing of Products or any other product, equipment or service which utilizes Boeing Proprietary Information and Materials, Spirit shall be required to execute a Hardware Material Services General Terms Agreement (HMSGTA) and SLA between Boeing and Spirit.
16.0
BOEING’S RIGHTS IN SPIRIT’S PATENTS, COPYRIGHTS, TRADE SECRETS, AND TOOLING
Spirit hereby grants to Boeing an irrevocable, nonexclusive, paid-up worldwide license to practice and/or use, and license others to practice and/or use on Boeing’s behalf, all of Spirit’s patents, copyrights, trade secrets (including,

- 62 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


without limitation, designs, processes, drawings, technical data and tooling), industrial designs, semiconductor mask works, and tooling (collectively hereinafter referred to as “Licensed Property”) related to the development, production, maintenance or repair of Product(s). Boeing hereafter retains all of the aforementioned license rights in Licensed Property, but Boeing hereby covenants not to exercise such rights (or license others to do so), except in connection with the making, having made, using and selling of Products or their substitutes provided that such Product(s) cannot, in Boeing’s sole determination, be reasonably obtained in the required time frame at a reasonable price from commercially available sources (including Boeing) without the use of Spirit’s Licensed Property and provided that one or more of the following situations occur:

A.
An Event of Default has occurred and Boeing has elected to exercise any of its remedies as provided in GTA Section 8.0 “Events of Default and Remedies”;
B.
In Boeing’s judgment, exercised in good faith, it becomes necessary, in order for Spirit to comply with the terms of this SBP or any Order, for Boeing to use Proprietary Information and Materials of Spirit solely to provide support to Spirit (in the form of design, manufacturing, or on-site personnel assistance) substantially in excess of that which Boeing normally provides to its suppliers.

As a part of the license granted under this SBP Section 16.0, Spirit shall, at the written request of Boeing and at no additional cost to Boeing except as otherwise provided in GTA Section 8.2.F “Tooling and Other Materials”, promptly deliver to Boeing any and all Licensed Property considered by Boeing in good faith to be necessary to satisfy Boeing’s requirements for Products and their substitutes.
17.0
PROPRIETARY INFORMATION AND MATERIALS
Except as otherwise provided in SBP Section 15.0 “Intellectual Property” (i) Boeing and Spirit shall each keep confidential and protect from disclosure all (a) Proprietary Information, (b) tangible items containing, conveying or embodying Proprietary Information and (c) Tooling obtained from and/or belonging to the other Party in connection with this SBP or any Order (collectively referred to as “Proprietary Information and Materials”); and (ii) Boeing and Spirit shall each use Proprietary Information and Materials of the other Party only in the performance of and for the purpose of this SBP and/or any Order; provided, however, that despite any other obligations or restrictions imposed by this SBP Section 17.0, and SBP Section 15.0, Boeing shall have the right to use, disclose and copy Spirit’s Proprietary Information and Materials for the purposes of testing, certification, use, sale, or support of any Products delivered under this SBP, or any Aircraft including such Products, and any such disclosure by Boeing shall, whenever appropriate, include a restrictive legend suitable to the particular

- 63 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


circumstances. Except as provided in SBP Section 15.2.7 “Derivative Technology” with respect to Derivative Technology, the restrictions on disclosure or use of Proprietary Information and Materials by either Party shall apply to all materials derived by such Party or others from the other Party’s Proprietary Information and Materials. Spirit shall not, without the prior written authorization of Boeing, sell or otherwise dispose of (as scrap or otherwise) any parts or other materials containing, conveying, embodying, or made under this SBP in accordance with or by reference to any Proprietary Information and Materials of Boeing. Prior to disposing of such parts or materials as scrap, Spirit shall render them unusable. Boeing shall have the right to reasonably inspect Spirit’s compliance with this SBP Section 17.0. The provisions of this SBP Section 17.0 are effective in lieu of, and will apply notwithstanding the absence of, any restrictive legends or notices applied to Proprietary Information and Materials; and the provisions of this SBP Section 17.0 shall survive the performance, completion, termination or cancellation of this SBP or any Order.
In addition, despite any other obligations or restrictions imposed by this SBP Section 17.0 and SBP Section 15.0, Spirit may disclose Proprietary Information and Materials of Boeing to its subcontractors or suppliers as required to support Spirit’s work under this SBP provided that each such subcontractor or supplier first assumes, by written agreement, the same or equivalent obligations imposed on Spirit by SBP Section 15.0 and this SBP Section 17.0, and Spirit shall be liable to Boeing for any breach of such obligation by subcontractor or supplier.
Subject to SBP Section 15.0 and GTA Sections 8.2.F “Tooling and Other Materials” and 9.3 “Transfer of Certain Property”, upon the termination or cancellation of this SBP, each Party shall return all of the other Party’s Proprietary Information and Materials, except that each Party may retain the other Party’s Proprietary Information and Materials for so long as necessary to support Product or Aircraft including Product.
The requirements of this SBP Section 17.0 shall not restrict Spirit’s or Boeing’s use or disclosure of Independently Available Materials. For the purpose of this Article the following definitions shall apply, (i) “Independently Available Materials” means items that contain, convey, or embody Independently Available Information, and that Spirit or Boeing knows or reasonably should know are not Proprietary Information or Materials of the other, and (ii). “Independently Available Information” means information that: (a) Spirit or Boeing lawfully obtains from a third party who has the right to disclose such information to Spirit or Boeing without restriction; (b) Spirit or Boeing independently develops without reference to, or incorporation of Proprietary Information or Materials of the other, or (c) that Spirit or Boeing obtains from publicly accessible sources; except, in each case, for information that Spirit or Boeing knows or reasonably should know are derived from Proprietary Information and Materials of the other.

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


For the avoidance of doubt, Spirit’s obligations with respect to Boeing Proprietary Information and Materials shall not be reduced even if such Boeing Proprietary Information and Materials contain Independently Available Information.
18.0
SOFTWARE PROPRIETARY INFORMATION RIGHTS
In the event Product includes loadable software purchased or licensed by Spirit, Spirit hereby grants to Boeing a perpetual, nonexclusive, paid-up, worldwide license to reproduce, distribute copies of, perform publicly, display publicly, and make Spirit intended derivative works from software included in or provided with or for Products (Software) and related information and materials (Software Documentation) as reasonably required by Boeing in connection with (1) the testing, certification, use, sale, or support of a Product, or the manufacture, testing, certification, use, sale, or support of any aircraft including and/or utilizing a Product, or (2) the design or acquisition of hardware or software intended to interface with Software. The license granted to Boeing under this SBP Section 18.0, also includes the right to grant sublicenses to Customers as reasonably required in connection with Customers’ operation, maintenance, overhaul, and modification of any aircraft including and/or utilizing Software. All copies and Spirit intended derivative works made pursuant to the foregoing license or any sublicense to a Customer will automatically become the property of Boeing or Customer, and Boeing agrees to preserve Spirit’s copyright notice thereon to the extent that such a notice was included with the original Software and/or Software Documentation. Spirit acknowledges that Boeing is the owner of all copies of Software and Software Documentation provided to or made by Boeing or Customers pursuant to this SBP, and Spirit hereby authorizes Boeing and Customers to dispose of, and to authorize the disposal of, the possession of any and all such copies by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending.
Spirit may propose the use in Product of third party software which includes unique requirements requiring one or more exceptions to the General Terms Agreement, this SBP or related documents. One such example is commercial off-the-shelf (“COTS”) software requiring transfer of end user license agreements (“EULA’s”). Boeing will grant Spirit the right to incorporate such third party software into Product on a case-by-case basis by prior, written agreement. Under no event will Boeing or Customers be required to execute EULA’s or to engage in any direct dealings with third party software owners or licensors.
Boeing shall not use the license granted in this SBP Section 18.0 for the purpose of competing with Spirit in aftermarket business opportunities.
19.0
INFRINGEMENT
Each Party will indemnify, defend, and hold harmless the other Party from all claims, suits, actions, awards (including, but not limited to, awards based on

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


intentional infringement of patents known at the time of such infringement, exceeding actual damages, and/or including attorneys’ fees and/or costs), liabilities, damages, costs and attorneys’ fees related to the actual or alleged infringement of any United States or foreign intellectual property right (including, but not limited to, any right in a patent, copyright, industrial design or semiconductor mask work, or based on misappropriation or wrongful use of information or documents) and arising out of the use of the indemnifying Party’s Proprietary Information and Materials in connection with the manufacture, sale or use of Products by the other Party or by Boeing’s Customers. Each Party will duly notify the other Party of any such claim, suit or action in respect of which the notifying Party may be obligated to provide indemnification under this SBP Section 19.0 and the indemnifying Party will, at its own expense, fully defend such claim, suit or action on behalf of the indemnified Party and, if applicable, Boeing’s Customers. Neither Party shall have any obligation under this SBP Section 19.0 with regard to any infringement arising from (i) such Party’s compliance with formal specifications issued by the other Party where infringement could not be avoided in complying with such specifications or (ii) use or sale of Products in combination with other items when such infringement would not have occurred from the use or sale of those Products solely for the purpose for which they were designed or sold by such Party. For purposes of this SBP Section 19.0 only, the term “Customer” shall not include the United States government; and the term “Party” shall include Boeing or Spirit, as applicable, its subsidiaries and all officers, agents and employees of Boeing or Spirit, as applicable, or any of its subsidiaries.
20.0
DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS
Spirit grants to Boeing a license under Spirit’s copyrights for the purpose of converting Spirit’s Proprietary Information and Materials to a digital format (“Digital Materials”) and make such Digital Materials available to its employees for company internal use through a computer data base system consistent with Boeing’s license rights in the underlying Spirit Proprietary Information and Materials. Except as otherwise specifically agreed to in writing by the Parties, said license set forth hereunder shall survive termination or cancellation of this SBP relative to Digital Materials included in Boeing’s computer data base system prior to receipt of such notice of termination or cancellation. Such Digital Materials shall be Spirit’s Proprietary Information and Materials and not Derivative Technology.
Boeing grants to Spirit a license under Boeing’s copyrights for the purpose of converting Boeing’s Proprietary Information and Materials to Digital Materials and make such Digital Materials available to its employees for company internal use through a computer data base system consistent with Spirit’s license rights in the underlying Boeing Proprietary Information and Materials. Except as otherwise

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


specifically agreed to in writing by the Parties, said license set forth hereunder shall survive termination or cancellation of this SBP relative to Digital Materials included in Spirit’s computer data base system prior to receipt of such notice of termination or cancellation. Such Digital Materials shall be Boeing’s Proprietary Information and Materials and not Derivative Technology.
21.0
CONFIGURATION CONTROL
Spirit agrees to abide by the configuration controls in accordance with SBP Attachment 4 “Work Statement Documents” when making changes in materials or design details which would affect the Product or any component part thereof with regard to (a) part number identification, (b) physical or functional interchangeability, or (c) repair and overhaul procedures and processes and material changes which affect these procedures. Spirit will place the above requirement in all its subcontracts for supplier identified purchased equipment whether such equipment is supplied to Spirit as an end item or as a component part of an end item. Notwithstanding the foregoing, it is Boeing’s intent to develop a documented configuration management process that shall provide for Spirit’s ability to make certain changes without prior Boeing approval. Spirit shall be provided the opportunity to review and provide input to such process.
22.0
WEIGHT
Pursuant to Section 1.4 “Weight Control Plan” of the Boeing/Seller Responsibility, Accountability, Authority for 787 Program Document as referenced in Attachment 4 "Work Statement Documents" (the “RAA”), Boeing will provide work package target weight to Spirit that aligns with the airplane target weight level.
Notwithstanding anything to the contrary set forth in such Section 1.4 of the RAA:

(a)
Spirit shall use its best commercially reasonable efforts to achieve and maintain work package target weight as a maximum, but Spirit shall not be responsible with respect to the achievement and maintenance of such work package target weight beyond the use of such best commercially reasonable efforts; and
(b)

(c)
Boeing and Spirit shall mutually agree to Spirit’s work package weight commitment level, and such mutually agreed work package weight commitment level may be lesser or greater than the work package target weight. Once agreed, Spirit shall be responsible with respect to the achievement and maintenance of such work package weight commitment level.


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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


23.0
LIFE CYCLE PRODUCT TEAM
23.1
Purpose
It is the objective of Boeing to utilize Life Cycle Product Teams. LCPT personnel located at Boeing’s facilities in accordance with this SBP will conduct their respective activities concurrently in a team environment to cooperate with Boeing in developing firm configuration and product development definition and meeting Program requirements which includes improving producibility, reliability and maintainability of the Aircraft. Notwithstanding Spirit’s participation in the LCPT, Boeing shall have the right to make any and all determinations with respect to airplane performance and product strategy and the design of the Program Airplane and any Derivative in accordance with the provisions of “Boeing/Partner Responsibility, Accountability, Authority for 787 Program” Document as listed in Attachment 4 “Work Statement Documents”.
23.2
Assignment of Personnel
Spirit will assign (or cause to be assigned) Spirit Personnel to Boeing’s Puget Sound facility in accordance with this SBP after consulting with Boeing with respect to the Program requirements for such Spirit Personnel.
23.3
Employment Status
Spirit Personnel shall at all times be employees of Spirit and not employees of Boeing. Spirit shall be responsible for all wages, salaries and other amounts due Spirit Personnel and shall be responsible for all reports, requirements and obligations respecting them under local, state or federal laws, or the laws of the United States, including but not limited to social security, income tax, unemployment compensation, workmen’s compensation and any other local, state or federal taxes or the taxes of the United States.
23.4
Team Leader
Spirit shall designate a leader of the Spirit Personnel (“Spirit Team Leader”). Administrative matters between Boeing and Spirit arising in the performance under this SBP shall be conducted through the Spirit Team Leader.
23.5
Discipline
Discipline of Spirit Personnel shall be Spirit’s responsibility. Spirit Personnel must comply with Boeing Company ethical standards, rules and regulations. Boeing shall disclose its internal rules applicable to Spirit Personnel (“Boeing rules”) to Spirit in advance.

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


23.6
Equipment and Supplies
Boeing shall furnish certain office equipment (e.g. desks, telephones, network access) and office supplies to Spirit’s LCPT personnel. Boeing will not provide personal property (such as computing equipment, software or drafting equipment and calculators) necessary for the performance by Spirit’s LCPT personnel. Spirit shall provide all computing equipment and software required to support its LCPT personnel while located at Boeing’s facilities.
Boeing shall not be responsible for loss or damage to such personal property.
23.7
Employment by Boeing of Spirit Personnel
Except as Spirit may otherwise agree in writing with respect to any individual, Boeing agrees not to hire or make any offer to hire any Spirit Personnel assigned by Spirit to perform work relating to Spirit’s obligations under this SBP prior to the elapse of [*****] following the termination of employment between Spirit and any Spirit Personnel. This restriction shall not apply to: i) any Spirit Personnel, either direct employees or contract employees, whose termination was initiated by Spirit, ii) Spirit contract employees whose term of employment with Spirit has expired or lapsed, or iii) to any Spirit Personnel who may have provided an employment application to a division of Boeing other than Boeing Commercial Airplanes, Wichita Division prior to June 16, 2005; provided, that the foregoing exception shall not affect Boeing restrictions on hiring Spirit Personnel contained in Section 6.12.(f) of the Asset Purchase Agreement (dated as of February 22, 2005) between Boeing and Spirit.
Spirit shall notify Spirit Personnel it has assigned or shall assign to perform work under this SBP of this provision as soon as possible following its effective date or prior to their assignment.

24.0
ON-SITE REVIEW AND RESIDENT REPRESENTATIVES
24.1
Review
Spirit hereby grants, and shall cause any of its subcontractors or suppliers to grant, to Boeing the right to visit the facility of Spirit or any of its subcontractors or suppliers during operating hours and after reasonable notice to review progress and performance with respect to production, schedule, quality and protection of Boeing’s proprietary rights under any Order. Any Boeing representative shall be allowed access to all areas used for the performance of this SBP at reasonable times, subject to governmental and other applicable rules and regulations regarding admissibility and movement of personnel on the premises of Spirit or any of its subcontractors or suppliers.

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Boeing shall provide Spirit reasonable notice prior to any visit. Such notice shall contain the names, citizenship and positions of the visiting personnel and the duration and purpose of such visit.
24.2
Resident Representatives
Boeing may, in its sole discretion and for such period as it deems necessary, locate resident personnel (“Resident Team”) at Spirit’s facility to assist or support Spirit. The Resident Team shall function under the direction of a resident Boeing manager, if appropriate, or a manager located at Boeing who will supervise Resident Team activities. In the event the Parties desire Spirit to locate resident personnel at Boeing, reciprocal arrangements shall be provided.
The Resident Team shall be allowed reasonable access to or to review, as the case may be, all work areas, program status reports and management reviews used for or relating to the host Party’s performance of this SBP.
The host Party shall supply the Resident Team with office space, desks, facsimile machines, telephones, high-speed access to internet services (if available from local providers), stationery supplies, filing cabinets, communication facilities, secretarial services and any other items reasonably requested by the other Party. A reasonable portion of the Resident Team’s working area shall be dedicated to space for private telephone calls, meetings and similar activities. All costs and expenses for such facilities and services, if required, shall be paid by the host Party.
Notwithstanding such access and review, each Party remains solely responsible for performing in accordance with this SBP and each Order.
25.0
ON-SITE SUPPORT REQUIREMENTS
25.1
Obligations of Spirit
25.1.1
Indemnification for Negligence of Spirit or Subcontractor
Spirit shall indemnify and hold harmless The Boeing Company, its subsidiaries, and their directors, officers, employees, and agents from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards, and damages, of any kind and nature whatsoever for property damage, personal injury, or death (including without limitation injury to or death of employees of Spirit or any subcontractor thereof) which occurs while Spirit is on premises owned or controlled by Boeing and expenses, costs of litigation and counsel fees related thereto or incident to establishing the right to indemnification arising out of or in any way related to this SBP, any Order or the performance hereof or thereof by Spirit or any subcontractor thereof, including without limitation in connection with the provision of services, personnel, facilities, equipment, support,

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


supervision, or review. The foregoing indemnity shall apply only to the extent of the negligence of Spirit, any subcontractor thereof, or their respective employees. In no event shall Spirit’s obligations hereunder be limited to the extent of any insurance available to or provided by Spirit or any subcontractor thereof. Spirit expressly waives any immunity under industrial insurance, whether arising out of statute or source, to the extent of the indemnity set forth in this paragraph.
25.1.2
Commercial General Liability
If Spirit or any subcontractor thereof will be performing work on Boeing premises, Spirit shall carry and maintain, and ensure that all subcontractors thereof carry and maintain, throughout the period when work is performed and until final acceptance by Boeing, Commercial General Liability insurance with available limits of not less than [*****] per occurrence for bodily injury and property damage combined.
25.1.3
Automobile Liability
If licensed vehicles will be used in connection with the performance of the work, Spirit shall carry and maintain, and ensure that any subcontractor thereof who uses a licensed vehicle in connection with the performance of the work carries and maintains, throughout the period when work is performed and until final acceptance by Boeing, Business Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed, or otherwise, with available limits of not less than [*****] per occurrence combined single limit for bodily injury and property damage.
25.1.4
Workers’ Compensation
Throughout the period when work is performed and until final acceptance by Boeing, Spirit shall, and ensure that any subcontractor thereof shall, cover or maintain insurance in accordance with the applicable laws relating to Workers’ Compensation with respect to all of their respective employees working on or about Boeing premises. If Boeing is required by any applicable law to pay any Workers’ Compensation premiums with respect to an employee of Spirit or any subcontractor thereof, Spirit shall reimburse Boeing for such payment.
25.1.5
Certificates of Insurance
Prior to commencement of the work Spirit shall provide for Boeing’s review and approval Certificates of Insurance reflecting full compliance with the requirements set forth in SBP Sections 25.1.2 “Commercial General Liability”, 25.1.3 “Automobile Liability” and 25.1.4 “Workers’ Compensation”. Such certificates shall be kept current and in compliance throughout the period when work is being performed and until final acceptance by Boeing, and shall provide for [*****] advance written notice to Boeing in the event of cancellation. Failure of Spirit or

- 71 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


any subcontractor thereof to furnish Certificates of Insurance, or to procure and maintain the insurance required herein or failure of Boeing to request such certificates, endorsements or other proof of coverage shall not constitute a waiver of the respective obligations of Spirit or its subcontractor hereunder.
25.1.6
Self-Assumption
Any self-insured retention, deductibles, and exclusions in coverage in the policies required under this SBP Section 25.1 shall be assumed by, for the account of, and at the sole risk of Spirit or the subcontractor which provides the insurance, and to the extent applicable shall be paid by Spirit or such subcontractor. In no event shall the liability of Spirit or any subcontractor thereof be limited to the extent of any of the minimum limits of insurance required herein.
25.1.7
Protection of Property By Spirit
Spirit assumes, and shall ensure that all subcontractors thereof and their respective employees assume, the risk of loss or destruction of or damage to any property of such parties whether owned, hired, rented, borrowed, or otherwise. Spirit waives, and shall ensure that any subcontractor thereof and their respective employees waive, all rights of recovery against Boeing, its subsidiaries, and their respective directors, officers, employees, and agents for any such loss or destruction of or damage to any property of Spirit, any subcontractor thereof, or their respective employees.
At all times Spirit shall, and ensure that any subcontractor thereof shall, use suitable precautions to prevent damage to Boeing property. If any such property is damaged by the fault or negligence of Spirit or any subcontractor thereof, Spirit shall, at no cost to Boeing, promptly and equitably reimburse Boeing for such damage, or repair or otherwise make good such property to Boeing’s satisfaction. If Spirit fails to do so, Boeing may do so and recover from Spirit the cost thereof.
25.1.8
Compliance with Boeing Site Requirements
In the event Spirit or Spirit’s subcontractor(s) performs any aspect of its work under this SBP involving activities potentially creating environmental or safety issues, including but not limited to manufacturing activities, on property owned, operated, leased, or controlled by Boeing (hereinafter “On-Site Work”), Spirit agrees to Attachment 9 “On-Site Terms and Conditions Supplement”.
25.2
Obligations of Boeing
25.2.1
Indemnification for Negligence of Boeing or Subcontractor
Boeing shall indemnify and hold harmless Spirit, its subsidiaries, and their directors, officers, employees, and agents from and against all actions, causes of

- 72 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


action, liabilities, claims, suits, judgments, liens, awards, and damages of any kind and nature whatsoever for property damage, personal injury, or death (including without limitation injury to or death of employees of Boeing or any subcontractor thereof) which occurs while Boeing is on premises owned or controlled by Spirit and expenses, costs of litigation and counsel fees related thereto or incident to establishing the right to indemnification arising out of or in any way related to this SBP, any Order or the performance hereof or thereof by Boeing or any subcontractor thereof, including without limitation in connection with the provision of services, personnel, facilities, equipment, support, supervision, or review. The foregoing indemnity shall apply only to the extent of the negligence of Boeing, any subcontractor thereof, or their respective employees. In no event shall Boeing’s obligations hereunder be limited to the extent of any insurance available to or provided by Boeing or any subcontractor thereof. Boeing expressly waives any immunity under industrial insurance, whether arising out of statute or source, to the extent of the indemnity set forth in this paragraph.
25.2.2
Protection of Property By Boeing
At all times Boeing shall, and ensure that any subcontractor thereof shall, use suitable precautions to prevent damage to Spirit property. If any such property is damaged by the fault or negligence of Boeing or any subcontractor thereof, Boeing shall, at no cost to Spirit, promptly and equitably reimburse Spirit for such damage, or repair or otherwise make good such property to Spirit’s satisfaction. If Boeing fails to do so, Spirit may do so and recover from Boeing the cost thereof.
26.0
PROPERTY INSURANCE
26.1
Insurance
Spirit shall obtain and maintain continuously in effect a property insurance policy covering loss or destruction of or damage to all property in which Boeing does or could have an insurable interest pursuant to this SBP, including but not limited to Tooling, Boeing Furnished Material, raw materials, parts, work-in-process, incomplete or completed assemblies and all other products or parts thereof, and all drawings, specifications, data and other materials relating to any of the foregoing in each case to the extent in the possession or under the effective care, custody or control of Spirit or any agent, employee, affiliate, subcontractor or supplier of Spirit, in the amount of full replacement value thereof providing protection against all perils normally covered in an “all risk” property insurance policy (including without limitation fire, windstorm, explosion, riot, civil commotion, aircraft, earthquake, flood or other acts of God). Any such policy shall be with insurers reasonably acceptable to Boeing and shall (i) provide for payment of loss thereunder to Boeing, as loss payee, as its interests may appear and (ii) contain a waiver of any rights of subrogation against Boeing, its subsidiaries, and their respective directors, officers, employees and agents.

- 73 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


26.2
Self Insurance
Spirit may, upon written approval from Boeing’s Procurement Representative, self-assume or self-insure all or a portion of Spirit’s obligations set forth in this SBP Section 26. Spirit’s request for approval of self-assumption or self-insurance shall include sufficient particulars to demonstrate Spirit’s financial capability to cover Spirit’s obligations and Boeing’s interests under any Order, this SBP and the GTA.
26.3
Certificate of Insurance
Upon written request from Boeing, Spirit shall provide to Boeing’s Procurement Representative certificates of insurance reflecting full compliance with the requirements set forth in SBP Section 26.1 “Insurance”. Such certificates shall be kept current and in compliance throughout the period of this SBP and shall provide for thirty (30) days advance written notice to Boeing’s Procurement Representative in the event of cancellation, non-renewal or material change adversely affecting the interests of Boeing.
26.4
Notice of Damage or Loss
Spirit shall give prompt written notice to Boeing’s Procurement Representative of the occurrence of any material damage or loss to any property required to be insured herein. If any such property shall be damaged or destroyed, in whole or in part, by an insured peril or otherwise, and if no Event of Default shall have occurred and be continuing, then Spirit may, upon written notice to Boeing, settle, adjust, or compromise any and all such loss or damage not in excess of [*****] Dollars ($[*****]) in any one occurrence and [*****] Dollars ($[*****]) in the aggregate. Spirit may settle, adjust or compromise any other claim by Spirit only after Boeing has given written approval, which approval shall not be unreasonably withheld or delayed.
27.0
CUSTOMS-TRADE PARTNERSHIP AGAINST TERRORISM (C-TPAT)
C-TPAT is an initiative between business and government to protect global commerce from terrorism and increase the efficiencies of global transportation. The program calls for importers, carriers and brokers to establish policies to enhance their own security practices and those of their business partners involved in their supply chain. Such practices may include but are not limited to the following:

Procedural Security - Procedures in place to protect against unmanifested material being introduced into the supply chain;


- 74 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Physical Security - Buildings constructed to resist intrusion, perimeter fences, locking devices, and adequate lighting;

Access Controls - Positive identification of all employees, visitors and suppliers;

Personnel Security - Employment screening, background checks and application verifications; and

Education and Training Awareness - Security awareness training, incentives for participation in security controls
Spirit agrees to work with Boeing and appropriate industry and governmental agencies, as necessary, to develop and implement policies and procedures consistent with the C-TPAT initiative to ensure the safe and secure transport of Products under this SBP.
28.0
NON-WAIVER/PARTIAL INVALIDITY
Any failures, delays or forbearances of either Party in insisting upon or enforcing any provisions of any Order, or in exercising any rights or remedies under this SBP, shall not be construed as a waiver or relinquishment of any such provisions, rights or remedies; rather, the same shall remain in full force and effect. If any provision of this SBP or any Order is or becomes void or unenforceable by law, then, to the fullest extent permitted by law, the remainder shall remain valid and enforceable.
29.0
HEADINGS
Section headings used in this SBP are for convenient reference only and do not affect the interpretation of this SBP.
30.0
CUSTOMER CONTACT
Boeing will be responsible for all contact with Customers regarding the Program, Program Airplanes and Derivatives and any other Boeing model aircraft programs. Except as otherwise provided in this SBP Section 30.0, Spirit shall not make any contact with actual or potential Customers on the subject of the Program, Program Airplanes or Derivatives without Boeing’s prior written consent. Spirit shall respond to any inquiry from actual or potential Customers regarding the Program, Program Airplanes or Derivatives by requesting that the inquiry be directed to Boeing. Spirit shall, concurrently with such response, advise Boeing of such inquiry.

- 75 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


31.0
APPLICABLE LAW
This SBP shall be governed by the laws of the State of Washington. No consideration shall be given to Washington’s conflict of law rules. This SBP excludes the application of the 1980 United Nations Convention on Contracts for the International Sale of Goods.
Spirit hereby irrevocably consents to and submits itself exclusively to the jurisdiction of the applicable courts of King County, Washington and the federal courts of Washington State for the purpose of any suit, action or other judicial proceeding arising out of or connected with any Order or the performance or subject matter thereof. Spirit hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that (a) Spirit is not personally subject to the jurisdiction of the above-named courts, (b) the suit, action or proceeding is brought in an inconvenient forum or (c) the venue of the suit, action or proceeding is improper.
32.0
SURVIVAL
Without limiting any other survival provision contained herein and notwithstanding any other provision of this SBP or the GTA to the contrary, the representations, covenants, agreements and obligations of the Parties set forth in SBP Section 2.7 “Order of Precedence”, SBP Section 12.9 “Responsibility for Property”, SBP Section 14.0 “Warranty”, SBP Section 15.0 “Intellectual Property”, SBP Section 16.0 “Boeing’s Rights in Spirit’s Patents, Copyrights, Trade Secrets and Tooling”, SBP Section 17.0 “Proprietary Information and Materials”, SBP Section 18.0 “Software Proprietary Information Rights”, SBP Section 19.0 “Infringement”, SBP Section 25.0 “On-Site Support Requirements” (if applicable), SBP Section 26.0 “Property Insurance”, SBP Section 28.0 “Non-Waiver/Partial Invalidity”, SBP Section 31.0 “Applicable Law” and this SBP Section 32.0 shall survive any cancellation, termination or expiration of this SBP, any assignment of this SBP or any payment and performance of any or all of the other obligations of the Parties hereunder. Termination or cancellation of any part of this SBP shall not alter or affect any part of this SBP, which has not been terminated or cancelled. It is the intention of the Parties that this SBP and the GTA shall terminate or expire at the same time and, accordingly, this SBP shall not survive (except as provided in this SBP Section 32.0) following the expiration or termination of the GTA.
33.0
INVENTORY AT CONTRACT COMPLETION
Subsequent to Spirit’s last delivery of Product(s) which contain, convey, embody or were manufactured in accordance with or by reference to Boeing’s Proprietary Information and Materials, including but not limited to finished goods, work-in-process and detail components (hereafter “Inventory”), which is in excess of Order quantity, such Inventory shall be made available to Boeing for purchase for

- 76 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


a reasonable period of time. In the event Boeing, in its sole discretion, elects not to purchase the Inventory, Spirit may scrap the Inventory. Prior to scrapping the Inventory, Spirit shall mutilate it or otherwise render it unusable. Spirit shall maintain, pursuant to its quality assurance system, records certifying destruction of the applicable Inventory. Said certification shall state the method and date of mutilation and destruction of the subject Inventory. Boeing or applicable regulatory agencies shall have the right to review and inspect these records at any time it reasonably deems necessary. In the event Spirit elects to maintain the Inventory, Spirit shall maintain accountability for the Inventory and Spirit shall not sell or provide the Inventory to any Third Party without prior specific written authorization from Boeing. Failure to comply with these requirements shall be a material breach of this SBP. Nothing in this SBP Section 33.0 prohibits Spirit from making legal sales directly to the United States of America government.
34.0
DISPOSITION OF TOOLING
In the event Boeing exercises its rights with respect to Tooling under GTA Section 7.0 “Termination for Convenience”, GTA Section 8.0 “Events of Default and Remedies” or GTA Section 9.3 “Transfer of Certain Property”, Spirit shall transfer to Boeing any and all Tooling requested by Boeing free and clear of any and all liens, claims or rights of any third party.
35.0
COUNTERPARTS
This SBP and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.
36.0
AMENDMENTS
Except as otherwise expressly provided herein, the terms of this SBP shall not be amended, or deemed amended, except by a written instrument signed by the duly authorized representatives of both Parties.
37.0
RESTRICTIONS ON LOBBYING
37.1
Applicability
SBP Section 37.0 applies to all Sellers, domestic and foreign if:
Seller’s Product is sold by Boeing, individually or incorporated into another product such as an Aircraft, to a Customer who finances the purchase of the Product or product with a direct loan from the Export-Import Bank of the United States (“Direct Loan”), and

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


The Shipset price of the Product, combined with the Shipset prices of any other items sold to Boeing by Seller which are incorporated into the product sold to the Customer, exceeds $[*****].
37.2
Certification
Boeing will notify Seller in writing if it believes the conditions of 37.1 are met and the below described certificate and disclosure form are required. If applicable, Boeing will also identify the Aircraft being financed.
Upon receipt of such notice, Seller will execute an “Anti-Lobbying Certificate” substantially in the form of Attachment 24 to this SBP and, if applicable, Standard Form-LLL, “Disclosure Form to Report Lobbying.” (a copy of the form can be found at http://www.ahrq.gov/downloads/pub/rfp010003/lobbying.pdf )
Seller will provide the executed certificate to the Boeing Procurement Representative. Also, Seller will forward to the Boeing Procurement Representative any originals of the Standard Form-LLL received by Seller from its subcontractors of any tier promptly upon Seller’s receipt.
37.3
Flow Down
With respect to any Direct Loan, the substance of this SBP BCA-MS-65530-0019 Section 37.0 shall apply to all of Seller’s suppliers of any tier who supply items with a Shipset price exceeding $[*****]. Seller agrees to incorporate the substance of SBP BCA-MS-65530-0019 Section 37.0 in all applicable subcontracts.




EXECUTED in duplicate as of the date and year first set forth above by the duly authorized representatives of the Parties.





    


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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].





BOEING
 
 SPIRIT AEROSYSTEMS, INC.

 
 
 
THE BOEING COMPANY     
 
SPIRIT AEROSYSTEMS, INC.

Acting By and Through
 
 
Boeing Commercial Airplanes

 
 
 
 
 
/s/ Alicia Mauldin
 
/s/ Clint Cotner
Name: Alicia Mauldin
 
Name: Clint Cotner
Title: Procurement Agent
 
Title:  Contracts Administrator
Date:  12/19/2012
 
Date: 12/14/2012































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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING
(Reference SBP Sections 3.1.1, 3.4.1, 4.1, 4.3.4.3, 4.7, 5.8, 22.0; GTA Section 1)

FOR PURPOSES OF SBP Section 3.1, “OBLIGATION TO PURCHASE AND SELL,” Boeing shall be defined as the following organizations, divisions, groups or entities:
BCA Suppler Management, The Boeing Company, Seattle, WA
The price for Products to be delivered on or before [*****] , except as otherwise noted below, will be as follows:


































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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING (cont

IMG13.JPG





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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING (cont.)
IMG14.JPG



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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS

PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES
(Reference SBP Sections 3.3.2.1, 3.3.2.2, 3.3.4.6, 3.4.1; GTA Section 1.0N, 1.0.P)

A.     Configuration

The configuration of each Production Article shall be as described in the Integrated Control Station Plan revision identified below, and in the Contract Change Notices listed in Paragraph B below as such Contract Change Notices relate to the configuration of any Production Article

Type
Product Number
Name
Manufacturing Change Level
Current Mfg Frozen LN
Extended Eff (Usage)
[*****]





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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS
PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES (Continued)

Type
Product Number
Name
Manufacturing Change Level
Current Mfg Frozen LN
Extended Eff (Usage)
[*****]

B.     Contract Change Notices

The following Contract Change Notices (CCN’s) are hereby incorporated into this SBP.
 
B.1
Non-D/MI Contract Change Notices :

All CCN’s listed in this Section B.1 are inclusive of all revisions and cancellations issued on or before December 21, 2010:

CCN 1 through 318, 320 through 542, 544 through 762, 764 through 766, 768 through 779, 781 through 871, 873 through 889, 891 through 984, 986 through 990, 992 through 1024, 1028 through 1100, 1102 through 1142, 1144 through 1148, 1150 through 1162, 1164 through 1170, 1172 through 1240, 1242 through 1295, 1298 through 1420, 1422 through 1440, 1442 through 1452, 1454 through 1461, 1463 through 1472, 1474 through 1503, 1505 through 1564, 1566 through 1593, 1595 through 1611, 1613 through 1616, 1618 through 1623, 1625 through 1633, 1635 through 1658, 1661 through 1671, 1673 through 1686, 1688 through 1696, 1698, 1700 through 1709, 1710, 1712 through 1716, 1718 through 1748, 1750, 1751, 1753 through 1763, 1765 through 1810, 1814 through 1833, 1837 through 1844, 1846 through 1856, 1858 through 1866, 1868 through 1895, 1897, 1898, 1901, 1904 through 1906, 1908, 1909, 1911 through 1914, 1919, 1921 through 1925, 1928, 1933 through 1937, 1940 through 1943, 1946 through 1950, 1952 through 1963, 1968, 1973 through 1976, 1980, 1982, 1984, 1985, 1988 through 1993, 1995, 1999, 2000, 2004, 2005, 2007, 2014 through 2019, 2021.

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 19 Exhibit 2 SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS

PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES (Continued)


B.2
D/MI PtP Contract Change Notices:

Section 41 D/MI CCN’s: 1163, 1241, 1915, 1916, 2158, 2159, 2168

Pylon D/MI CCN: 2166

Wing LE D/MI CCN: 2167

CCN’s listed above are inclusive of any numerical formatting convention, i.e. CCN 1 is the same as CCN-00001 or CCN 0001.





























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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS
PRICE STATUS AND SUMMARY TABLES
(Reference SBP Section 7.8.2)


Price Status and Summary Tables - Section 41
 
Work Package
Total Recurring Price Adjustment for Shipsets
[*****] - [*****]
Total Recurring Price for Shipsets
[*****] - [*****]
Recurring Unit Price Adjustment for
[*****] - [*****]
Recurring Unit Price for [*****] - [*****]
Recurring Unit Price Adjustment for [*****] thru yr [*****]
Recurring Unit Price for [*****] thru yr [*****]
Contract Award
Section 41
[*****]
Amend 6
Section 41
Amend 11
Section 41
Amend 12
Section 41
Amend 13
Section 41
Amend 14
Section 41
Amend 15
Section 41
Amend 16
Section 41
 
 
Total [*****]
Total [*****]
 
 
 
 
Amend 17
Section 41
[*****]
[*****]
 
 
 
 
Amend 18
Section 41
 
 
 
 
Amend 19
Section 41
 
 
 
 

Price Status and Summary Tables - Pylon
 
Work Package
Total Recurring Price Adjustment for Shipsets
[*****] - [*****]
Total Recurring Price for Shipsets
[*****] - [*****]
Recurring Unit Price Adjustment for
[*****] - [*****]
Recurring Unit Price for [*****] - [*****]
Recurring Unit Price Adjustment for [*****] thru yr [*****]
Recurring Unit Price for [*****] thru yr [*****]
Contract Award
Pylon
[*****]
Amend 8
Pylon
Amend 9
Pylon
Amend 11
Pylon
Amend 12
Pylon
Amend 13
Pylon
Amend 14
Pylon
Amend 15
Pylon
Amend 16
Pylon
 
 
Total [*****]
Total [*****]
 
 
 
 
Amend 17
Pylon
[*****]
[*****]
 
 
 
 
Amend 18
Pylon
 
 
 
 
Amend 19
Pylon
 
 
 
 

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS
PRICE STATUS AND SUMMARY TABLES (Cont.)

Price Status and Summary Tables - Wing Leading Edge
 
Work Package
Total Recurring Price Adjustment for Shipsets
[*****] - [*****]
Total Recurring Price for Shipsets
[*****] - [*****]
Recurring Unit Price Adjustment for
[*****] - [*****]
Recurring Unit Price for [*****] - [*****]
Recurring Unit Price Adjustment for [*****] thru yr [*****]
Recurring Unit Price for [*****] thru yr [*****]
Contract Award
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 9
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 11
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 12
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 13
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 14
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 15
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 16
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
 
 
Total [*****]
Total [*****]
 
 
 
 
Amend 17
Wing LE
[*****]
[*****]
 
 
 
 
Amend 18
Wing LE
[*****]
[*****]
 
 
 
 
Amend 19
Wing LE
[*****]
[*****]
 
 
 
 


Price Status and Summary Tables - Nose Landing Gear

 
Work Package
Total Recurring Price Adjustment for Shipsets
[*****] - [*****]
Total Recurring Price for Shipsets
[*****] - [*****]
Recurring Unit Price Adjustment for
[*****] - [*****]
Recurring Unit Price for [*****] - [*****]
Recurring Unit Price Adjustment for [*****] thru yr [*****]
Recurring Unit Price for [*****] thru yr [*****]
Contract Award
Nose LG
[*****]
Amend 17
Nose LG
[*****]
Amend 18
Nose LG
Amend 19
Nose LG








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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS
PRICE STATUS AND SUMMARY TABLES (Cont.)

