10-Q

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 30, 2009

OR

¨ 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 1-442

THE BOEING COMPANY

(Exact name of registrant as specified in its charter)

Delaware	91-0425694
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

100 N. Riverside, Chicago, IL 60606-1596

(Address of principal executive offices, including zip code)

(312) 544-2000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 ¨

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 ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer               ¨

Non-accelerated filer    ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of October 16, 2009, there were 726,599,064 shares of common stock, $5.00 par value, issued and outstanding.

(This number includes 29 million outstanding shares held by the ShareValue Trust which are not eligible to vote.)

THE BOEING COMPANY

FORM 10-Q

For the Quarter Ended September 30, 2009

INDEX

			Page
Part I. Financial Information (Unaudited)
	Item 1.	Financial Statements	1
		Condensed Consolidated Statements of Operations	1
		Condensed Consolidated Statements of Financial Position	2
		Condensed Consolidated Statements of Cash Flows	3
		Condensed Consolidated Statement of Shareholders’ Equity	4
		Summary of Business Segment Data	5
		Note 1 – Basis of Presentation	6
		Note 2 – Acquisition	6
		Note 3 – Earnings Per Share	7
		Note 4 – Income Taxes	7
		Note 5 – Inventories	8
		Note 6 – Investments	9
		Note 7 – Liabilities, Commitments and Contingencies	10
		Note 8 – Arrangements with Off-Balance Sheet Risk	14
		Note 9 – Debt	16
		Note 10 – Postretirement Plans	16
		Note 11 – Share-Based Compensation and Other Compensation Arrangements	17
		Note 12 – Derivative Financial Instruments	17
		Note 13 – Fair Value Measurements	19
		Note 14 – Legal Proceedings	21
		Note 15 – Business Segment Data	24
		Report of Independent Registered Public Accounting Firm	26
	Forward-Looking Information Is Subject to Risk and Uncertainty		27
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
		Consolidated Operating Results	29
		Commercial Airplanes	32
		Integrated Defense Systems	38
		Boeing Capital Corporation	43
		Other Segment	45
		Liquidity and Capital Resources	45
		Off-Balance Sheet Arrangements	47
		Contingent Obligations	47
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
	Item 4.	Controls and Procedures	48
Part II. Other Information
	Item 1.	Legal Proceedings	49
	Item 1A.	Risk Factors	49
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
	Item 6.	Exhibits	50
	Signature		51
	Exhibit (15) – Letter from Independent Registered Public Accounting Firm Regarding Unaudited Interim Financial Information		52
	Exhibit (31)(i) – CEO Section 302 Certification		53
	Exhibit (31)(ii) – CFO Section 302 Certification		54
	Exhibit (32)(i) – CEO Section 906 Certification		55
	Exhibit (32)(ii) – CFO Section 906 Certification		56

Part I. Financial Information

Item 1. Financial Statements

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollars in millions, except per share data)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Sales of products	$	42,098		$	40,393		$	13,967		$	12,407
Sales of services		8,246			7,852			2,721			2,886
Total revenues		50,344			48,245			16,688			15,293
Cost of products		(35,432	)		(32,736	)		(12,273	)		(10,311	)
Cost of services		(6,468	)		(6,179	)		(2,165	)		(2,176	)
Boeing Capital Corporation interest expense		(132	)		(173	)		(42	)		(54	)
Total costs and expenses		(42,032	)		(39,088	)		(14,480	)		(12,541	)
		8,312			9,157			2,208			2,752
Income from operating investments, net		186			195			84			72
General and administrative expense		(2,584	)		(2,350	)		(868	)		(740	)
Research and development expense, net		(5,504	)		(2,811	)		(3,574	)		(937	)
(Loss)/gain on dispositions, net		(7	)		2			(1	)
Earnings/(loss) from operations		403			4,193			(2,151	)		1,147
Other income/(loss), net		7			257			(4	)		55
Interest and debt expense		(229	)		(145	)		(92	)		(49	)
Earnings/(loss) before income taxes		181			4,305			(2,247	)		1,153
Income tax (expense)/benefit		(129	)		(1,565	)		687			(470	)
Net earnings/(loss) from continuing operations		52			2,740			(1,560	)		683
Net (loss)/gain on disposal of discontinued operations, net of taxes of $5, ($10), $2 and ($6)		(8	)		18			(4	)		12
Net earnings/(loss)	$	44		$	2,758		$	(1,564	)	$	695
Basic earnings/(loss) per share from continuing operations	$	0.08		$	3.78		$	(2.22	)	$	0.95
Net (loss)/gain on disposal of discontinued operations, net of taxes		(0.01	)		0.02			(0.01	)		0.02
Basic earnings/(loss) per share	$	0.07		$	3.80		$	(2.23	)	$	0.97
Diluted earnings/(loss) per share from continuing operations	$	0.07		$	3.74		$	(2.22	)	$	0.94
Net (loss)/gain on disposal of discontinued operations, net of taxes		(0.01	)		0.02			(0.01	)		0.02
Diluted earnings/(loss) per share	$	0.06		$	3.76		$	(2.23	)	$	0.96
Cash dividends paid per share	$	1.26		$	1.20		$	0.42		$	0.40
Weighted average diluted shares (millions)		708.1			734.2			701.3			721.9