Price Status and Summary Tables - Nonrecurring Prices

Amendment
Work Package
R&D Nonrecurring Price Adjustment
Total R&D Nonrecurring Price
Other Nonrecurring Price Adjustment
Total Other Nonrecurring
Amendment 17
Sec 41
[*****]
Amendment 17
Pylon
Amendment 17
Wing LE
Amendment 18
Sec 41
[*****]
Amendment 18
Pylon
Amendment 18
Wing LE
Amendment 19
Sec 41
[*****]
Amendment 19
Pylon
Amendment 19
Wing LE

Price Status and Summary Tables - Other Pricing

 
Description
Price
Amendment 1
2 nd  Fatigue Section 41 Barrel
[*****]
Amendment 2
COPB5 Test Article
[*****]



















SBP ATTACHMENT 4 TO

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SPECIAL BUSINESS PROVISIONS

WORK STATEMENT DOCUMENTS
(Reference SBP Sections 3.3.1, 3.3.2.1, 3.3.3, 3.3.4.6, 3.4.5, 3.4.8,
3.4.9, 3.6.1, 4.5, 7.2.1, 12.3, 21.0, 22.0, 23.1; GTA Section 1.0.P)

Spirit’s statement of work includes the following documents and all other documents reference therein:

WORK STATEMENT DOCUMENTS

Document Nomenclature
Document Number
Configuration Memo for Wing LE (787-9)
[*****]
Rev New
[*****]
(Model 763-589-9_Spirit_S_14-16)
Configuration Memo for Section 41 (787-9)
[*****]
Rev New
[*****]
Model 763-589-9_Spirit_S_41
Configuration Memo for Pylon (787-9)
[*****]
Rev New
[*****]
Model 763-589-9_Spirit_Pylon
Boeing/Seller Responsibility, Accountability, Authority for 787 Program (RAA)
[*****]
Commonality Matrix
[*****]
PSAD
D6-83069-MidWestern, Rev A (5/5/05)















SBP ATTACHMENT 5 TO

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SPECIAL BUSINESS PROVISIONS



BOEING AOG COVERAGE
(Reference SBP Section 3.5.3)

*
NORMAL HOURS BOEING’S PROCUREMENT REPRESENTATIVE
Approximately 5:30 a.m. - 6:00 p.m.

*
Performs all functions of procurement process.
*
Manages formal communication with Spirit.

*
SECOND SHIFT - AOG PROCUREMENT SUPPORT
3:00 p.m. - 11:00 p.m.

*
May place order and assist with commitment and shipping information, working with several suppliers on a priority basis.

*
Provides a communication link between Spirit and Boeing.

*
24 HOUR AOG SERVICE - AOG CUSTOMER REPRESENTATIVE (CUSTOMER SERVICE DIVISION) (206) 662-7200

*
    Support commitment information particularly with urgent orders.

*
    Customer Service Representative needs (if available):

1.
Part Number
2.
Boeing Purchase Order
3.
Airline Customer & customer purchase order number
4.
Boeing S.I.S. #

If Spirit is unable to contact any of the above, please provide AOG/Critical shipping information notification via FAX using Boeing AOG/Critical shipping notification form (SBP Attachment 6).








SBP ATTACHMENT 6 TO

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SPECIAL BUSINESS PROVISIONS


BOEING AOG
SHIPPING NOTIFICATION
(Reference SBP Section 3.5.3)

To: FAX:
(206) 662-7145
Phone:
(206) 662-7200
Procurement Agent Name:
 
Phone:
 
From:
 
Today’s Date:
 
 
 
 
 
Part Number:
 
Customer P.O.:
 
Customer:
 
Ship Date:
 
Qty Shipped:
 
*SIS Number:
 
Boeing P.O.:
 
Pack Sheet:
 
*Airway Bill:
 
or Invoice:
 
Carrier:
 
*Flight #:
 
Freight Forwarder:
 
 
 

*If Applicable


SHIPPED TO:
*
(check one)

*
Boeing

*
Direct Ship to Customer

*
Direct Ship to Spirit

Remarks:

If unable to contact Procurement Agent, please use this form to fax shipping information.







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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 7 TO
SPECIAL BUSINESS PROVISIONS

PRICED PARTS LIST AND SPARES PRICING
(Reference SBP Sections 3.3.2.1, 3.3.4.6, 3.5.2.1, 4.3.1, 4.3.4.1, 4.3.4.2, 4.3.2, 4.5, 4.6.1, 4.6.2, 12.1.3, 12.10.1)
A.
Template for Creation of IPPL and Spare Parts Price Catalog (SPPC) as defined in SBP Section 3.5
IMG15.JPG
IPPL Outline and Criteria
 
 
 
Initial IPPL Bill of Material will be representative of BP 20.
Indentured Parts list will be priced to a spareable part level.
IPPL pricing will be equivalent the detail part pricing reflective of the [*****] Price based on an [*****] units.
IPPL Pricing would not include Standards. Parties will establish a separate pricing list for Standards using [*****] methodology.
IPPL Pricing to be updated with the annual price reset activity if necessary.
IPPL Document to list [*****] price for details and for assemblies (not including [*******])








SBP ATTACHMENT 8 TO

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SPECIAL BUSINESS PROVISIONS

Spirit DATA SUBMITTALS
(Reference SBP Sections 7.5, 9.2)

EXAMPLES
1.
Program Status Reports (as requested by Boeing)
2.
Spirit’s program progress reports, highlighting significant accomplishments and critical program issues, etc.
3.
Product Definition Milestone Schedule (as requested by Boeing)
4.
Spirit’s Product Definition schedule depicting key milestone events to support program requirements.
5.
Manufacturing Milestone Schedule (as requested by Boeing)
6.
Spirit’s manufacturing schedule depicting key milestone events to support program requirements.
7.
Certified Tool List
8.
Spirit’s Certified Tool Lists for identifying all accountable tools, including any subsequent new, reworked or re-identified tools affecting the first production spares Product.
9.
Problem Reports (as required)
10.
Spirit’s written notification to Boeing of program problems, potential program impact and corrective action.
11.
AOG Spares Support Plan
12.
Spirit ‘s written plan describing Spirit’s procedure for supporting AOG spares delivery requirements. Refer to SBP Section 3.5.3 for details.
13.
Order Readiness Matrix
14.
Spirit’s plan (matrix) identifying pre-manufacturing activities, such as, material procurement, tooling, planning and manufacturing readiness, that must be prioritized and completed prior to manufacture of a spares Product.
15.
Total Cost Management Plan
16.
Within six months of the effective date of this SBP Spirit will submit a TCM plan as required under SBP Section 7.5.











SBP ATTACHMENT 9 TO

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SPECIAL BUSINESS PROVISIONS



On-Site Terms and Conditions Supplement
(Reference SBP Section 25.1.8)

To be negotiated and established in the event Spirit or Spirit’s subcontractor performs any aspect of its work under this SBP involving activities potentially creating environmental or safety issues at a Boeing facility.


































SBP ATTACHMENT 10 TO

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SPECIAL BUSINESS PROVISIONS

QUALITY ASSURANCE REQUIREMENTS
(Reference SBP Section 8.1)

A10.1
Documents Incorporated by Reference
In addition to any other documents incorporated elsewhere in this SBP or the GTA by reference, Spirit is required to maintain compliance with the following documents as may be revised from time to time and incorporated herein and made a part of this SBP by reference with full force and effect, as if set out in full text:
A10.1.1
Document AS/EN/JISQ 9100, “Quality Systems - Aerospace - Model for Quality Assurance in Design, Development, Production, Installation and Servicing”
A10.1.2
Document AS/EN/SJAC 9102, “Aerospace First Article Inspection (FAI) Requirement”
Spirit shall perform First Article Inspections (FAIs) in accordance with AS/EN/SJAC 9102. First article inspections for certain non-critical detail components may be waived, as agreed by Spirit and Boeing.
A10.1.3
Boeing Document [*****]
This document defines the approved sources for special processing, composite raw materials, composite products, aircraft bearings, designated fasteners, and metallic raw materials.
A10.2
AS/EN/JISQ 9100 Certification/Registration
Spirit shall maintain an accredited aerospace industry certification/registration to AS/EN/JISQ 9100. Boeing reserves the right to make final determination regarding Spirit compliance to quality management system requirements.
Boeing recognition of Spirit’s Aerospace Quality Management System certification/registration does not affect the right of Boeing to conduct audits and issue findings at the Spirit’s facility. Boeing reserves the right to provide Boeing-identified quality system findings, associated quality system data, and quality performance data to the Spirit’s CRB.
SBP ATTACHMENT 10 TO
SPECIAL BUSINESS PROVISIONS


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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


QUALITY ASSURANCE REQUIREMENTS (Cont.)

Spirit shall ensure the following relative to AQMS certification:
A10.2.1
Accreditation of Certification/Registration Body
The certification/registration body (CRB) is accredited to perform aerospace quality management system (AQMS) assessments. The CRB must use approved auditors and operate in accordance with the corresponding International Aerospace Quality Group (IAQG) certification/registration scheme.
NOTE:    IAQG sanctioned certification/registration schemes include but are not limited to AIR 5359, SJAC 9010, TS157, etc. Reference IAQG website for listing of accredited CRBs: http://www.iaqg.sae.org/iaqg/audit_information/registrars.htm.
A10.2.2
Records of Certification/Registration
Spirit maintains objective evidence of CRB certification/registration on file at Spirit’s facility. Objective evidence shall include:
a.
The accredited AQMS certificate(s) of registration;
b.
The audit report(s), including all information pertaining to the audit results in accordance with the applicable certification/registration scheme;
c.
Copies of all CRB finding(s), objective evidence of acceptance of corrective action(s), and closure of the finding(s).
NOTE:    Certification records shall be maintained in accordance with Boeing specified contractual quality record retention requirements.
A10.2.3
Right of Access to CRB
The CRB services agreement provides for “right of access” to all CRB records by Boeing, applicable accreditation body, applicable Registrar Management Committee (RMC) and other regulatory or government bodies for the purpose of verifying CRB certification/registration criteria and methods are in accordance with the applicable IAQG certification/registration scheme.




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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 10 TO
SPECIAL BUSINESS PROVISIONS

QUALITY ASSURANCE REQUIREMENTS (Cont.)
A10.2.4
Audit Results/Data Reporting to IAQG
The CRB has Spirit’s written permission to provide audit results/data to IAQG membership as required by the applicable IAQG certification/registration scheme.
A10.2.5
Notification to Boeing of Change in Status
Boeing is immediately notified in writing should the Spirit’s certification/registration be suspended or withdrawn, or accreditation status of Spirit’s CRB be withdrawn. Send email notification to grpcrboversightrep@boeing.com .
A10.2.6
Provision of Boeing Quality Data to CRB
Boeing-identified findings and Spirit’s quality performance data is provided to the CRB during certification/registration and surveillance activity.
A10.2.7
CRB Access to Proprietary Data
CRB shall be provided access to applicable proprietary data (including Boeing proprietary data) to the extent necessary to assess supplier compliance to AQMS requirements. CRB shall agree to keep confidential and protect Boeing proprietary information under terms no less stringent than Spirit’s contractual agreement with Boeing. Spirit will assure that such information is conspicuously marked “BOEING PROPRIETARY.”
A10.2.8
Spirit Compliance with CRB Requirements
Spirit complies with all CRB requirements imposed to issue and maintain certification/registration.
A10.3
Additional Quality Assurance Requirements
A10.3.1
Relocation/Subcontract Notification
Spirit shall not relocate or subcontract any Category I or II without written Boeing acceptance. Notification to Boeing should be made to the Procurement Agent who manages the Spirit contract and shall contain the subcontractor name, address, telephone number, QA manager name, applicable part numbers, and part descriptions. Category I and II work is defined in FAA Order 8120.2, Appendix 4.”

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 10 TO
SPECIAL BUSINESS PROVISIONS

QUALITY ASSURANCE REQUIREMENTS (Cont.)
A10.3.2
English Language

When specifically requested by Boeing, Spirit shall make requested quality data or approved design data available in the English language.
A10.3.3      Nadcap Accreditation
Spirit and Spirit’s processor/supplier base shall be Nadcap accredited for equivalent/similar technologies requiring Nadcap accreditation under Boeing document D1-4426, Approved Process Sources. A separate D1-4426 approval is not required and Spirit’s specifications may or may not be listed in the Nadcap specification list for the applicable technologies. Equivalent technologies are non-Boeing process or material specifications incorporated into Spirit’s design, including but not limited to military, government, industry and Spirit specifications.
A10.4
Guidance Documents
Refer to the following documents for guidance relative to AS/EN/JISQ 9100 requirements:
A10.4.1
Document AS/EN/SJAC 9103, “Variation Management of Key Characteristics”
A10.4.2
Document AS9006, “Deliverable Aerospace Software Supplement for AS9100A Quality Management Systems - Aerospace - Requirements for Software (based on AS9100A)”
A10.4.3
Boeing Document [*****]

A10.4.4
Document [*****]







- 98 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 11 TO
SPECIAL BUSINESS PROVISIONS
Boeing Commercial Airplanes (BCA) SECOND TIER REPORT (Reference SBP Section 9.6)
Spirit Name:
Date:
Spirit Contact: Phone:
BCA Procurement Agent Contact: Phone:
BCA Purchase Contract #:
Reporting Period * Jan - Mar Apr - Jun July - Sept Oct - Dec
Year:
Definitions **
Small Business (SB)
The term “small business” shall mean a small business as defined pursuant to Section 3 of the Small Business Act (15 U.S.C.A. 632) and relevant regulations issued pursuant thereto. Generally, this means a small business organized for profit, it is independently owned and operated, is not dominant in the field of operations in which it is bidding, and meets the size standards as prescribed in Government regulations. (Includes SDBs, SMBEs and WOSBs)
Small Disadvantaged business (SDB)
A small business certified by the U.S. Small Business Administration as a socially and economically small disadvantaged business for consideration of Government set-a-side contracting opportunities and business development. (Includes SDBs who are women-owned)
Small Minority Business Enterprise (SMBE)
A small business that is at least 51 percent owned, operated and controlled by a minority group member (Asian, Black, Hispanic, and Native Americans); or, in the case of a publicly-owned business, at least 51% of the stock is owned by one or more minority group members and such individuals control the management and daily operations. (Includes SDBs)
Women-owned Small Business (WOSB)
A small business concern that is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the stock is owned by one or more women; and whose management and daily business operations are controlled by one or more women. (Includes WOSBs who are also SDBs)
Contract Dollars Received by Spirit
A.
Boeing Commercial Airplanes contract dollars received by Spirit for the above reporting period* (report in whole numbers): $________________________________
Value of Subcontract 2nd Tier Dollars Awarded
(for Boeing Commercial Airplanes Purchase Contracts ONLY)
Diversity Category
Reporting Period (see above*)
Dollars
(report in whole numbers)
Percent of
Spirit Dollars
B.
Small Business (SB)
 
(B ÷ A)
C.
Small Minority Business Enterprise (SMBE)
 
(C ÷ A)
D.
Women-owned Small Business (WOSB)
 
(D ÷ A)
Authorized Company Representative (Print):
Authorized Company Representative (Signature): Date:















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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 12 TO
SPECIAL BUSINESS PROVISIONS

NON-U.S. PROCUREMENT REPORT FORM
(Spirit to Submit)
(Reference SBP Sections 12.7.1, 12.7.2)

Spirit Name
Country
Commodity/
Nomenclature
Bid
Dollars
Contracted
Dollars
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
























- 100 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 13 TO
SPECIAL BUSINESS PROVISIONS

[Reserved]









































- 101 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 14 TO
SPECIAL BUSINESS PROVISIONS
PRODUCTION ARTICLE DELIVERY SCHEDULE
(Reference SBP Sections 3.3.2.2, 3.3.4.1, 3.4.2.1)

A14.1 Deliveries to Boeing Final Assembly and Delivery (FA&D)

The Production Article Delivery Schedule for Final Assembly & Delivery (FA&D) will be established from the Master Schedule-on-the-Web Process described in Document [*****] accessed through Boeing’s Boeing Partner Network/Content Delivery Service (BPN/CDS) (see [*****] and [*****]).

The CDS schedule represents the required On-dock dates for deliveries to FA&D. Spirit shall access CDS and use the information contained therein for managing deliveries to FA&D.

If Spirit delivers by utilizing the LCF, Spirit shall utilize [*****] for the precise formula to derive the LCF ready to ship date (RTS).


A14.2 Deliveries to a non-Boeing site or consuming partner (non-Boeing FA&D):

The Production Article Delivery Schedule shall be established and documented in accordance with [*****]. The Production Article Delivery Schedule will be located within the Exostar SCMP system and will be provided by the consuming partner. If Spirit delivers by utilizing the LCF, Spirit shall utilize Document [*****] for the precise formula to derive the LCF ready to ship date (RTS).
















- 102 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SCHEDULE CHANGE EXAMPLES

(Reference SBP Section 7.4)


DECELERATION EXAMPLE

Current Shipset Price = $[*****]

Notification given the last day of Month [*****]
Impact through the last day of Month [*****]
IMG16.JPG
Month
[*****]
 
 
 
 
 
 
 
 
 
 
 
Baseline Schedule
[*****]
 
 
 
 
 
 
 
 
 
 
 
Revised Schedule
[*****]
 
 
 
 
 
 
 
 
 
 
 
Shipsets affected by month
[*****]
 
 
 
 
 
 
 
 
 
 
 
Shipset Months
[*****]
Total Shipset Months
[*****]

Total Shipsets affected: [*****]
Total Shipset months: [*****]

Value= Shipset Price * [*****] * Total Shipset Months
= [*****]
= [*****]







- 103 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 15 TO
SPECIAL BUSINESS PROVISIONS

SCHEDULE CHANGE EXAMPLES (Cont.)



ACCELERATION EXAMPLE

Notification given the last day of Month [*****]
Impact through the last day of Month [*****]
IMG16.JPG
Month
[*****]
 
 
 
 
 
 
 
 
 
 
 
Baseline Schedule
[*****]
 
 
 
 
 
 
 
 
 
 
 
Revised Schedule
[*****]
 
 
 
 
 
 
 
 
 
 
 
Shipsets affected by month
[*****]
 
 
 
 
 
 
 
 
 
 
 
Shipset Months
[*****]
Total Shipset Months
[*****]

Total Shipsets affected: [*****]
Total Shipset months: [*****]

Value: [*****]









- 104 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS


PRICING METHODOLOGIES
(Reference SBP Sections 7.2.3.1, 7.2.3.2, 7.8.1, 11.1, 12.10.1)

A.      Boeing Performed Repair and Rework

Prices for Boeing performed repair and rework (including traveled or incomplete work) shall utilize the following methodology

A.1
Price for non-conformance and traveled work identified in Spirit Generated Line Unit OSSN EPD (Open Ship Short Notification Emergent Process Document)
    
Definitions for Traveled Work Nomenclature:                             
SOI-A = All Traveled Work other than SOI-B
SOI-B = Traveled work resulting from PMI delivery delays that are the responsibility of Boeing or written instructions by Boeing to not complete certain Spirit responsible work.

Upon delivery of any Product by Spirit, all exceptions to defined configuration are documented by Spirit in a product known as a OSSN EPD or through other approved processes. Upon analysis by Boeing of such OSSN EPDs or other Spirit documented product, Boeing will establish incomplete work, repair and rework to be accomplished at Boeing’s facility. Incomplete Spirit work shall be comprised of incomplete work that is 1) due to Spirit (SOI-A) and 2) due to Boeing (SOI-B). The definition of this incomplete work will be documented in a product known as a “Closure Report”, or through other approved processes. Upon release of a line number Closure Report, or other documentation through approved processes, Boeing shall notify Spirit of the total quantity of SOI’s planned by Boeing for such Shipset multiplied by the prices per unit in table A.1.












- 105 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS


PRICING METHODOLOGIES (cont.)

Boeing shall notify Spirit of the total number of Line Unit OSSN EPDs due to traveled non-conformances. These shall be multiplied by the prices per unit in table A.1. The resulting values shall be the costs and expenses incurred by Boeing for such repair or rework as provided in SBP Section 11.1.

Table A.1
Traveled Work Nomenclature
Price Per Unit
SOI-A
$ [*****]
SOI-B
$ [*****]
Non-conformance EPD
$ [*****]



A.2
Price for non-conformance, repair or rework identified at Boeing

Boeing shall consolidate and notify Spirit in a timely manner of all non-conformance EPDs identified at Boeing deemed to be Spirit responsibility. Spirit shall notify Boeing in a timely manner of any exceptions to the assignment of responsibility of any non-conformance EPD. The Parties shall work in good faith to resolve such exceptions.

Upon delivery of an Aircraft to Boeing’s customer, Boeing shall notify Spirit of all non-conformance EPDs identified at Boeing for such Shipset multiplied by the prices per unit in table A.1. The resulting value shall be the costs and expenses incurred by Boeing for such repair or rework as provided in SBP Section 11.1.

A.3    Other incomplete work, repair or rework

For any other incomplete work, repair or rework, including such work performed at a consuming partner/supplier, Boeing shall notify Spirit of the costs and expenses incurred by Boeing for such repair and rework.






- 106 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS


PRICING METHODOLOGIES (cont.)

A.4     Process for updating prices for Boeing performed traveled work, repair and rework

In the third calendar quarter of each year, the fixed prices for traveled work, repair and rework shall be updated.

The value for SOI-A shall be updated based on the following:
The total quantity of Boeing direct factory labor hours expended from January 1 through June 30 (occurring in the same year the third quarter update is being calculated) for those SOI’s completed by Boeing in those calendar months, shall be divided by the total quantity of the same SOI’s used to establish the total quantity of Boeing direct factory labor hours. The result shall be the average direct factory labor hours per SOI-A. [*****] additional [*****] shall be added to this average to account for additional support labor (M.E. Planning) not included in the above calculation or the Boeing wrap rate. The sum of the average hours per SOI-A plus [*****] shall be multiplied by the Boeing developed wrap rates. Boeing developed wrap rates shall reflect any annual changes in Boeing rates utilized for traveled work, repair and rework. The result shall be the fixed dollars per SOI-A for such work.

The value for SOI-B’s shall be updated based on the following:
The average direct labor hours per SOI-A described above shall be divided by [*****] and multiplied by the Spirit developed wrap as calculated in SBP Attachment 16, Paragraph C. This calculation shall exclude the additional [*****] incorporated in to the SOI-A calculation.

The value for Non-conformance EPD’s shall be updated based on the following:
The total quantity of Boeing direct factory labor hours expended from January 1 through June 30 (occurring in the same year the third quarter update is being calculated) for those EPD’s completed by Boeing in those calendar months, shall be divided by the total quantity of the same EPD’s used to establish the total quantity of Boeing direct factory labor hours. The result shall be the average direct factory labor hours per EPD. [*****] additional [*****] shall be added to this average to account for additional overhead not included in the above calculation or the Boeing wrap rate. The sum of the average hours per EPD plus [*****] additional [*****] shall be multiplied by the Boeing developed wrap rates for EPD work. Boeing developed wrap rates shall reflect any annual changes in Boeing

- 107 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


rates utilized for traveled work, repair and rework. The result shall be the fixed dollars per EPD for such work.

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS


PRICING METHODOLOGIES (cont.)

During any update, the Parties may review the relationship of the Boeing direct factory labor hours and the hours of Boeing support to total rework hours and adjust the CER accordingly.

These updated values shall be effective beginning October 1 st of each year and shall be in effect until the subsequent annual update.


B.      Derivative Pricing

The Price for any derivative shall utilize the methodology set forth in SBP Attachment 16, Section D.

The baseline CER values utilized to establish the Price for the 787-9, shall be as follows:

Section 41
Fabrication dollars, these dollars include aluminum, titanium, composites and other. Other includes such elements as sealant, fasteners, coatings and other miscellaneous
Total Fabrication Dollars
[*****]
 
 
 
Total Assembly and Support dollars. This includes such elements as recurring assembly, Eng, ME, IE and other support functions
Assembly and Support
[*****]
 
 
 
Amortized Non-recurring included in baseline below
NR Amortization
[*****]
 
 
 
Baseline Price [*****] Shipsets
Baseline
[*****]










- 108 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)

Wing Leading Edge
Fabrication dollars, these dollars include aluminum, titanium, composites and other. Other includes such elements as sealant, fasteners, coatings and other miscellaneous
Total Fabrication Dollars
[*****]
 
 
 
Total Assembly and Support dollars. This includes such elements as recurring assembly, Eng, ME, IE and other support functions
Assembly and Support
[*****]
 
 
 
Amortized Non-recurring included in baseline below
NR Amortization
[*****]
 
 
 
Baseline Price [*****] Shipsets
Baseline
[*****]


Pylon
Fabrication dollars, these dollars include aluminum, titanium, composites and other. Other includes such elements as sealant, fasteners, coatings and other miscellaneous
Total Fabrication Dollars
[*****]
 
 
 
Total Assembly and Support dollars. This includes such elements as recurring assembly, Eng, ME, IE and other support functions
Assembly and Support
[*****]
 
 
 
Amortized Non-recurring included in baseline below
NR Amortization
[*****]
 
 
 
Baseline Price [*****] Shipsets
Baseline
[*****]














- 109 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)

Fabrication - Baseline recurring cost estimating relationships for the Fabrication category:

A. Baseline weights used to establish baseline pricing. (Excludes PMI)    
Material Type
Baseline Weights
Summary Level (lbs)
Material Type Detailed Level (lbs)
Baseline Weights
Detailed  Level (lbs)
Section 41
Aluminum
[*****]
 
[*****]
Titanium
[*****]
 
[*****]
Composite
[*****]
 
[*****]
Other
[*****]
 
[*****]
Total
[*****]
 
[*****]
Wing Leading Edge
Aluminum
[*****]
 
[*****]
Titanium*
(*Includes splice straps and roller bolts)
[*****]
 
[*****]
Composite
[*****]
 
[*****]
Other
[*****]
Steel
[*****]
Remaining Other
[*****]
Total
[*****]
 
[*****]
Pylon
(simple average of [*****] and [*****])
Aluminum
[*****]
 
[*****]
Titanium
[*****]
Ti 5-5-5-3
[*****]
All other Ti
[*****]
Composite
[*****]
CFRP
[*****]
All other Comp
[*****]
Other
[*****]
Steel
[*****]
Remaining Other
[*****]
Total
[*****]
 
[*****]











- 110 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)

B. Cost factors for the materials that make up the baseline weights in order to allocate the fabrication dollars. These cost factors reflect relative associated complexity ($ per lb) of each material.
Material Types Detailed Level
Relative Cost Factors
Detailed
Level
Section 41
Aluminum
[*****]
Titanium
[*****]
Composite
[*****]
Other
[*****]
Wing Leading Edge
Aluminum
[*****]
Titanium
[*****]
Composite
[*****]
Steel
[*****]
All other Other
[*****]
Pylon
Aluminum
[*****]
Ti-5553
[*****]
All other Ti
[*****]
CFRP
[*****]
All other Comp
[*****]
Steel
[*****]
All other Other
[*****]


















- 111 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 
PRICING METHODOLOGIES (Cont.)

C. Resulting baseline $ per pound as a result of the factors used above.
Material Type Detailed  Level
Dollars per pound
Detailed Level
Section 41
Aluminum
[*****]
Titanium
[*****]
Composite
[*****]
Other
[*****]
Wing Leading Edge
Aluminum
[*****]
Titanium
[*****]
Composite
[*****]
Steel
[*****]
All other Other
[*****]
Pylon
Aluminum
[*****]
Ti 5-5-5-3
[*****]
All other Ti
[*****]
CFRP
[*****]
All other Comp
[*****]
Steel
[*****]
All other Other
[*****]


Assembly and Support - Baseline recurring Cost Estimating Relationships for the Assembly and Support category:
A. Baseline values used to establish baseline pricing.
Total Assembly & Support $
Total In-House Assembled/Installed Part Count
$ per Part
Section 41
[*****]
[*****]
[*****]
Wing Leading Edge
[*****]
[*****]
[*****]
Pylon
(simple average of [*****]and [*****])
[*****]
[*****]
[*****]










- 112 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)



C.      Prices for Miscellaneous Work

The Price for any Miscellaneous Work shall be negotiated based on a proposal from Spirit which shall utilize the following rates and factors:

 
2006 Baseline Burdened Rate
Engineering
[*****]
Tool Fabrication
[*****]
Operations
[*****]
 
 
Non Labor (includes travel, raw material and any special parts not addressed by Spare Parts provisions of contract
Non-labor $ + [*****] % of Non-labor $

$ [*****] /hour for Engineering (including D.E., Stress, M.E. and any other direct labor providing input to the engineering statement of work).

$ [*****] /hour for Operations (including direct production hours other than Spare Parts and support labor)

$ [*****] /hour for tool fabrication.

The above rates are year 2006 base year rates and will be escalated to the period of performance in accordance with the methodology described in Attachment 23, Section III.H.










- 113 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)


D.      Annual Shipset Price Adjustment

D.1      Introduction

As provided in SBP Section 7.2.2, a single annual Price adjustment for all changes shall be made in the first calendar quarter of each year. The following methodology and models shall be utilized as a basis for Price adjustments for all changes. Such models shall be subject to annual update based on changes in the cost estimating relationships (CER’s) or other model parameters reflecting the effect of Price adjustments.

D.2      Types of Changes
In recognition that changes will be implemented with the intent of reducing Spirit cost to achieve certain cost conditions, and that certain types of changes will affect Spirit costs in different manners, changes will be segregated in to 2 different categories: [*****] . Each of these 2 categories will be input independently in to the cost model (CER) and the result subject to the tests and process depicted in paragraph D.3.

D.3      Process


 
[*****]
 
 
 
 
 
 
 
 
 


- 114 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)

D.3.1      Pricing Models
The Shipset Price adjustment shall be the result of a Cost Estimating Relationship (CER) model as described in D.3.1.1 and D.3.1.2 which generates an average Price over an extended quantity of Shipsets.

This model contains two components, 1) a recurring price factor utilizing i) a weight based cost estimating relationship (CER) for fabrication and ii) a part count based CER for assembly and support as described in SBP Attachment 16, D.3.1.1 and 2) for nonrecurring not compensated or addressed in accordance with SBP Section 3.3.7 and Attachment 23 and SBP Section 7.5, “TCM”, a nonrecurring price factor utilizing an average dollar per part card CER as described in SBP Attachment 16, D.3.1.2. Nonrecurring is treated as a price component amortized into recurring price, as described in Attachment 16, paragraph D.3.1.2.

The methodology for Price adjustments shall be as follows:





















- 115 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)
D.3.1.1 Recurring Price Factor

Recurring price factor adjustments

Recurring price factor calculations will be based on changes in weight for fabrication and Spirit installed part count for assembly and support. The pricing model price per pound (for fabrication) and price per part (for assembly) is set forth below. The authority source for weight data is the [*****] or its successor. The authority source for the Spirit installed/assembled part count is Spirit SAP (or equivalent).
 
Base Values

Section 41
[*****]
[*****]
[*****]
 
 
 
[*****]
[*****]
[*****]
 
 
 
[*****]
[*****]
[*****]
 
 
 
[*****]
[*****]
[*****]

















- 116 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)

Wing Leading Edge
[*****]
[*****]
[*****]
 
 
 
[*****]
[*****]
[*****]
 
 
 
[*****]
[*****]
[*****]
 
 
 
[*****]
[*****]
[*****]


Pylon
[*****]
[*****]
[*****]
 
 
 
[*****]
[*****]
[*****]
 
 
 
[*****]
[*****]
[*****]
 
 
 
[*****]
[*****]
[*****]





















- 117 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)

Fabrication - Baseline recurring cost estimating relationships for the Fabrication category:

A. Baseline weights used to establish baseline pricing. (Excludes PMI)    
Material Type
Baseline Weights
Summary Level (lbs)
Material Type Detailed Level (lbs)
Baseline Weights
Detailed  Level (lbs)
Section 41
Aluminum
[*****]
 
[*****]
Titanium
[*****]
 
[*****]
Composite
[*****]
 
[*****]
Other
[*****]
 
[*****]
Total
[*****]
 
[*****]
Wing Leading Edge
Aluminum
[*****]
 
[*****]
Titanium*
(*Includes splice straps and roller bolts)
[*****]
 
[*****]
Composite
[*****]
 
[*****]
Other
[*****]
[*****]
[*****]
[*****]
[*****]
Total
[*****]
 
[*****]
Pylon
(simple average of [*****] and [*****])
Aluminum
[*****]
 
[*****]
Titanium
[*****]
[*****]
[*****]
[*****]
[*****]
Composite
[*****]
[*****]
[*****]
[*****]
[*****]
Other
[*****]
[*****]
[*****]
[*****]
[*****]
Total
[*****]
 
[*****]











- 118 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)

B. Cost factors for the materials that make up the baseline weights in order to allocate the fabrication dollars. These cost factors reflect relative associated complexity ($ per lb) of each material.
Material Types Detailed Level
Relative Cost Factors
Detailed
Level
Section 41
Aluminum
[*****]
Titanium
[*****]
Composite
[*****]
Other
[*****]
Wing Leading Edge
Aluminum
[*****]
Titanium
[*****]
Composite
[*****]
Steel
[*****]
All other Other
[*****]
Pylon
Aluminum
[*****]
Ti-5553
[*****]
All other Ti
[*****]
CFRP
[*****]
All other Comp
[*****]
Steel
[*****]
All other Other
[*****]

















- 119 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)

C. Resulting baseline $ per pound as a result of the factors used above.
Material Type Detailed  Level
Dollars per pound
Detailed
Level
Section 41
Aluminum
[*****]
Titanium
[*****]
Composite
[*****]
Other
[*****]
Wing Leading Edge
Aluminum
[*****]
Titanium
[*****]
Composite
[*****]
Steel
[*****]
All other Other
[*****]
Pylon
Aluminum
[*****]
Ti 5-5-5-3
[*****]
All other Ti
[*****]
CFRP
[*****]
All other Comp
[*****]
Steel
[*****]
All other Other
[*****]


Recurring Price Factor Calculation Process for Fabrication category :

Step 1 : [*********]

Step 2A : [*********]












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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)

Step 2B : [*****]

Step 3 : [*****]

Step 4 : [*****]

Formula: [*****]

[*****]

[*****]

Step 5 : [*****]

























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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)


Assembly and Support - Baseline recurring Cost Estimating Relationships for the Assembly and Support category:
A. Baseline values used to establish baseline pricing.
Total Assembly & Support $
Total In-House Assembled/Installed Part Count
$ per Part
Section 41
[*****]
[*****]
[*****]
Wing Leading Edge
[*****]
[*****]
[*****]
Pylon
(simple average of [*****] and [*****])
[*****]
[*****]
[*****]

Step 1:

[*****]
























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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 

PRICING METHODOLOGIES (Cont.)

Step 2 : [*****]

Step 3 : [*****]

Formula: [*****]

[*****]

[*****] .

Step 4 : [*****]



























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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
 
PRICING METHODOLOGIES (Cont.)
D.3.1.2 Parametrics for Certain Nonrecurring
For nonrecurring not compensated or addressed in accordance with SBP Section 3.3.7 and Attachment 23 and SBP Section 7.5, “TCM”, a nonrecurring price factor will be calculated utilizing:

1) For engineering changes resulting in a part card change (generally implemented through a Change Notice (CN)) - [*****] . A “part card” is defined as a unique engineering part number and is not the number of instances the engineering part is used. The authority source for part card count is ENOVIA.

The Parties acknowledge that those engineering changes identified as 95000 type changes, e.g. 95000E and 95000T are typically the result of engineering error. The nonrecurring effort for such 95000 type changes are not compensable. In the event Spirit deems a 95000 type change has been released and the cause of such change was not due to Spirit error, Spirit may request that any associated part card impact be included in the calculation set forth above.

2) For Planning effort associated with revisions to Wire Harness Installation Documents (WHIDs) impacted by the Electrical Corrective Action Team process (ECAT)s - [*****] . The authority source for WHIDs is DELMIA.

3) For new Tooling - A CER based model by tool type for tool design and tool fabrication will be used to calculate the value for new Tooling required as a result of new or changed parts driven by an engineering change described in D.3.1.2. [*****] . Spirit shall provide a list of tools generated from change activity by part number and Boeing shall review and validate.









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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS


PRICING METHODOLOGIES (cont.)

4) For revised Tooling - [*****] . Spirit shall provide a list of tools generated from change activity by part number and Boeing shall review and validate.

In the first calendar quarter of each year, the Parties shall establish:

1) The total part card change for engineering changes implemented in the previous calendar year, as defined by an extract from ENOVIA for all of the Spirit work packages for the same Line Unit. The Line Unit used to establish the number of unique part card changes shall be the Line Unit of the last Section 41 delivered by Spirit to Boeing in the prior calendar year.

2) The total new and revised tools as a result of new or changed parts driven by an engineering change described in D.3.1.2 developed by Spirit and validated by Boeing.

3) The total quantity of WHID changes implemented in the previous calendar year as defined by an extract from DELMIA for all of the Spirit work packages for the same line unit. The Line Unit used to establish the number of changes shall be the Line Unit of the last Section 41 delivered by Spirit to Boeing in the prior calendar year.

In the event the Parties are unable to agree on the total quantity of new and revised part cards and tools subject to such compensation in time to support the Annual Price Adjustment, [************] shall be utilized. The Parties will continue to work to reconcile their differing counts and any subsequent adjustment shall be made at the next Annual Price Adjustment and applied retroactively.










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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

The methodology for deriving the nonrecurring price factor shall be a follows:

Table 1 - Engineering (Engineering, M.E., Operations and NC)
 
Hours per Part Card - New and revised
(Eng, ME, Ops, NC)
Section 41
[*****]
Wing Leading Edge
[*****]
Pylon
(applicable to [*****] and [*****]
[*****]
WHIDs
[*****]

Table 2 - New Tooling
Fixed Hours Per Tool
 
New Make
Tool Code
Design Hours
Fab Hours
AJ
[*****]
[*****]
BAJ
[*****]
[*****]
BOF
[*****]
[*****]
CP
[*****]
[*****]
DFT
[*****]
[*****]
DJ
[*****]
[*****]
FAJ
[*****]
[*****]
FME
[*****]
[*****]
FMHF
[*****]
[*****]
LJ
[*****]
[*****]
LM
[*****]
[*****]
ME
[*****]
[*****]
MF
[*****]
[*****]
MHF
[*****]
[*****]
MIT
[*****]
[*****]
MOLD
[*****]
[*****]
NCMIT
[*****]
[*****]
OHME
[*****]
[*****]
PME
[*****]
[*****]
PRE
[*****]
[*****]
SME
[*****]
[*****]
TME
[*****]
[*****]

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

Table 3 - Reworked Tooling
 
Fixed Hours Per Tool
Tool Design
[*****]
Tool Fabrication
[*****]

Table 4 - Labor Rates
 
2006 Baseline Burdened Rate
Engineering (Includes Engineering, Tool Engineering, M.E., Operations and NC)
$ [*****] /hour
Tool Fabrication
$ [*****] /hour
The above rates are year 2006 base year rates and will be escalated to the period of performance in accordance with the methodology described in Attachment 23, Section III.H.


Step 1 : [**********] .


Step 2: [************] .

D.3.1.2.1      Cap on Application of Certain Parametrics for Nonrecurring

In the event the result of the calculation in SBP Attachment 16, paragraph D3.1.2 exceeds [*****] dollars ($ [*****] ) in any year, either Party may propose alternative pricing methods. In the event the Parties do not reach agreement on the alternative pricing in time to incorporate it in to the Annual Price Adjustment,










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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

the [*****] shall be utilized as an interim value and incorporated in to the Annual Price Adjustment until completion and incorporation of a negotiated agreement. Such agreement shall be incorporated in to the next Annual Price Adjustment and retroactively applied to the applicable Shipset Price effectivity as provided in SBP Attachment 16, paragraph D.3.3.
D.3.2          Annual Price Adjustment Calculation

The sums of the fabrication, assembly and amortized nonrecurring price factors shall be evaluated against the criteria specified in SBP Attachment 16, D.2 in determining the annual Price adjustment. Utilizing the examples generated in the fabrication factor and assembly factor sections above and assuming a nonrecurring factor of $ [*****] per Shipset, the following are examples of resulting Annual Price Adjustment.

Scenario 1:
 
[*****]
[*****]
Fabrication Factor
$[*****]
(example 1)
-$[*****]
(example 2)
Assembly Factor
$[*****]
(example 1)
-$[*****]
(example 2)
Nonrecurring Factor
 
$[*****]
Result
$[*****]
$[*****]

In Scenario 1: [*****]














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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

Scenario 2:
 
[*****]
[*****]
Fabrication Factor
-$[*****]j
(example 2)
$[*****]
(example 1)
Assembly Factor
-$[*****]
(example 2)
$[*****]
(example 1)
Nonrecurring Factor
$[*****]
$[*****]
Result
-$[*****]
$[*****]

In Scenario 2: [************]

D.3.3 Effectivity of Annual Price Adjustment
The Shipset Price adjustment shall be effective for all Products at the same Line Unit which shall be equivalent to the first Section 41 Shipset delivered on or after July 1 of the prior year. This represents an averaging of the impact of all changes over all Shipsets for that year. Such adjustment shall become payable upon contract amendment following the completion of the second quarter annual risk sharing evaluation as provided in SBP Section 4.10.

Example:
The final 41 Section delivery in 2013 is Shipset 200. The first Section 41 delivered on or after July 1 in 2013 is Shipset 150. In Q1 of the year 2014, the Annual Price Adjustment process will utilize the configuration of Shipset 200 for all Products for all the calculations required to accomplish the Annual Price Adjustment. Such price shall be effective at Shipset 150 and-on for all Products.













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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS
PRICING METHODOLOGIES (cont.)
D.3.4      Update of CER Models
Upon completion of each annual Price adjustment, the Parties shall review the CER models and determine if any modifications or updates are necessary to reflect new information and experience. Such modifications or updates shall reflect the principles utilized to establish the initial CER models. These are:
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
To provide reference and not as precedence, some of the methodology utilized to establish the initial CERs included:
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]












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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 17 TO
SPECIAL BUSINESS PROVISIONS

 
[RESERVED]





















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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 18 TO
SPECIAL BUSINESS PROVISIONS

Abnormal Escalation
(Reference SBP Section 4.1.2)

1.
Shipset Prices will be adjusted for Abnormal Escalation as provided below. In the event that escalation, as forecast by a composite of the identified below indices, exceeds [*****] for any given calendar year (“Abnormal Escalation”), the Shipset Prices, as applicable, for the subsequent calendar year shall be adjusted by that percentage value which exceeds [*****] . Abnormal Escalation is calculated each year against the Shipset Prices, as applicable, effective for that year and is not cumulative. The adjusted Shipset Prices will revert back to the SBP Attachment 1 Shipset Prices at the beginning of the subsequent calendar year.

Any prolonged extraordinary inflation would be considered by the Parties to determine any mutually agreeable proper actions to be taken.

2.
Adjustments to the Shipset Prices will be determined by the following economic indices:

A.      Material - [*****] .

B.      Labor - [*****] .

Composite - [*****] .


3.
Special Notes:

In the event the U.S. Bureau of Labor Statistics discontinues or alters its current method of calculating the indices specified above, Boeing and Spirit shall agree upon an appropriate substitution for or adjustment to the indices to be employed herein.

All calculations will be held to a six (6) decimal place level of precision.

Indices shall be pulled on November 15th of each year.





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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 18 TO
SPECIAL BUSINESS PROVISIONS

Abnormal Escalation (Cont.)

4.
Abnormal Escalation Formula:

Adjustments to the Shipset Prices, if any, for the period 2008 through 2021 shall be calculated as follows:

[*****]

Where [*****]

A = Adjusted Shipset Prices (20X2 Price)
B = Base Shipset Prices
IP = Percentage of composite index as compared to the previous year
MC = Current material index value (September 20X1)
MP = Previous year material index value (September 20X0)
LC = Current labor index value (3rd quarter 20X1)
LP = Previous year labor index value (3rd quarter 20X0)

5.
Example: Abnormal Escalation Price Increase

B = $2,000,000
MC = September 2008 material index value = [*****]
MP = September 2007 material index value = [*****]
LC = 3rd quarter 2008 labor index value = [*****]
LP = 3rd quarter 2007 labor index value = [*****]

IP = [*****]
Since IP > [*****] , clause is triggered

2009 Unit Price = [*****]

6. Example: Abnormal Escalation Clause Not Triggered

B = $2,000,000
MC = September 2008 material index value = [*****]
MP = September 2007 material index value = [*****]
LC = 3rd quarter 2008 labor index value = [*****]
LP = 3rd quarter 2007 labor index value = [*****]

IP = [*****]

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Clause not triggered because (IP < [*****] )]


SBP ATTACHMENT 19 TO
SPECIAL BUSINESS PROVISIONS

[Reserved]




















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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 20 TO
SPECIAL BUSINESS PROVISIONS

Bonded Stores Requirements
(Reference SBP Section 12.8.1)
A20.1
Boeing Furnished Material
Boeing will provide Boeing Furnished Material to Spirit for the purpose of enabling Spirit to perform its obligations under this SBP. During the term of this SBP, Spirit shall store and use the Boeing Furnished Material, as more particularly described in SBP Attachment 21, in accordance with the provisions of this SBP Attachment 20.
A20.2
Storage and Handling
At no charge to Boeing, Spirit will store Boeing Furnished Material at Spirit’s premises located in (enter address where Materials are physically located, city and state), supplier code (enter supplier code). Such Boeing Furnished Material at all times must be easily distinguishable from all other materials stored on Spirit’s premises. Such distinction shall be maintained by placing a sign on the Boeing Furnished Material clearly stating that the Boeing Furnished Material is owned by Boeing, and by segregating the Boeing Furnished Material within a fenced or other storage area (the “Storage Area”). The Storage Area shall contain a sign which shall indicate that there is located therein “Boeing Materials - Property of The Boeing Company.” The quantity and amount of such Boeing Furnished Material to be stored at Spirit’s facility should be coordinated from time to time between Boeing and Spirit after taking into account the available capacity of Spirit’s warehouse provided that Spirit’s facilities are adequate to perform their obligations under any Order, this SBP and the GTA.
Boeing maintains the right to mark all Boeing Furnished Material, and upon request from Boeing, Spirit shall so mark any items as requested. The Boeing Furnished Material shall only be removed from the Storage Area pursuant to SBP Attachment 20, Section A20.3. The Boeing Furnished Material shall at all times be stored and maintained by Spirit with the same degree of care used by Spirit under like circumstances for the storage and maintenance of Spirit’s own similar materials, provided that such standard shall in no event be less than that of reasonable care designed to prevent damage, loss or abnormal deterioration, and in accordance with good commercial practice.


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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 20 TO
SPECIAL BUSINESS PROVISIONS

Bonded Stores Requirements (Cont.)
A20.3
Withdrawal of Materials
Spirit shall remove Boeing Furnished Material from the Storage Area for use in the production of Products pursuant to any Order, this SBP and the GTA, or upon Boeing’s direction, ship them at Boeing’s expense in accordance with Boeing’s instructions; provided that Spirit shall not be responsible for any delay in the delivery of any Products that is caused by the removal of any Boeing Furnished Material upon Boeing’s direction.
A20.4
Title to Materials
Title to the Boeing Furnished Material shall at all times remain in Boeing. Spirit hereby warrants to Boeing that Spirit will not take any action that would result in the imposition by Spirit or by third parties of any liens, charges or encumbrances on the Boeing Furnished Material. Spirit shall not sell, assign, lease, transfer possession of, or grant a security interest in the Boeing Furnished Material, allow the Boeing Furnished Material to be attached or seized on execution or otherwise, or in any other way dispose of or encumber the Boeing Furnished Material or any part thereof except as provided herein.
Without in any way limiting Spirit’s obligations as set forth in this Section, Spirit, on request from Boeing, shall file a financing statement in the appropriate jurisdiction where the property is located, for notice purposes only, Form UCC-1, and on request from Boeing, file any other documents or notices necessary to preserve and protect the interest of Boeing in the Boeing Furnished Material.







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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 20 TO
SPECIAL BUSINESS PROVISIONS

Bonded Stores Requirements (Cont.)
A20.6
Records
A20.6.1
Access
Spirit shall maintain and preserve adequate records relating to the Boeing Furnished Material as provided herein, including records of all Boeing Furnished Material transactions. Boeing may inspect the Storage Area, Boeing Furnished Material and records relating thereto at any reasonable time.
A20.6.2
Quarterly Certified Boeing Furnished Material
Within thirty (30) days after the end of each calendar quarter, Spirit shall prepare and furnish to Boeing a report in the form provided in SBP Attachment 21 (the “Inventory Reporting Form”), identifying the content of the certified Boeing Furnished Material as of the end of each such quarter, which report shall be verified as correct by an officer of Spirit. In addition to the Inventory Reporting Form, Spirit will be able, for each quarterly inventory, to demonstrate the traceability of the Boeing Furnished Material used to the specific Boeing purchase orders for the end items produced. Boeing personnel shall, if desired by Boeing, participate in the preparation of such report.
Due to the anticipated extensive requirement for Boeing Furnished Material under the Program, this paragraph shall be revised upon agreement between the Parties on appropriate systems and processes to properly account for Boeing Furnished Material.
In the event of a shortage or loss for which Spirit is responsible, at Boeing’s option, Spirit shall (i) make prompt replacement of such Boeing Furnished Material at Spirit’s expense, or (ii) be deemed to have purchased all missing items of Boeing Furnished Material and shall promptly pay to Boeing an amount equal to the replacement value of such missing items. Boeing shall have the right to set off against, or appropriate and apply to the payment or performance of any obligation, sum or amount owing at any time to Boeing hereunder, all deposits, amounts or balances held by Boeing for the account of Spirit and any amounts owed by Boeing to Spirit, regardless of whether any such deposit, amount, balance or other amount or payment is then due and owing.


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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 20 TO
SPECIAL BUSINESS PROVISIONS

Bonded Stores Requirements (Cont.)
A20.7
Nonconforming Materials
In the event such Boeing Furnished Material are received at Spirit’s facility and found at any time thereafter to be nonconforming:
A.
Spirit shall promptly identify and control nonconforming Boeing Furnished Material in accordance with Spirit’s documented procedures;
B.
Spirit shall have delegated authority to disposition nonconforming product provided that Spirit has concurrence of supporting supplier of such Boeing Furnished Material;
C.
For dispositions requiring rework or repair, Spirit and supporting supplier of such Boeing Furnished Material shall concur on which parties shall perform the work. All costs and expenses associated with such rework or repair shall be the responsibility of Boeing;
D.
Spirit shall maintain accurate records relating to receipt and disposition of nonconforming Boeing Furnished Material in accordance with 787 Program data requirements;
E.
Spirit shall promptly notify Boeing’s Procurement Representative if concurrence with supporting supplier cannot be reached, disposition exceeds Spirit’s scope of delegated MRB authority, or nonconformance involves more than two parties.

A20.8      Taxes
Spirit shall pay, on Boeing’s behalf, all present and future property, sales, use, and other taxes levied as a result of the storage of Boeing Furnished Material by Spirit, and Boeing shall hold Spirit harmless from all such taxes. Notwithstanding the above, Boeing shall declare directly to the appropriate taxing authority, all property, the title to which is in Boeing, and shall notify Spirit of any taxes levied on such property, and Boeing shall reimburse Spirit for all such taxes immediately upon the receipt of Spirit’s invoice. Upon request, Spirit shall, in a timely manner, furnish Boeing with Boeing Furnished Material information necessary to assist Boeing for tax computation and tax reporting purposes.



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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 21 TO
SPECIAL BUSINESS PROVISIONS

Boeing Furnished Material and Inventory Reporting Form
(Reference SBP Section 12.8.1, Attachment 20)
IMG17.JPG















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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 21 TO
SPECIAL BUSINESS PROVISIONS

Boeing Furnished Material and Inventory Reporting Form (Cont.)
(Reference SBP Section 12.8.1, Attachment 20)
IMG18.JPG















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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 22 TO
SPECIAL BUSINESS PROVISIONS
Compliance and Cooperation Regarding orders, permits and Approvals
(Reference SBP Section 12.11)

This Attachment 22 states the Parties' agreement regarding allocation of responsibility for compliance with the local, state, and federal environmental laws and this allocation of environmental responsibility shall apply except: (1) as otherwise agreed in writing between Boeing and Spirit relating to the allocation of environmental responsibilities; or (2) as provided in environmental permits issued to Boeing as of today’s date by a state or federal regulatory authority (and any additional amendments or modifications thereto) or any administrative orders issued to Boeing as of today’s date by a state or federal environmental authority (and any additional amendments thereto) which the Parties have agreed will not be transferred to Spirit but for which Boeing will retain implementation responsibility (hereinafter, “Allocated Environmental Responsibilities”). 
a.
The Parties understand and agree that Spirit is allocated the sole responsibility to manage, fund, and otherwise satisfy the obligations of the owner and operator of the facilities and operations used in its performance of this Agreement (including but not limited to materials storage and handling, manufacturing, waste handling, maintenance, inventory storage, and distribution facilities and operations) (“the Facilities and Operations”) under the local, state, and federal environmental laws.
b.
Spirit responsibility includes, but is not limited to, the requirement to apply for and hold in Spirit individual name all required orders, permits and approvals legally required under environmental laws for the Facilities and Operations.
c.
Boeing shall not be obligated to manage, fund, or otherwise satisfy any such obligations related to the Facilities and Operations.
d.
Should any environmental regulatory agency assert that Boeing is the owner and/or operator of any of the Facilities and Operations or is responsible for compliance with any such obligations, unless Boeing’s environmental obligations that result from this regulatory action are required by the Allocated Environmental Responsibilities, Spirit will continue to bear the sole cost to comply, and at its sole cost will take affirmative steps to shift the status of owner and operator and sole responsibility for compliance with any such obligations to itself

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


including, but not limited to applying for orders, permits, and approvals as necessary under environmental laws.
SBP ATTACHMENT 22 TO
SPECIAL BUSINESS PROVISIONS
Compliance and Cooperation Regarding orders, permits and Approvals (Cont.)


e.
In any regulatory proceeding in which an environmental regulatory agency asserts or seeks to impose joint or shared regulatory obligations under environmental laws on Spirit and Boeing with respect to the Facilities and Operations, unless Boeing’s environmental obligations that result from this regulatory action are required by the Allocated Environmental Responsibilities, the Parties will cooperate with one another diligently to establish Partner’s sole responsibility for such obligations.
f.
Where necessary to comply in an instance in which an environmental agency has asserted or imposed owner and/or operator status, or responsibility for such obligations, on Boeing, Spirit will cooperate to provide Boeing with relevant, objective, and verifiable evidence of the compliance status of those Facilities and Operations.





















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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].






SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan
(Reference SBP Sections 3.3.7, 4.7, 4.8, 5.6, 5.8)
Derivatives and Mission Improvement Performance to Plan
This Attachment 23 sets forth the Performance to Plan ("PtP") detailed planning and pricing process that the Parties will use to manage the D&MI Nonrecurring Work covered by this SBP. In the event of a conflict between this Attachment 23 and any other provision of the SBP or GTA, such provision(s) of the SBP or GTA shall prevail.
I.      General
A.
This D&MI PtP process will apply to Nonrecurring Work included in Spirit’s D&MI statement of work. For the avoidance of doubt, only those D&MI activities contained in the One Plan Documents listed in Exhibit E of this Attachment 23 shall qualify for treatment under this PtP process.
B.
The PtP process shall be used to plan D&MI Nonrecurring Work for a period of performance that extends through each [*****] and through the [*****].
C.
All Recurring Work necessary to support the entry into service schedule of the MI changes and the Derivative Aircraft will be performed in accordance with the GTA and SBP.

II.      Detailed Planning Process
A.
Phase Definition The detail planning process will be broken in to logical phases that align to the Program D&MI development schedule. Each phase will incorporate required deliverables defined by the Parties as necessary to meet specific D&MI requirements. These phases may be subdivided as necessary to facilitate Program planning and requirements.
    




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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].





SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

B.
One Plan Documents - The Parties shall develop and maintain One Plan Documents for D&MI requirements on each Spirit work package covered by this SBP. The One Plan Documents will be the PtP baseline used for monthly PtP performance reviews. The Parties shall perform the activities of the One Plan Document in accordance with the following:
1.
The Parties shall each support all long lead activities required to meet D&MI requirements and schedule including but not limited to configuration development and trade studies as set forth in the One Plan Document.
2.
After Work Share Agreements and Resource Plans have been agreed, Boeing and Spirit will each select its personnel required to meet Program and One Plan Document requirements.
3.
When agreed Resource Plans include Spirit personnel working at Boeing or some other agreed location, Spirit will designate an employee to be a focal for each location.
The respective technical teams will reconvene as necessary until labor hour agreements are reached. The technical teams will co-sign the agreed One Plan Documents.
If the Parties are unable to agree on any element of the One Plan Document, Spirit will continue to perform the D&MI Nonrecurring Work in accordance with SBP Sections 6.1 and 6.2, provided that if the Parties do not agree on the D&MI NR Value that dispute shall be resolved in accordance with Section III.G of this Attachment 23.
 
C.
Monthly Review and Update - The Parties shall participate in a monthly joint PtP review process, including weekly status reviews (process flow example in Exhibit A hereto) . The monthly PtP review process will include, but not be limited to, identification of revisions in the One Plan Documents that may result in Boeing adjusting the agreed PtP baseline to ensure the objectives of the Program are being met. Spirit will perform the activities set forth in the adjusted One Plan Documents.

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


.
SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

The Parties will update the One Plan Documents monthly to ensure the One Plan Documents include the activities each Party will perform to accomplish the required D&MI Nonrecurring Work to meet Program requirements. If revisions are required to the One Plan Documents, it is the intent of the parties that the revisions will be co-developed and will be co-signed by the Parties (see example in Exhibit B). If the Parties are unable to agree on any element of the One Plan Document revisions, Spirit will continue to perform the D&MI Nonrecurring Work in accordance with SBP Sections 6.1 and 6.2, provided that if the Parties do not agree on the D&MI NR Value that dispute shall be resolved in accordance with Section III.G of this Attachment 23.    
D.
Planning of Subsequent Phases - The Parties agree to establish schedules for completing the requirements of the One Plan Document for the next Phase that allows reasonable time to conclude a D&MI NR Value agreement as contemplated in Section III.A.
E.
Administrative - In accordance with the Administrative Agreement, Boeing will authorize D&MI SOW by written direction. For proposal and pricing purposes, at the beginning of each Phase Boeing will issue a Contract Change Notice (CCN) referring to the relevant One Plan Document. This CCN will be revised as necessary to facilitate monthly updates. Prices and Performance Based Payments and Performance Based Advance Payments reflecting the agreed D&MI NR Value shall be updated in accordance with Section III of this Attachment 23.
III.      Pricing
A.
Negotiation of Phase Baseline - The Parties will reach agreement on a D&MI NR Value for each Phase subsequent to Spirit’s submittal of a [*****] proposal based on the signed One Plan Document for each work package, the methodology described in Section III.D of this Attachment 23 and as otherwise in accordance with this Section III of this Attachment 23. This [*****] proposal will utilize estimates of [*****] agreed upon between the respective technical teams as appropriate and will include any [*****] not specifically addressed by the respective technical teams that are necessary to complete the activities specified in the One Plan Document.

- 145 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


    
SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

Spirit's [*****] proposals shall be in sufficient detail to permit Boeing to establish classification by individual task of D&MI Nonrecurring Work to be either i) Research and Development as described in SBP Section 3.3.7.2 or ii) Other D&MI Nonrecurring Work as described in SBP Section 3.3.7.3. Boeing shall have the right to make a final determination of classification. This process shall be applied to any revision to the One Plan Document and the D&MI NR Value for those modifications will be negotiated during the next applicable monthly PtP review based on a [*****] proposal submitted by Spirit.
In the event the Parties are unable to reach a D&MI NR Value agreement, the dispute resolution process set forth in Section III.G of this Attachment 23 will be utilized.
B.
Monthly Update - In accordance with Section II.C of this Attachment 23, the PtP baseline will be reviewed monthly and the agreed D&MI NR Value will be modified (up or down), as necessary to reflect revisions in the One Plan Document as mutually agreed. In the event the Parties are unable to reach agreement, the process set forth in Section III.G of this Attachment 23 will apply.
The agreed D&MI NR Value will only be adjusted based on One Plan Document revisions that reflect a new or re-defined D&MI statement of work, major Program schedule adjustments, new tasks and deliverables and/or revised Work Share Agreement. Updates will require teams to document the revisions as an amendment to the baseline One Plan Document. Spirit’s inability to perform to plan will not drive a revision to the baseline One Plan Document.
C.
Negotiation of Subsequent Phases - The Parties will negotiate in good faith regarding the D&MI NR Value for subsequent Phases at the conclusion of each Phase utilizing the process and pricing elements as described in this Section II.







- 146 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

D.
D&MI NR Value Methodology - Excluding those One Plan Document tasks which will be paid in accordance with Section III.G of this Attachment 23, the D&MI NR Value for each Phase shall be based on the [*****] . For the avoidance of doubt, sub-contracted tooling is considered [*****]. The D&MI NR Value does not include any Incentive Payment.
E. Proposal Submittal - Unless otherwise agreed in writing, Spirit shall submit all [*****] proposals under this Attachment 23 within [*****] after receipt of the applicable CCN referring to the relevant One Plan Document or authorized CN including any revision thereto. Boeing may, at its sole discretion, consider any such proposal regardless of when submitted. Failure of the Parties to agree on the D&MI NR Value shall not excuse Spirit from performing in accordance with Boeing’s written direction, provided that if the Parties do not agree on the D&MI NR Value that dispute shall be resolved in accordance with Section III.G of this Attachment 23.
F.
Wrap Rates - [*****] .




















- 147 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

1. $ [*****] per hour for Product Definition and Product development tasks as specified in CCNs issued pursuant to Section II.E. above. This rate will be escalated from 2006 to the midpoint of the performance of the specific D&MI Nonrecurring Work using the [*****] index as developed in accordance with Attachment 23, Section H. The resultant wrap rate will be applied to the agreed hours for Spirit internal direct charged, or sub-contracted, Product Definition and Product development tasks in the following categories: i) design engineering, ii) stress engineering, iii) project manufacturing engineering, iv) tool engineering, v) Numerical Control programming, vi) process manufacturing engineering - which is defined as planning tasks and tasks required to ensure a Product Definition that meets the requirements of the airplane and is producible, and vii) LCPT support - which is defined as the effort of certain direct charge shop personnel that work with the LCPT to develop producible design solutions.
2.
$ [*****] per hour for tooling fabrication tasks as specified in the CCNs issued pursuant to Section II.E. above. This rate will be escalated from 2006 to the midpoint of the performance of the specific D&MI Nonrecurring Work using the [*****] index as developed in accordance with Attachment 23, Section H. The resultant wrap rate will be applied to the agreed value for either: i) Spirit’s internal direct charged Basic Factory Labor hours; or ii) In the case of Spirit’s AeroStructures Business Unit, the equivalent of internal direct charged Basic Factory Labor hours.
G.
Dispute Resolution - In the event the Parties are unable to reach agreement on the D&MI NR Value, the Parties agree to utilize the process specified in this Section III.G to determine the D&MI NR Value.
1.
If the difference in each Party’s valuation of each disputed task is less than [*****] % of the lower value, the Parties will agree to settle the D&MI NR Value by splitting the difference between the Party’s positions equally.





- 148 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

2.
If the difference in each Party’s valuation of each disputed task is greater that [*****] % of the lower value, the Party’s technical and business teams will convene a special meeting to discuss the Parties respective positions and attempt to reach an agreement. In addition, Boeing will provide Spirit with written direction to either continue or delay work on specified tasks. If the Parties close the difference to within [*****] % of the lower value the process in Section III.G.1 of this Attachment 23 will be used to settle the D&MI NR Value. If the difference in the Party’s’ positions remains greater than [*****] % of the lower value, and the difference is greater than $ [*****] the parties will elevate the issues to the leadership of the Procurement Representative and the LCPT organizations, or their designees, in the case of Boeing and to the leadership of the Contracts and applicable Business Unit organizations, or their designees, in the case of Spirit, for resolution. If the leadership teams are unable to totally resolve the issue, but the remaining difference is within [*****] % of the lower value, the process in Section III.G.1 of this Attachment 23 will be used to settle the D&MI NR Value.
3.
If the difference in each Party’s valuation is greater than [*****] % of the lower value but less than $ [*****] or if subsequent to the process specified in Section III.G.2 of this Attachment 23, the remaining difference in each Party’s valuation of each disputed task is greater than [*****] % of the lower value, the Parties agree that notwithstanding any other provision of this SBP, Boeing has the right to perform the disputed tasks itself or hire a third party to perform such tasks at its sole discretion. Boeing will provide Spirit with written direction to continue, delay or stop work on specified tasks. If Boeing chooses not to perform such tasks, the Parties will separate the disputed tasks from tasks not in dispute and group these disputed tasks into discrete, identifiable, traceable tasks for reporting and tracking purposes.








- 149 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

4.
If the Parties do not reach agreement under Sections III.G.1 or III.G.2 and/or if Boeing does not elect to perform the disputed tasks pursuant to Section III.G.3 of this Attachment 23, the following process will be utilized. In the case of disputed labor D&MI Nonrecurring Work tasks, Spirit will provide data as agreed between the Parties on a monthly basis regarding the actual hours expended for the disputed task. Boeing will work with Spirit to validate the data provided by Spirit. Upon validation of the data by Boeing, the hours will be multiplied by the following wrap rates to determine the D&MI NR Value:
a) $ [*****] per hour for Product Definition and Product development tasks specified in the CCNs issued pursuant to Section II.E. above. This rate will be escalated from 2006 to the midpoint of the performance of the specific D&MI Nonrecurring Work using the [*****] index as developed in accordance with Attachment 23, Section H. The resultant wrap rate will be applied to:

[*****]
[*****] .



















- 150 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

b)
$ [*****] per hour for tooling fabrication tasks specified in the CCNs issued pursuant to Section II.E. above. This rate will be escalated from 2006 using the [*****] index as developed in accordance with Attachment 23, Section H. [*****]
[*****] .
In the case of disputed non-labor Nonrecurring Work tasks, if the Parties do not reach agreement under Sections III.G.1 or III.G.2 and/or if Boeing does not elect to perform the disputed tasks pursuant to Section III.G.3 of this Attachment 23, the following process will be utilized: Spirit will provide data as agreed between the Parties on a monthly basis regarding Spirit‘s actual expenditures for the task. Boeing will work with Spirit to validate the data provided by Spirit. Upon validation of the data by Boeing, these expenditures will be the D&MI NR Value for the task. For the avoidance of doubt, sub-contracted tooling [*****] .
5.
Notwithstanding the foregoing, the final D&MI NR Value for any disputed task shall not exceed Spirit's valuation at the time of entering the dispute process of this Section III.G.4, or be less than Boeing's valuation at the time of entering the dispute process of this Section III.G.4.
6.
Throughout this process the Parties will continue to work in good faith to resolve the disputed issues and nothing shall prohibit the Parties from reaching agreement at any time and upon such agreement, removing the disputed tasks from the process specified in this Section (example in Exhibit C hereto).











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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

H.
Application of Rate Escalation Methodology
1.    Midpoint of the Specific D&MI Non-recurring Work
a.
For the purpose of establishing the midpoint per Sections III.F.1, III.F.2, III.G.4.a, and III.G.4.b, the specific D&MI Nonrecurring Work is the non-recurring SOW for a particular MI Blockpoint or Derivatives Phase including all CNs/PDDMs associated with that Blockpoint or Derivatives Phase (Examples: 787-9 Phase as mutually agreed by the Parties or BP-34 or BP-55 or BP-90 etc.).
b.
The midpoint for the specific D&MI Non-recurring Work will be determined as follows:
i.
In the case of MI Changes - The year that contains the month that lies halfway between the month nonrecurring work began on the first CN authorized for the Blockpoint and the month that the Blockpoint line number is scheduled to be delivered.
ii.
In the Case of Derivative Changes - The year that contains the month that lies halfway between the month nonrecurring work under that Phase begins and the month that non-recurring work under that Phase ends.
a.
Non-recurring Work on MI changes prior to an authorized CN (including Trade Study (TS) and Change Request (CR) activities) will not be included to determine the midpoint but will be paid in accordance with the yearly escalation index forecast value (for the year the work is scheduled to be performed) in effect at the time the work is negotiated.
2.     Midpoint Rate Determination
The D&MI Nonrecurring Work midpoint rate will be the then current annual forecasted index rate per Attachment 23 Sections III.F.1, III.F.2, III.G.4.a, and III.G.4.b for the midpoint year (as established in Attachment 23 Section III.H.1.b) in effect at the time the particular -9 Phase or first CN for the particular Blockpoint is negotiated.





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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

The midpoint rate for the particular specific D&MI Nonrecurring Work will not change unless the schedule for the beginning and/or ending points of the specific D&MI Non-recurring Work changes by more than one (1) cumulative year. If the schedule changes by more than one (1) cumulative year, the parties shall establish a new midpoint rate by using the then current index value for the new midpoint year. The new rate will be applied at the time of the schedule change to future scheduled work only. (any new rate will not be retroactive to work that was scheduled to be performed prior to the schedule change).
I.
Cost Estimating Relationship (CER) Development - The Parties will cooperate in good faith to streamline the D&MI Nonrecurring Work value estimating processes, using cost history and other cost estimating methodologies. The Parties will establish standard D&MI NR Values with each Party reserving the right to develop a discrete D&MI NR Value for CRs and CNs that require significantly more or less work. For the activities in each Phase, the Parties agree that CERs will be utilized to establish D&MI NR Value agreements. After CERs are established, the Parties shall utilize CERs to estimate the cost impact of revisions, as provided in Section III.B, and reach agreement on an adjusted D&MI NR Value
J.
Research and Development - The Price for Research and Development (reference Attachment 23 Sections III.A and III.D) is incorporated into SBP Attachment 1 "Work Statement and Pricing" and shall be subject to Performance Based Payments in accordance with SBP Section 5.6 "Performance Based Payments for Research and Development.”
K.
Other D&MI Nonrecurring Work - The value of Other D&MI Nonrecurring Work (reference Attachment 23 Sections III.A and III.D) is incorporated into SBP Attachment 1 "Work Statement and Pricing" and shall be subject to Performance Based Payments and Performance Based Advance Payments in accordance with SBP Section 5.8 "Performance Based Payments and Performance Based Advance Payments for Other D&MI Nonrecurring Work.
                

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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)


L.
Rework - Any claim for the costs associated with re-working partially completed or completed tooling and Products to be compliant with MI configuration changes identified in the One Plan Document, and which were incurred by Spirit using “reasonable ordering and scheduling practices” in relation to Boeing’s master schedule will be promptly negotiated upon receipt of a fully supported proposal from Spirit. Such proposal shall contain sufficient detail to explain the proposed amount. For purposes of this provision, “reasonable ordering and scheduling practices” include placing timely orders using reasonable lead times based on the delivery schedules in effect at the time of initial order placement. It also includes making appropriate and timely modifications in accordance with Spirit sub-tier supplier contract terms as subsequent delivery schedules are issued. Spirit will use [*****] efforts to mitigate the impact of any Spirit sub-tier supplier contract terms which would result in higher re-work costs. Boeing will issue a priced purchase order within [*****] of completing negotiations. This purchase order will be paid by Boeing in accordance with SBP Section 5.0.

M.
Obsolescence - Notwithstanding Section 7.7 of SBP, any claim for the cost of obsolete tooling, Products, and material specifically authorized in accordance with the terms of this Attachment 23 resulting from MI configuration changes identified in the One Plan Document, and which were incurred by Spirit using “reasonable ordering and scheduling practices” in relation to Boeing’s master schedule will be promptly negotiated upon receipt of a fully supported claim from Spirit. Such claim shall contain sufficient detail to explain the claimed amount. For purposes of this provision, “reasonable ordering and scheduling practices” include placing timely orders and reasonable lead times based on the delivery schedules in effect at the time of initial order placement. It also includes making appropriate and timely modifications in accordance with Spirit sub-tier supplier contract terms as subsequent delivery schedules are issued. Spirit will use [********] efforts to mitigate the impact of any Spirit sub-tier supplier contract terms which would result in higher costs and apply obsolete parts to other production requirements where possible. Boeing will issue a priced purchase order within [*****] of completing negotiations. This purchase order will be paid by Boeing in accordance with SBP Section 5.0
 

- 154 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

N.
Other Claims - All costs or claims for changes relating to Spirit’s D&MI Nonrecurring Work, Recurring Work and other activities, other than those changes specified and mutually agreed in the One Plan Document, are subject to the change process specified in SBP Sections 6.0 and 7.0.
IV.      Performance Based R&D Payments and Advance Payments
A.
Spirit shall be entitled to payment of a Performance Based Payment for Research and Development upon the successful accomplishment of the event or performance criterion ("Performance Event") for which payment is specified. The Parties shall mutually determine whether the event or performance criterion for which payment is requested has been successfully accomplished in accordance with Exhibit D of this Attachment 23.
B.
Spirit shall be entitled to a Performance Based Payment and Performance Based Advance Payment for Other D&MI Nonrecurring Work upon the successful accomplishment of the event or performance criterion for which payment is specified. The Parties shall mutually determine whether the event or performance criterion for which payment is requested has been successfully accomplished in accordance with Exhibit D of this Attachment 23

V.      Audit
Spirit agrees to submit data for its actual D&MI Nonrecurring Work costs within [*****] days after the end of the month that the Phase completes. Submittals shall include, but not be limited to hours, direct material dollars and total dollars supporting Spirit actual D&MI Nonrecurring Work costs. Spirit submittals will be subject to Boeing verification.
After CERs have been developed, actual D&MI Nonrecurring Work costs will be used to update CERs (increase or decrease) which shall be used to establish future D&MI NR Values and value change activity.
Previously agreed D&MI NR Values will not be adjusted to reflect updated actual cost data.

- 155 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

 
VI.      Amendment
SBP Amendments shall be executed every six (6) months, or as otherwise agreed between the Parties, for all other revisions to the D&MI NR Values. The cumulative adjustments to D&MI Nonrecurring Work values resulting from revisions to the One Plan Document per Section III.B of this Attachment 23 shall be incorporated by SBP Amendment upon the successful accomplishment of the event or performance criterion established in Exhibit D of this Attachment 23. As applicable, SBP Sections to be amended shall include SBP Section 5.8.1, SBP Attachment 1 and Exhibits D and E to this Attachment 23.


Exhibits:

Exhibit A - Performance to Plan Cycle - Notional Process Flow
Exhibit B - Changes (Example: New Task is identified)
Exhibit C - Start Work Resolution Process Flow
Exhibit D - Criteria for Performance Based R&D Payments and Advance Payments
Exhibit E - One Plan Document Record










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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

Exhibit A

    
 
PtP Cycle - Notional Process Flow
 
Tier 1
 
 
 
 
 
 
 
 
 
 
 
[*****]
 
 
 
 
 
 
 
 
 
 
 
 
 
Workshop results support Performance Assessment and Value Determination
 
 
 
 
 
 



















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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

Exhibit B
IMG19.JPG







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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



Exhibit C - Start Work Resolution Process Flow
(for Illustration purposes only)

 
[*****]
 
 
 
 
 
 
 
 
 

























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787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

Exhibit D - Criteria for Performance Based R&D Payments and Advance Payments

1.    Performance Based Payments for Research and Development (reference SBP Section 5.6)
Performance Based Payments for Research and Development consist of four (4) individual performance events plus a final payment. This Exhibit provides a description of each performance event, the success criterion and verification for each event.
*The amounts for each event are initially for D&MI work negotiated through December 21, 2010 and shall be amended as additional D&MI work statement is negotiated in accordance with this SBP Attachment 23.

Event No.
Performance Event
Completion Criteria
Verification
*Amount (as of 06/19/2012 and Amendment 19)
(Paid in accordance with SBP 5.6)
1.
Section 41 Preliminary Layouts [*****]% Complete
i) [*****]% of Section 41 Preliminary Layouts
ii) all other Section 41 R&D events scheduled prior to or concurrent to planned Section 41 [**]% milestone are complete and
iii) all Pylon R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete and
iv) all WLE R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete
Events closed in ETAC
$[*****]



- 160 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

2.
CDR complete for [*****] Pylon
i) CDR completed for Sec 41 and [*****]   Pylon
ii) all Section 41 R&D events and all Pylon R&D events and all WLE R&D events scheduled prior to or concurrent to planned [*****] Pylon CDR
When all actions items are closed following CDR and applicable events are closed in ETAC
[*****]
3.
Sec 41 Approved Layouts [*****] % Complete
i) [*****]% of Section 41 Approved Layouts
ii) all other Section 41 R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete and
iii) all Pylon R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete
iv) all WLE R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete
Events closed in ETAC
[*****]
4.
All Products On Dock to the Delivery Point
i) Delivery of all products to Boeing
ii) all Section 41 R&D events scheduled prior to or concurrent to planned Section 41 delivery milestone are complete and
iii) all Pylon R&D events scheduled prior to or concurrent to planned Section 41 delivery milestone are complete
iv) all WLE R&D events scheduled prior to or concurrent to planned Section 41 delivery milestone are complete
Section 41 on dock at Boeing and applicable events are closed in ETAC
[*****]
5.
Final Payment
 
Airplane Certification
[*****]

2.    Performance Based Payments and Performance Based Advance Payments for Other D&MI Nonrecurring Work (reference SBP Section 5.8)
Performance Based Payments and Peformance Based Advance Payments for Other D&MI Nonrecurring Work consist of six (6) individual performance events







- 161 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

plus a final payment. This Exhibit provides a description of each performance event, the success criterion and verification for each event.
*The amounts for each event are initially for D&MI work negotiated through December 21, 2010 and shall be amended as additional D&MI work statement is negotiated in accordance with this SBP Attachment 23.

Event No.
Performance Event
Completion Criteria
Verification
* Amount (as of 06/19/2012 and Amendment 19)
(Paid in accordance with SBP 5.8)
1.
BP [*****] Tooling & Birdstrike Forging
Line Unit [*****] delivered & Birdstrike forgings on dock Spirit
Line Unit [*****] loaded in LCF & FAI complete on forgings
[*****]
2.
BP [*****] Tooling
Line Unit [*****] delivered
Line Unit [*****] loaded in LCF
[*****]
3.
BP [*****] Tooling
Line Unit [*****] delivered
Line Unit [*****] loaded in LCF
[*****]
4.
Begin spinning of 1 st  787-9 Sec 41 barrel
Planned Other D&MI NR Work completed prior to the beginning of spinning of 1 st  787-9 Sec 41 barrel
Load of barrel in to AFP cell
[*****]
5.
787-9
First 787-9 Delivered
First 787-9 on LCF
[*****]
6.
Final Payment
 
 
[*****]













- 162 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

Exhibit E - One Plan Document Record

D&MI One Plan Documents:
*
787 Section 41 IPT Derivatives and Mission Improvement One Plan Summary, Revision New, dated 01-15-09
*
787 Section 41 IPT Derivatives and Mission Improvement One Plan Line [*****], Revision New, 01-15-09
*
787 Section 41 IPT Derivatives and Mission Improvement One Plan Line [*****], Revision New, 01-15-09
*
787 Section 41 IPT Derivatives and Mission Improvement One Plan Line [*****], Revision New, 01-15-09
*
787 Section 41 IPT Derivatives and Mission Improvement One Plan 787-9, Revision New, 01-15-09
*
Spirit-Tulsa One Plan Grand Total, dated 4/16/09
*
787-9 One-Plan Spirit Pylon April 7-8, 2009
*
787-9 One-Plan Spirit S41 April 1, 2010
*
787-9 One-Plan Spirit WLE (Interim Agreement) May 21, 2010
*
787-9 One-Plan Spirit Pylon March 4, 2010
*
787-9 & MI Phase 2 One-Plan - Wing LE (WP 10 & 12)” (Interim Agreement) dated 09/22/10
*
“787 Pylon Derivatives & Mission Improvement Phase II ONE PLAN UPDATE 2 nd QUARTER - 2010” dated 7/1/2010
*
787 Section 41 IPT Derivatives & Mission Improvement Phase II ONE PLAN dated 6/30/2010
*
787 Section 41 IPT Derivatives & Mission Improvement Phase II ONE PLAN dated 8/26/2010
*
787 Pylon Derivatives & Mission Improvement Phase IIIa ONE PLAN - November 2010 - August 2011 dated 11/4/2010
*
787-9 & MI One-Plan; PtP Plan, Wing Leading Edge, dated 12/13, 2010, Rev 14
*
787 Phase III PtP Negotiation Status Between Spirit Wichita and Boeing as of March 11, 2011
*
787 Phase III PtP Negotiation Status Between Spirit Wichita and Boeing as of April 21, 2011
*
787 Section 41 D&MI Improvement “Sec 41 Tooling One Plan Agreements March and April 2011”




- 163 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)
Exhibit E - One Plan Document Record
D&MI One Plan Documents (cont.):
*
787 Section 41 D&MI Improvement “CN 22067 - Sec 41 [*****] dated June 1, 2011
*
787 One Plan - Section 41 | SOW Hours Agreement “D_MI Sec 41 Engineering One Plan Agreements 6_9_11”
*
787 Section 41 D&MI Improvement “787 D_MI Sec 41 Tooling One Plan Agreements 6_7_11”
*
787 Pylon Derivatives & Mission Improvement Phase IIIa ONE PLAN Rev. B - November 2010 - June 2011 dated 7/7/2011
*
787-9 One-Plan Phase IIIb; PtP Plan, Wing Leading Edge, dated 7/1/2011
*
787-9 Section 41 D/MI PtP Phase IIIb One Plan Updates for the following NR changes: CN21389-[*****], dated 11-4-11, CN26217-[*****], dated 12-22-11, CN27164-ME Impact, dated 2-1-12, CN28726-[*****], dated 12-22-11, CN29139-[*****] dated 12-1-11, LMA CN643-[*****] dated 12-1-11, LMA CN646, dated 11-16-11, LMA CN647-[*****], dated 11-17-11, LMA CN648-[*****], dated 11-16-11, LMA CN651-[*****], dated 11-17-11, LMA CN655, dated 11-17-11, LMA CN659-[*****], dated 11-17-11, LMA CN665-dated 11-17-11, LMA CN671-[*****], dated 12-1-11, LMA CN677-[*****], dated 12-1-11, LMA CN688-[*****], dated 1-12-12, LMA CN705- [*****], dated 1-12-12, LMA CN727-[*****], dated 1-12-12, LMA CN689-[*****], dated 1-12-12, LMA CN690-[*****], dated 12-15-11, LMA CN691-[*****], dated 1-12-12
*
787-9 Section 41 D/MI Tooling Phase IIIb One Plan Updates for non-recurring activities for the following changes: CN 22067, [*****], dated 6-1-11, CN 25334, [*****], dated 11-1-11, 787-9 [*****], dated 11-8-11
*
787-9 Pylon Derivatives & Mission Improvement Phase IIIb One Plan -- July 2011 - [*****], dated 12/19/2011
*
787-9 One Plan Phase IIIb, PTP Plan, Wing Leading Edge, Spirit AeroSystems, Tulsa, Dated 7/1/2011








- 164 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 24 TO
SPECIAL BUSINESS PROVISIONS


ANTI-LOBBYING CERTIFICATE
(Reference SBP Section 37.0)

      
________, 20__


Export-Import Bank of the United States
811 Vermont Avenue, N.W.
Washington, D.C. 20571
Attention: Operations & Data Quality Division


Subject:
Ex-Im Bank Credit No. _______ - [Name of Country]
[Name of Borrower] ("Borrower")
Anti-Lobbying Certificate

Ladies and Gentlemen:

The undersigned certifies, to the best of his or her knowledge and belief, that:

(1)    No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement and the extension, continuation, renewal, amendment or modification of any Federal contract, grant, loan or cooperative agreement.

(2)    If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress or an employee of a Member of Congress in connection with this Federal contract, grant, loan or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying" in accordance with its instructions.




- 165 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP ATTACHMENT 24 TO
SPECIAL BUSINESS PROVISIONS

ANTI-LOBBYING CERTIFICATE (cont.)

(3)    The undersigned shall require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans and cooperative agreements) and that all subrecipients shall certify and disclose accordingly.

This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by Section 1352, Title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.

[NAME OF SELLER]     

By:_______________________________________
(Signature of Authorized Representative)



Name:_____________________________________
(Print)


Title:____________________________________
(Print)
Address
_________________________________
1     Include Dun & Bradstreet Number.


2     This Certificate must be signed by the President, Chief Executive Officer (if different) and/or Chief Financial Officer, and/or by any other authorized officer(s) of the undersigned. Execution of this certificate constitutes a representation that the signer(s) are fully authorized to do so on behalf of the undersigned. Any person who makes a false representation to Ex-Im Bank may be subject to fine and/or imprisonment pursuant to 18 U.S.C. §1001. The undersigned agrees that, upon request, it will provide Ex-Im Bank with evidence of authority with respect to the person(s) signing this certificate.
3     Include Zip Code of company facility that produced the Item.

- 166 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 25 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment
(Reference SBP Sections 4.9)


A.      Incentive Payment Plan

An Incentive Payment plan is provided to improve and assure the execution of Spirit's Derivatives and Mission Improvement (D&MI) Nonrecurring Work ("Incentive Payment Plan"). This Incentive Payment Plan relies upon the collaborative efforts of Boeing and Spirit to maximize achievement of these performance improvements.

The Incentive Payment Plan establishes the basis for providing incentives to Spirit, to improve and/or enhance contract performance in support of D&MI. This Incentive Payment Plan provides the means by which Spirit’s performance evaluation will be conducted and amounts to be paid will be determined. The criteria and grading standards will be established to obtain specific 787 program benefits from Spirit. For clarity, Boeing shall further evaluate all Spirit activities, including those requested by Spirit, in order to appropriately adjust Incentive Payment scores for extenuating circumstances, e.g. impact of late Boeing Furnished Property and/or information, demonstrated effectiveness in working around unforeseen obstacles, and deliverables that require waivers or deviations. The Incentive Payment Plan is contained in Document [*****].


B.      Incentive Payment Pool

The available Incentive Payment amount (“Incentive Payment Pool”) is $[*****] for Research and Development plus Other D&MI Nonrecurring Work and $[*****] for Tooling. Boeing shall pay Spirit the Incentive Payment amount as determined in accordance with Document [*****].

The Incentive Payment Pool will be updated by SBP Amendment in conjunction with the establishment of, and updates to, the D&MI SOW as described in SBP Attachment 23.
Incentive Payment Pool Methodology: The Incentive Payment Pool shall be established at [*****]% of the agreed D&MI NR Value (as defined in SBP Attachment 23, Section III.A), provided that if any D&MI Nonrecurring Work is to



- 167 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 25 TO
SPECIAL BUSINESS PROVISIONS
Incentive Payment (cont.)
be paid in accordance with the Dispute Resolution clause of SBP Attachment 23, Section III.G, such work shall contribute to the Incentive Payment Pool at [*****]% of the Boeing initial estimate of the disputed value.

C.      Incentive Payment Plan Changes

The Incentive Payment Plan is not a negotiated document and Boeing may change any aspect of the Incentive Payment Plan in its sole discretion before the start of any upcoming [*****] evaluation period. Such changes shall be made for the purpose of supporting Program requirements or goals, as determined by Boeing in good faith. Changes to the Incentive Payment Plan affecting any current evaluation period may only be implemented upon mutual agreement of the parties. Boeing will notify Spirit in writing of any change(s) to the Incentive Payment Plan.

D.      Incentive Payment Plan Term and Termination

The term of the Incentive Payment Plan is [*****], consisting of [*****] evaluation periods of [*****] each, provided that Boeing may terminate the Incentive Payment Plan at the end of any evaluation period by providing thirty (30) day advance written notice to Spirit. In the event that Boeing terminates the Incentive Payment Plan, effective as of the date of termination, the 2006 base year wrap rates specified in Section III.F of SBP Attachment 23 “Derivatives and Mission Improvement Performance to Plan” shall change to $[*****] per hour for Product Definition and Product development task and $[*****] per hour for tooling fabrication tasks and the 2006 base year wrap rates specified in Section III.G of SBP Attachment 23 “Derivatives and Mission Improvement Performance to Plan” shall change to $[*****] per hour for Product Definition and Product development task and $[*****] per hour for tooling fabrication tasks.

E.      Contract Termination

If this SBP is terminated after the start of an Incentive Payment evaluation period, the Incentive Payment deemed earned for that period shall be determined by Boeing using the Incentive Payment evaluation process, as specified in Document [*****] , provided that the Incentive Payment amounts earned will be pro-rated based on the time period the SBP is in effect during the evaluation period. After termination, the remaining Incentive Payment amounts allocated to all subsequent Incentive Payment evaluation periods cannot be earned by Spirit and, therefore, shall not be paid.


- 168 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 25 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment (cont.)


F. Incentive Payments Granted

1. Record of total amount of Incentive Payment payments for Research and Development (reference SPB Section 5.7)

Period
Dates
Amount
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
 
[*****]
[*****]
 
[*****]
[*****]
 
[*****]
[*****]
 

2. Record of Incentive Payments for Other D&MI Nonrecurring Work (reference SBP Sections 4.9 and 5.7)

Period
Dates
Amount
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
 
[*****]
[*****]
 
[*****]
[*****]
 
[*****]
[*****]
 
















- 169 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 26 TO
SPECIAL BUSINESS PROVISIONS
    
TOTAL COST MANAGEMENT
(Reference SBP Section 7.5)
1.0
Introduction
For purposes of enabling Price reductions as contemplated in SBP Section 7.5, the Parties shall utilize the Total Cost Management (TCM) methodology described in this SBP Attachment. This TCM methodology facilitates identification of cost reduction opportunities for prioritization, business case evaluation, commitment, authorization and implementation of ideas with the purpose of reducing costs of Spirit's contracted statement of work.
2.0
Cost Saving Categories
With respect to Spirit’s contracted statement of work, the Parties shall collaborate to identify and implement cost reduction projects. Cost reduction projects shall be evaluated in the context of the overall benefit or impact to the Program and the Program Airplane. For purposes of illustration, but not limitation, the Parties may consider the following categories, ideas, and concepts when identifying potential cost reduction opportunities:
Supply Chain Architecture : - Reduce non-value added flow time, transactions, transportation and the associated costs. Align to “best value” suppliers taking into consideration the following non-exclusive list: lowest cost, highest quality, ability to offer higher assembly builds that align with Spirit’s strategic objective. Evaluate the benefits and the opportunities of various strategies, including: establishment of second sources, re-evaluation of make versus buy, establishment of common commodity purchases between Boeing’s major structure suppliers or where appropriate, re-evaluation of Boeing Furnished Material plans.
Raw Material Optimization - Review procurement practices to facilitate leveraging raw material costs to the fullest extent possible by utilizing the combined market forecast requirements of Spirit, Spirit’s sub-tier suppliers and Boeing as applicable and where appropriate.
Value Engineering - Changes to configuration, design requirements, material and process requirements that improve the manufacturability and/or producibility of the Product.


- 170 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 26 TO
SPECIAL BUSINESS PROVISIONS
TOTAL COST MANAGEMENT (cont.)
Manufacturing optimization (metals and composites) - Reduce flow-time, improve machining feeds and speeds, improving composite lay-down rates, optimize equipment selection and tooling, and optimize material buy to fly ratios.
Restructure - Evaluate the benefits of restructuring the subcontracted build products that are delivered, or could be delivered, directly to the next higher level of assembly or integration.
Technology Insertion - Utilization and implementation of new technology that significantly improves raw material usage, design and manufacturability.
Tools and Processes : Evaluate the opportunity to optimize or simplify the design, build and project management requirements defined in the applicable commonality matrix referred to in Attachment 4 to the SBP; e.g. processes to manage PMI and design tools.
The Parties shall also consider in good faith such other cost reduction opportunities as may be jointly developed or independently developed by either Party.
3.0
Boeing and Spirit Engagement Processes
The parties will assign dedicated full-time personnel as necessary to develop and utilize a prioritized list of TCM ideas and provide schedule, technical and cost information that enables both parties to develop and evaluate a business case and implementation plan for each TCM idea.
3.1
Identify, Prioritize and Provide Business Case Information
3.1.1
Identify and Prioritize - The parties shall generate, prioritize and present ideas for review. Generating and prioritizing ideas for further review may be done independently or in collaboration with the other party when requested.

3.1.2
For ideas selected for further consideration, a business case shall be developed in accordance with the template provided in paragraph 5.0 below. Notwithstanding anything to the contrary herein, the Parties do not intend to modify or waive Boeing’s right to request information or Spirit’s obligation to provide information as set forth in other provisions of this SBP or the GTA, including without limitation SBP Section 7.2.1


- 171 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 26 TO
SPECIAL BUSINESS PROVISIONS
TOTAL COST MANAGEMENT (cont.)
and GTA Section 5.0. The template provided in paragraph 5.0 is an initial definition of the appropriate level of detail intended to accomplish the objectives of SBP Section 7.5 and this Attachment 26. Either party may request reasonable adjustments to the template to better support these objectives.
Upon review of the business case information, if either party believes the TCM idea does not support the objectives set forth herein that party may provide a written explanation to the other.
3.2
Evaluate and Authorize TCM Ideas
3.2.1
For TCM ideas intended to be incorporated into the program approved baseline configuration of each Aircraft (pre-firm configuration), the Parties will use 787 trade study management product development processes including, but not limited to, airplane level studies, preliminary design decision memos, and configuration descriptions memos to evaluate, authorize, and implement such TCM ideas.
3.2.2
For TCM ideas intended to be incorporated after the program declares firm configuration for each Aircraft (post-firm configuration), the Parties will use the 787 common change process including, but not limited to, technical studies, change requests and change notices to evaluate, authorize and implement such TCM ideas.
3.2.3
For TCM ideas not related to Aircraft configuration, the Parties shall evaluate and authorize such TCM ideas in a manner consistent with the objectives of TCM and their respective RAA’s.
3.3
Pricing and Contract Amendment

The benefits of TCM on Prices shall not be incorporated discretely but shall be integrated with the Price Adjustment and Risk Sharing processes established in accordance with SBP Sections 4.10 and 7.2 and Attachments 16 and 27.

4.0
Changes Determined Not to Support Cost Reduction
In the event either Party determines a change does not meet the purpose of TCM, the change may be evaluated, authorized and compensated as any other change in accordance with SBP Sections 6 and 7.

- 172 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 26 TO
SPECIAL BUSINESS PROVISIONS

TOTAL COST MANAGEMENT (cont.)

5.0
Business Case Development

In support of SBP Attachment 26, paragraph 3.0, a notional template for business analysis information is provided below:
IMG20.JPG



- 173 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS


Risk Sharing
(Reference SBP Section 4.10)
I.
Introduction
A.
The Prices for Shipsets set forth in SBP Attachment 1 are subject to an annual risk sharing supplemental payment or credit as set forth in this Attachment 27. The evaluation of a supplemental payment or credit shall take place beginning in the second calendar quarter of the year following the delivery of Shipset [*****] and in each second calendar quarter annually thereafter. The final evaluation of a supplemental payment or credit shall be made in the second calendar quarter of the year following Spirit’s delivery to Boeing of Shipset [*****].
B.
The evaluation of Spirit’s cost and any supplemental payment or credit hereunder shall begin upon receipt of Spirit’s costs in accordance with the templates in this SBP Attachment 27, Section VI (the “Cost Templates”), which shall be submitted no later than [*****], and conclude no later than the [*****].

C.
An annual supplemental payment or credit shall be determined based on the combined result of 2 evaluations: 1) the Price effect of all change as calculated annually in accordance with SBP Section 7.2 and Attachment 16; and 2) a risk sharing calculation when certain Spirit cost conditions exist as specified and calculated in this Attachment 27.

D.
Notwithstanding the above provisions, for purposes of evaluating risk and identifying opportunity, Spirit shall provide its costs to Boeing on or about [*****] utilizing the templates in this SBP Attachment 27, Section VI (the “Cost Templates”).













- 174 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

I.
Baseline Prices and Risk Sharing Control Limits
A.
The annual supplemental payment or credit process contained in this Attachment 27 shall utilize the following baseline prices and risk sharing control limits. All prices and calculations shall be made on a total Shipset basis and not at an individual Work Package basis. Upon the establishment of Pricing for a Derivative, a table applicable to such Derivative shall be established and used. Prior to each annual calculation of the supplemental payment or credit, Column (A) shall be updated to reflect the Shipset Prices as determined in each first calendar quarter update in accordance with SBP Section 7.2 and Attachment 16:
 
787-8 Model
(A)
(B)
(C)
 
Attachment 1 Price
Upper Limit
Lower Limit
Shipsets [*****]- [*****]
$[*****]
+ [*****]%
-[*****]%
Shipsets [*****]-[*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****]- [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****]- [*****]
$[*****]
+[*****]%
-[*****]%
















- 175 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

III.
Annual Supplemental Payment or Credit
A.
Process Flow
 
[*****]
 
 
 
 
 
 
 
 
 

B.
No later than [*****] of each year, Spirit shall submit its costs to Boeing in accordance with the templates in this SBP Attachment 27, Section VI (the “Cost Templates”).
C.
The average Shipset Prices for Shipsets delivered in the prior calendar year shall be compared to these costs and result in a risk sharing calculation.
D.
Risk Sharing Calculation - The risk sharing supplemental payment or credit shall be determined on the basis of Spirit’s cost condition as follows:
1.
Spirit costs exceed the updated average Shipset Price for the prior calendar year but are less than the Upper Limit (B)
a.
Supplemental payment calculation: [*****]
b.
Example: [*****].








- 176 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)


2.
Spirit costs for the prior calendar year are greater than the average Upper Limit (B)
a.
Supplemental payment calculation: [*****]

b.
Example: [*****].

3.
Spirit costs are less than the updated average Shipset Price for the prior calendar year but are greater than the Lower Limit (C)
a.
Supplemental credit calculation:[*****]

b.
Example: [*****].

4.
Spirit costs for the prior calendar year are less than the Lower Limit (C)
a.
Supplemental credit calculation: [*****]

b.
Example: [*****].

IV. Support of Annual Review
A.
In the event Boeing determines in good faith, using standards that are commercially reasonable, that Spirit has not provided adequate data, records or support for its Cost Template in a manner to support the conclusion of the Annual Review set forth in Section I.B, Boeing shall notify Spirit of this determination in writing as soon as possible, but in any event, prior to the conclusion of the Annual Review period. In such notice, Boeing shall identify with specificity the reason it believes that Spirit has not provided adequate data, records or support. Spirit shall have [*****] days following the scheduled conclusion of such Annual Review to address any issues identified by Boeing in such notice. In the event Spirit does not adequately address the issues during this [*****] day cure period, Boeing shall be entitled to a supplemental credit payment








- 177 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

for Shipsets delivered in the prior calendar year in the amount of [*****] of the Prices paid for such Shipsets. In no event shall Boeing take action on the supplemental credit during the [*****] day cure period.
V.
Validation and Audit process
Spirit agrees to provide any supplemental information as reasonably requested by Boeing and Boeing shall have the right to verify such information at Spirit’s facilities.
VI.
Cost Review Cost Templates
A.
Spirit will provide several reports. These reports will support both the annual risk sharing adjustment as well as provide information to further guide cost reduction activities. The Parties agree that reports provided by Spirit shall meet the following general requirements:  (1) data included in the reports shall allow for direct comparison to the contract price, (2) report formats shall be established to be consistent with Spirit's existing systems for tracking costs and to minimize the amount of data translation required by Spirit, and (3) data provided in the reports shall be auditable.

These reports will be provided by [*****] for the prior calendar year and by [*****] for [*****] of the current calendar year.

Other general features include:
1.
All costs, including recurring and nonrecurring, associated with production end items (exclude spares/POA’s/-9 NR)
2.
Data can be summarized to total line unit for comparison to Total Spirit Contract Price.
3.
Detail available at the end item level.
4.
Capability to drill down as necessary (reference Paragraph V)








- 178 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS


Risk Sharing (cont.)

B.
Templates and Descriptions

The templates in this Section are an initial definition of the appropriate level of detail intended to accomplish the required objectives of SBP Section 4.10 and this Attachment 27. Boeing shall advise Spirit of any reasonable adjustments to these templates for the purpose of providing Boeing better insight and accountability in the pursuit of these objectives. Boeing’s requests for adjustment shall recognize the capabilities of Spirit’s accounting systems and Spirit shall provide these adjusted templates. These templates are also subject to revision based on changes to Spirit’s accounting systems.




























- 179 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS
Risk Sharing (cont.)
a)
Assigned Value Template - primary function: support annual risk sharing adjustment. The actual annual risk sharing adjustment shall be calculated from the values in this report. The template will include the following (Example templates are in the noted Exhibits to this Attachment 27):
 
Section 41 (Exhibit A)
Pylon (Exhibit B)
Wing Leading Edge (Exhibit C)
 
[*****]
 
 
 
 
 
 
 
 







- 180 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS
Risk Sharing (cont.)
b)
Incurred Value Templates - primary functions: i) aid in validating the Assigned Value Template, and ii) guide cost reduction activities.
Incurred Cost Performance Report for total 787 Program Work Packages by major function with the Total Operations level broken down by Cost Center where available and will include the following:
 
Section 41 and Pylon ( Exhibit D )
Sect 41 and Pylon Costing Rate Templates (Exhibit L)
[*****]
 
[*****]
[*****]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sect 41 and Pylon Purchased Parts Extract (Exhibit M)
 
[*****]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
787 Sec 41 Control Station to Cost Center Matrix (Exhibit J)
 
 
 
 



- 181 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS
Risk Sharing (cont.)
 
Wing Leading Edge Equivalent Personnel ( Exhibit E )
Wing Leading Edge Incurred Hours by Line Number ( Exhibit F )
 
[*****]
[*****]
 
 
 
 
 
 
Wing Leading Edge Incurred Work In Process ( Exhibit G )
 
[*****]
 
 
 
 
 
 
787 WLE Program Cost (Exhibit H)
 
[*****]
 
 
 
 
787 WLE Rate Flow Template (Exhibit I)
 
[*****]
 
 
 
787 WLE Costing Rate Templates (Exhibit K)
[*****]
 
[*****]
 
 
 
 
 
 
 
787 WLE Purchased Parts Extract (Exhibit M)
 
[*****]
 
 
 
 
 
 





- 182 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit A
Section 41 Assigned Value Template
IMG24.JPG






















- 183 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit B
Pylon Assigned Value Template:
IMG25.JPG




















- 184 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit C
Wing Leading-Edge Assigned Value Template - MLE & FLE
IMG26.JPG






















- 185 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit D

Section 41 and Pylon Incurred Value Template


IMG67.JPG













- 186 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit E
787 Wing Leading Edge Equivalent Personnel -
•
787 WLE Equivalent Personnel
•
787 FLE Equivalent Personnel
•
787 MLE Equivalent Personnel

IMG68.JPG












- 187 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit F
Wing Leading Edge [*****] by Line Unit


 
[*****]
 
 
 
 
 
 
 
 
 










- 188 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit G
Wing Leading Edge Incurred Work In Process

IMG72.JPG




- 189 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit H

787 WLE Program Cost


IMG31.JPG











- 190 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit I

Rate Flow Template - depicts Control Station relationship to Flow and Build process to include Control Stations to Cost Centers matrix.

 
[*****]
 
 
 
 
 
 
 
 
 
























- 191 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit J


Section 41 Control Station to Cost Center Matrix

 
Factory
Factory
Factory
Factory
 
Composite Fabrication
Structure
System
QA
 
 
 
 
 
 
 
 
 
 
 
[*****]
 
 
 
 
 












- 192 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].
















SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit K

787 WLE Costing Rate Templates


- 193 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


IMG70.JPG




SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit L
Costing Rate Templates

- 194 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


IMG34.JPG

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit M


- 195 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


787 Section 41, Pylon and Wing Leading Edge Purchased Parts Extract

Report of procured engineered parts by Work Package containing part number, part nomenclature, quantity per shipset, then-current price, supplier name and contract expiration.

































SBP ATTACHMENT 28 TO
SPECIAL BUSINESS PROVISIONS

Business Case for Rates Greater Than [*****] Shipsets Per Month
(Reference SBP Section 3.2.1)


- 196 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


All values are established at the time of calculation based on current delivery schedule, increased delivery forecast and Shipset pricing in place at that time.
Variables :
B 1 , B 2 , B 3 …B 10 = Current Boeing forecasted deliveries by year for the [*****] years beginning in the year rates are projected to be greater than [*****] Shipsets per month, but capped at [*****] Shipsets per month.
C 1 , C 2 , C 3 …C 10 = Boeing projected deliveries by year for [*****]years beginning in the year rates are projected to be greater than [*****] Shipsets per month, but not capped.
R 1 R 2 , R 3 …- R 10 = Average Shipset prices by year for the [*****] year period beginning at the point rates are projected to be greater than [*****] Shipsets per month (note: if the [*****] year period extends beyond those priced in Attachment 1, the average price for the [*****]priced shipsets priced in Attachment 1 will be applied to those Shipsets beyond those priced in Attachment 1 to establish the total [*****] year period).
[*****]% = Profit margin value resulting in a factor of [*****] applied to calculation below.
[*****]% = Contribution margin value.
[*****]% = NPV annual discount rate.













SBP ATTACHMENT 28 TO
SPECIAL BUSINESS PROVISIONS

Business Case for Rates Greater Than [*****] Shipsets Per Month (cont.)
Calculations :

- 197 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


I 1 , I 2 , …I N = Estimate of Spirit capital investment by year.
S 1 , S 2 , S 3 …S 10 = the additional projected contribution margin by year based on additional projected deliveries which shall be calculated as [*****]
•
NPV Calculation: If n is the number of cash flows in the list of values, the formula for NPV is:


IMG35.JPG
Result: If NPV of S 1 ,S 2 ,S 3 ,S 4 ,S 5 ,S 6 ,S 7 ,S 8 ,S 9 ,S 10 > NPV of I 1 ,I 2 …,I N , Spirit investments are covered.
Example:
Assumes the following Capital Investments.         
Tooling     $[*****]
PP & E     $[*****]
Assume [*****] APM going to [*****] APM        
Assume [*****] APM first line unit is [*****] so average price would be the average of Units [*****].






SBP ATTACHMENT 28 TO
SPECIAL BUSINESS PROVISIONS

Business Case for Rates Greater Than [*****] Shipsets Per Month (cont.)

- 198 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


IMG36.JPG













SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment for Quality

- 199 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


(Reference SBP Section 4.11)

A.      Incentive Payment for Quality

An Incentive Payment for Quality is provided to further enhance quality performance in the execution of Spirit's statement of work.

B.      Incentive Payment for Quality Pool

The available Incentive Payment for Quality amount (“Incentive Payment for Quality Pool”) is [*****] dollars ($[*****]). Boeing shall pay Spirit any awarded Incentive Payment for Quality amount as set forth in this SBP Attachment 29.


C.      Incentive Payment for Quality Plan Term

The term of the Incentive Payment for Quality is [*****], consisting of [*****] evaluation periods of [*****] each. The [*****] evaluated shall be [*****] through [*****]. The Incentive Payment for Quality Pool shall be equally divided among each [*****] resulting in an available Incentive Payment for Quality amount of [*****] dollars ($[*****]) for each of the [*****] evaluated. A base year of 2012 shall establish the basis for evaluation for each of the [*****] though [*****].

D.      Evaluation Methodology

D.1.1        In [*****], Boeing shall calculate the total quantity of Nonconformance EPDs assigned to Spirit in accordance with SBP Attachment 16 for those Shipsets both 1) delivered by Spirit to Boeing after [*****] (see table at end of this paragraph D.1.1) and 2) delivered by Boeing to its customers in the [*****]. This total quantity of Nonconformance EPDs shall be divided by the quantity of Shipsets both 1) delivered by Spirit to Boeing after [*****] and 2) delivered by Boeing to its customers in the [*****] to establish an average Nonconformance EPDs per Shipset value. An example of this calculation is set forth in Exhibit A to this Attachment 29.








SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment for Quality (cont.)

- 200 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


The following shall be considered delivered by Spirit to Boeing for each of Spirit’s Work Packages as of [*****]:
Work Package
Units Delivered As of [*****]
Section 41
[*****]
Pylon
[*****]
Wing
 
     MLE
[*****]
     FLE
[*****]


D.1.2         In [*****], Spirit shall calculate the total quantity of Spirit Tags for those Shipsets both 1) delivered by Spirit to Boeing after [*****] and 2) delivered by Boeing to its customers in the [*****]. This total quantity of Spirit Tags shall be divided by the quantity of Shipsets both 1) delivered by Spirit to Boeing after [*****] and 2) delivered by Boeing to its customers in the [*****] to establish an average Spirit Tags per Shipset value. An example of this calculation is set forth in Exhibit A to this Attachment 29.

D.1.3        Introduction of 787-9: In the [*****] Boeing delivers the first 787-9 Derivative, all of the 787-9 Shipsets delivered by Boeing to its Customers in [*****] shall be excluded from the performance calculation set forth in D.2.1, D.2.2, D.3 or D4 as applicable. All such 787-9 Shipsets excluded from such performance calculation shall be included in the calculation establishing the performance basis for [*****]. An example of this provision is set forth in Exhibit B to this Attachment 29.

D.2.1        In the [*****], Boeing shall calculate the total quantity of Nonconformance EPDs assigned to Spirit in accordance with SBP Attachment 16 for those Shipsets delivered by Boeing to its customers in the [*****]. This total quantity of Nonconformance EPDs shall be divided by the quantity of Shipsets delivered by Boeing to its customers in the [*****] to establish an average Nonconformance EPDs per Shipset value for [*****].






SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment for Quality (cont.)

- 201 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



D.2.2        In the [*****], Spirit shall calculate the total quantity of Spirit Tags for those Shipsets delivered by Boeing to its customers in the [*****]. This total quantity of Spirit Tags shall be divided by the quantity of Shipsets delivered by Boeing to its customers in the [*****] to establish an average Spirit Tags per Shipset value for [*****].

D.3        Both the average Nonconformance EPDs and Spirit Tags per Shipset for [*****] shall be compared to the average Nonconformance EPDs and Spirit Tags per Shipset for [*****]. If both the average Nonconformance EPDs and Spirit Tags per Shipset for [*****] are equal to or less than [*****] percent ([*****]%) of the average Nonconformance EPDs and Spirit Tags per Shipset for [*****] Spirit shall be awarded an Incentive Payment for Quality of [*****] dollars ($[*****]). If neither the average Nonconformance EPDs or Spirit Tags are greater than [*****] percent ([*****]%) of the average Nonconformance EPDs and Spirit Tags per Shipset for [*****], Spirit shall be awarded an Incentive Payment for Quality of [*****] dollars ($[*****]). If neither the average
Nonconformance EPDs or Spirit Tags are greater than [*****] percent ([*****]%) of the average Nonconformance EPDs and Spirit Tags per Shipset for [*****], Spirit shall be awarded an Incentive Payment for Quality of [*****] dollars ($[*****]). If either the average Nonconformance EPDs or Spirit Tags per Shipset for [*****] are greater than [*****] percent ([*****]%) of the average Nonconformance EPDs or Spirit Tags per Shipset for [*****], Spirit shall not be awarded any Incentive Payment for Quality for the [*****]. An example of this calculation is set forth in Exhibit A to this Attachment 29.

D.4        In the [*****], Boeing and Spirit shall make the same calculation as described in D.2 to establish the average Nonconformance EPDs and Spirit Tags per Shipset for [*****]. Such calculation shall be compared to the lowest value for average Nonconformance EPDs and Spirit Tags per Shipset of [*****] prior to that being evaluated and the calculation of any Incentive Payment for Quality shall be between those two values utilizing the same thresholds and Incentive Payment for Quality values described in paragraph D.3 of this Attachment 29. When determining the lowest value of [*****], such value shall exclude 787-9 Shipsets for the [*****].







SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment for Quality (cont.)

- 202 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



E.      Contract Termination

If this SBP is terminated after the start of an Incentive Payment for Quality evaluation period, the Incentive Payment for Quality deemed earned for that period shall be determined by Boeing using the Incentive Payment for Quality evaluation process, as specified herein, provided that the Incentive Payment for Quality amounts earned will be pro-rated based on the time period the SBP is in effect during the evaluation period. After termination, the remaining Incentive Payment for Quality amounts allocated to all subsequent Incentive Payment for Quality evaluation periods cannot be earned by Spirit and, therefore, shall not be paid.

`



























SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS



- 203 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Incentive Payment for Quality (cont.)
Exhibit A


All stated Shipset deliveries, Nonconformance EPD quantities and calculation results are notional and for example purposes only.
1.
[*****] baseline calculation example per Attachment 29, paragraphs D.1.1 and D.1.2. Calculated in the [*****]
A.    Establish Shipsets to be included in base calculation:
The final Shipset delivered by Spirit to Boeing prior to [*****] was Shipset [*****].
From [*****] through [*****], Spirit delivers Shipsets [*****] to Boeing.
In the [*****] Spirit delivers Shipsets [*****] to Boeing.
In the [*****], Boeing delivers Shipsets [*****] to its customers.
Result: The Shipsets used to establish the [*****] baseline calculation shall be Shipsets [*****].
B.    Establish total Nonconformance EPD count:
The total quantity of Nonconformance EPDs assigned to Shipsets [*****] in accordance with SBP Attachment 16 are [*****].
C.    Establish total Spirit Tags count:
The total quantity of Spirit Tags assigned to Shipsets [*****] are [*****]
D.    Calculation:
Total Nonconformance EPDs of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Nonconformance EPDs per Shipset.
Total Spirit Tags of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Spirit Tags per Shipset.




SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS


Incentive Payment for Quality (cont.)

- 204 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Exhibit A (cont.)

2.
Quality Incentive Payment Calculation - Notional Calculations for [*****] . Calculated in the [*****]
2.1
Scenario 1
A.    Establish Shipsets to be included in calculation:
In [*****], Boeing delivers Shipsets [*****] to its customers.
B.    Establish total Nonconformance EPD count:
The total quantity of Nonconformance EPDs assigned to Shipsets [*****] is [*****].
The total quantity of Spirit Tags assigned to Shipsets [*****] is [*****].
C.    Calculation:
Total Nonconformance EPDs of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Nonconformance EPDs per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Total Spirit Tags of [*****] are divided by total Shipset count of [*****]. Result is an average of [*****] Spirit Tags per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Both calculations are less than the [*****]% threshold required for the full Incentive Payment for Quality value and Spirit is awarded $[*****] for [*****].

2.2
Scenario 2
A.    Establish Shipsets to be included in calculation:
In [*****], Boeing delivers Shipsets [*****] to its customers.
B.    Establish total Nonconformance EPD count:
The total quantity of Nonconformance EPD’s assigned to Shipsets [*****] is [*****].
The total quantity of Spirit Tags assigned to Shipsets [*****] is [*****].
SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS


Incentive Payment for Quality (cont.)

- 205 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Exhibit A (cont.)

C.    Calculation:
Total Nonconformance EPDs of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Nonconformance EPDs per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Total Spirit Tags of [*****] are divided by total Shipset count of [*****]. Result is an average of [*****] Spirit Tags per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Neither calculation is greater than the [*****]% threshold required for the Incentive Payment for Quality value of $[*****] and Spirit is awarded $[*****] for [*****].

2.3
Scenario 3
A.    Establish Shipsets to be included in calculation:
In [*****], Boeing delivers Shipsets [*****] to its customers.
B.    Establish total Nonconformance EPD count:
The total quantity of Nonconformance EPD’s assigned to Shipsets [*****] is [*****].
The total quantity of Spirit Tags assigned to Shipsets [*****] is [*****].
C.    Calculation:
Total Nonconformance EPDs of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Nonconformance EPDs per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Total Spirit Tags of [*****] are divided by total Shipset count of [*****]. Result is an average of [*****] Spirit Tags per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Neither calculation is greater than the [*****]% threshold required for the Incentive Payment for Quality value of $[*****] and Spirit is awarded $[*****] for [*****].
SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS


Incentive Payment for Quality (cont.)

- 206 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Exhibit A (cont.)

2.4
Scenario 4
A.    Establish Shipsets to be included in calculation:
In [*****], Boeing delivers Shipsets [*****] to its customers.
B.    Establish total Nonconformance EPD count:
The total quantity of Nonconformance EPDs assigned to Shipsets [*****] is [*****].
The total quantity of Spirit Tags assigned to Shipsets [*****] is [*****].
C.    Calculation:
Total Nonconformance EPDs of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Nonconformance EPDs per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Total Spirit Tags of [*****] are divided by total Shipset count of [*****]. Result is an average of [*****] Spirit Tags per Shipset. This represents [*****] % of the [*****] baseline value of [*****].
One of the calculations is greater than the [*****]% threshold required for any Incentive Payment for Quality and no Incentive Payment for Quality is awarded for [*****].














SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS


Incentive Payment for Quality (cont.)

- 207 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Exhibit B

All stated Shipset deliveries are notional and for example purposes only.

1.      Introduction of the 787-9

Assumptions: the first 787-9 is delivered by Boeing to its Customer in the [*****][*****]. A total of [*****] 787-9’s are delivered by Boeing to its Customers in the [*****]. They are Shipsets [*****]. Boeing delivers Shipsets [*****] to its Customers in [*****].

In calculating the average Boeing EPDs per Shipset and Spirit Tags per Shipset for the [*****], Shipsets [*****] and any Boeing EPDs or Spirit Tags associated with Shipsets [*****] are not included in the calculation when comparing to [*****] results. However, Shipsets [*****],[*****] and any Boeing EPDs or Spirit Tags associated with Shipsets [*****] are included in the [*****] values when the [*****] results are compared to [*****].



- 208 -
787 SBP between Boeing and Spirit
Conformed SBP BCA-MS-65530-0019, August 20, 2012

EXHIBIT 10.5
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


AMENDMENT NUMBER. 20

TO

Special Business Provisions (SBP) BCA-MS-65530-0019

BETWEEN

THE BOEING COMPANY

AND

SPIRIT AEROSYSTEMS, INC.


THIS AMENDMENT NUMBER 20 (“Amendment No. 20”) is entered into this June 5, 2013, by and between Spirit AeroSystems, Inc. (“Spirit”), a Delaware corporation having its principal office in Wichita, Kansas, and The Boeing Company, a Delaware corporation, acting by and through its division, Boeing Commercial Airplanes (“Boeing”). Herein, Spirit and Boeing may be referred to jointly as the “Parties”.
 
The Parties have entered into the General Terms Agreement, GTA BCA-65520-0032, dated June 16, 2005 as amended from time to time (the “GTA”), and the Special Business Provisions, BCA-MS-65530-0019, dated June 16, 2005 as amended from time to time (the "SBP"), and now desire to again modify the SBP.
Background
The 787 Program includes designing and building the Program Airplane and Derivatives and Mission Improvement work as identified by Boeing. This Amendment No. 20 updates the SBP to address the following:
1.
Incorporation of signed One Plan Documents and their associated settlement values (as defined in SBP Attachment 23).
2. SBP Attachments 1, 2, 3, 16, 23, 25 and 27 are revised.



Agreement

THEREFORE, the Parties hereby agree to amend the SBP as follows:






1
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


1.
SBP Attachment 1, “Work Statement and Pricing” is hereby amended as set forth in Exhibit 1 hereto to incorporate revisions to the following sections: “Recurring Shipset Price -8”, “Recurring Shipset Net Payment (not inclusive of Boeing Cost Recovery)”, “APAP LN [*****] Summary through [*****]”, “Non-Recurring Value Agreements”, “Advance Payments for Remaining Other D/MI NR Balance”, “Incentive Plan Payments” .

2.
SBP Attachment 2, “Production Article Definition and Contract Change Notices” is hereby amended in its entirety as set forth in Exhibit 2 hereto to incorporate revisions to Section B “Contract Change Notices”.

3.
SBP Attachment 3, “Price Status and Summary Tables” is hereby amended to revise “Price Status and Summary Tables- Non Recurring Prices” as set forth in Exhibit 3 hereto.

4.
SBP Attachment 16, “Pricing Methodologies” is hereby amended to revise Table A.1 of Section A “Boeing Performed Repair and Rework”as set forth in Exhibit 4 hereto.

5.
SBP Attachment 16, “Pricing Methodologies” is hereby amended to revise Section 41 , Fabrication Table C, and Assembly and Support Table A of Section B “Derivative Pricing” as set forth in Exhibit 4 hereto.

6.
SBP Attachment 16, “Pricing Methodologies” is hereby amended to revise Section 41 Base Values, Fabrication Table C, and Assembly and Support Table A of Section D.3.1.1 “Recurring Price Factor” as set forth in Exhibit 4 hereto.

7.
SBP Attachment 23, “Derivatives and Mission Improvement Performance to Plan” is hereby amended to revise Exhibit D - “Criteria for Performance Based R&D Payments and Advance Payments”, Sections 1 and 2 and Exhibit E - “One Plan Document Record” as set forth in Exhibit 5 hereto.

8.
SBP Attachment 25, “Incentive Payment” is hereby amended to revise Section B “Incentive Payment Pool” and Section F “Incentive Payments Granted”, 1 and 2 as set forth in Exhibit 6 hereto.

9. SBP Attachment 27, “Risk Sharing” is hereby amended to revise Section II “ Baseline Prices and Risk Sharing Control Limits ” A. as set forth in Exhibit 7 hereto.






2
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Except as otherwise indicated, all terms defined in the GTA or SBP shall have the same meanings when used in this Amendment No. 20. This Amendment No. 20 constitutes the complete and exclusive agreement between the parties with respect to the subject matter of Amendment No. 20, and Amendment No. 20 supersedes all previous agreements between the parties relating to the subject matter of Amendment No. 20, whether written or oral. This Amendment No. 20 shall be governed by the laws of the state of Washington, other than the conflict of law rules thereof. The amendments made to the SBP by this Amendment No. 20 shall be effective as of the date of this Amendment No. 20 or as of such other date as specified herein. The GTA and SBP remain in full force and effect and are not modified, revoked or superseded except as specifically stated in this Amendment No. 20.


EXECUTED in duplicate as of the date and year first set forth above by the duly authorized representatives of the Parties:
The Boeing Company
 
 
 Spirit AeroSystems Inc.

Acting by and through its division

 
 
 
Boeing Commercial Airplanes

 
 
 
 
 
 
 
 
By:
/s/ Jeff Loomis

 
By:
/s/ Clint Cotner
 
 
 
 
 
Name:
Jeff Loomis
 
Name:
Clint Cotner
 
 
 
 
 
Title:
Procurement Agent    

 
Title:
Contracts Administrator
 
 
 
 
 
Date:
6/15/13
 
Date:
6/28/13























3
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].





AMENDMENTS


Number

17
















18



19



20


Description

MOA Dated 12-21-10 (Blockpoint 20 Settlement)
Amended or added: SBP Table of Contents, Sections 1.0, 3.1.1, 3.2.1, 3.3.1, 3.3.2.2, 3.3.4.3 and 3.3.4.8, 3.3.7, 3.3.7.1, 3.3.7.2, 3.3.7.3, 3.4.2.1, 3.4.5, 4.1.1, 4.1.3, 4.2, 4.3.1, 4.3.1.1, 4.4, 4.7, 4.8, 4.9, 4.10, 4.11, 5.5, 5.6, 5.7, 5.8, 5.8.1, 5.8.2, 6.1, 6.2, 6.3, 7.1, 7.2, 7.2.1, 7.2.2, 7.2.3, 7.5, 7.5.1, 7.5.2, 7.8, 7.8.1, 7.8.2, 11.2
Deleted SBP Sections 3.3.2.3.I, 3.4.2.3, 7.9, 7.10
Amended or added SBP Attachments 1, 2, 3, 4, 7, 14, 16, 23, 25, 26, 27, 28, 29
Deleted SBP Attachments 13 and 19
Throughout SBP, various references to: “SBP Attachment 7 Indentured Parts Price List and Spare Parts Pricing” are revised to “the SPPC”.

D&MI One Plan Update
Updated SBP Attachments 1, 3, 23, 25
Amended: SBP Section 7.4 per Amendment 3

D&MI One Plan Update
Updated SBP Attachments 1, 2, 3, 16, 23, 25


D&MI One Plan Update
Updated SBP Attachments 1, 2, 3, 16, 23, 25

MOA Dated July 10, 2012 (Blockpoint [*****] Settlement)
1. Updated SBP Attachments 1, 2, 3, 16, 23, 25, 27

Date

5/12/11
















8/24/11



7/30/12



6/5/13
Approval

R. Parks
M. Kurimsky















M. Guillen
M. Kurimsky


A. Mauldin
M. Kurimsky


Jeff Loomis
C. Cotner





















4
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 1
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING
(Reference SBP Sections 3.1.1, 3.4.1, 4.1, 4.3.4.3, 4.7, 5.8, 22.0; GTA Section 1)

FOR PURPOSES OF SBP Section 3.1, “OBLIGATION TO PURCHASE AND SELL,” Boeing shall be defined as the following organizations, divisions, groups or entities:
BCA Suppler Management, The Boeing Company, Seattle, WA
The price for Products to be delivered on or before [*****] , except as otherwise noted below, will be as follows:




























5
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 1 SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING (cont.)

IMG37.JPG










6
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



IMG38.JPG





























7
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 20 Exhibit 1 SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS
WORK STATEMENT AND PRICING (cont.)
IMG39.JPG



8
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 20 Exhibit 2
SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS
        
PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES
(Reference SBP Sections 3.3.2.1, 3.3.2.2, 3.3.4.6, 3.4.1; GTA Section 1.0N, 1.0.P)

A.      Configuration

The configuration of each Production Article shall be as described in the Integrated Control Station Plan revision identified below, and in the Contract Change Notices listed in Paragraph B below as such Contract Change Notices relate to the configuration of any Production Article

Type
Product Number
Name
Manufacturing Change Level
Current Mfg Frozen LN
Extended Eff (Usage)
[*****]


















9
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 2
SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS
PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES (Continued)

Type
Product Number
Name
Manufacturing Change Level
Current Mfg Frozen LN
Extended Eff (Usage)
[*****]



B.      Contract Change Notices

The following Contract Change Notices (CCN’s) are hereby incorporated into this SBP.
 
B.1
Non-D/MI Contract Change Notices :

A. All CCN’s listed in this Section B.1, A. are inclusive of all revisions and cancellations issued on or before December 21, 2010:

CCN 1 through 318, 320 through 542, 544 through 762, 764 through 766, 768 through 779, 781 through 871, 873 through 889, 891 through 984, 986 through 990, 992 through 1024, 1028 through 1100, 1102 through 1142, 1144 through 1148, 1150 through 1162, 1164 through 1170, 1172 through 1240, 1242 through 1295, 1298 through 1420, 1422 through 1440, 1442 through 1452, 1454 through 1461, 1463 through 1472, 1474 through 1503, 1505 through 1564, 1566 through 1593, 1595 through 1611, 1613 through 1616, 1618 through 1623, 1625 through 1633, 1635 through 1658, 1661 through 1671, 1673 through 1686, 1688 through 1696, 1698, 1700 through 1709, 1710, 1712 through 1716, 1718 through 1748, 1750, 1751, 1753 through 1763, 1765 through 1810, 1814 through 1833, 1837 through 1844, 1846 through 1856, 1858 through 1866, 1868 through 1895, 1897, 1898, 1901, 1904 through 1906, 1908, 1909, 1911 through 1914, 1919, 1921 through 1925, 1928, 1933 through 1937, 1940 through 1943, 1946 through 1950, 1952 through 1963, 1968, 1973 through 1976, 1980, 1982, 1984, 1985, 1988 through 1993, 1995, 1999, 2000, 2004, 2005, 2007, 2014 through 2019, 2021.


10
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 2
SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS

PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES (Continued)


B. All CCN’s listed in this Section B1.B. are inclusive of all revisions committed on and before December 31, 2011 and which are effective on or before Shipset Line Number [*****]

CCN 319, 543, 763, 767, 780, 991,1025 through 1027, 1101, 1143, 1149, 1171,1296,1297,1421,1441,1473,1504,1565,1594,1617,1624,1634,1659,1660,1687, 1697,1699,1717,1749,1752,1764,1770,1834,1836,1926,1927,1929 through 1932, 1938,1939,1945,1951,1966,1967,1969,1971,1972,1977 through 1979, 1981,1983,1986,1987,1994,1996 through 1998, 2002,2003,2006,2008 through, 2013, 2020, 2022 through 2037, 2039 through 2058, 2060 through 2073, 2075 through 2111, 2113, 2115, 2116, 2118, 2120 through 2108, 2130 through 2135, 2137 through 2139, 2141, 2143, 2145 through 2157, 2160, 2161, 2162.


B.2
D/MI PtP Contract Change Notices:

Section 41 D/MI CCN’s: 1163, 1241, 1915, 1916, 2158, 2159, 2168, 2170R2

Pylon D/MI CCN: 2166,

Wing LE D/MI CCN: 2167, 2170R2

CCN’s listed above are inclusive of any numerical formatting convention, i.e. CCN 1 is the same as CCN-00001 or CCN 0001.




















11
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 3
SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS



PRICE STATUS AND SUMMARY TABLES (Cont.)

(Reference SBP Section 7.8.2)
IMG40.JPG




























12
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 4
SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

Pricing Methodologies (cont.)

Table A.1
Traveled Work Nomenclature
Price Per Unit
SOI-A
 $ [*****]
SOI-B
 $ [*****]
Non-conformance EPD
 $ [*****]

B. Derivative Pricing

The price for any derivative shall utilize the methodology set forth in SBP Attachment 16, Section D.

The baseline CER values utilized to establish the price for the 787-9, shall be as follows:
Section 41
 
Fabrication dollars include aluminumitanium,composites and other. Other includes such elements as sealant, fasteners, coatings and other miscellaneous.
Total Fabrication Dollars
 $ [*****]
 
 
 
Total Assembly and Support dollars. This includes such elements as recurring assembly,Eng, ME, IE and other support functions.
Assembly and Support
 $ [*****]
 
 
 
Amortized Non-recurring included in the baseline below.
NR Amortization
 $ [*****]
 
 
 
Baseline Price [*****] shipsets
Baseline
 $ [*****]




















13
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 20 Exhibit 4
SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

Pricing Methodologies (cont.)

C. Resulting baseline $ per pound as a result of the factors used above.
Material Type Detailed  Level
Dollars per pound
Detailed Level
Section 41
Aluminum
[*****]
Titanium
Composite
Other
Wing Leading Edge
Aluminum
[*****]
Titanium
Composite
Steel
All other Other
Pylon
Aluminum
[*****]
Ti 5-5-5-3
All other Ti
CFRP
All other Comp
Steel
All other Other

Assembly and Support - Baseline recurring Cost Estimating Relationships for the Assembly and Support category:
A. Baseline values used to establish baseline pricing.
Total Assembly & Support $
Total In-House Assembled/Installed Part Count
$ per Part
Section 41
[*****]
[*****]
[*****]
Wing Leading Edge
[*****]
[*****]
[*****]
Pylon
(simple average of [*****] and [*****] )
[*****]
[*****]
[*****]


















14
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 4
SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

Pricing Methodologies (cont.)

D.3.1.1 Recurring Price Adjustments

Base Values
Section 41
 
 
Fabrication dollars include aluminumitanium,composites and other. Other includes such elements as sealant, fasteners, coatings and other miscellaneous.
Total Fabrication Dollars
 $ [*****]
 
 
 
Total Assembly and Support dollars. This includes such elements as recurring assembly,Eng, ME, IE and other support functions.
Assembly and Support
 $ [*****]
 
 
 
Amortized Non-recurring included in the baseline below.
NR Amortization
 $ [*****]
 
 
 
Baseline Price [*****] shipsets
Baseline
 $ [*****]

C. Resulting baseline $ per pound as a result of the factors used above.
Material Type Detailed  Level
Dollars per pound
Detailed Level
Section 41
Aluminum
[*****]
Titanium
Composite
Other
Wing Leading Edge
Aluminum
[*****]
Titanium
Composite
Steel
All other Other
Pylon
Aluminum
[*****]
Ti 5-5-5-3
All other Ti
CFRP
All other Comp
Steel
All other Other










15
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 4
SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

Pricing Methodologies (cont.)

Assembly and Support - Baseline recurring Cost Estimating Relationships for the Assembly and Support category:
A. Baseline values used to establish baseline pricing.
Total Assembly & Support $
Total In-House Assembled/Installed Part Count
$ per Part
Section 41
[*****]
[*****]
[*****]
Wing Leading Edge
[*****]
[*****]
[*****]
Pylon
(simple average of [*****] and [*****] )
[*****]
[*****]
[*****]








































16
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 5
SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Exhibit D - Criteria for Performance Based R&D Payments and Advance Payments

1.      Performance Based Payments for Research and Development (reference SBP Section 5.6)
Performance Based Payments for Research and Development consist of four (4) individual performance events plus a final payment. This Exhibit provides a description of each performance event, the success criterion and verification for each event.
*The amounts for each event are initially for D&MI work negotiated through December 21, 2010 and shall be amended as additional D&MI work statement is negotiated in accordance with this SBP Attachment 23.

Event No.
Performance Event
Completion Criteria
Verification
*Amount (as of 5/20/13 and Amendment 20)
(Paid in accordance with SBP 5.6)
1.
Section 41 Preliminary Layouts [*****]% Complete
i) [*****]% of Section 41 Preliminary Layouts
ii) all other Section 41 R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete and
iii) all Pylon R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete and
iv) all WLE R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete
Events closed in ETAC
[*****]











17
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 5
SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

2.
CDR complete for [*****] Pylon
i) CDR completed for Sec 41 and [*****] Pylon
ii) all Section 41 R&D events and all Pylon R&D events and all WLE R&D events scheduled prior to or concurrent to planned [*****] Pylon CDR
When all actions items are closed following CDR and applicable events are closed in ETAC
[*****]
3.
Sec 41 Approved Layouts 95% Complete
i) [*****]% of Section 41 Approved Layouts
ii) all other Section 41 R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete and
iii) all Pylon R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete
iv) all WLE R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete
Events closed in ETAC
[*****]
4.
All Products On Dock to the Delivery Point
i) Delivery of all products to Boeing
ii) all Section 41 R&D events scheduled prior to or concurrent to planned Section 41 delivery milestone are complete and
iii) all Pylon R&D events scheduled prior to or concurrent to planned Section 41 delivery milestone are complete
iv) all WLE R&D events scheduled prior to or concurrent to planned Section 41 delivery milestone are complete
Section 41 on dock at Boeing and applicable events are closed in ETAC
[*****]
5.
Final Payment
 
Airplane Certification
[*****]
2.Performance Based Payments and Performance Based Advance Payments for Other D&MI Nonrecurring Work (reference SBP Section 5.8)
Performance Based Payments and Performance Based Advance Payments for Other D&MI Nonrecurring Work consist of six (6) individual performance events.
SBP BCA-MS-65530-0019, Amendment 20 Exhibit 5










18
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

This Exhibit provides a description of each performance event, the success criterion and verification for each event.
*The amounts for each event are initially for D&MI work negotiated through December 21, 2010 and shall be amended as additional D&MI work statement is negotiated in accordance with this SBP Attachment 23.

Event No.
Performance Event
Completion Criteria
Verification
* Amount (as of 5/20/13 and Amendment20)
(Paid in accordance with SBP 5.8)
1.
BP [*****] Tooling & Birdstrike Forging
Line Unit [*****] delivered & Birdstrike forgings on dock Spirit
Line Unit [*****] loaded in LCF & FAI complete on forgings
[*****]
2.
BP [*****] Tooling
Line Unit [*****] delivered
Line Unit [*****] loaded in LCF
[*****]
3.
BP [*****] Tooling
Line Unit [*****] delivered
Line Unit [*****] loaded in LCF
[*****]
4.
Begin spinning of 1 st  787-9 Sec 41 barrel
Planned Other D&MI NR Work completed prior to the beginning of spinning of 1 st  787-9 Sec 41 barrel
Load of barrel in to AFP cell
[*****]
5.
787-9
First 787-9 Delivered
First 787-9 on LCF
[*****]
6.
Final Payment
 
 
[*****]




















19
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 5
SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)
Exhibit E - One Plan Document Record

D&MI One Plan Documents:
•
787 Section 41 IPT Derivatives and Mission Improvement One Plan Summary, Revision New, dated 01-15-09
•
787 Section 41 IPT Derivatives and Mission Improvement One Plan Line [*****], Revision New, 01-15-09
•
787 Section 41 IPT Derivatives and Mission Improvement One Plan Line [*****], Revision New, 01-15-09
•
787 Section 41 IPT Derivatives and Mission Improvement One Plan Line [*****], Revision New, 01-15-09
•
787 Section 41 IPT Derivatives and Mission Improvement One Plan 787-9, Revision New, 01-15-09
•
Spirit-Tulsa One Plan Grand Total, dated 4/16/09
•
787-9 One-Plan Spirit Pylon April 7-8, 2009
•
787-9 One-Plan Spirit S41 April 1, 2010
•
787-9 One-Plan Spirit WLE (Interim Agreement) May 21, 2010
•
787-9 One-Plan Spirit Pylon March 4, 2010
•
787-9 & MI Phase 2 One-Plan - Wing LE (WP 10 & 12)” (Interim Agreement) dated 09/22/10
•
“787 Pylon Derivatives & Mission Improvement Phase II ONE PLAN UPDATE 2 nd QUARTER - 2010” dated 7/1/2010
•
787 Section 41 IPT Derivatives & Mission Improvement Phase II ONE PLAN dated 6/30/2010
•
787 Section 41 IPT Derivatives & Mission Improvement Phase II ONE PLAN dated 8/26/2010
•
787 Pylon Derivatives & Mission Improvement Phase IIIa ONE PLAN - November 2010 - August 2011 dated 11/4/2010
•
787-9 & MI One-Plan; PtP Plan, Wing Leading Edge, dated 12/13, 2010, Rev 14
•
787 Phase III PtP Negotiation Status Between Spirit Wichita and Boeing as of March 11, 2011
•
787 Phase III PtP Negotiation Status Between Spirit Wichita and Boeing as of April 21, 2011
•
787 Section 41 D&MI Improvement “Sec 41 Tooling One Plan Agreements March and April 2011”










20
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 5
SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)
Exhibit E - One Plan Document Record
D&MI One Plan Documents (cont.):
•
787 Section 41 D&MI Improvement “CN 22067 - Sec 41 [*****]” dated June 1, 2011
•
787 One Plan - Section 41 | SOW Hours Agreement “D_MI Sec 41 Engineering One Plan Agreements 6_9_11”
•
787 Section 41 D&MI Improvement “787 D_MI Sec 41 Tooling One Plan Agreements 6_7_11”
•
787 Pylon Derivatives & Mission Improvement Phase IIIa ONE PLAN Rev. B - November 2010 - June 2011 dated 7/7/2011
•
787-9 One-Plan Phase IIIb; PtP Plan, Wing Leading Edge, dated 7/1/2011
•
787-9 Section 41 D/MI PtP Phase IIIb One Plan Updates for the following NR changes: CN21389-[*****], dated 11-4-11, CN26217-[*****], dated 12-22-11, CN27164-ME Impact, dated 2-1-12, CN28726-[*****], dated 12-22-11, CN29139-[*****], dated 12-1-11, LMA CN643-[*****], dated 12-1-11, LMA CN646, dated 11-16-11, LMA CN647-[*****], dated 11-17-11, LMA CN648-[*****], dated 11-16-11, LMA CN651-[*****], dated 11-17-11, LMA CN655, dated 11-17-11, LMA CN659-[*****], dated 11-17-11, LMA CN665-dated 11-17-11, LMA CN671-[*****], dated 12-1-11, LMA CN677-SCN Package Updates, dated 12-1-11, LMA CN688-[*****] SCN Packages, dated 1-12-12, LMA CN705-[*****], dated 1-12-12, LMA CN727-[*****], dated 1-12-12, LMA CN689-SCN Updates, dated 1-12-12, LMA CN690-[*****], dated 12-15-11, LMA CN691-[*****], dated 1-12-12
•
787-9 Section 41 D/MI Tooling Phase IIIb One Plan Updates for non-recurring activities for the following changes: CN 22067, [*****], dated 6-1-11, CN 25334, [*****], dated 11-1-11, [*****], dated 11-8-11
•
787-9 Pylon Derivatives & Mission Improvement Phase IIIb One Plan -- July 2011 - [*****], dated 12/19/2011
•
787-9 One Plan Phase IIIb, PTP Plan, Wing Leading Edge, Spirit AeroSystems, Tulsa, Dated 7/1/2011
•
787-9 One Plan for Section 41 and Wing documented in CCN 2170R2 , Attachment A
•
787-9 One Plan for Pylon [*****], dated January , 2012.










21
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 6
SBP ATTACHMENT 25 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment
(Reference SBP Sections 4.9)
B. Incentive Payment Pool

The available Incentive Payment Pool amount (“Incentive Payment Pool”) is $[*****] for Research and Development plus Other D&MI NonrecurringWork and $[*****] for Tooling. Boeing shall pay Spirit the Incentive Payment amount as determined in accordance with Document [*****].

The Incentive Payment Pool will be updated by SBP Amendment in conjunction with the establishment of, and updates to, the D&MI SOW as described in SBP Attachment 23.
Incentive Payment Pool Methodology: The Incentive Payment Pool shall be established at [*****]% of the agreed D&MI NR Value (as defined in SBP Attachment 23, Section III.A), provided that if any D&MI Nonrecurring Work is to be paid in accordance with the Dispute Resolution clause of SBP Attachment 23, Section III.G, such work shall contribute to the Incentive Payment Pool at [*****]% of the Boeing initial estimate of the disputed value.

F. Incentive Payments Granted

1. Record of total amount of Incentive Payment payments for Research and Development (reference SPB Section 5.7)

Period
Dates
Amount
[*****]

2. Record of Incentive Payments for Other D&MI Nonrecurring Work (reference SBP Sections 4.9 and 5.7)

Period
Dates
Amount
[*****]








22
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 20 Exhibit 7
SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

II. Baseline Prices and Risk Sharing Control Limits

A. The annual supplemental payment or credit process contained in this Attachment 27 shall utilize the following baseline prices and risk sharing control limits. All prices and calculations shall be made on a total Shipset basis and not at an individual Work Package basis. Upon the establishment of Pricing for a Derivative, a table applicable to such Derivative shall be established and used. Prior to each annual calculation of the supplemental payment or credit, Column (A) shall be updated to reflect the Shipset Prices as determined in each first calendar quarter update in accordance with SBP Section 7.2 and Attachment 16:

787-8 Model
(A)
(B)
(C)
 
Attachment 1 Price
Upper Limit
Lower Limit
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%




23
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 20, May 28, 2013


EXHIBIT 10.6
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



AMENDMENT NUMBER 21

TO

Special Business Provisions (SBP) BCA-MS-65530-0019

BETWEEN

THE BOEING COMPANY

AND

SPIRIT AEROSYSTEMS, INC.


THIS AMENDMENT NUMBER 21 (“Amendment No. 21”) is entered into this July 1, 2014, by and between Spirit AeroSystems, Inc. (“Spirit”), a Delaware corporation having its principal office in Wichita, Kansas, and The Boeing Company, a Delaware corporation, acting by and through its division, Boeing Commercial Airplanes (“Boeing”). Herein, Spirit and Boeing may be referred to jointly as the “Parties”.
 
The Parties have entered into the General Terms Agreement, GTA BCA-65520-0032, dated June 16, 2005 as amended from time to time (the “GTA”), and the Special Business Provisions, BCA-MS-65530-0019, dated June 16, 2005 as amended from time to time (the "SBP"), and now desire to again modify the SBP.
Background
The 787 Program includes designing and building the Program Airplane and Derivatives and Mission Improvement work as identified by Boeing. This Amendment No. 21 updates the SBP to address the following:
1.
Incorporation of signed One Plans Document and associated settlement values (as defined in SBP Attachment 23).
2. SBP 8.5 and SBP Attachments 1, 2, 3, 16, 23, 25, 27 and 29 are revised.
















1
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Agreement

THEREFORE, the Parties hereby agree to amend the SBP as follows:

1. SBP 8.5
“Retention of Quality Records ” is herby deleted in its entirety and replaced with the text set forth in Exhibit 1 hereto.     

2. SBP Attachment 1, “Work Statement and Pricing” is hereby amended as set forth in Exhibit 2 hereto to incorporate revisions to the following sections: “Recurring Shipset Price -8”, “Recurring Shipset Net Payment (not inclusive of Boeing Cost Recovery)”, “APAP LN [*****] Summary through [*****]”, “Non-Recurring Value Agreements”, “Advance Payments for Remaining Other D/MI NR Balance”, “Incentive Plan Payments” (Reference SBP Section 4.9),” “Incentive Plan for Quality Payments (Reference SBP Section 4.11).”

3.
SBP Attachment 2, “Production Article Definition and Contract Change Notices” is hereby amended in its entirety as set forth in Exhibit 3 hereto to incorporate revisions to Section B “Contract Change Notices”.

4.
SBP Attachment 3, “Price Status and Summary Tables” is hereby amended to revise “Price Status and Summary Tables- Non Recurring Prices” as set forth in Exhibit 4 hereto.

5.
SBP Attachment 16, “Pricing Methodologies” is hereby amended to revise Table A.1 of Section A.1 “Boeing Performed Repair and Rework” as set forth in Exhibit 5 hereto.

6. SBP Attachment 23, “Derivatives and Mission Improvement Performance to Plan” is hereby amended to revise Exhibit D - “Criteria for Performance Based R&D Payments and Advance Payments”, Sections 1 and 2 and Exhibit E - “One Plan Document Record” as set forth in Exhibit 6 hereto.

7. SBP Attachment 25, “Incentive Payment” is hereby amended to revise Section B “Incentive Payment Pool”, Section F “Incentive Payments Granted”, 1 and 2 as set forth in Exhibit 7 hereto.

8. SBP Attachment 27, “Risk Sharing” is hereby amended to revise Section II “ Baseline Prices and Risk Sharing Control Limits ” A. as set forth in Exhibit 8 hereto.

9. SBP Attachment 29, “Incentive Payment for Quality” is hereby amended to revise Section C “Incentive Payment for Quality Plan Term,” Section D “Evaluation Methodology,” and Exhibit A as set forth in Exhibit 9 hereto.




2
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Except as otherwise indicated, all terms defined in the GTA or SBP shall have the same meanings when used in this Amendment No. 21. This Amendment No. 21 constitutes the complete and exclusive agreement between the parties with respect to the subject matter of Amendment No. 21, and Amendment No. 21 supersedes all previous agreements between the parties relating to the subject matter of Amendment No. 21, whether written or oral. This Amendment No. 21 shall be governed by the laws of the state of Washington, other than the conflict of law rules thereof. The amendments made to the SBP by this Amendment No. 21 shall be effective as of the date of this Amendment No. 21 or as of such other date as specified herein. The GTA and SBP remain in full force and effect and are not modified, revoked or superseded except as specifically stated in this Amendment No. 21. EXECUTED in duplicate as of the date and year first set forth above by the duly authorized representatives of the Parties:

The scope of Amendment No. 21 is limited to the impact of the Contract Change Notifications (CCNs) identified herein on 787-8 recurring pricing, 787-8 non-recurring pricing, and 787-9 non-recurring pricing. Boeing and Spirit reserve any and all rights with regards to initial Derivative pricing matters outside the scope of Amendment No. 21.
The Boeing Company
 
 
 Spirit AeroSystems Inc.

Acting by and through its division

 
 
 
Boeing Commercial Airplanes

 
 
 
 
 
 
 
 
By:
/s/ Crystal Francois

 
By:
/s/ Leanna Hampton
 
 
 
 
 
Name:
Crystal Francois
 
Name:
Leanna Hampton
 
 
 
 
 
Title:
Procurement Agent    

 
Title:
Contracts Administrator
 
 
 
 
 
Date:
7/1/2014
 
Date:
7/1/2014


















3
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


AMENDMENTS


Number

17
















18



19



20




21
Description

MOA Dated 12-21-10 (Blockpoint 20 Settlement)
Amended or added: SBP Table of Contents, Sections 1.0, 3.1.1, 3.2.1, 3.3.1, 3.3.2.2, 3.3.4.3 and 3.3.4.8, 3.3.7, 3.3.7.1, 3.3.7.2, 3.3.7.3, 3.4.2.1, 3.4.5, 4.1.1, 4.1.3, 4.2, 4.3.1, 4.3.1.1, 4.4, 4.7, 4.8, 4.9, 4.10, 4.11, 5.5, 5.6, 5.7, 5.8, 5.8.1, 5.8.2, 6.1, 6.2, 6.3, 7.1, 7.2, 7.2.1, 7.2.2, 7.2.3, 7.5, 7.5.1, 7.5.2, 7.8, 7.8.1, 7.8.2, 11.2
Deleted SBP Sections 3.3.2.3.I, 3.4.2.3, 7.9, 7.10
Amended or added SBP Attachments 1, 2, 3, 4, 7, 14, 16, 23, 25, 26, 27, 28, 29
Deleted SBP Attachments 13 and 19
Throughout SBP, various references to: “SBP Attachment 7 Indentured Parts Price List and Spare Parts Pricing” are revised to “the SPPC”.

D&MI One Plan Update
Updated SBP Attachments 1, 3, 23, 25
Amended: SBP Section 7.4 per Amendment 3

D&MI One Plan Update
Updated SBP Attachments 1, 2, 3, 16, 23, 25


D&MI One Plan Update
      1.  Updated SBP Attachments 1, 2, 3, 16, 23, 25, 27


D&MI One Plan Update
      1. Amended: SBP Section 8.5
2. Updated SBP Attachments 1, 2, 3, 16, 23, 25, 27, 29
Date

5/12/11
















8/24/11



7/30/12



6/5/13





7/1/14
Approval

R. Parks
M. Kurimsky















M. Guillen
M. Kurimsky


A. Mauldin
M. Kurimsky


Jeff Loomis
C. Cotner




C. Francois
L. Hampton











4
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 21 Exhibit 1
SPECIAL BUSINESS PROVISIONS
8.5
Retention of Quality Records
Spirit shall maintain, on file at Spirit’s facility, quality records traceable to the conformance of Products delivered to Boeing. Spirit shall make such records available to regulatory authorities and Boeing’s authorized representatives. Spirit shall retain such records for a period of not less than ten (10) years from the date of shipment under each applicable Order for all Products unless otherwise specified on the Order. Spirit shall maintain all records related to the current first article inspection (“FAI”) for ten (10) years past final delivery of the last Product covered by the FAI.
At the expiration of such period, Boeing reserves the right to request delivery of a copy of such records. In the event Boeing chooses to exercise this right, Spirit shall promptly deliver such copy to Boeing at no additional cost on media agreed to by both Parties.

































5
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 2
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING
(Reference SBP Sections 3.1.1, 3.4.1, 4.1, 4.3.4.3, 4.7, 5.8, 22.0; GTA Section 1)

FOR PURPOSES OF SBP Section 3.1, “OBLIGATION TO PURCHASE AND SELL,” Boeing shall be defined as the following organizations, divisions, groups or entities:
BCA Suppler Management, The Boeing Company, Seattle, WA
The price for Products to be delivered on or before [*****] , except as otherwise noted below, will be as follows:











































6
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 2
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING (cont.)
IMG41.JPG







7
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 2
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING (cont.)
IMG42.JPG














8
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 21 Exhibit 3
SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS

PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES
(Reference SBP Sections 3.3.2.1, 3.3.2.2, 3.3.4.6, 3.4.1; GTA Section 1.0N, 1.0.P)

A.      Configuration

The configuration of each Production Article shall be as described in the Integrated Control Station Plan revision identified below, and in the Contract Change Notices listed in Paragraph B below as such Contract Change Notices relate to the configuration of any Production Article

Type
Product Number
Name
Manufacturing Change Level
Current Mfg Frozen LN
Extended Eff (Usage)
[*****]











9
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 21 Exhibit 3
SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS
PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES (Continued)

Type
Product Number
Name
Manufacturing Change Level
Current Mfg Frozen LN
Extended Eff (Usage)
[*****]


Contract Change Notices

The following Contract Change Notices (CCN’s) are hereby incorporated into this SBP.
 
B.1
Non-D/MI Contract Change Notices :

All CCN’s listed in this Section B.1 are inclusive of all revisions and cancellations issued on or before December 21, 2010:

CCN 1 through 318, 320 through 542, 544 through 762, 764 through 766, 768 through 779, 781 through 871, 873 through 889, 891 through 984, 986 through 990, 992 through 1024, 1028 through 1100, 1102 through 1142, 1144 through 1148, 1150 through 1162, 1164 through 1170, 1172 through 1240, 1242 through 1295, 1298 through 1420, 1422 through 1440, 1442 through 1452, 1454 through 1461, 1463 through 1472, 1474 through 1503, 1505 through 1564, 1566 through 1593, 1595 through 1611, 1613 through 1616, 1618 through 1623, 1625 through 1633, 1635 through 1658, 1661 through 1671, 1673 through 1686, 1688 through 1696, 1698, 1700 through 1709, 1710, 1712 through 1716, 1718 through 1748, 1750, 1751, 1753 through 1763, 1765 through 1810, 1814 through 1833, 1837 through 1844, 1846 through 1856, 1858 through 1866, 1868 through 1895, 1897, 1898, 1901, 1904 through 1906, 1908, 1909, 1911 through 1914, 1919, 1921 through 1925, 1928, 1933 through 1937, 1940 through 1943, 1946 through 1950, 1952 through 1963, 1968, 1973 through 1976, 1980, 1982, 1984, 1985, 1988 through 1993, 1995, 1999, 2000, 2004, 2005, 2007, 2014 through 2019, 2021.




10
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 21 Exhibit 3
SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS

PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES (Continued)


B. All CCN’s listed in this Section B1.B. are inclusive of all revisions committed on and before December 31, 2011 and which are effective on or before Shipset Line Number [*****]

CCN 319, 543, 763, 767, 780, 991,1025 through 1027, 1101, 1143, 1149, 1171,1296,1297,1421,1441,1473,1504,1565,1594,1617,1624,1634,1659,1660,1687, 1697,1699,1717,1749,1752,1764,1770,1834,1836,1926,1927,1929 through 1932, 1938,1939,1945,1951,1966,1967,1969,1971,1972,1977 through 1979, 1981,1983,1986,1987,1994,1996 through 1998, 2002,2003,2006,2008 through, 2013, 2020, 2022 through 2037, 2039 through 2058, 2060 through 2073, 2075 through 2111, 2113, 2115, 2116, 2118, 2120 through 2108, 2130 through 2135, 2137 through 2139, 2141, 2143, 2145 through 2157, 2160, 2161, 2162.

C. Subject to the statement of scope of Amendment 21 as set forth above, all CCN’s listed in this Section B1.C. are inclusive of all revisions commited on and before December 31, 2012 and which are effective on or before Shipset Line Number [*****]:

CCN 1835, 1899, 1902, 1903, 1944, 1965, 1970, 2038, 2074, 2112, 2114, 2117, 2142, 2144, 2178.

    
B.2 D/MI PtP Contract Change Notices:

Section 41 D/MI CCN’s: 1163, 1241, 1915, 1916, 2158, 2159, 2168, 2170R2, 2179

Pylon D/MI CCN: 2166, 2179

Wing LE D/MI CCN: 2167, 2170R2

CCN’s listed above are inclusive of any numerical formatting convention, i.e. CCN 1 is the same as CCN-00001 or CCN 0001.






11
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 21 Exhibit 4 SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS
PRICE STATUS AND SUMMARY TABLES
(Reference SBP Section 7.8.2)

IMG43.JPG




























12
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 5


SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

Boeing shall notify Spirit of the total number of Line Unit OSSN EPDs due to traveled non-conformances.  These shall be multiplied by the prices per unit in table A.1.  The resulting values shall be the costs and expenses incurred by Boeing for such repair or rework as provided in SBP Section 11.1.

Table A.1
Traveled Work Nomenclature
Price Per Unit
SOI-A
$ [*****]
SOI-B
$ [*****]
Non-conformance EPD
$ [*****]




































13
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 6
SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS
Derivatives and Mission Improvement Prformance to Plan (cont.)
Exhibit D - Criteria for Performance Based R&D Payments and Advance Payments
1.      Performance Based Payments for Research and Development (reference SBP Section 5.6)
Performance Based Payments for Research and Development consist of four (4) individual performance events plus a final payment. This Exhibit provides a description of each performance event, the success criterion and verification for each event.
*The amounts for each event are initially for D&MI work negotiated through December 21, 2010 and shall be amended as additional D&MI work statement is negotiated in accordance with this SBP Attachment 23.


Event No.
Performance Event
Completion Criteria
Verification
*Amount (as of 2/21/14 and Amendment 21)
(Paid in accordance with SBP 5.6)
1.
Section 41 Preliminary Layouts [*****]% Complete
i) [*****]% of Section 41 Preliminary Layouts
ii) all other Section 41 R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete and
iii) all Pylon R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete and
iv) all WLE R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete
Events closed in ETAC
$[*****]










14
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 6
SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

2.
CDR complete for [*****] Pylon
i) CDR completed for Sec 41 and [*****] Pylon
ii) all Section 41 R&D events and all Pylon R&D events and all WLE R&D events scheduled prior to or concurrent to planned [*****] Pylon CDR
When all actions items are closed following CDR and applicable events are closed in ETAC
$[*****]
3.
Sec 41 Approved Layouts [*****]% Complete
i) [*****]% of Section 41 Approved Layouts
ii) all other Section 41 R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete and
iii) all Pylon R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete
iv) all WLE R&D events scheduled prior to or concurrent to planned Section 41 [*****]% milestone are complete
Events closed in ETAC
$[*****]
4.
All Products On Dock to the Delivery Point
i) Delivery of all products to Boeing
ii) all Section 41 R&D events scheduled prior to or concurrent to planned Section 41 delivery milestone are complete and
iii) all Pylon R&D events scheduled prior to or concurrent to planned Section 41 delivery milestone are complete
iv) all WLE R&D events scheduled prior to or concurrent to planned Section 41 delivery milestone are complete
Section 41 on dock at Boeing and applicable events are closed in ETAC
$[*****]
5.
Final Payment
 
Airplane Certification
$[*****]
2.Performance Based Payments and Performance Based Advance Payments for Other D&MI Nonrecurring Work (reference SBP Section 5.8)
Performance Based Payments and Performance Based Advance Payments for Other D&MI Nonrecurring Work consist of six (6) individual performance events.














15
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 6
SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)

This Exhibit provides a description of each performance event, the success criterion and verification for each event.
*The amounts for each event are initially for D&MI work negotiated through December 21, 2010 and shall be amended as additional D&MI work statement is negotiated in accordance with this SBP Attachment 23.

Event No.
Performance Event
Completion Criteria
Verification
* Amount (as of 2/11/14 and Amendment 21)
(Paid in accordance with SBP 5.8)
1.
BP [*****] Tooling & Birdstrike Forging
Line Unit [*****] delivered & Birdstrike forgings on dock Spirit
Line Unit [*****] loaded in LCF & FAI complete on forgings
$[*****]
2.
BP [*****] Tooling
Line Unit [*****] delivered
Line Unit [*****] loaded in LCF
$[*****]
3.
BP [*****] Tooling
Line Unit [*****] delivered
Line Unit [*****] loaded in LCF
$[*****]
4.
Begin spinning of 1 st  787-9 Sec 41 barrel
Planned Other D&MI NR Work completed prior to the beginning of spinning of 1 st  787-9 Sec 41 barrel
Load of barrel in to AFP cell
$[*****]
5.
787-9
First 787-9 Delivered
First 787-9 on LCF
$[*****]
6.
Final Payment
 
Airplane Certification
$[*****]

















 

16
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 6

SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS
Exhibit E - One Plan Document Record

D&MI One Plan Documents:
•
787 Section 41 IPT Derivatives and Mission Improvement One Plan Summary, Revision New, dated 01-15-09
•
787 Section 41 IPT Derivatives and Mission Improvement One Plan Line [*****], Revision New, 01-15-09
•
787 Section 41 IPT Derivatives and Mission Improvement One Plan Line [*****], Revision New, 01-15-09
•
787 Section 41 IPT Derivatives and Mission Improvement One Plan Line [*****], Revision New, 01-15-09
•
787 Section 41 IPT Derivatives and Mission Improvement One Plan 787-9, Revision New, 01-15-09
•
Spirit-Tulsa One Plan Grand Total, dated 4/16/09
•
787-9 One-Plan Spirit Pylon April 7-8, 2009
•
787-9 One-Plan Spirit S41 April 1, 2010
•
787-9 One-Plan Spirit WLE (Interim Agreement) May 21, 2010
•
787-9 One-Plan Spirit Pylon March 4, 2010
•
787-9 & MI Phase 2 One-Plan - Wing LE (WP 10 & 12)” (Interim Agreement) dated 09/22/10
•
“787 Pylon Derivatives & Mission Improvement Phase II ONE PLAN UPDATE 2 nd QUARTER - 2010” dated 7/1/2010
•
787 Section 41 IPT Derivatives & Mission Improvement Phase II ONE PLAN dated 6/30/2010
•
787 Section 41 IPT Derivatives & Mission Improvement Phase II ONE PLAN dated 8/26/2010
•
787 Pylon Derivatives & Mission Improvement Phase IIIa ONE PLAN - November 2010 - August 2011 dated 11/4/2010
•
787-9 & MI One-Plan; PtP Plan, Wing Leading Edge, dated 12/13, 2010, Rev 14
•
787 Phase III PtP Negotiation Status Between Spirit Wichita and Boeing as of March 11, 2011
•
787 Phase III PtP Negotiation Status Between Spirit Wichita and Boeing as of April 21, 2011
•
787 Section 41 D&MI Improvement “Sec 41 Tooling One Plan Agreements March and April 2011”








17
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 6 SBP ATTACHMENT 23 TO
SPECIAL BUSINESS PROVISIONS

Derivatives and Mission Improvement Performance to Plan (cont.)
Exhibit E - One Plan Document Record
D&MI One Plan Documents (cont.):
•
787 Section 41 D&MI Improvement “CN 22067 - Sec 41 [*****]” dated June 1, 2011
•
787 One Plan - Section 41 | SOW Hours Agreement “D_MI Sec 41 Engineering One Plan Agreements 6_9_11”
•
787 Section 41 D&MI Improvement “787 D_MI Sec 41 Tooling One Plan Agreements 6_7_11”
•
787 Pylon Derivatives & Mission Improvement Phase IIIa ONE PLAN Rev. B - November 2010 - June 2011 dated 7/7/2011
•
787-9 One-Plan Phase IIIb; PtP Plan, Wing Leading Edge, dated 7/1/2011
•
787-9 Section 41 D/MI PtP Phase IIIb One Plan Updates for the following NR changes: CN21389-[*****], dated 11-4-11, CN26217-[*****], dated 12-22-11, CN27164-ME Impact, dated 2-1-12, CN28726-[*****], dated 12-22-11, CN29139-[*****], dated 12-1-11, LMA CN643-[*****], dated 12-1-11, LMA CN646, dated 11-16-11, LMA CN647-[*****], dated 11-17-11, LMA CN648-[*****], dated 11-16-11, LMA CN651-[*****], dated 11-17-11, LMA CN655, dated 11-17-11, LMA CN659-[*****], dated 11-17-11, LMA CN665-dated 11-17-11, LMA CN671-[*****], dated 12-1-11, LMA CN677-SCN Package Updates, dated 12-1-11, LMA CN688-[*****], dated 1-12-12, LMA CN705-[*****], dated 1-12-12, LMA CN727-[*****], dated 1-12-12, LMA CN689-SCN Updates, dated 1-12-12, LMA CN690-[*****], dated 12-15-11, LMA CN691-[*****], dated 1-12-12
•
787-9 Section 41 D/MI Tooling Phase IIIb One Plan Updates for non-recurring activities for the following changes: CN 22067, [*****], dated 6-1-11, CN 25334, [*****], dated 11-1-11, 787-9 [*****], dated 11-8-11
•
787-9 Pylon Derivatives & Mission Improvement Phase IIIb One Plan -- July 2011 - [*****], dated 12/19/2011
•
787-9 One Plan Phase IIIb, PTP Plan, Wing Leading Edge, Spirit AeroSystems, Tulsa, Dated 7/1/2011
•
787-9 One Plan for Section 41 and Wing documented in CCN 2170R2 , Attach A
•
787-9 One Plan for Pylon [*****], CN 32338 and CN 32339, dated January , 2012.
•
787-9 One Plans for Section 41 and Pylon documented in CCN 2179 Attachment A dated 2/11/14





18
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 7
SBP ATTACHMENT 25 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment
(Reference SBP Sections 4.9)

B. Incentive Payment Pool

The available Incentive Payment Pool amount (“Incentive Payment Pool”) is $[*****] for Research and Development plus Other D&MI Nonrecurring Work and $[*****] for Tooling. Boeing shall pay Spirit the Incentive Payment amount as determined in accordance with Document [*****].

The Incentive Payment Pool will be updated by SBP Amendment in conjunction with the establishment of, and updates to, the D&MI SOW as described in SBP Attachment 23.
Incentive Payment Pool Methodology: The Incentive Payment Pool shall be established at [*****]% of the agreed D&MI NR Value (as defined in SBP Attachment 23, Section III.A), provided that if any D&MI Nonrecurring Work is to be paid in accordance with the Dispute Resolution clause of SBP Attachment 23, Section III.G, such work shall contribute to the Incentive Payment Pool at [*****]% of the Boeing initial estimate of the disputed value.

F. Incentive Payments Granted

1. Record of total amount of Incentive Payment payments for Research and Development (reference SPB Section 5.7)

Period
Dates
Amount
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]

2. Record of Incentive Payments for Other D&MI Nonrecurring Work (reference SBP Sections 4.9 and 5.7)

Period
Dates
Amount
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]


19
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 21 Exhibit 8
SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

II. Baseline Prices and Risk Sharing Control Limits

A. The annual supplemental payment or credit process contained in this Attachment 27 shall utilize the following baseline prices and risk sharing control limits. All prices and calculations shall be made on a total Shipset basis and not at an individual Work Package basis. Upon the establishment of Pricing for a Derivative, a table applicable to such Derivative shall be established and used. Prior to each annual calculation of the supplemental payment or credit, Column (A) shall be updated to reflect the Shipset Prices as determined in each first calendar quarter update in accordance with SBP Section 7.2 and Attachment 16:

787-8 Model
(A)
(B)
(C)
 
Attachment 1 Price
Upper Limit
Lower Limit
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
























20
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 9

SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment for Quality
(Reference SBP Section 4.11)

A.      Incentive Payment for Quality

An Incentive Payment for Quality is provided to further enhance quality performance in the execution of Spirit's statement of work.

B.      Incentive Payment for Quality Pool

The available Incentive Payment for Quality amount (“Incentive Payment for Quality Pool”) is [*****] dollars ($[*****]). Boeing shall pay Spirit any awarded Incentive Payment for Quality amount as set forth in this SBP Attachment 29.


C.      Incentive Payment for Quality Plan Term

The term of the Incentive Payment for Quality is [*****], consisting of [*****] evaluation periods of [*****] each. The [*****] evaluated shall be [*****] through [*****]. The Incentive Payment for Quality Pool shall be equally divided among each [*****] resulting in an available Incentive Payment for Quality amount of [*****] dollars ($[*****]) for each of the [*****] evaluated. A base year of 2013 shall establish the basis for evaluation for each of the [*****] through [*****].

D.      Evaluation Methodology

D.1.1          In the [*****], Boeing shall calculate the total quantity of Nonconformance EPDs assigned to Spirit in accordance with SBP Attachment 16 for those Shipsets both 1) delivered by Spirit to Boeing after [*****] and 2) delivered by Boeing to its customers in the [*****]. This total quantity of Nonconformance EPDs shall be divided by the quantity of Shipsets both 1) delivered by Spirit to Boeing after [*****] and 2) delivered by Boeing to its customers in the [*****] to establish an average Nonconformance EPDs per Shipset value. An example of this calculation is set forth in Exhibit A to this Attachment 29.

For purposes of executing the methodology contained herein, the Shipsets delivered by Spirit to Boeing after [*****] will be based on the Section 41. For the avoidance of doubt, Section 41 line unit [*****] shall be considered delivered by Spirit to Boeing as of [*****].







21
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 9

SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment for Quality (cont.)
D.1.2          In [*****], Spirit shall calculate the total quantity of Spirit Tags for those Shipsets both 1) delivered by Spirit to Boeing after December 20, 2010 and 2) delivered by Boeing to its customers in the [*****]. This total quantity of Spirit Tags shall be divided by the quantity of Shipsets both 1) delivered by Spirit to Boeing after [*****] and 2) delivered by Boeing to its customers in the [*****] to establish an average Spirit Tags per Shipset value. An example of this calculation is set forth in Exhibit A to this Attachment 29.

D.1.3          Introduction of 787-9: In the [*****] Boeing delivers the first 787-9 Derivative, all of the 787-9 Shipsets delivered by Boeing to its Customers in [*****] shall be excluded from the performance calculation set forth in D.2.1, D.2.2, D.3 or D4 as applicable. All such 787-9 Shipsets excluded from such performance calculation shall be included in the calculation establishing the performance basis for [*****]. An example of this provision is set forth in Exhibit B to this Attachment 29.

D.2.1          In the [*****], Boeing shall calculate the total quantity of Nonconformance EPDs assigned to Spirit in accordance with SBP Attachment 16 for those Shipsets delivered by Boeing to its customers in the [*****]. This total quantity of Nonconformance EPDs shall be divided by the quantity of Shipsets delivered by Boeing to its customers in the [*****] to establish an average Nonconformance EPDs per Shipset value for [*****].



























22
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment 21 Exhibit 9

SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment for Quality (cont.)

D.2.2          In the [*****], Spirit shall calculate the total quantity of Spirit Tags for those Shipsets delivered by Boeing to its customers in the [*****]. This total quantity of Spirit Tags shall be divided by the quantity of Shipsets delivered by Boeing to its customers in the [*****] to establish an average Spirit Tags per Shipset value for [*****].

D.3          Both the average Nonconformance EPDs and Spirit Tags per Shipset for [*****] shall be compared to the average Nonconformance EPDs and Spirit Tags per Shipset for [*****]. If both the average Nonconformance EPDs and Spirit Tags per Shipset for [*****] are equal to or less than [*****] percent ([*****] %) of the average Nonconformance EPDs and Spirit Tags per Shipset for [*****], Spirit shall be awarded an Incentive Payment for Quality of [*****] dollars ($[*****]). If neither the average Nonconformance EPDs or Spirit Tags are greater than [*****] percent ([*****] %) of the average Nonconformance EPDs and Spirit Tags per Shipset for [*****], Spirit shall be awarded an Incentive Payment for Quality of [*****] dollars ($[*****]). If neither the average Nonconformance EPDs or Spirit Tags are greater than [*****] percent ([*****] %) of the average Nonconformance EPDs and Spirit Tags per Shipset for [*****], Spirit shall be awarded an Incentive Payment for Quality of [*****] dollars ($[*****]). If either the average Nonconformance EPDs or Spirit Tags per Shipset for [*****] are greater than [*****] percent ([*****] %) of the average Nonconformance EPDs or Spirit Tags per Shipset for [*****], Spirit shall not be awarded any Incentive Payment for Quality for the [*****]. An example of this calculation is set forth in Exhibit A to this Attachment 29.

D.4          In the [*****], Boeing and Spirit shall make the same calculation as described in D.2 to establish the average Nonconformance EPDs and Spirit Tags per Shipset for the [*****]. Such calculation shall be compared to the lowest value for average Nonconformance EPDs and Spirit Tags per Shipset of [*****] prior to that being evaluated and the calculation of any Incentive Payment for Quality shall be between those two values utilizing the same thresholds and Incentive Payment for Quality values described in paragraph D.3 of this Attachment 29. When determining the lowest value of [*****], such value shall exclude 787-9 Shipsets for the [*****].









23
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment 21 Exhibit 9

SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS

Incentive Payment for Quality (cont.)

E.      Contract Termination

If this SBP is terminated after the start of an Incentive Payment for Quality evaluation period, the Incentive Payment for Quality deemed earned for that period shall be determined by Boeing using the Incentive Payment for Quality evaluation process, as specified herein, provided that the Incentive Payment for Quality amounts earned will be pro-rated based on the time period the SBP is in effect during the evaluation period. After termination, the remaining Incentive Payment for Quality amounts allocated to all subsequent Incentive Payment for Quality evaluation periods cannot be earned by Spirit and, therefore, shall not be paid.








































24
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].





SBP BCA-MS-65530-0019, Amendment 21 Exhibit 9

SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS


Incentive Payment for Quality (cont.)
Exhibit A


All stated Shipset deliveries, Nonconformance EPD quantities and calculation results are notional and for example purposes only.
1.
[*****] baseline calculation example per Attachment 29, paragraphs D.1.1 and D.1.2. Calculated in the [*****]
A.      Establish Shipsets to be included in base calculation:
In the year [*****] Spirit delivers Shipsets [*****] to Boeing.
In the year [*****], Boeing delivers Shipsets [*****] to its customers.
Result: The Shipsets used to establish the [*****] baseline calculation shall be Shipsets [*****].
B.      Establish total Nonconformance EPD count:
The total quantity of Nonconformance EPDs assigned to Shipsets [*****] in accordance with SBP Attachment 16 are [*****].
C.      Establish total Spirit Tags count:
The total quantity of Spirit Tags assigned to Shipsets [*****] are [*****]
D.      Calculation:
Total Nonconformance EPDs of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Nonconformance EPDs per Shipset.
Total Spirit Tags of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Spirit Tags per Shipset.










25
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 9

SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS


Incentive Payment for Quality (cont.)
Exhibit A (cont.)

2.
Quality Incentive Payment Calculation - Notional Calculations for [*****]. Calculated in the [*****]
2.1
Scenario 1
A.      Establish Shipsets to be included in calculation:
In [*****], Boeing delivers Shipsets [*****] to its customers.
B.      Establish total Nonconformance EPD count:
The total quantity of Nonconformance EPDs assigned to Shipsets [*****] is [*****].
The total quantity of Spirit Tags assigned to Shipsets [*****] is [*****].
C.      Calculation:
Total Nonconformance EPDs of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Nonconformance EPDs per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Total Spirit Tags of [*****] are divided by total Shipset count of [*****]. Result is an average of [*****] Spirit Tags per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Both calculations are less than the [*****] % threshold required for the full Incentive Payment for Quality value and Spirit is awarded $[*****] for [*****].

2.2
Scenario 2
A.      Establish Shipsets to be included in calculation:
In [*****], Boeing delivers Shipsets [*****] to its customers.
B.      Establish total Nonconformance EPD count:
The total quantity of Nonconformance EPD’s assigned to Shipsets [*****] is [*****].
The total quantity of Spirit Tags assigned to Shipsets [*****] is [*****].



26
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 21 Exhibit 9

SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS


Incentive Payment for Quality (cont.)
Exhibit A (cont.)

C.      Calculation:
Total Nonconformance EPDs of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Nonconformance EPDs per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Total Spirit Tags of [*****] are divided by total Shipset count of [*****]. Result is an average of [*****] Spirit Tags per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Neither calculation is greater than the [*****] % threshold required for the Incentive Payment for Quality value of $[*****] and Spirit is awarded $[*****] for [*****].

2.3
Scenario 3
A.      Establish Shipsets to be included in calculation:
In [*****], Boeing delivers Shipsets [*****] to its customers.
B.      Establish total Nonconformance EPD count:
The total quantity of Nonconformance EPD’s assigned to Shipsets [*****] is [*****].
The total quantity of Spirit Tags assigned to Shipsets [*****] is [*****].
C.      Calculation:
Total Nonconformance EPDs of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Nonconformance EPDs per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Total Spirit Tags of [*****] are divided by total Shipset count of [*****]. Result is an average of [*****] Spirit Tags per Shipset. This represents [*****] % of the [*****] baseline value of [*****].
Neither calculation is greater than the [*****]% threshold required for the Incentive Payment for Quality value of $[*****] and Spirit is awarded $[*****] for [*****].


27
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment 21 Exhibit 9

SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS


Incentive Payment for Quality (cont.)
Exhibit A (cont.)

2.4
Scenario 4
A.      Establish Shipsets to be included in calculation:
In [*****], Boeing delivers Shipsets [*****] to its customers.
B.      Establish total Nonconformance EPD count:
The total quantity of Nonconformance EPDs assigned to Shipsets [*****] is [*****].
The total quantity of Spirit Tags assigned to Shipsets [*****] is [*****].
C.      Calculation:
Total Nonconformance EPDs of [*****] are divided by total Shipset count of [*****] (Shipsets [*****]). Result is average of [*****] Nonconformance EPDs per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
Total Spirit Tags of [*****] are divided by total Shipset count of [*****]. Result is an average of [*****] Spirit Tags per Shipset. This represents [*****]% of the [*****] baseline value of [*****].
One of the calculations is greater than the [*****]% threshold required for any Incentive Payment for Quality and no Incentive Payment for Quality is awarded for [*****].












28
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014


Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 21 Exhibit 9

SBP ATTACHMENT 29 TO
SPECIAL BUSINESS PROVISIONS


Incentive Payment for Quality (cont.)
Exhibit B

All stated Shipset deliveries are notional and for example purposes only.

1.      Introduction of the 787-9

Assumptions: the first 787-9 is delivered by Boeing to its Customer in the [*****]. A total of [*****] 787-9’s are delivered by Boeing to its Customers in the [*****]. They are Shipsets [*****]. Boeing delivers Shipsets [*****] to its Customers in [*****].

In calculating the average Boeing EPDs per Shipset and Spirit Tags per Shipset for the [*****], Shipsets [*****] and any Boeing EPDs or Spirit Tags associated with Shipsets [*****] are not included in the calculation when comparing to [*****] results. However, Shipsets [*****] and any Boeing EPDs or Spirit Tags associated with Shipsets [*****] are included in the [*****] values when the [*****] results are compared to [*****].




29
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 21, July 1, 2014

EXHIBIT 10.7
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].





AMENDMENT NUMBER 22 Revision 1

TO

Special Business Provisions (SBP) BCA-MS-65530-0019

BETWEEN

THE BOEING COMPANY

AND

SPIRIT AEROSYSTEMS, INC.


THIS AMENDMENT NUMBER 22 REVISION 1 (“Amendment No. 22R1”) is entered into this December 4, 2014, by and between Spirit AeroSystems, Inc. (“Spirit”), a Delaware corporation having its principal office in Wichita, Kansas, and The Boeing Company, a Delaware corporation, acting by and through its division, Boeing Commercial Airplanes (“Boeing”). Herein, Spirit and Boeing may be referred to jointly as the “Parties”.
 
The Parties have entered into the General Terms Agreement, GTA BCA-65520-0032, dated June 16, 2005 as amended from time to time (the “GTA”), the Special Business Provisions, BCA-MS-65530-0019, dated June 16, 2005 as amended from time to time (the "SBP"), and the Memorandum of Agreement: 737 / 747 / 767 / 777 Pricing Agreement Through 2015, dated April 8, 2014 (“2015 Sustaining Pricing Agreement”), and now desire to amend the SBP to incorporate Article 4 of the 2015 Sustaining Pricing Agreement.
Background
The 787 Program includes designing and building the Program Airplane and Derivatives and Mission Improvement work as identified by the Parties. This Amendment No. 22R1 updates the SBP by revising SBP Section 5.5, SBP Attachment 1 and page 3 of the table of Amendments to the SBP, to incorporate Article 4 of the 2015 Sustaining Pricing agreement.

Agreement

THEREFORE, the Parties hereby agree to amend the SBP as follows:

1. Page 3 of the table of Amendments to the SBP is hereby amended as set forth in Exhibit 1 hereto to list this Amendment No. 22R1 in such table.




    

1
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 22R1, December 4, 2014



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


2. SBP Section 5.5 “Advance Payments” is hereby amended as set forth in Exhibit 2 hereto to incorporate Article 4 of the 2015 Sustaining Pricing Agreement by and between the Parties.

3. SBP Attachment 1,”Work Statement and Pricing” is hereby amended as set forth in Exhibit 3 hereto to incorporate Article 4 of the 2015 Sustaining Pricing Agreement.
Except as otherwise indicated, all terms defined in the GTA or SBP shall have the same meanings when used in this Amendment No. 22R1. This Amendment No. 22R1 constitutes the complete and exclusive agreement between the Parties with respect to the subject matter of this Amendment No. 22R1, and this Amendment No. 22R1 supersedes all previous agreements between the Parties relating to the subject matter of Amendment No. 22R1, whether written or oral. This Amendment No. 22R1 shall be governed by the laws of the state of Washington, other than the conflict of law rules thereof. The amendments made to the SBP by this Amendment No. 22R1 shall be effective as of the date of this Amendment No. 22R1 or as of such other date as specified herein. The GTA and SBP remain in full force and effect and are not modified, revoked or superseded except as specifically stated in this Amendment No. 22R1.
EXECUTED in duplicate as of the date and year first set forth above by the duly authorized representatives of the Parties:

The Boeing Company
 
 
 Spirit AeroSystems Inc.

Acting by and through its division

 
 
 
Boeing Commercial Airplanes

 
 
 
 
 
 
 
 
By:
/s/ Sarena Garcia-Deleone

 
By:
/s/ Leanna Hampton
 
 
 
 
 
Name:
Sarena Garcia-Deleone

 
Name:
Leanna Hampton
 
 
 
 
 
Title:
Procurement Agent    

 
Title:
Contracts Administrator
 
 
 
 
 
Date:
12/8/14
 
Date:
12/04/14


















2
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 22R1, December 4, 2014



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 22R1 Exhibit 1
SBP BCA-MS-65530-0019, Amendment 22R1 Exhibit 2

Number

17
















18



19



20




21





22
(VOID)



22R1
Description

MOA Dated 12-21-10 (Blockpoint 20 Settlement)
Amended or added: SBP Table of Contents, Sections 1.0, 3.1.1, 3.2.1, 3.3.1, 3.3.2.2, 3.3.4.3 and 3.3.4.8, 3.3.7, 3.3.7.1, 3.3.7.2, 3.3.7.3, 3.4.2.1, 3.4.5, 4.1.1, 4.1.3, 4.2, 4.3.1, 4.3.1.1, 4.4, 4.7, 4.8, 4.9, 4.10, 4.11, 5.5, 5.6, 5.7, 5.8, 5.8.1, 5.8.2, 6.1, 6.2, 6.3, 7.1, 7.2, 7.2.1, 7.2.2, 7.2.3, 7.5, 7.5.1, 7.5.2, 7.8, 7.8.1, 7.8.2, 11.2
Deleted SBP Sections 3.3.2.3.I, 3.4.2.3, 7.9, 7.10
Amended or added SBP Attachments 1, 2, 3, 4, 7, 14, 16, 23, 25, 26, 27, 28, 29
Deleted SBP Attachments 13 and 19
Throughout SBP, various references to: “SBP Attachment 7 Indentured Parts Price List and Spare Parts Pricing” are revised to “the SPPC”.

D&MI One Plan Update
Updated SBP Attachments 1, 3, 23, 25
Amended: SBP Section 7.4 per Amendment 3

D&MI One Plan Update
Updated SBP Attachments 1, 2, 3, 16, 23, 25


D&MI One Plan Update
      1. Updated SBP Attachments 1, 2, 3, 16, 23, 25, 27


D&MI One Plan Update
      1. Amended: SBP Section 8.5
2. Updated SBP Attachments 1, 2, 3, 16, 23, 25, 27, 29


MOA Dated 4-8-14 (2015 Sustaining Pricing Agreement)
Amended SBP Section 5.5
Updated SBP Attachment 1

MOA Dated 4-8-14 (2015 Sustaining Pricing Agreement)
Amended SBP Section 5.5
Updated SBP Attachment 1
Date

5/12/11
















8/24/11



7/30/12



6/5/13





6/2/14




11/12/14




12/4/14
Approval

R. Parks
M. Kurimsky















M. Guillen
M. Kurimsky


A. Mauldin
M. Kurimsky


Jeff Loomis
C. Cotner




C. Francois
L. Hampton



S. Garcia - Deleone
C. Green


S. Garcia - Deleone
L. Hampton
      









                     

3
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 22R1, December 4, 2014



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


5.5    Advance Payments

Notwithstanding the payment due dates for Shipsets specified elsewhere in this SBP, Boeing shall make total advance payments to Spirit for Shipsets in the amount of $[*****] (“Advance Payments”). The schedule for Boeing’s Advance Payments shall be as follows: $[*****] shall be due on [*****]; an additional $[*****] shall be due on each of [*****],[*****],[*****] and [*****]; an additional $[*****] shall be due on each of [*****],[*****],[*****] and [*****]; an additional $[*****] shall be Due on [*****]; an additional $[*****] shall be due on [*****]; an additional $[*****] shall be due on [*****] and [*****]; and an additional $[*****] shall be due on [*****]. Excepting the [*****] payment, Spirit shall invoice Boeing [*****] days prior to these dates. These payments are made for the Work Statement set forth in Attachment 1 - “Work Statement and Pricing”. Notwithstanding anything to the contrary contained herein, in the GTA or in any other agreement between Boeing and Spirit, Boeing shall not be entitled to any offset or credit of the Advance Payments for any amounts owed by Spirit to Boeing under this SBP or otherwise.

The Advance Payments shall be applied against payments due by Boeing to Spirit for the first 1120 Shipsets such that the Shipset Price, for each of the first 1120 Shipsets shall be decreased as follows: $[*****] for shipsets [*****]; $[*****] for Shipsets [*****]; $[*****] for Shipsets [*****]; $[*****] for shipsets [*****]; $[*****] for Shipsets [*****]; $[*****] for Shipsets [*****]; $[*****] for Shipsets [*****]; $[*****] for Shipsets [*****]; $[*****] for Shipsets [*****]; $[*****] for Shipsets [*****]; $[*****] for Shipsets [*****]; $[*****] for Shipsets [*****]; $[*****] for Shipsets [*****]; and $700,000 for Shipsets 344-1120.

The foregoing recovery of Advance Payments, and the allocation of such recovery as set forth in the “ Advanced Payment Recovery (Per Shipset) ” table in Attachment 1 - “Work Statement and Pricing”, reflects (a) the agreement of the Parties under Article 4 of the Memorandum of Agreement: 737 / 747 / 767 / 777 Pricing Agreement Through 2015, by and between the Parties, dated April 8, 2014 (“2015 Sustaining Pricing Agreement”) to suspend the applicaton of Advance Payments for Shipsets delivered during the twelve (12) months beginning on April 1, 2014 and ending on March 31, 2015, (b) the agreement by the Parties that such suspension shall apply first to the Shipset line units set forth in the table below, and (c) the assumption that the Production Article Delivery Schedule will not be modified prior to [*****].


















4
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 22R1, December 4, 2014



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 22R1 Exhibit 2





Work Package
First Line Unit Subject to Suspension
Section 41
[*****]
Pylon
[*****]
Wing - FLE
[*****]
Wing - MLE
[*****]


In the event that the Production Article Delivery Schedule is modified prior to [*****], the Parties shall, as necessary, amend this Section 5.5 and the “ Advanced Payment Recovery (Per Shipset) ” table in Attachment 1 - “Work Statement and Pricing” to make the same consistent with Article 4 of the 2015 Sustaining Pricing Agreement. For the avoidance of doubt, in no event shall Boeing resume the recovery of Advance Payments for any Shipsets delivered prior to April 1, 2015.

In the event that Boeing does not take delivery of 1120 Shipsets under the terms of this SBP prior to the termination of the Program or this SBP, the remaining balance of the Advance Payments shall be first applied against any outstanding payments then due by Boeing to Spirit in respect of the 787 program. Finally, any remaining balance shall be prorated at an equivalent rate of [*****] Shipsets per year, beginning in the month following delivery to Boeing of Spirit’s final production Shipset. Spirit shall make a payment to Boeing on December 15 of each year for the payments due on account of such year until any remaining balance of the Advance Payments has been fully recovered.

























5
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 22R1, December 4, 2014



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 22R1 Exhibit 3

SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS


WORK STATEMENT AND PRICING
IMG44.JPG








6
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 22R1, December 4, 2014



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 22R1 Exhibit 3

SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS


WORK STATEMENT AND PRICING (cont.)
IMG45.JPG




































7
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 22R1, December 4, 2014



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 22R1 Exhibit 3
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING (cont.)
IMG46.JPG

8
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 22R1, December 4, 2014


EXHIBIT 10.8
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


AMENDMENT NUMBER 23

TO

Special Business Provisions (SBP) BCA-MS-65530-0019

BETWEEN

THE BOEING COMPANY

AND

SPIRIT AEROSYSTEMS, INC.


THIS AMENDMENT NUMBER 23 (“Amendment No. 23”) to Special Business Provisions BCA-MS-65530-0019 is entered into as of August 3, 2015, by and between Spirit AeroSystems, Inc., a Delaware corporation having its principal office in Wichita, Kansas (“Spirit”) and The Boeing Company, a Delaware corporation, acting by and through its division, Boeing Commercial Airplanes (“Boeing”). Hereinafter, Spirit and Boeing may be referred to jointly as the “Parties”.

Now, therefore, in consideration of the mutual covenants set forth herein, the Parties agree as follows:

RECITALS
 
A.
The Parties have entered into the General Terms Agreement, GTA BCA-65520-0032, dated June 16, 2005 as amended from time to time (the “GTA”), the Special Business Provisions, BCA-MS-65530-0019, dated June 16, 2005 as amended from time to time (the "SBP"), the Memorandum of Agreement: 737 / 747 / 767 / 777 Pricing Agreement Through 2015, dated April 8, 2014 (“2015 Sustaining Pricing Agreement”), and the Memorandum of Agreement: 787 Interim Price Agreements, dated November 21, 2014, and now desire to again modify the SBP.

B.
The 787 Program includes designing and building the Program Airplane and Derivatives and Mission Improvement work as identified by the Parties. This Amendment No. 23 updates the SBP to incorporate the outcome of the Annual Price Adjustment for changes committed on and before December 31, 2013 and which are effective on or before Shipset Line Number [*****] and to incorporate the annual update of the traveled work cost estimating relationship values.






1
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 23, August 3, 2015



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the value, receipt, and suffieciency of which are hereby acknowledged, the Parties hereby agree as follows:
1.
Page 4 of the table of Amendments to the SBP is hereby added as set forth in Exhibit 1 hereto to list this Amendment No. 23 in such table.

2.
Attachment 1 “Work Statement and Pricing” is hereby deleted and replaced in its entirety as set forth in Exhibit 2 hereto to incorporate the outcome of the Annual Price Adjustment for changes committed on and before December 31, 2013 and which are effective on or before Shipset Line Number [*****].

3.
Attachment 2 “Production Article Definition and Contract Change Notices” Section B.1 “ Non-D/MI Contract Change Notices ” is hereby amended to add the following:
D. Subject to the statement of scope of Amendment 23 as set forth herein, all CCN’s listed in this Section B.1.D are inclusive of all revisions committed on and before December 31, 2013 and which are effective on or before Shipset Line Number [*****]:

CCN 2001, 2059, 2129, 2140, 2172, 2197
4.
Attachment 2 “Production Article Definition and Contract Change Notices” Section B.2 “ D/MI PtP Contract Change Notices ” is hereby deleted and replaced in its entirety with the following:

B.2 D/MI PtP Contract Change Notices
    
Section 41 D/MI CCN’s: 1163, 1241, 1915, 1916, 2158, 2159, 2168, 2170R2,
2179, 2198

Pylon D/MI CCN’s: 2166, 2179, 2198

Wing LE D/MI CCN’s: 2167, 2170R2, 2198
 
CCN’s listed above are inclusive of any numerical formatting convention, i.e. CCN
1 is the same as CCN-00001 or CCN 0001.

5.
Attachment 16 “Pricing Methodologies” Table A.1 is hereby deleted and replaced in its entirety with the following:


Traveled Work Nomenclature
Price Per Unit
SOI-A
$[*****]
SOI-B
$[*****]
Non-conformance EPD
$[*****]




2
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 23, August 3, 2015



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].





6.
Attachment 27 “Risk Sharing” Section II. “ Baseline Prices and Risk Sharing Control Limits ” Section A. is hereby deleted and replaced in its entirety as set forth in Exhibit 3 hereto to update the 787-8 Attachment 1 Price to incorporate the outcome of the Annual Price Adjustment for changes committed on and before December 31, 2013 and which are effective on or before Shipset Line Number [*****].

Except as otherwise indicated, all terms defined in the GTA or SBP shall have the same meanings when used in this Amendment No. 23. This Amendment No. 23 constitutes the complete and exclusive agreement between the Parties with respect to the subject matter of this Amendment No. 23, and this Amendment No. 23 supersedes all previous agreements between the Parties relating to the subject matter of Amendment No. 23, whether written or oral. The amendments made to the SBP by this Amendment No. 23 shall be effective as of the date of this Amendment No. 23 or as of such other date as specified herein. The GTA and SBP remain in full force and effect and are not modified, revoked or superseded except as specifically stated in this Amendment No. 23. EXECUTED in duplicate as of the date and year first set forth above by the duly authorized representatives of the Parties.
The scope of Amendment No. 23 is limited to the impact of the Contract Change Notifications (CCNs) identified herein on 787-8 recurring pricing, 787-8 non-recurring pricing, and 787-9 non-recurring pricing. Boeing and Spirit reserve any and all rights with regards to initial Derivative pricing matters outside the scope of Amendment No. 23.
The Boeing Company
 
 
 Spirit AeroSystems Inc.

Acting by and through its division

 
 
 
Boeing Commercial Airplanes

 
 
 
 
 
 
 
 
By:
/s/ Jeff Loomis
 
By:
/s/ Leanna Hampton
 
 
 
 
 
Name:
Jeff Loomis
 
Name:
Leanna Hampton
 
 
 
 
 
Title:
Procurement Agent    

 
Title:
Contracts Administrator
 
 
 
 
 
Date:
8/18/15
 
Date:
8/3/15









3
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 23, August 3, 2015



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment 23 Exhibit 1

AMENDMENTS
Page 4

Number

23










Description

Annual Price Adjustment thru Line Number [*****]
Updated SBP Attachments 1, 2, and 27
Boeing Performed Rework and Repair
Updated SBP Attachment 16 Table A.1

Date

8/3/15















Approval

J. Loomis
L. Hampton














































4
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 23, August 3, 2015



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment 23 Exhibit 2

SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS


WORK STATEMENT AND PRICING
IMG47.JPG






5
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 23, August 3, 2015



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 23 Exhibit 2
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING (cont.)
IMG48.JPG









6
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 23, August 3, 2015



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 23 Exhibit 3

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

II. Baseline Prices and Risk Sharing Control Limits

A. The annual supplemental payment or credit process contained in this Attachment 27 shall utilize the following baseline prices and risk sharing control limits. All prices and calculations shall be made on a total Shipset basis and not at an individual Work Package basis. Upon the establishment of Pricing for a Derivative, a table applicable to such Derivative shall be established and used. Prior to each annual calculation of the supplemental payment or credit, Column (A) shall be updated to reflect the Shipset Prices as determined in each first calendar quarter update in accordance with SBP Section 7.2 and Attachment 16:

787-8 Model
(A)
(B)
(C)
 
Attachment 1 Price
Upper Limit
Lower Limit
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%



7
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 23, August 3, 2015


EXHIBIT 10.9
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



TO

Special Business Provisions (SBP) BCA-MS-65530-0019

BETWEEN

THE BOEING COMPANY

AND

SPIRIT AEROSYSTEMS, INC.


THIS AMENDMENT NUMBER 24 (“Amendment No. 24”) to Special Business Provisions BCA-MS-65530-0019 is made as of the last date executed below (“the “Effective Date”) by and between Spirit AeroSystems, Inc., a Delaware corporation having its principal office in Wichita, Kansas (“Spirit”) and The Boeing Company, a Delaware corporation, acting by and through its division, Boeing Commercial Airplanes (“Boeing”). Hereinafter, Spirit and Boeing may be referred to jointly as the “Parties”.

Now, therefore, in consideration of the mutual covenants set forth herein, the Parties agree as follows:

RECITALS
 
A.
The Parties have entered into the General Terms Agreement, GTA BCA-65520-0032, dated June 16, 2005 as amended from time to time (the “GTA”), the Special Business Provisions, BCA-MS-65530-0019, dated June 16, 2005 as amended from time to time (the "SBP") and the Memorandum of Agreement: 787 Interim Price Agreements, dated November 21, 2014, and now desire to again modify the SBP.

B.
The 787 Program includes designing and building the Program Airplane and Derivatives and Mission Improvement work as identified by the Parties. This Amendment No. 24 updates the SBP to incorporate the outcome of the Annual Price Adjustment for changes committed on and before December 31, 2014 and which are effective on or before Shipset Line Number [*****] and to incorporate the annual update of the traveled work cost estimating relationship values.







1
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the value, receipt, and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1.
Page 4 of the table of Amendments to the SBP is hereby deleted and replaced in its entirety as set forth in Exhibit 1 hereto.

2.
SBP Attachment 1 “Work Statement and Pricing” is hereby deleted and replaced in its entirety as set forth in Exhibit 2 hereto to incorporate the outcome of the Annual Price Adjustment for changes committed on and before December 31, 2014 and which are effective on or before Shipset Line Number [*****].

3.
SBP Attachment 2 “Production Article Definition and Contract Change Notices” Section B. “ Contract Change Notices ” is hereby deleted and replaced in its entirety as set forth in Exhibit 3 hereto to.

4.
SBP Attachment 3 “Price Status and Summary Tables” is hereby deleted and replaced in its entirety as set forth in Exhibit 4 hereto to incorporate the outcome of the Annual Price Adjustments completed to date, which includes changes committed on and before December 31, 2014 and which are effective on or before Shipset Line Number [*****].

5.
SBP Attachment 16 “Pricing Methodologies” Table A.1 is hereby deleted and replaced in its entirety with the following:
Traveled Work Nomenclature
Price Per Unit
SOI-A
$[*****]
SOI-B
$[*****]
Non-conformance EPD
$[*****]

6.
SBP Attachment 27 “Risk Sharing” Section II. “ Baseline Prices and Risk Sharing Control Limits ” Section A. is hereby deleted and replaced in its entirety as set forth in Exhibit 5 hereto to update the 787-8 SBP Attachment 1 Price to incorporate the outcome of the Annual Price Adjustment for changes committed on and before December 31, 2014 and which are effective on or before Shipset Line Number [*****].







2
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


Except as otherwise indicated, all terms defined in the GTA or SBP shall have the same meanings when used in this Amendment No. 24. This Amendment No. 24 constitutes the complete and exclusive agreement between the Parties with respect to the subject matter of this Amendment No. 24, and this Amendment No. 24 supersedes all previous agreements between the Parties relating to the subject matter of Amendment No. 24, whether written or oral. The GTA and SBP shall remain in full force and effect and are not modified, revoked, or superseded except as specifically stated in this Amendment No. 24.
The scope of Amendment No. 24 is limited to the impact of the Contract Change Notifications (CCNs) identified herein on 787-8 recurring pricing, 787-8 non-recurring pricing, and 787-9 non-recurring pricing. Boeing and Spirit reserve any and all rights with regards to initial Derivative pricing matters outside the scope of Amendment No. 24.

IN WITNESS WHEREOF, the duly authorized representatives of the Parties have executed this Amendment No. 24 as of the last date of execution set forth below.
The Boeing Company
 
 
 Spirit AeroSystems Inc.
Acting by and through its division
 
 
 
Boeing Commercial Airplanes
 
 
 
 
 
 
 
 
By:
/s/ Jeff Loomis
 
By:
/s/ Leanna Hampton
 
 
 
 
 
Name:
Jeff Loomis
 
Name:
Leanna Hampton
 
 
 
 
 
Title:
Procurement Agent
 
Title:
Contracts Administrator
 
 
 
 
 
Date:
12/16/15
 
Date:
11/17/15





















3
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 24 Exhibit 1

AMENDMENTS
Page 4

Number

23




24





Description

Annual Price Adjustment thru Line Number [*****]
Updated SBP Attachments 1, 2, and 27
Boeing Performed Rework and Repair
Updated SBP Attachment 16 Table A.1

Annual Price Adjustment thru Line Number [*****]
Updated SBP Attachments 1, 2, 3 and 27
Boeing Performed Rework and Repair
Updated SBP Attachment 16 Table A.1

Date

8/3/15




12/16/15










Approval

J. Loomis
L. Hampton



J. Loomis
L. Hampton











































4
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment 24 Exhibit 2

SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS


WORK STATEMENT AND PRICING
IMG49.JPG





5
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 24 Exhibit 2
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING (cont.)
IMG50.JPG







6
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 24 Exhibit 3
SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS
PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES (Continued)

B.      Contract Change Notices

The following Contract Change Notices (CCN’s) are hereby incorporated into this SBP.
 
B.1
Non-D/MI Contract Change Notices :

A. All CCN’s listed in this Section B.1 are inclusive of all revisions and cancellations issued on or before December 21, 2010:

CCN 1 through 318, 320 through 542, 544 through 762, 764 through 766, 768 through 779, 781 through 871, 873 through 889, 891 through 984, 986 through 990, 992 through 1024, 1028 through 1100, 1102 through 1142, 1144 through 1148, 1150 through 1162, 1164 through 1170, 1172 through 1240, 1242 through 1295, 1298 through 1420, 1422 through 1440, 1442 through 1452, 1454 through 1461, 1463 through 1472, 1474 through 1503, 1505 through 1564, 1566 through 1593, 1595 through 1611, 1613 through 1616, 1618 through 1623, 1625 through 1633, 1635 through 1658, 1661 through 1671, 1673 through 1686, 1688 through 1696, 1698, 1700 through 1709, 1710, 1712 through 1716, 1718 through 1748, 1750, 1751, 1753 through 1763, 1765 through 1810, 1814 through 1833, 1837 through 1844, 1846 through 1856, 1858 through 1866, 1868 through 1895, 1897, 1898, 1901, 1904 through 1906, 1908, 1909, 1911 through 1914, 1919, 1921 through 1925, 1928, 1933 through 1937, 1940 through 1943, 1946 through 1950, 1952 through 1963, 1968, 1973 through 1976, 1980, 1982, 1984, 1985, 1988 through 1993, 1995, 1999, 2000, 2004, 2005, 2007, 2014 through 2019, 2021.

B. All CCN’s listed in this Section B1.B. are inclusive of all revisions committed on and before December 31, 2011 and which are effective on or before Shipset Line Number [*****]:

CCN 319, 543, 763, 767, 780, 991,1025 through 1027, 1101, 1143, 1149, 1171,1296,1297,1421,1441,1473,1504,1565,1594,1617,1624,1634,1659,1660,1687, 1697,1699,1717,1749,1752,1764,1770,1834,1836,1926,1927,1929 through 1932, 1938,1939,1945,1951,1966,1967,1969,1971,1972,1977 through 1979, 1981,1983,1986,1987,1994,1996 through 1998, 2002,2003,2006,2008 through, 2013, 2020, 2022 through 2037, 2039 through 2058, 2060 through 2073, 2075 through 2111, 2113, 2115, 2116, 2118, 2120 through 2108, 2130 through 2135, 2137 through 2139, 2141, 2143, 2145 through 2157, 2160, 2161, 2162.

C. Subject to the statement of scope as set forth in SBP Amendment 21, all CCN’s listed in this Section B1.C. are inclusive of all revisions commited on and before December 31, 2012 and which are effective on or before Shipset Line Number [*****]:

CCN 1835, 1899, 1902, 1903, 1944, 1965, 1970, 2038, 2074, 2112, 2114, 2117, 2142, 2144, 2178.

7
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment 24 Exhibit 3
SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS


PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES (Continued)


D. Subject to the statement of scope as set forth in SBP Amendment 23, all CCN’s listed in this Section B.1.D are inclusive of all revisions committed on and before December 31, 2013 and which are effective on or before Shipset Line Number [*****]:

CCN 2001, 2059, 2129, 2140, 2172, 2197

E. Subject to the statement of scope as set forth in SBP Amendment 24, all CCN’s listed in this Section B.1.E are inclusive of all revisions committed on and before December 31, 2014 and which are effective on or before Shipset Line Number [*****]:

CCN 2171, 2173, 2200

    
B.2 D/MI PtP Contract Change Notices:

     Section 41 D/MI CCN’s: 1163, 1241, 1915, 1916, 2158, 2159, 2168, 2170R2, 2179
2198, 2201

     Pylon D/MI CCN’s: 1811, 1812, 2166, 2179, 2198, 2201

     Wing LE D/MI CCN’s: 2167, 2170R2, 2198, 2201
 
     CCN’s listed above are inclusive of any numerical formatting convention, i.e. CCN 1 is
the same as CCN-00001 or CCN 0001.



















8
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 24 Exhibit 4

SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS

PRICE STATUS AND SUMMARY TABLES
(Reference SBP Section 7.8.2)

Price Status and Summary Tables - 787-8 Section 41
 
Work Package
Total Recurring Price Adjustment for Shipsets
[*****]
Total Recurring Price for Shipsets
[*****]
Recurring Unit Price Adjustment for
[*****]
Recurring Unit Price for [*****]
Recurring Unit Price Adjustment for [*****] thru yr [*****]
Recurring Unit Price for [*****] thru yr [*****]
Contract Award
Section 41
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 6
Section 41
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 11
Section 41
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 12
Section 41
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 13
Section 41
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 14
Section 41
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 15
Section 41
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 16
Section 41
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
 
 
Total [*****]
Total [*****]
 
 
 
 
Amend 17
Section 41
[*****]
[*****]
 
 
 
 
Amend 18
Section 41
[*****]
[*****]
 
 
 
 
Amend 19
Section 41
[*****]
[*****]
 
 
 
 
Amend 20
Section 41
[*****]
[*****]
 
 
 
 
Amend 21
Section 41
[*****]
[*****]
 
 
 
 
Amend 22
Section 41
[*****]
[*****]
 
 
 
 
Amend 23
Section 41
[*****]
[*****]
 
 
 
 
Amend 24
Section 41
[*****]
[*****]
 
 
 
 





















9
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 24 Exhibit 4

SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS

PRICE STATUS AND SUMMARY TABLES (Cont.)


Price Status and Summary Tables - 787-8 Pylon
 
Work Package
Total Recurring Price Adjustment for Shipsets
[*****]
Total Recurring Price for Shipsets
[*****]
Recurring Unit Price Adjustment for
[*****]
Recurring Unit Price for [*****]
Recurring Unit Price Adjustment for [*****] thru yr [*****]
Recurring Unit Price for [*****] thru yr [*****]
Contract Award
Pylon
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 8
Pylon
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 9
Pylon
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 11
Pylon
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 12
Pylon
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 13
Pylon
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 14
Pylon
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 15
Pylon
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 16
Pylon
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
 
 
Total [*****]
Total [*****]
 
 
 
 
Amend 17
Pylon
[*****]
[*****]
 
 
 
 
Amend 18
Pylon
[*****]
[*****]
 
 
 
 
Amend 19
Pylon
[*****]
[*****]
 
 
 
 
Amend 20
Pylon
[*****]
[*****]
 
 
 
 
Amend 21
Pylon
[*****]
[*****]
 
 
 
 
Amend 22
Pylon
[*****]
[*****]
 
 
 
 
Amend 23
Pylon
[*****]
[*****]
 
 
 
 
Amend 24
Pylon
[*****]
[*****]
 
 
 
 





















10
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 24 Exhibit 4

SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS

PRICE STATUS AND SUMMARY TABLES (Cont.)

Price Status and Summary Tables - 787-8 Wing Leading Edge
 
Work Package
Total Recurring Price Adjustment for Shipsets
[*****]
Total Recurring Price for Shipsets
[*****]
Recurring Unit Price Adjustment for
[*****]
Recurring Unit Price for [*****]
Recurring Unit Price Adjustment for [*****] thru yr [*****]
Recurring Unit Price for [*****] thru yr [*****]
Contract Award
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 9
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 11
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 12
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 13
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 14
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 15
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 16
Wing LE
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
 
 
Total [*****]
Total [*****]
 
 
 
 
Amend 17
Wing LE
[*****]
[*****]
 
 
 
 
Amend 18
Wing LE
[*****]
[*****]
 
 
 
 
Amend 19
Wing LE
[*****]
[*****]
 
 
 
 
Amend 20
Wing LE
[*****]
[*****]
 
 
 
 
Amend 21
Wing LE
[*****]
[*****]
 
 
 
 
Amend 22
Wing LE
[*****]
[*****]
 
 
 
 
Amend 23
Wing LE
[*****]
[*****]
 
 
 
 
Amend 24
Wing LE
[*****]
[*****]
 
 
 
 


Price Status and Summary Tables - Nose Landing Gear

 
Work Package
Total Recurring Price Adjustment for Shipsets
[*****]
Total Recurring Price for Shipsets
[*****]
Recurring Unit Price Adjustment for
[*****]
Recurring Unit Price for [*****]
Recurring Unit Price Adjustment for [*****] thru yr [*****]
Recurring Unit Price for [*****] thru yr [*****]
Contract Award
Nose LG
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
Amend 17
Nose LG
[*****]
Amend 18
Nose LG
[*****]
Amend 19
Nose LG
[*****]








11
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 24 Exhibit 4

SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS

PRICE STATUS AND SUMMARY TABLES (Cont.)
IMG51.JPG




















12
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24



Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment 24 Exhibit 5

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

II. Baseline Prices and Risk Sharing Control Limits

A. The annual supplemental payment or credit process contained in this Attachment 27 shall utilize the following baseline prices and risk sharing control limits. All prices and calculations shall be made on a total Shipset basis and not at an individual Work Package basis. Upon the establishment of Pricing for a Derivative, a table applicable to such Derivative shall be established and used. Prior to each annual calculation of the supplemental payment or credit, Column (A) shall be updated to reflect the Shipset Prices as determined in each first calendar quarter update in accordance with SBP Section 7.2 and Attachment 16:

787-8 Model
(A)
(B)
(C)
 
Attachment 1 Price
Upper Limit
Lower Limit
Shipsets [*****] - [*****]
[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
[*****]
+[*****]%
-[*****]%











13
787 SBP between Boeing and Spirit
SBP BCA-MS-65530-0019, Amendment 24


EXHIBIT 10.10
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


AMENDMENT NUMBER 25

TO

Special Business Provisions (SBP) BCA-MS-65530-0019

BETWEEN

THE BOEING COMPANY

AND

SPIRIT AEROSYSTEMS, INC.


THIS AMENDMENT NUMBER 25 (“Amendment No. 25”) to Special Business Provisions BCA-MS-65530-0019 is made as of the last date executed below (the “Effective Date”) by and between Spirit AeroSystems, Inc., a Delaware corporation having its principal office in Wichita, Kansas (“Spirit”) and The Boeing Company, a Delaware corporation, acting by and through its division, Boeing Commercial Airplanes (“Boeing”). Hereinafter, Spirit and Boeing may be referred to jointly as the “Parties”.


BACKGROUND
 
A.
The Parties have entered into the General Terms Agreement, GTA BCA-65520-0032, dated June 16, 2005 as amended from time to time (the “GTA”), the Special Business Provisions, BCA-MS-65530-0019, dated June 16, 2005 as amended from time to time (the "SBP"), the Memorandum of Agreement: 787 Interim Price Agreements, dated November 21, 2014, and the Collective Resolution Memorandum of Understanding, dated August 1, 2017, and now desire to again amend the SBP.

B.
This Amendment No. 25 incorporates the agreements set forth in the Collective Resolution Memorandum of Understanding dated August 1, 2017; the CY2015 Annual Shipset Price Adjustment for changes committed on and before December 31, 2015 and which are effective on or before Shipset Line Number [*****]; the CY2016 Annual Shipset Price Adjustment for changes committed on and before December 31, 2016 and which are effective on or before Shipset Line Number [*****] (limited to the [*****] percent ([*****]%) nonrecurring allocation resulting from the CY2016 Annual Shipset Price Adjustment Change list due at Line Number [*****] under Attachment 16 Section C.3.1.2); and the annual update of the traveled work cost estimating relationship values.

AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the value, receipt, and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 1 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


1.
The SBP is hereby amended by deleting the SBP Table of Contents listing of Attachments and replacing it in its entirety with a new Table of Contents listing of Attachments, attached hereto as Exhibit 1.

2.
The SBP is hereby amended by deleting the SBP Table of Amendments Page 4 and replacing it in its entirety with a new Table of Amendments Page 4, attached hereto as Exhibit 2.

3.
The SBP is hereby amended by deleting SBP Section 3.2.1 “Production Rates” and replacing it in its entirety with the new SBP Section 3.2.1, attached hereto as Exhibit 3.

4.
The SBP is hereby amended by deleting SBP Section 4.1.3 “Shipset Price for Shipsets [*****] Through Year End [*****]” and replacing it in its entirety with a new SBP Section 4.1.3, attached hereto as Exhibit 4.

5.
The SBP is hereby amended by deleting SBP Section 4.2 “Derivative Pricing” and replacing it in its entirety with a new SBP Section 4.2, attached hereto as Exhibit 5.

6.
The SBP is hereby amended by deleting SBP Section 4.3.1.1 “[*****] Prices for Spare Parts Not Listed in SPPC” and replacing it in its entirety with a new SBP Section 4.3.1.1, attached hereto as Exhibit 6.

7.
The SBP is hereby amended by deleting SBP Section 4.10 “Risk Sharing” and replacing it in its entirety with a new SBP Section 4.10, attached hereto as Exhibit 7.

8.
The SBP is hereby amended by adding a new SBP Section 4.12 “Cost Reduction Achievement Credit”, attached hereto as Exhibit 8.

9.
The SBP is hereby amended by deleting SBP Section 5.2.1 “Payment Due Date” and replacing it in its entirety with a new SBP Section 5.2.1, attached hereto as Exhibit 9.

10.
The SBP is hereby amended by deleting SBP Section 7.2.1 “Changes” and replacing it in its entirety with a new SBP Section 7.2.1, attached hereto as Exhibit 10.

11.
The SBP is hereby amended by deleting SBP Section 7.2.2 “Annual Price Adjustments” and replacing it in its entirety with a new SBP Section 7.2.2, attached hereto as Exhibit 11.

12.
The SBP is hereby amended by deleting SBP Section 7.5.1 “Total Cost Management” and replacing it in its entirety with a new SBP Section 7.5.1, attached hereto as Exhibit 12.

13.
The SBP is hereby amended by deleting SBP Section 7.8.2 “SBP Amendment” and replacing it in its entirety with a new SBP Section 7.8.2, attached hereto as Exhibit 13.

14.
The SBP is hereby amended by deleting SBP Section 8.1 “Quality Assurance Requirements” and replacing it in its entirety with a new SBP Section 8.1, attached hereto as Exhibit 14.


787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 2 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


15.
The SBP is hereby amended by deleting SBP Section 11.2 “Reimbursement for Repairs” and replacing it in its entirety with a new SBP Section 11.2, attached hereto as Exhibit 15.

16.
The SBP is hereby amended by deleting SBP Section 12.6 “Source Selection” and replacing it in its entirety with a new SBP Section 12.6, attached hereto as Exhibit 16.

17.
The SBP is hereby amended by deleting SBP Section 12.8.1 “Boeing Furnished Material; Bonded Stores Requirements” and replacing it in its entirety with a new SBP Section 12.8.1, attached hereto as Exhibit 17.

18.
The SBP is hereby amended by deleting SBP Attachment 1 “Work Statement and Pricing” and replacing it in its entirety with a new SBP Attachment 1, attached hereto as Exhibit 18.

19.
The SBP is hereby amended by deleting SBP Attachment 2 “Production Article Definition and Contract Change Notices” and replacing it in its entirety with a new SBP Attachment 2, attached hereto as Exhibit 19.

20.
The SBP is hereby amended by deleting SBP Attachment 3 “Price Status and Summary Tables” and marking it as “Reserved”, attached hereto as Exhibit 20.

21.
The SBP is hereby amended by deleting SBP Attachment 7 “Priced Parts List and Spares Pricing” and replacing it in its entirety with a new SBP Attachment 7, attached hereto as Exhibit 21.

22.
The SBP is hereby amended by deleting SBP Attachment 10 Section A10.3.1 “Relocation/Subcontract Notification” and replacing it in its entirety with a new SBP Attachment 10 Section A10.3.1, attached hereto as Exhibit 22.

23.
The SBP is hereby amended by deleting SBP Attachment 16 “Pricing Methodologies” and replacing it in its entirety with a new SBP Attachment 16, attached hereto as Exhibit 23.

24.
The SBP is hereby amended by deleting SBP Attachment 26 “Total Cost Management” and replacing it in its entirety with a new SBP Attachment 26, attached hereto as Exhibit 24.

25.
The SBP is hereby amended by deleting SBP Attachment 27 “Risk Sharing” and replacing it in its entirety with a new SBP Attachment 27, attached hereto as Exhibit 25.

26.
The SBP is hereby amended by deleting SBP Attachment 28 “Business Case for Rates Greater Than [*****] Shipsets Per Month” and replacing it in its entirety with a new SBP Attachment 28, attached hereto as Exhibit 26.

27.
The SBP is hereby amended by adding a new SBP Attachment 30 “Cost Reduction Achievement Credit”, attached hereto as Exhibit 27.


787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 3 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


28.
Within [*****] days following the Effective Date Spirit shall pay Boeing a net amount of $[*****], inclusive of 2015 and 2016 risk sharing payments. No other adjustments shall be made to the prices previously paid by Boeing to Spirit for Shipsets prior to line unit [*****].

29.
Within [*****] days following the Effective Date, the Parties shall determine the amount by which the aggregate price paid by Boeing to Spirit for line unit [*****] through the last line unit delivered by Spirit to Boeing on or before October 1, 2017 exceeds the aggregate price for such line units calculated pursuant to the pricing set forth in SBP Attachment 1. Spirit shall pay such excess amount no later than October 31, 2017. The Parties shall also make such a determination and make such payment no later than November 30, 2017 for line units delivered after October 1, 2017.

30.
Entire Agreement. Except as otherwise indicated in this Amendment No. 25, all terms defined in the GTA or SBP shall have the same meanings when used in this Amendment No. 25. This Amendment No. 25 constitutes the complete and exclusive agreement between the Parties with respect to the subject matter of this Amendment No. 25, and this Amendment No. 25 supersedes all previous agreements between the Parties relating to the subject matter of Amendment No. 25, whether written or oral, including, but not limited to, the Memorandum of Agreement: 787 Interim Price Agreements, dated November 21, 2014, and the Collective Resolution Memorandum of Understanding, dated August 1, 2017. The GTA and SBP shall remain in full force and effect and are not modified, revoked, or superseded except as specifically stated in this Amendment No. 25.

31.
No Admission of Liability. No Precedential Value. The Parties acknowledge that this Amendment No. 25 reflects a compromise resolution by the Parties of certain claims and that nothing contained in this Amendment No. 25 constitutes or will be construed as an acknowledgement or admission of liability or absence of liability in any way on the part of the Parties, each of which expressly denies any liability or wrongdoing in connection with such claims, and the Parties agree not to issue any public statement or comment to the contrary. The Parties agree that this Amendment No. 25, and the terms and conditions hereof, including without limitation the figures used to reach all pricing and payment figures herein, will have no precedential value and therefore will not be used in support or defense of any other claim arising from the Parties’ contracts.

32.
Governing Law. This Amendment No. 25 will be governed by the laws of the state of Washington exclusive of Washington’s conflict of laws principles.











787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 4 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


33.
Order of Precedence. In the event of a conflict between the terms of this Amendment No. 25 and either the SBP or GTA, the terms of this Amendment No. 25 shall have precedence with respect to the subject matter of this Amendment No. 25.




IN WITNESS WHEREOF, the duly authorized representatives of the Parties have executed this Amendment No. 25 as of the last date of execution set forth below.
The Boeing Company
 
 
 Spirit AeroSystems Inc.
Acting by and through its division
 
 
 
Boeing Commercial Airplanes
 
 
 
 
 
 
 
 
By:
/s/ Jeff Will
 
By:
/s/ Mike Kurimsky
 
 
 
 
 
Name:
Jeff Will
 
Name:
Mike Kurimsky
 
 
 
 
 
Title:
Procurement Agent
 
Title:
Sr. Manager, 787 Contracts
 
 
 
 
 
Date:
9-22-17
 
Date:
9-22-17



787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 5 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 1

Signature Page

Attachment 1      Work Statement and Pricing
Attachment 2      Production Article Definition and Contract Change Notices
Attachment 3      [Reserved]
Attachment 4      Work Statement Documents
Attachment 5      Boeing AOG Coverage
Attachment 6      Boeing AOG Shipping Notification
Attachment 7      Priced Parts List and Spares Pricing
Attachment 8      Spirit Data Submittals
Attachment 9      On-Site Terms and Conditions Supplement
Attachment 10      Quality Assurance Requirements
Attachment 11      Second Tier Report
Attachment 12      Non-U.S. Procurement Report Form
Attachment 13      [Reserved]
Attachment 14      Production Article Delivery Schedule
Attachment 15      Schedule Change Examples
Attachment 16      Pricing Methodologies
Attachment 17      Commercial Invoice Requirements (Customs Invoice) For Imports
into the United States
Attachment 18      Abnormal Escalation
Attachment 19      [Reserved]
Attachment 20      Bonded Stores Requirements
Attachment 21      Boeing Furnished Material and Inventory Reporting Form
Attachment 22      Compliance and Cooperation regarding orders, Permits and
Approvals
Attachment 23      Derivatives and Mission Improvement Performance to Plan
Attachment 24      Anti-Lobbying Certificate
Attachment 25      Incentive Payment
Attachment 26      Total Cost Management
Attachment 27      Risk Sharing
Attachment 28      Business Case for Rates Greater Than 14 Shipsets Per Month
Attachment 29      Incentive Payment for Quality
Attachment 30      Cost Reduction Achievement Credit













787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 6 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 2

AMENDMENTS
Page 4

Number

23




24




25





Description

Annual Price Adjustment thru Line Number [*****]
Updated SBP Attachments 1, 2, and 27
Boeing Performed Rework and Repair
Updated SBP Attachment 16 Table A.1

Annual Price Adjustment thru Line Number [*****]
Updated SBP Attachments 1, 2, 3, and 27
Boeing Performed Rework and Repair
Updated SBP Attachment 16 Table A.1

MOU Dated 8-1-17 (Collective Resolution)
Amended SBP Sections 3.2.1, 4.1.3, 4.2, 4.3.1.1, 4.10, 4.12, 5.2.1, 7.2.1, 7.2.2, 7.5.1, 7.8.2, 8.1, 11.2, 12.6, and 12.8.1
Updated SBP Attachments 1, 2, 3, 7, 10, 16, 26, 27, 28, and 30
Annual Shipset Price Adjustment thru Line Number [*****]
Updated SBP Attachments 1, 2, and 27
Annual Shipset Price Adjustment thru Line Number [*****]
Updated SBP Attachments 1 and 2
Boeing Performed Rework and Repair
Updated SBP Attachment 16 Table A.1

Date

8/3/15




12/16/15




9/22/17






Approval

J. Loomis
L. Hampton



J. Loomis
L. Hampton



J. Will
M. Kurimsky































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 7 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 3

3.2.1
Production Rates
This SBP contains no minimum or maximum production rates. Spirit is responsible for capitalization to support a production rate of twelve (12) Shipsets per month.
Spirit will implement a production rate of fourteen (14) Shipsets per month [*****] months from when Boeing directs such a production rate increase in writing. Boeing will pay Spirit [*****] dollars ($[*****]) within [*****] days following issuance of such direction. Boeing will accelerate deliveries of Boeing Furnished Material, also referred to as Partner Managed Inventory (“PMI”), as reasonably necessary to support Spirit’s start of fourteen (14) Shipsets per month.

For the first occurrence exceeding fourteen (14) Shipsets per month, Spirit acknowledges that production rates can be reached within a commercially reasonable lead time. Boeing will provide market and backlog data to Spirit prior to Boeing’s decision to increase the production rate and to assist the Parties in determining Spirit’s overall business case.

At the time of the Boeing decision to increase the production rate above fourteen (14) Shipsets per month, if Spirit requires capital investments to attain the desired rate, a contribution margin calculation as specified in SBP Attachment 28 shall be utilized to determine if the additional revenue will reasonably recover Spirit’s estimate of its capital investments. In the event this calculation does not project recovery of Spirit’s investments, then Boeing and Spirit will negotiate an equitable price adjustment.

Spares requirements are in addition to production. Spirit shall support all Spares. (For capacity planning purposes only, a reasonable estimate at the time of execution of this SBP is an average of [*****] Shipsets per month.)

For the avoidance of doubt, nothing in this SBP Section 3.2.1 shall affect the provisions of SBP Section 3.3.7 and Attachment 23, “Derivatives and Mission Improvement”.




















787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 8 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 4

4.1.3
Shipset Price for Shipsets 1406 and Beyond

Pricing for Shipsets 1406 and beyond shall be negotiated by the Parties, and the Parties will begin negotiating twenty-four (24) months prior to the scheduled delivery date for Shipset 1405.














































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 9 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 5

4.2
Derivative Pricing
The initial pricing for any future Derivatives shall be mutually agreed by the Parties in good faith.
















































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 10 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 6
4.3.1.1      [*****] Prices for Spare Parts Not Listed In SPPC
Spare Parts not yet incorporated into the SPPC shall first be priced based on the [*****]. These [*****] shall be listed in the SPPC. In the event the [*****] is not identified in the SPPC, Spare Parts shall be priced based on the [*****]. Any Spare Part priced in this manner shall be discretely priced in the next revision of the SPPC. [*****] shall be documented in the SPPC and such [*****] shall be updated each time the SPPC is updated.
Standard parts shall not be discretely listed in the SPPC, however, [*****] pricing for families of standards shall be established and listed in the SPPC to facilitate ordering and payment of such standard parts in the event Boeing should require such standard parts.









































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 11 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 7
4.10
Risk Sharing
The Shipset Price for Shipsets [*****] and [*****] shall be subject to a supplemental payment or credit as provided in SBP Attachment 27 “Risk Sharing”. Any resulting payment shall be due upon amendment of the SBP in accordance with SBP Section 7.8.2 and as provided in SBP Section 5.0. For any resulting credit, Boeing shall be entitled to either (a) set off the amount of such credit against any amounts payable to Spirit hereunder or (b) invoice Spirit for the amount of such costs and expenses, and Spirit shall pay the invoiced amount within [*****] days after receipt of a correct (proper) invoice.












































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 12 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 8

4.12
Cost Reduction Achievement Credit

Shipsets [*****] shall be subject to a cost reduction achievement credit evaluated as provided in SBP Attachment 30 “Cost Reduction Achievement Credit”.















































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 13 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 9

5.2.1
Payment Due Date
Unless otherwise provided pursuant to a written agreement between the Parties, payment for all Products delivered before [*****] shall be net [*****] days, and payment for all subsequent Products shall be net [*****] days. In the event Spirit is able to implement payment terms of net [*****] days prior to [*****], Spirit shall notify Boeing and Boeing shall make such change.
Except as otherwise provided pursuant to a written agreement between the Parties, payment due dates, including discount periods, shall be computed from (a) the actual date of delivery of the Product, (b) the date of receipt of a correct (proper) invoice for such Product or (c) the scheduled delivery date of such Product, whichever is last. Unless freight and other charges are itemized, any discount shall be taken on the full amount of the invoice. Boeing shall notify Spirit AeroSystems, Inc. in a timely manner if it receives an invoice it believes to be incorrect or improper. All payments are subject to adjustment for shortages, credits and rejections. When practical, Boeing shall consult with Spirit AeroSystems, Inc. regarding any adjustments.


































787 SBP between Boeing and Spirit     
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Page 14 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 10

7.2.1
Changes
Except as stated in this SBP Section 7.2.1, Changes authorized by Boeing on or before [*****] that are first effective at Shipset [*****] or earlier, are hereby incorporated into the SBP and are not subject to any Price adjustment. Changes authorized by Boeing in accordance with SBP Section 6.1 subsequent to [*****] that are first effective for Shipsets after Shipset [*****], are subject to Price adjustment in accordance with SBP Sections 7.2.2 and 7.2.3.
The CY2017 Annual Shipset Price Adjustments to be completed in accordance with SBP Section 7.2.2 for recurring shall require a comparison of the configurations of Shipset [*****] (787-8), Shipset [*****] (787-9), and Shipset [*****] (787-10) to the Shipset configurations of the line number of the last Section 41 units delivered by Spirit to Boeing in calendar year 2017 for each model. For all CY2017 Annual Shipset Price Adjustments, the Shipset Price adjustments shall be effective beginning with the line number of the first Section 41 Shipset delivered by Spirit on or after [*****].
Changes authorized by Boeing after [*****] that are first effective from Shipsets [*****] shall be subject to Price adjustment for nonrecurring work in accordance with SBP Section 7.2.2 and SBP Attachment 16 Section C.3.1.2. For the avoidance of doubt, the [*****] percent ([*****]%) amortized value for such changes shall not apply in the CY2017 Annual Shipset Price Adjustments calculations and is considered closed.
Only those changes authorized in writing by Boeing as provided in the Administrative Agreement shall be subject to a Price adjustment pursuant to this SBP Section 7.0. In the event Boeing has formally delegated authority to Spirit to issue engineering design changes independently of Boeing, Spirit shall provide a monthly summary to Boeing’s Procurement Representative of such changes and their anticipated impact to Spirit costs. Provided these conditions are met, such changes shall be considered authorized in writing by Boeing.
When requested by Boeing, Spirit shall participate in and support the evaluation of any change prior to its authorization. This may include, but not be limited to, Spirit cost analysis in a manner that supports timely program decision making, and other processes to be jointly developed by Boeing and Spirit to maintain change visibility by means of tracking and approval processes.













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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 11

7.2.2
Annual Shipset Price Adjustments
A separate annual adjustment to Shipset Prices for each model (“Annual Shipset Price Adjustment”) shall be developed using the pricing methodology described in SBP Attachment 16 "Pricing Methodologies".














































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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 12

7.5.1
Total Cost Management
Boeing and Spirit shall engage in a process herein known as Total Cost Management ("TCM"). Boeing and Spirit shall each identify cost reduction opportunities and work together for implementation. Each Party shall fund and be responsible for those Nonrecurring costs associated with cost reduction activities that are consistent with their RAAs as generally defined by the scope of the SBP and as set forth in SBP Attachment 4 “Work Statement Documents”. Spirit shall provide certain data to Boeing sufficient to guide cost reduction activities, as specified in SBP Attachment 26. Executive reviews will be conducted from time to time to assess progress of cost reduction activities.
Boeing shall provide at its cost dedicated personnel and engineering resources to Spirit to enable opportunities to reduce costs in an efficient manner. Such opportunities shall include, but not be limited to, raw material cost ([*****]), limited source suppliers, source-controlled drawing parts, and further reductions on supply chain optimization parts (i.e. should-cost pricing).
For purposes of benchmarking and sharing best practices, Boeing shall provide its champion factory performance metrics for 787 Section 47 and 787 Section 48 to Spirit on a regular basis (at least quarterly). Such metrics shall include, but not be limited to, hours per unit, flow days, headcount, and OPE/OEE.
The Parties shall utilize the TCM program set forth in SBP Attachment 26, which sets forth the general methodology to be used by the Parties to identify and implement cost reduction opportunities.























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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 13

7.8.2
SBP Amendment
Each adjustment to Shipset Prices, Research and Development Prices and Other D&MI Nonrecurring Work Prices shall be set forth in an amendment to this SBP. Unless the Parties shall agree otherwise, this SBP shall be amended to reflect adjustments to such Prices hereunder twice each calendar year while any work is being performed under the provisions of Attachment 23, or otherwise once each calendar year.













































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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 14

8.1
Quality Assurance Requirements
In addition to those general quality assurance requirements set forth below, the work performed under this SBP shall be in accordance with the requirements set forth in SBP Attachment 10 “Quality Assurance Requirements.”
Spirit agrees to work with Boeing to align on information required to support Boeing’s obligations to the FAA with respect to work transfers and implement an appropriate periodic review cadence.










































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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 15

11.2
Reimbursement for Repairs
Pursuant to this SBP Section 11.2, for those costs and expenses for the completion, repair or rework of Products incurred by Boeing after [*****], and not reimbursed as set forth in paragraph 2 of this SBP Section 11.2, Boeing will either: (1) advise Spirit quarterly, within [*****] days after the end of each calendar quarter, of the total costs and expenses incurred for repair of Products by Line Unit for those Aircraft delivered by Boeing to its Customers in the prior calendar quarter; or (2)  upon implementation by Boeing of automated systems, which shall be coordinated with Spirit prior to implementation, notify Spirit of costs and expenses incurred for each individual repair. Spirit shall notify Boeing within [*****] days after receipt of such advice of any errors detected by Spirit in, or any other disagreements by Spirit with, Boeing’s estimate of costs and expenses. Boeing and Spirit shall promptly resolve such errors in a fair and equitable manner. Furthermore, Boeing agrees to provide any supplemental information related to the statement of work for the repair of Products as reasonably requested by Spirit and Spirit shall have the right to verify such information at Boeing’s facilities. Spirit’s failure to so notify Boeing shall be deemed to be an acceptance of Boeing’s determination of such costs and expenses. Boeing shall be entitled to either (a) set off the amount of such costs and expenses against any amounts payable to Spirit hereunder or (b) invoice Spirit for the amount of such costs and expenses, and Spirit shall pay the invoiced amount within [*****] days after receipt of a correct (proper) invoice.
For those costs and expenses for the completion, repair or rework of Products incurred by Boeing prior to [*****], and for work planned in Boeing’s manufacturing systems prior to [*****], the total reimbursement of all Boeing costs and expenses prior to [*****] is [*****] dollars ($[*****]). The full recovery of such Boeing costs and expenses shall be a set off of [*****] dollars ($[*****]) per Shipset for Shipsets [*****]. This recovery schedule is included in SBP Attachment 1. This recovery schedule is exclusive to those costs and expenses for the completion, repair or rework of Products incurred by Boeing prior to [*****], and for work planned in Boeing’s manufacturing systems prior to [*****].



















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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 16

12.6
Source Selection
During the term of this SBP, Spirit agrees to work with Boeing to identify and implement opportunities to introduce into its sub-contract base substantial changes in manufacturing procedures, manufacturing technology, process specifications, and alternate sourcing to lower cost subcontractors. Spirit and Boeing shall periodically review the implementation of these opportunities and evaluate the sharing of cost savings in accordance with SBP Section 7.5 “Total Cost Management”. Notwithstanding the foregoing, Spirit shall retain the right to select all subcontractors in its sole discretion, except as otherwise provided in the following paragraph.
In addition to the provisions of GTA Section 20.2 “Subcontracting”, Boeing may at any time during the performance of this SBP review Spirit’s make-or-buy plan and source selection for Products and Tooling considered critical by Boeing because of process requirements or manufacturing complexity; provided, that any subcontract by Spirit for the procurement of goods or services in excess of $[*****] U.S. Dollars from any source shall be subject to Boeing’s prior written approval. Boeing’s approval shall not be unreasonably withheld, conditioned, or delayed. Spirit shall in a timely manner submit to Boeing its proposed make-or-buy plan and proposed source selection before awarding any subcontract or purchase order with respect to any Products or Tooling. Boeing shall have the right to determine whether the proposed subcontractors are technically qualified to manufacture Products and Tooling in accordance with Boeing processes; provided, however, that Spirit may accompany Boeing when Boeing is investigating the qualifications of proposed subcontractors, and Boeing shall give Spirit reasonable notice of any such investigation. Any action taken by Boeing in connection with the approval, disapproval or qualification of subcontractors shall not be construed as relieving Spirit of any of its obligations under this SBP.






















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Page 21 of 78
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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 17

12.8.1
Boeing Furnished Material; Bonded Stores Requirements
Material, including but not limited to raw material, standards, detail components, systems components and major assemblies, furnished to Spirit by Boeing (“Boeing Furnished Material”) shall be administered in accordance with and subject to the provisions of SBP Attachment 20 “Bonded Stores Requirements”.
Spirit and Boeing shall cooperate in the development of processes for the efficient management of Boeing Furnished Material. Spirit shall provide notice to Boeing and to the sources of Boeing Furnished Material of the required on-dock dates for all such material. Boeing and Spirit shall work together to establish reasonable lead times to permit Spirit to provide such sources with sufficient time to provide the material. Spirit and Boeing shall work together in good faith to implement a scheduling and ordering method that aligns Boeing Furnished Material delivery with the planned day of consumption as reflected in Spirit’s and its sub-tiers’ internal master schedules. Furthermore, Spirit and Boeing shall work together to establish a mutually agreeable supply chain extract from Spirit’s SAP (or equivalent) system for Boeing Furnished Material data. Spirit shall notify Boeing, as necessary, in the event of schedule conflicts between Spirit and Boeing sources of Boeing Furnished Material. All Boeing Furnished Material shall be provided to Spirit FOB [Spirit designated facility].































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Page 22 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 18
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING
IMG52.JPG




















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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 18
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING (cont.)


IMG53.JPG



















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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 18
SBP ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS

WORK STATEMENT AND PRICING (cont.)

IMG54.JPG





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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 19

SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS

PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES
(Reference SBP Sections 3.3.2.1, 3.3.2.2, 3.3.4.6, 3.4.1; GTA Section 1.0N, 1.0.P)

A.      Configuration

The configuration of each Production Article shall be as described in the Integrated Control Station Plan revision identified below, and in the Contract Change Notices listed in Paragraph B below as such Contract Change Notices relate to the configuration of any Production Article

Type
Product Number
Name
Manufacturing Change Level
Current Mfg Frozen LN
Extended Eff (Usage)
[*****]














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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 19
SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS
PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES (cont.)

B.      Contract Change Notices

The following Contract Change Notices (CCN’s) are hereby incorporated into this SBP.
 
B.1
Non-D/MI Contract Change Notices :

A. All CCN’s listed in this Section B.1 are inclusive of all revisions and cancellations issued on or before December 21, 2010:
CCN 1 through 318, 320 through 542, 544 through 762, 764 through 766, 768 through 779, 781 through 871, 873 through 889, 891 through 984, 986 through 990, 992 through 1024, 1028 through 1100, 1102 through 1142, 1144 through 1148, 1150 through 1162, 1164 through 1170, 1172 through 1240, 1242 through 1295, 1298 through 1420, 1422 through 1440, 1442 through 1452, 1454 through 1461, 1463 through 1472, 1474 through 1503, 1505 through 1564, 1566 through 1593, 1595 through 1611, 1613 through 1616, 1618 through 1623, 1625 through 1633, 1635 through 1658, 1661 through 1671, 1673 through 1686, 1688 through 1696, 1698, 1700 through 1709, 1710, 1712 through 1716, 1718 through 1748, 1750, 1751, 1753 through 1763, 1765 through 1810, 1814 through 1833, 1837 through 1844, 1846 through 1856, 1858 through 1866, 1868 through 1895, 1897, 1898, 1901, 1904 through 1906, 1908, 1909, 1911 through 1914, 1919, 1921 through 1925, 1928, 1933 through 1937, 1940 through 1943, 1946 through 1950, 1952 through 1963, 1968, 1973 through 1976, 1980, 1982, 1984, 1985, 1988 through 1993, 1995, 1999, 2000, 2004, 2005, 2007, 2014 through 2019, 2021.

B. All CCN’s listed in this Section B1.B. are inclusive of all revisions committed on and before December 31, 2011 and which are effective on or before Shipset Line Number [*****]:

CCN 319, 543, 763, 767, 780, 991,1025 through 1027, 1101, 1143, 1149, 1171,1296,1297,1421,1441,1473,1504,1565,1594,1617,1624,1634,1659,1660,1687, 1697,1699,1717,1749,1752,1764,1770,1834,1836,1926,1927,1929 through 1932, 1938,1939,1945,1951,1966,1967,1969,1971,1972,1977 through 1979, 1981,1983,1986,1987,1994,1996 through 1998, 2002,2003,2006,2008 through, 2013, 2020, 2022 through 2037, 2039 through 2058, 2060 through 2073, 2075 through 2111, 2113, 2115, 2116, 2118, 2120 through 2108, 2130 through 2135, 2137 through 2139, 2141, 2143, 2145 through 2157, 2160, 2161, 2162.

C. All CCN’s listed in this Section B1.C. are inclusive of all revisions committed on and before December 31, 2012 and which are effective on or before Shipset Line Number [*****]:

CCN 1835, 1899, 1902, 1903, 1944, 1965, 1970, 2038, 2074, 2112, 2114, 2117, 2142, 2144, 2178.

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 19

SBP ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS

PRODUCTION ARTICLE DEFINITION AND CONTRACT CHANGE NOTICES (cont.)



D. All CCN’s listed in this Section B.1.D are inclusive of all revisions committed on and before December 31, 2013 and which are effective on or before Shipset Line Number [*****]:

CCN 2001, 2059, 2129, 2140, 2172, 2197

E. All CCN’s listed in this Section B.1.E are inclusive of all revisions committed on and before December 31, 2014 and which are effective on or before Shipset Line Number [*****]:

CCN 2171, 2173, 2200

F. CCN 2207 is inclusive of all revisions committed on and before December 31, 2015 and which are effective on or before Shipset Line Number [*****].

G. CCN 2233 is inclusive of all revisions committed on and before December 31, 2016 and which are effective on or before Shipset Line Number [*****].

    
B.2 D/MI PtP Contract Change Notices:

     Section 41 D/MI CCN’s: 1163, 1241, 1915, 1916, 2158, 2159, 2168, 2170R2, 2179
2198, 2201

     Pylon D/MI CCN’s: 1811, 1812, 2166, 2179, 2198, 2201, 2208

     Wing LE D/MI CCN’s: 2167, 2170R2, 2198, 2201

     CCN’s listed above are inclusive of any numerical formatting convention, i.e. CCN 1 is
the same as CCN-00001 or CCN 0001.












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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 20

SBP ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS

[Reserved]
 














































 

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Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 21

SBP ATTACHMENT 7 TO
SPECIAL BUSINESS PROVISIONS

PRICED PARTS LIST AND SPARES PRICING
(Reference SBP Sections 3.3.2.1, 3.3.4.6, 3.5.2.1, 4.3.1, 4.3.4.1, 4.3.4.2, 4.3.2, 4.5, 4.6.1, 4.6.2, 12.1.3, 12.10.1)
A.
Template for Creation of IPPL and Spare Parts Price Catalog (SPPC) as defined in SBP Section 3.5


IMG55.JPG

IPPL Outline and Criteria
 
 
 
 
Indentured Parts list will be priced to a spareable part level.
IPPL pricing will be equivalent to the detail part pricing reflective of the [*****]  Price based on an [*****]  units. (The Parties shall mutually agree on the projected model mix to calculate the [*****] .)
IPPL Pricing does not include Standards. Parties will establish a separate pricing list for Standards using [*****]  methodology.
IPPL Pricing to be updated with the [*****]  activity if necessary.
IPPL Document to list [*****]  prices for part families.
IPPL Document to list [*****]  price for details and for assemblies (not including [*****] )







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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 22

SBP ATTACHMENT 10 TO
SPECIAL BUSINESS PROVISIONS

A10.3.1
Relocation/Subcontract Notification

Spirit shall not relocate or subcontract any Category I or II work without written Boeing acceptance (such acceptance shall not be unreasonably withheld, conditioned, or delayed). Notification to Boeing should be made to the Procurement Agent who manages the Spirit contract and shall contain the subcontractor name, address, telephone number, QA manager name, applicable part numbers, and part descriptions. Category I and II work is defined in FAA Order 8120.2, Appendix 4.










































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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES
(Reference SBP Sections 7.8.1, 11.1, 12.10.1)

A.      Boeing Performed Repair and Rework

Prices for Boeing performed repair and rework (including traveled or incomplete work) shall utilize the following methodology

A.1
Price for non-conformance and traveled work identified in Spirit Generated Line Unit OSSN EPD (Open Ship Short Notification Emergent Process Document)
    
Definitions for Traveled Work Nomenclature:                             
SOI-A = All Traveled Work other than SOI-B
SOI-B = Traveled work resulting from PMI delivery delays that are the responsibility of Boeing or written instructions by Boeing to not complete certain Spirit responsible work.

Upon delivery of any Product by Spirit, all exceptions to defined configuration are documented by Spirit in a product known as a OSSN EPD or through other approved processes. Upon analysis by Boeing of such OSSN EPDs or other Spirit documented product, Boeing will establish incomplete work, repair and rework to be accomplished at Boeing’s facility. Incomplete Spirit work shall be comprised of incomplete work that is 1) due to Spirit (SOI-A) and 2) due to Boeing (SOI-B). The definition of this incomplete work will be documented in a product known as a “Closure Report”, or through other approved processes. Upon release of a line number Closure Report, or other documentation through approved processes, Boeing shall notify Spirit of the total quantity of SOI’s planned by Boeing for such Shipset multiplied by the prices per unit in table A.1.




















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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23
SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

Boeing shall notify Spirit of the total number of Line Unit OSSN EPDs due to traveled non-conformances. These shall be multiplied by the prices per unit in table A.1. The resulting values shall be the costs and expenses incurred by Boeing for such repair or rework as provided in SBP Section 11.1.

Table A.1
Traveled Work Nomenclature
Price Per Unit
SOI-A
$[*****]
SOI-B
$[*****]
Non-conformance EPD
$[*****]







A.2
Price for non-conformance, repair or rework identified at Boeing

Boeing shall consolidate and notify Spirit in a timely manner of all non-conformance EPDs identified at Boeing deemed to be Spirit responsibility. Spirit shall notify Boeing in a timely manner of any exceptions to the assignment of responsibility of any non-conformance EPD. The Parties shall work in good faith to resolve such exceptions.

Upon delivery of an Aircraft to Boeing’s customer, Boeing shall notify Spirit of all non-conformance EPDs identified at Boeing for such Shipset multiplied by the prices per unit in table A.1. The resulting value shall be the costs and expenses incurred by Boeing for such repair or rework as provided in SBP Section 11.1.

A.3      Other incomplete work, repair or rework

For any other incomplete work, repair or rework, including such work performed at a consuming partner/supplier, Boeing shall notify Spirit of the costs and expenses incurred by Boeing for such repair and rework.










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SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

A.4      Process for updating prices for Boeing performed traveled work, repair and rework

In the third calendar quarter of each year, the fixed prices for traveled work, repair and rework shall be updated.

The value for SOI-A shall be updated based on the following:
The total quantity of Boeing direct factory labor hours expended from January 1 through June 30 (occurring in the same year the third quarter update is being calculated) for those SOI’s completed by Boeing in those calendar months, shall be divided by the total quantity of the same SOI’s used to establish the total quantity of Boeing direct factory labor hours. The result shall be the average direct factory labor hours per SOI-A. [*****] additional [*****] shall be added to this average to account for additional support labor (M.E. Planning) not included in the above calculation or the Boeing wrap rate. The sum of the average hours per SOI-A plus [*****] shall be multiplied by the Boeing developed wrap rates. Boeing developed wrap rates shall reflect any annual changes in Boeing rates utilized for traveled work, repair and rework. The result shall be the fixed dollars per SOI-A for such work.

The value for SOI-B’s shall be updated based on the following:
The average direct labor hours per SOI-A described above shall be divided by [*****] and multiplied by the Spirit developed wrap as calculated in SBP Attachment 16, Paragraph C. This calculation shall exclude the additional [*****] incorporated in to the SOI-A calculation.

The value for Non-conformance EPD’s shall be updated based on the following:
The total quantity of Boeing direct factory labor hours expended from January 1 through June 30 (occurring in the same year the third quarter update is being calculated) for those EPD’s completed by Boeing in those calendar months, shall be divided by the total quantity of the same EPD’s used to establish the total quantity of Boeing direct factory labor hours. The result shall be the average direct factory labor hours per EPD. [*****] additional [*****] shall be added to this average to account for additional overhead not included in the above calculation or the Boeing wrap rate. The sum of the average hours per EPD plus [*****] additional [*****] shall be multiplied by the Boeing developed wrap rates for EPD work. Boeing developed wrap rates shall reflect any annual changes in Boeing rates utilized for traveled work, repair and rework. The result shall be the fixed dollars per EPD for such work.

During any update, the Parties may review the relationship of the Boeing direct factory labor hours and the hours of Boeing support to total rework hours and adjust the CER accordingly.

These updated values shall be effective beginning October 1 st of each year and shall be in effect until the subsequent annual update.



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SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 34 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

B.      Prices for Miscellaneous Work

The Price for any Miscellaneous Work shall be negotiated based on a proposal from Spirit which shall utilize the following rates and factors:

 
2006 Baseline Burdened Rate
Engineering
$[*****]
Tool Fabrication
$[*****]
Operations
$[*****]
 
 
Non Labor (includes travel, raw material and any special parts not addressed by Spare Parts provisions of contract
Non-labor $ + [*****]% of Non-labor $


$[*****]/hour for Engineering (including D.E., Stress, M.E. and any other direct labor providing input to the engineering statement of work).

$[*****]/hour for Operations (including direct production hours other than Spare Parts and support labor)

$[*****]/hour for tool fabrication.

The above rates are year 2006 base year rates and will be escalated to the period of performance in accordance with the methodology described in SBP Attachment 23, Section III.H.

















787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 35 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

C.      Annual Shipset Price Adjustment

C.1      Introduction

As provided in SBP Section 7.2.2, a separate Annual Shipset Price Adjustment for each model for all changes shall be made in the first calendar quarter of each year. The following methodology and models shall be utilized as a basis for Price adjustments for all changes. Such models shall be subject to annual update based on changes in the cost estimating relationships (CER’s) or other model parameters reflecting the effect of Price adjustments.

C.2      Types of Changes
In recognition that changes will be implemented with the intent of reducing Spirit cost to achieve certain cost conditions, and that certain types of changes will affect Spirit costs in different manners, changes will be segregated in to 2 different categories: [*****]. Each of these 2 categories will be input independently in to the cost model (CER) and the result subject to the tests and process depicted in paragraph C.3.





























787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 36 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

C.3      Process


 
[*****]
 
 
 
 
 
 
 
 
 
C.3.1      Pricing Models
The Shipset Price adjustment shall be the result of a Cost Estimating Relationship (CER) model as described in C.3.1.1 and C.3.1.2 which generates an average Price adjustment over an extended quantity of Shipsets.

This model contains two components, 1) a recurring price factor utilizing i) a weight based cost estimating relationship (CER) for fabrication and ii) a part count based CER for assembly and support as described in SBP Attachment 16, C.3.1.1 and 2) for nonrecurring not compensated or addressed in accordance with SBP Section 3.3.7 and SBP Attachment 23 and SBP Section 7.5, “TCM”, a nonrecurring price factor utilizing an average dollar per part card CER as described in SBP Attachment 16, C.3.1.2. Nonrecurring is treated as a price component amortized into recurring price, as described in Attachment 16, paragraph C.3.1.2.

The methodology for Price adjustments shall be as follows:













787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 37 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)
C.3.1.1 Recurring Price Factor

Recurring price factor adjustments

Recurring price factor calculations will be based on changes in weight for fabrication and Spirit installed part count for assembly and support. The pricing model price per pound (for fabrication) and price per part (for assembly) is set forth below. The authority source for weight data is the [*****] or its successor. The authority source for the Spirit installed/assembled part count is Spirit SAP (or equivalent).
 
Fabrication - Baseline recurring cost estimating relationships for the Fabrication category:


 
Material Type Detailed  Level
Dollars per pound
Detailed
Level
Section 41
Aluminum
[*****]
Titanium
Composite
Other
Wing Leading Edge
Aluminum
[*****]
Titanium
Composite
Steel
All other Other
Pylon
Aluminum
[*****]
Ti 5-5-5-3
All other Ti
CFRP
All other Comp
Steel
All other Other












787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 38 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

Recurring Price Factor Calculation Process for Fabrication category :

Step 1 : [*****]

Step 2A : [*****]

Step 2B : [*****]

Step 3 : [*****]

Step 4 : [*****]































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 39 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)


Formula: [*****]

Example 1: [*****]

Example 2: [*****]

Step 5 : [*****]


Assembly and Support - Baseline recurring cost estimating relationships for the Assembly and Support category:
 
$ per Part
Section 41
$ [*****]
Wing Leading Edge
$ [*****]
Pylon
(simple average of [*****]  and [*****] )
$ [*****]

Step 1:
[*****]

























787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 40 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

Step 2 : [*****]

Step 3 : [*****]

Formula: [*****]

Example 1: [*****]

Example 2: [*****]

Step 4 : [*****]


C.3.1.1.1 Cap on Application of Certain Recurring Price Factors for Work Transfers

In the event the result of the calculation in SBP Attachment 16, paragraph C3.1.1 or the actual cost exceeds [*****] dollars ($[*****]) (price increase or decrease) per Shipset for work transfers, either Party may propose alternative pricing methods. In the event the Parties do not reach agreement on the alternative pricing in time to incorporate it in to the Annual Shipset Price Adjustment, the CER value shall be utilized as an interim value and incorporated in to the Annual Shipset Price Adjustment until completion and incorporation of a negotiated agreement. Such agreement shall be incorporated in to the next Annual Shipset Price Adjustment and retroactively applied to the applicable Shipset Price effectivity as provided in SBP Attachment 16, paragraph C.3.3.





















787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 41 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)
C.3.1.2 Parametrics for Certain Nonrecurring
For nonrecurring not compensated or addressed in accordance with SBP Section 3.3.7 and Attachment 23 and SBP Section 7.5, “TCM”, a nonrecurring price factor will be calculated utilizing:

1) For engineering changes resulting in a part card change (generally implemented through a Change Notice (CN)) - [*****]. A “part card” is defined as a unique engineering part number and is not the number of instances the engineering part is used. The authority source for part card count is ENOVIA.

The Parties acknowledge that those engineering changes identified as 95000 type changes, e.g. 95000E and 95000T are typically the result of engineering error. The nonrecurring effort for such 95000 type changes are not compensable. In the event Spirit deems a 95000 type change has been released and the cause of such change was not due to Spirit error, Spirit may request that any associated part card impact be included in the calculation set forth above.

2) For Planning effort associated with revisions to Wire Harness Installation Documents (WHIDs) impacted by the Electrical Corrective Action Team process (ECAT)s - [*****]. The authority source for WHIDs is DELMIA.

3) For new Tooling - A CER based model by tool type for tool design and tool fabrication will be used to calculate the value for new Tooling required as a result of new or changed parts driven by an engineering change described in C.3.1.2. [*****]. Spirit shall provide a list of tools generated from change activity by part number and Boeing shall review and validate.


















787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 42 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23
SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

4) For revised Tooling - [*****]. Spirit shall provide a list of tools generated from change activity by part number and Boeing shall review and validate.

No later than February 15 of each year, the Parties shall establish:

1) The total part card change for engineering changes implemented in the previous calendar year, as defined by an extract from ENOVIA for all of the Spirit work packages for the same Line Unit. The Line Units used to establish the number of unique part card changes shall be the Line Units of the last Section 41 units delivered by Spirit to Boeing in the prior calendar year for each model.

2) The total new and revised tools as a result of new or changed parts driven by an engineering change described in C.3.1.2 developed by Spirit and validated by Boeing.

3) The total quantity of WHID changes implemented in the previous calendar year as defined by an extract from DELMIA for all of the Spirit work packages for the same line unit. The Line Units used to establish the number of changes shall be the Line Units of the last Section 41 units delivered by Spirit to Boeing in the prior calendar year for each model.

In the event the Parties are unable to agree on the total quantity of new and revised part cards and tools subject to such compensation in time to support the Annual Shipset Price Adjustment, [*****] shall be utilized. The Parties will continue to work to reconcile their differing counts and any subsequent adjustment shall be made at the next Annual Shipset Price Adjustment and applied retroactively.




















787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 43 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

The methodology for deriving the nonrecurring price factor shall be a follows:

Table 1 - Engineering (Engineering, M.E., Operations and NC)
 
Hours per Part Card - New and revised
(Eng, ME, Ops, NC)
Section 41
[*****]
Wing Leading Edge
[*****]
Pylon
(applicable to [*****]  and [*****] )
[*****]
WHIDs
[*****]

Table 2 - New Tooling
Fixed Hours Per Tool
 
New Make
Tool Code
Design Hours
Fab Hours
AJ
[*****]
[*****]
BAJ
[*****]
[*****]
BOF
[*****]
[*****]
CP
[*****]
[*****]
DFT
[*****]
[*****]
DJ
[*****]
[*****]
FAJ
[*****]
[*****]
FME
[*****]
[*****]
FMHF
[*****]
[*****]
LJ
[*****]
[*****]
LM
[*****]
[*****]
ME
[*****]
[*****]
MF
[*****]
[*****]
MHF
[*****]
[*****]
MIT
[*****]
[*****]
MOLD
[*****]
[*****]
NCMIT
[*****]
[*****]
OHME
[*****]
[*****]
PME
[*****]
[*****]
PRE
[*****]
[*****]


787 SBP between Boeing and Spirit     
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Page 44 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SME
[*****]
[*****]
TME
[*****]
[*****]






















































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 45 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

Table 3 - Reworked Tooling
 
Fixed Hours Per Tool
Tool Design
[*****]
Tool Fabrication
[*****]

Table 4 - Labor Rates
 
2006 Baseline Burdened Rate
Engineering (Includes Engineering, Tool Engineering, M.E., Operations and NC)
$[*****]/hour
Tool Fabrication
$[*****]/hour
The above rates are year 2006 base year rates and will be escalated to the period of performance in accordance with the methodology described in Attachment 23, Section III.H.


Step 1 : [*****]


Step 2: [*****]




























787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 46 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)
C.3.1.2.1      Cap on Application of Certain Parametrics for Nonrecurring

In the event the result of the calculation in SBP Attachment 16, paragraph C.3.1.2 exceeds [*****] dollars ($[*****]) in any year, either Party may propose alternative pricing
methods. In the event the Parties do not reach agreement on the alternative pricing in time to incorporate it in to the Annual Shipset Price Adjustment, the [*****] shall be utilized as an interim value and incorporated in to the Annual Shipset Price Adjustment until completion and incorporation of a negotiated agreement. Such agreement shall be incorporated in to the next Annual Shipset Price Adjustment and retroactively applied to the applicable Shipset Price effectivity as provided in SBP Attachment 16, paragraph C.3.3.

C.3.2          Annual Shipset Price Adjustment Calculations

The sums of the fabrication, assembly and amortized nonrecurring price factors shall be evaluated against the criteria specified in SBP Attachment 16, C.2 in determining the annual Price adjustments. Utilizing the examples generated in the fabrication factor and assembly factor sections above and assuming a nonrecurring factor of $[*****] per Shipset, the following are examples of resulting Annual Shipset Price Adjustment.

Scenario 1:
 
[*****]
[*****]
Fabrication Factor
$ [*****]
(example 1)
-$ [*****]
(example 2)
Assembly Factor
$ [*****]
(example 1)
-$ [*****]
(example 2)
Nonrecurring Factor
 
$ [*****]
Result
$ [*****]
$ [*****]

In Scenario 1: [*****]













787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 47 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)

Scenario 2:

 
[*****]
[*****]
Fabrication Factor
-$ [*****]
(example 2)
$ [*****]
(example 1)
Assembly Factor
-$ [*****]
(example 2)
$ [*****]
(example 1)
Nonrecurring Factor
$ [*****]
$ [*****]
Result
-$ [*****]
$ [*****]

In Scenario 2: [*****]

C.3.3 Effectivity of Annual Shipset Price Adjustments
The Shipset Price adjustments shall be effective for all Products at the same Line Unit which shall be equivalent to the first Section 41 Shipset delivered on or after July 1 of the prior year. This represents an averaging of the impact of all changes over all Shipsets for that year. Such adjustments shall become payable upon contract amendment following the completion of the second quarter annual risk sharing evaluation as provided in SBP Section 4.10, if applicable.

Example:
The final 41 Section delivery in 2013 is Shipset 200. The first Section 41 delivered on or after July 1 in 2013 is Shipset 150. In Q1 of the year 2014, the Annual Shipset Price Adjustment process will utilize the configuration of Shipset 200 for all Products for all the calculations required to accomplish the Annual Shipset Price Adjustment. Such price shall be effective at Shipset 150 and-on for all Products.















787 SBP between Boeing and Spirit     
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Page 48 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].





SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 23

SBP ATTACHMENT 16 TO
SPECIAL BUSINESS PROVISIONS

PRICING METHODOLOGIES (cont.)
C.3.4      Update of CER Models
Upon completion of each Annual Shipset Price Adjustment, the Parties shall review the CER models and determine if any modifications or updates are necessary to reflect new information and experience. Such modifications or updates shall reflect the principles utilized to establish the initial CER models. These are:
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]

To provide reference and not as precedence, some of the methodology utilized to establish the initial CERs included:
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]
•
[*****]










787 SBP between Boeing and Spirit     
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Page 49 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 24

SBP ATTACHMENT 26 TO
SPECIAL BUSINESS PROVISIONS

TOTAL COST MANAGEMENT
(Reference SBP Section 7.5)
1.0
Introduction
For purposes of enabling Price reductions as contemplated in SBP Section 7.5, the Parties shall utilize the Total Cost Management (TCM) methodology described in this SBP Attachment. This TCM methodology facilitates identification of cost reduction opportunities for prioritization, business case evaluation, commitment, authorization and implementation of ideas with the purpose of reducing costs of Spirit's contracted statement of work.
2.0
Cost Saving Categories
With respect to Spirit’s contracted statement of work, the Parties shall collaborate to identify and implement cost reduction projects. Cost reduction projects shall be evaluated in the context of the overall benefit or impact to the Program and the Program Airplane. For purposes of illustration, but not limitation, the Parties may consider the following categories, ideas, and concepts when identifying potential cost reduction opportunities:
Supply Chain Architecture : - Reduce non-value added flow time, transactions, transportation and the associated costs. Align to “best value” suppliers taking into consideration the following non-exclusive list: lowest cost, highest quality, ability to offer higher assembly builds that align with Spirit’s strategic objective. Evaluate the benefits and the opportunities of various strategies, including: establishment of second sources, re-evaluation of make versus buy, establishment of common commodity purchases between Boeing’s major structure suppliers or where appropriate, re-evaluation of Boeing Furnished Material plans.
Raw Material Optimization - Review procurement practices to facilitate leveraging raw material costs to the fullest extent possible by utilizing the combined market forecast requirements of Spirit, Spirit’s sub-tier suppliers and Boeing as applicable and where appropriate.
Value Engineering - Changes to configuration, design requirements, material and process requirements that improve the manufacturability and/or producibility of the Product.








787 SBP between Boeing and Spirit     
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Page 50 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 24

SBP ATTACHMENT 26 TO
SPECIAL BUSINESS PROVISIONS

TOTAL COST MANAGEMENT (cont.)
Manufacturing optimization (metals and composites) - Reduce flow-time, improve machining feeds and speeds, improving composite lay-down rates, optimize equipment selection and tooling, and optimize material buy to fly ratios.
Restructure - Evaluate the benefits of restructuring the subcontracted build products that are delivered, or could be delivered, directly to the next higher level of assembly or integration.
Technology Insertion - Utilization and implementation of new technology that significantly improves raw material usage, design and manufacturability.
Tools and Processes : Evaluate the opportunity to optimize or simplify the design, build and project management requirements defined in the applicable commonality matrix referred to in Attachment 4 to the SBP; e.g. processes to manage PMI and design tools.
The Parties shall also consider in good faith such other cost reduction opportunities as may be jointly developed or independently developed by either Party.
3.0
Boeing and Spirit Engagement Processes
The parties will assign dedicated full-time personnel as necessary to develop and utilize a prioritized list of TCM ideas and provide schedule, technical and cost information that enables both parties to develop and evaluate a business case and implementation plan for each TCM idea.
3.1
Identify, Prioritize and Provide Business Case Information
3.1.1
Identify and Prioritize - The parties shall generate, prioritize and present ideas for review. Generating and prioritizing ideas for further review may be done independently or in collaboration with the other party when requested.
3.1.2
For ideas selected for further consideration, a business case shall be developed in accordance with the template provided in paragraph 5.0 below. Notwithstanding anything to the contrary herein, the Parties do not intend to modify or waive Boeing’s right to request information or Spirit’s obligation to provide information as set forth in other provisions of this SBP or the GTA, including without limitation SBP Section 7.2.1 and GTA Section 5.0. The template provided in paragraph 5.0 is an initial definition of the appropriate level of detail intended to accomplish the objectives of SBP Section 7.5 and this Attachment 26. Either party may request reasonable adjustments to the template to better support these objectives.

787 SBP between Boeing and Spirit     
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Page 51 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 24

SBP ATTACHMENT 26 TO
SPECIAL BUSINESS PROVISIONS

TOTAL COST MANAGEMENT (cont.)
Upon review of the business case information, if either party believes the TCM idea does not support the objectives set forth herein that party may provide a written explanation to the other.
3.2
Evaluate and Authorize TCM Ideas
3.2.1
For TCM ideas intended to be incorporated into the program approved baseline configuration of each Aircraft (pre-firm configuration), the Parties will use 787 trade study management product development processes including, but not limited to, airplane level studies, preliminary design decision memos, and configuration descriptions memos to evaluate, authorize, and implement such TCM ideas.
3.2.2
For TCM ideas intended to be incorporated after the program declares firm configuration for each Aircraft (post-firm configuration), the Parties will use the 787 common change process including, but not limited to, technical studies, change requests and change notices to evaluate, authorize and implement such TCM ideas.
3.2.3
For TCM ideas not related to Aircraft configuration, the Parties shall evaluate and authorize such TCM ideas in a manner consistent with the objectives of TCM and their respective RAA’s.
3.3
Pricing and Contract Amendment

The benefits of TCM on Prices shall not be incorporated discretely but shall be integrated with the Price Adjustments, Risk Sharing, and Cost Reduction Achievement Credit processes established in accordance with SBP Sections 4.10, 4.12, and 7.2 and Attachments 16, 27, and 30.
4.0
Changes Determined Not to Support Cost Reduction
In the event either Party determines a change does not meet the purpose of TCM, the change may be evaluated, authorized and compensated as any other change in accordance with SBP Sections 6 and 7.









787 SBP between Boeing and Spirit     
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Page 52 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 24

SBP ATTACHMENT 26 TO
SPECIAL BUSINESS PROVISIONS

TOTAL COST MANAGEMENT (cont.)

5.0
Business Case Development

In support of SBP Attachment 26, paragraph 3.0, a notional template for business analysis information is provided below:
IMG56.JPG







787 SBP between Boeing and Spirit     
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Page 53 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing
(Reference SBP Section 4.10)
I.
Introduction
A.
The Prices for Shipsets [*****] and [*****] set forth in SBP Attachment 1 are subject to an annual risk sharing supplemental payment or credit as set forth in this Attachment 27. The evaluation of a supplemental payment or credit shall take place beginning in the second calendar quarter of the year following the delivery of Shipset [*****] and in each second calendar quarter annually thereafter, if applicable. The final evaluation of a supplemental payment or credit shall be made in the second calendar quarter of the year following Spirit’s delivery to Boeing of Shipset [*****].
B.
The evaluation of Spirit’s costs for Shipsets [*****] and [*****] and any supplemental payment or credit hereunder shall begin upon receipt of Spirit’s costs in accordance with the templates in this SBP Attachment 27, Section VI (the “Cost Templates”), which shall be submitted no later than [*****], and conclude no later than the [*****].

C.
An annual supplemental payment or credit shall be determined based on the combined result of 2 evaluations: 1) the Price effect of all change as calculated annually in accordance with SBP Section 7.2 and Attachment 16; and 2) a risk sharing calculation when certain Spirit cost conditions exist as specified and calculated in this Attachment 27, if applicable.

D.
Notwithstanding the above provisions, for purposes of evaluating risk and identifying opportunity, Spirit shall provide its costs to Boeing on or about [*****] utilizing the templates in this SBP Attachment 27, Section VI (the “Cost Templates”).

E.
For the avoidance of doubt, Spirit shall provide its costs to Boeing for Shipsets [*****] in accordance with Section I.D above. These Shipset costs shall not be subject to an Annual Review as set forth in this SBP Attachment 27 Section IV or the validation and audit process as set forth in this SBP Attachment 27 Section V. Spirit agrees to address any inquiries as reasonably requested by Boeing for the purposes of understanding Spirit's costs for Shipsets [*****] .












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SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 54 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

II.
Baseline Prices and Risk Sharing Control Limits
A.
The annual supplemental payment or credit process contained in this Attachment 27 shall utilize the following baseline prices and risk sharing control limits. All prices and calculations shall be made on a total Shipset basis and not at an individual Work Package basis. Upon the establishment of Pricing for a Derivative, a table applicable to such Derivative shall be established and used. Prior to each annual calculation of the supplemental payment or credit, Column (A) shall be updated to reflect the Shipset Prices as determined in each first calendar quarter update in accordance with SBP Section 7.2 and Attachment 16:
 
787-8 Model
(A)
(B)
(C)
 
Attachment 1 Price
Upper Limit
Lower Limit
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
[*****]
[*****]
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
























787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 55 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

787-9 Model
(A)
(B)
(C)
 
Attachment 1 Price
Upper Limit
Lower Limit
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
[*****]
[*****]
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%



787-10 Model
(A)
(B)
(C)
 
Attachment 1 Price
Upper Limit
Lower Limit
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%
Shipsets [*****] - [*****]
$[*****]
[*****]
[*****]
Shipsets [*****] - [*****]
$[*****]
+[*****]%
-[*****]%




























787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 56 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

III.
Annual Supplemental Payment or Credit

A.      Process Flow
 
[*****]
 
 
 
 
 
 
 
 
 
B.
No later than [*****] of each year, Spirit shall submit its costs to Boeing in accordance with the templates in this SBP Attachment 27, Section VI (the “Cost Templates”).
C.
The average Shipset Prices for Shipsets delivered in the prior calendar year shall be compared to these costs and result in a risk sharing calculation.
D.
Risk Sharing Calculation - The risk sharing supplemental payment or credit shall be determined on the basis of Spirit’s cost condition as follows:
1.
Spirit costs exceed the updated average Shipset Price for the prior calendar year but are less than the Upper Limit (B)
a.
Supplemental payment calculation: [*****]
b.
Example: [*****]














787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 57 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)


2.
Spirit costs for the prior calendar year are greater than the average Upper Limit (B)
a.
Supplemental payment calculation: [*****]

b.
Example: [*****]

3.
Spirit costs are less than the updated average Shipset Price for the prior calendar year but are greater than the Lower Limit (C)
a.
Supplemental credit calculation:[*****]
b.
Example: [*****]

4.
Spirit costs for the prior calendar year are less than the Lower Limit (C)
a.
Supplemental credit calculation: [*****]

b.
Example: [*****]

IV. Support of Annual Review
A.
In the event Boeing determines in good faith, using standards that are commercially reasonable, that Spirit has not provided adequate data, records or support for its Cost Template in a manner to support the conclusion of the Annual Review set forth in Section I.B, Boeing shall notify Spirit of this determination in writing as soon as possible, but in any event, prior to the conclusion of the Annual Review period. In such notice, Boeing shall identify with specificity the reason it believes that Spirit has not provided adequate data, records or support. Spirit shall have [*****] days following the scheduled conclusion of such Annual Review to address any issues identified by Boeing in such notice. In the event Spirit does not adequately address the issues during this [*****] day cure period, Boeing shall be entitled to a supplemental credit payment for Shipsets delivered in the prior calendar year in the amount of [*****] of the Prices paid for such Shipsets. In no event shall Boeing take action on the supplemental credit during the [*****] day cure period.










787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 58 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

V.
Validation and Audit process
Spirit agrees to provide any supplemental information as reasonably requested by Boeing and Boeing shall have the right to verify such information at Spirit’s facilities.
VI.
Cost Review Cost Templates
A.
Spirit will provide several reports. These reports will support both the annual risk sharing adjustment as well as provide information to further guide cost reduction activities. The Parties agree that reports provided by Spirit shall meet the following general requirements:  (1) data included in the reports shall allow for direct comparison to the [*****], (2) report formats shall be established to be consistent with Spirit's existing systems for[*****] and to minimize the amount of data translation required by Spirit, and (3) data provided in the reports shall be auditable.

These reports will be provided by [*****] for the prior calendar year and by [*****] for [*****] of the current calendar year.

Other general features include:
1.
All costs, including recurring and nonrecurring, associated with production end items (exclude spares, POA’s, -9 NR, -10 NR, and [*****]% of the depreciation expense in Spirit’s line unit costs for equipment and tooling purchased to achieve the rate increase from [*****] Airplanes per Month to [*****] Airplanes per Month)
2.
Data can be summarized to total line unit for comparison to Total Spirit Contract Price.
3.
Detail available at the end item level.
4.
Capability to drill down as necessary (reference Paragraph V)

A.
Templates and Descriptions

The templates in this Section are an initial definition of the appropriate level of detail intended to accomplish the required objectives of SBP Section 4.10 and this Attachment 27. Boeing shall advise Spirit of any reasonable adjustments to these templates for the purpose of providing Boeing better insight and accountability in the pursuit of these objectives. Boeing’s requests for adjustment shall recognize the capabilities of Spirit’s accounting systems and Spirit shall provide these adjusted templates. These templates are also subject to revision based on changes to Spirit’s accounting systems.

787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 59 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS
Risk Sharing (cont.)
a)
Assigned Value Template - primary function: support annual risk sharing adjustment. The actual annual risk sharing adjustment shall be calculated from the values in this report. The template will include the following (Example templates are in the noted Exhibits to this Attachment 27):

Section 41 ( Exhibit A )
Pylon ( Exhibit B )
[*****]
[*****]









































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 60 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)


Movable Leading Edge ( Exhibit C1 )
Fixed Leading Edge Leading (Exhibit C2)
[*****]
[*****]











































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 61 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

b)
Incurred Value Templates - primary functions: i) aid in validating the Assigned Value Template, and ii) guide cost reduction activities.

Incurred Cost Performance Report for total 787 Program Work Packages by major function with the Total Operations level broken down by Cost Center where available and will include the following:


Section 41, Pylon, and Movable Leading Edge ( Exhibit D )
Section 41, Pylon, and Movable Leading Edge Costing Rate Templates (Exhibit L)
[*****]
[*****]
Section 41, Pylon, and Fixed/Movable Leading Edge Purchased Parts Extract (Exhibit M)
[*****]
Section 41, Pylon, and Fixed/Movable Leading Edge [*****] for production rate increase from [*****]  APM to [*****]  APM (Exhibit N)
[*****]
787 Section 41 Control Station to Cost Center Matrix (Exhibit J)
 

























787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 62 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit A
Section 41 Assigned Value Template
IMG57.JPG

































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 63 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit B
Pylon Assigned Value Template:
IMG58.JPG


























787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 64 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit C1
Wing Leading-Edge Assigned Value Template - MLE
IMG59.JPG
































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 65 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit C2
Wing Leading-Edge Assigned Value Template - FLE

IMG60.JPG























787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 66 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].




SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit D

Section 41, Pylon, and MLE Incurred Value Template
IMG61.JPG














787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 67 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit J

Section 41 Control Station to Cost Center Matrix
IMG62.JPG


























787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 68 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit L
Costing Rate Templates

IMG71.JPG
















787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 69 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit M

787 Section 41, Pylon and Wing Leading Edge Purchased Parts Extract

Report of procured engineered parts by Work Package containing part number, part nomenclature, quantity per shipset, then-current price, supplier name and contract expiration.










































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 70 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 25

SBP ATTACHMENT 27 TO
SPECIAL BUSINESS PROVISIONS

Risk Sharing (cont.)

Exhibit N

Equipment and Tooling Depreciation Expense for Rate Increase from [*****] Shipsets per Month to [*****] Shipsets per Month
IMG64.JPG





787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 71 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 26

SBP ATTACHMENT 28 TO
SPECIAL BUSINESS PROVISIONS

Business Case for Rates Greater Than 14 Shipsets Per Month
(Reference SBP Section 3.2.1)

All values are established at the time of calculation based on current delivery schedule, increased delivery forecast and Shipset pricing in place at that time.
Variables :
B 1 , B 2 , B 3 …B 10 = Current Boeing forecasted deliveries by year for the [*****] years beginning in the year rates are projected to be greater than 14 Shipsets per month, but capped at 14 Shipsets per month.
C 1 , C 2 , C 3 …C 10 = Boeing projected deliveries by year for [*****] years beginning in the year rates are projected to be greater than 14 Shipsets per month, but not capped.
R 1 R 2 , R 3 …- R 10 = Average Shipset prices by year for the [*****] year period beginning at the point rates are projected to be greater than 14 Shipsets per month (note: if the [*****] year period extends beyond those priced in Attachment 1, the average price for the [*****] priced shipsets priced in Attachment 1 will be applied to those Shipsets beyond those priced in Attachment 1 to establish the total [*****] year period).
[*****]% = Profit margin value resulting in a factor of [*****] applied to calculation below.
[*****]% = Contribution margin value.
[*****]% = NPV annual discount rate.





















787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 72 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 26

SBP ATTACHMENT 28 TO
SPECIAL BUSINESS PROVISIONS

Business Case for Rates Greater Than 14 Shipsets Per Month (cont.)
Calculations :
I 1 , I 2 , …I N = Estimate of Spirit capital investment by year.
S 1 , S 2 , S 3 …S 10 = the additional projected contribution margin by year based on additional projected deliveries which shall be calculated as [*****]
•
NPV Calculation: If n is the number of cash flows in the list of values, the formula for NPV is:
IMG65.JPG
Result: If NPV of S 1 ,S 2 ,S 3 ,S 4 ,S 5 ,S 6 ,S 7 ,S 8 ,S 9 ,S 10 > NPV of I 1 ,I 2 …,I N , Spirit investments are covered.
Example:
Assumes the following Capital Investments.         
Tooling      $[*****]
PP & E      $[*****]
Assume 14 APM going to [*****] APM         
Assume [*****] APM first line unit is [*****] so average price per year would start at LU [*****]



















787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 73 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 26

SBP ATTACHMENT 28 TO
SPECIAL BUSINESS PROVISIONS

Business Case for Rates Greater Than 14 Shipsets Per Month (cont.)
Example of Contribution Calculation
 
[*****]
 
 
 
 
 
 
 
 
 

















787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 74 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 27

SBP ATTACHMENT 30 TO
SPECIAL BUSINESS PROVISIONS

Cost Reduction Achievement Credit
(Reference SBP Section 4.12)

I.
Shipsets [*****] shall be subject to an annual cost reduction achievement credit evaluation as set forth in this SBP Attachment 30. The provisions set forth herein shall apply to only 787-[*****] Shipsets and shall not apply to 787- [*****] Shipsets. Following the completion of the risk sharing activity set forth in SBP Attachment 27 (if applicable), the evaluation shall take place beginning in the third calendar quarter of the year following the delivery of Shipset [*****] and in each third calendar quarter annually thereafter. The final evaluation shall be made in the third calendar quarter of the year following Spirit’s delivery of Shipset [*****] . For the avoidance of doubt, all calculations shall be made on a total Shipset basis and not at an individual work package basis. The Shipsets to be included in the annual evaluation shall be based on the Section 41 units delivered by Spirit to Boeing in a given calendar year.

II.
The credit shall be calculated using Spirit’s Shipset costs provided to Boeing in accordance with SBP Attachment 27 and the cost figures identified in Table A below. Notwithstanding the foregoing and for the purpose of clarity, Spirit’s Shipset costs shall not be adjusted downward for (a) [*****] or (b) [*****] for purposes of determining the credit as set forth in this SBP Attachment 30. In the event Spirit’s statement of work is modified due to work transfers in accordance with the SBP, the Parties shall determine whether an adjustment to the cost figures is appropriate and modify the cost figures in Table A below accordingly.
Table A

Model
Shipsets
Annual
Production Rate
Cost Figure
787-9/-10
Shipsets [*****]-[*****]
<[*****] APM
No credit evaluation
787-9/-10
Shipsets [*****]-[*****]
[*****] APM
$[*****]
787-9/-10
Shipsets [*****]-[*****]
Between [*****] & [*****] APM
[*****] calculated per paragraph IV below
787-9/10
Shipsets [*****]-[*****]
[*****] APM
$[*****]
787-9/-10
Shipsets [*****]-[*****]
>[*****] APM
No credit evaluation








787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 75 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].



For Shipsets [*****] - [*****] , in the event Spirit’s [*****] Shipset [*****] is less than the [*****] figures identified in Table A above, the Parties will [*****] share ( [*****] ) the difference between the applicable [*****] figures identified above and the [*****] Shipset [*****] .



















































787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 76 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 27

SBP ATTACHMENT 30 TO
SPECIAL BUSINESS PROVISIONS

Cost Reduction Achievement Credit (cont.)

For Shipsets [*****] - [*****] , in the event Spirit’s [*****] Shipset [*****] is less than the [*****] figures identified in Table A above but greater than the [*****] limit as set forth in SBP Attachment 27 Section II.A., the Parties will [*****] share ( [*****] ) the difference between the applicable [*****] figures and the [*****] Shipset [*****] . In the event Spirit’s annual Shipset [*****] is at or below the [*****] limit as set forth in SBP Attachment 27 Section II.A., the provisions set forth in this SBP Attachment 30 shall not apply.

In the event Shipsets [*****] and [*****] are delivered in the same calendar year, the Parties shall complete two separate evaluations utilizing the methodology set forth above (one for Shipsets delivered through Shipset [*****] and one for Shipsets delivered beyond Shipset [*****] ).

III.
For any resulting credit, Boeing shall submit an invoice to Spirit for the mutually agreed amount and Spirit shall pay the invoiced amount within [*****] days after receipt of a correct and accurate invoice.

IV.
In the event the production rate is not constant at [*****] Shipsets per month or [*****] Shipsets per month in a given year, the Parties will utilize a [*****] based on the production rate break(s) and the cost figures identified in the table above to determine the appropriate cost figure to complete the evaluation. In the event the production rate is decreased to less than [*****] Shipsets per month or increased to greater than [*****] Shipsets per month, the provisions set forth in this SBP Attachment 30 shall not apply.

V.
In the event Spirit’s average annual Shipset cost is less than the applicable cost figure identified in Table A above and the Parties reasonably determine that the associated cost reductions were proposed and initiated by Spirit, the Parties shall mutually agree on an appropriate substitute method in lieu of the foregoing to share such savings below the applicable cost figure that reflects the relative participation of the Parties in achieving such cost reduction. For the avoidance of doubt, Boeing’s share shall not exceed [*****] percent ( [*****] ) for any such substitute method.












787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 77 of 78
Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission. Omissions are designated by the symbol [*****].


SBP BCA-MS-65530-0019, Amendment No. 25 Exhibit 27

SBP ATTACHMENT 30 TO
SPECIAL BUSINESS PROVISIONS

Cost Reduction Achievement Credit (cont.)
Examples

1.
For Shipsets [*****] - [*****] ( [*****] APM), the [*****] Shipset [*****] is less than the applicable [*****] figure.
a. Credit calculation: [*****]
b. Example: [*****]

2.
For Shipsets [*****] - [*****] ( [*****] Shipsets at [*****] APM and [*****] Shipsets at [*****] APM), the [*****] Shipset [*****] is less than the applicable [*****] figure.
a. Credit calculation: [*****]
b. Example: [*****]

3.
For Shipsets [*****] - [*****] ( [*****] APM), the [*****] Shipset [*****] is less than the applicable [*****] figure but greater than the [*****] limit as set forth in SBP Attachment 27.
a. Credit Calculation: [*****]
b. Example: [*****]

4.
For Shipsets [*****] - [*****] ( [*****] APM), the [*****] Shipset [*****] is less than the applicable [*****] figure and the [*****] limit as set forth in SBP Attachment 27 Section II.A.. The provisions set forth in this SBP Attachment 30 shall not apply and no credit will be paid.


787 SBP between Boeing and Spirit     
SBP BCA-MS-65530-0019, Amendment No. 25                         Boeing Initials:_____ Spirit Initials:_____

Page 78 of 78


EXHIBIT 31.1
 
CERTIFICATION PURSUANT TO
RULE 13a/15d OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Thomas C. Gentile III, certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q of Spirit AeroSystems Holdings, Inc. (“registrant”);
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
 
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
 
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
/s/ Thomas C. Gentile III
 
Thomas C. Gentile III
 
President and Chief Executive Officer
 
Date: November 3, 2017





EXHIBIT 31.2
 
CERTIFICATION PURSUANT TO
RULE 13a/15d OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Sanjay Kapoor, certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q of Spirit AeroSystems Holdings, Inc. (“registrant”);
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
 
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
 
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
/s/ Sanjay Kapoor
 
Sanjay Kapoor
 
Executive Vice President and Chief Financial Officer
 
Date: November 3, 2017





EXHIBIT 32.1
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Spirit AeroSystems Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 28, 2017 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas C. Gentile III, as President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
 
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
/s/ Thomas C. Gentile III
 
Thomas C. Gentile III
 
President and Chief Executive Officer
 
Date: November 3, 2017





EXHIBIT 32.2
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Spirit AeroSystems Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 28, 2017 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sanjay Kapoor, as Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
 
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
/s/ Sanjay Kapoor
 
Sanjay Kapoor
 
Executive Vice President and Chief Financial Officer
 
Date: November 3, 2017