See Notes to Condensed Consolidated Financial Statements.

1

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Financial Position

(Unaudited)

(Dollars in millions, except per share data)	September 30 2009			December 31 2008
Assets
Cash and cash equivalents	$	6,095		$	3,268
Short-term investments		351			11
Accounts receivable, net		6,718			5,602
Current portion of customer financing, net		341			425
Deferred income taxes		741			1,046
Inventories, net of advances and progress billings		15,981			15,612
Total current assets		30,227			25,964
Customer financing, net		5,923			5,857
Property, plant and equipment, net of accumulated depreciation of $12,742 and $12,280		8,912			8,762
Goodwill		4,293			3,647
Other acquired intangibles, net		2,920			2,685
Deferred income taxes		3,835			4,114
Investments		1,120			1,328
Pension plan assets, net		20			16
Other assets, net of accumulated amortization of $511 and $400		1,417			1,406
Total assets	$	58,667		$	53,779
Liabilities and shareholders’ equity
Accounts payable	$	7,053		$	5,871
Other accrued liabilities		12,217			11,564
Advances and billings in excess of related costs		11,792			12,737
Income taxes payable		14			41
Short-term debt and current portion of long-term debt		973			560
Total current liabilities		32,049			30,773
Accrued retiree health care		7,344			7,322
Accrued pension plan liability, net		8,553			8,383
Non-current income taxes payable		998			1,154
Other long-term liabilities		535			337
Long-term debt		10,065			6,952
Shareholders’ equity:
Common shares, par value $5.00 – 1,200,000,000 shares authorized; shares issued – 1,012,261,159 and 1,012,261,159 shares		5,061			5,061
Additional paid-in capital		3,956			3,456
Treasury shares, at cost – 285,761,457 and 285,661,944 shares		(17,733	)		(17,758	)
Retained earnings		22,104			22,675
Accumulated other comprehensive loss		(12,821	)		(13,525	)
ShareValue Trust shares – 29,338,820 and 28,460,769		(1,595	)		(1,203	)
Total Boeing shareholders’ equity		(1,028	)		(1,294	)
Noncontrolling interest		151			152
Total shareholders’ equity		(877	)		(1,142	)
Total liabilities and shareholders’ equity	$	58,667		$	53,779

See Notes to Condensed Consolidated Financial Statements.

2

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in millions)	Nine months ended September 30
	2009			2008
Cash flows – operating activities:
Net earnings	$	44		$	2,758
Adjustments to reconcile net earnings to net cash provided by operating activities:
Non-cash items –
Share-based plans expense		180			159
Depreciation		1,047			952
Amortization of other acquired intangibles		152			122
Amortization of debt discount/premium and issuance costs		7			8
Investment/asset impairment charges, net		66			21
Customer financing valuation provision		31			73
Loss/(gain) on disposal of discontinued operations		13			(28	)
Loss/(gain) on dispositions, net		7			(2	)
Other charges and credits, net		170			83
Excess tax benefits from share-based payment arrangements		(5	)		(100	)
Changes in assets and liabilities –
Accounts receivable		(818	)		(145	)
Inventories, net of advances and progress billings		(582	)		(1,670	)
Accounts payable		1,169			742
Other accrued liabilities		1,091			(570	)
Advances and billings in excess of related costs		(961	)		(2,061	)
Income taxes receivable, payable and deferred		133			733
Other long-term liabilities		(3	)		(157	)
Pension and other postretirement plans		819			(159	)
Customer financing, net		(204	)		628
Other		35			(147	)
Net cash provided by operating activities		2,391			1,240
Cash flows – investing activities:
Property, plant and equipment additions		(965	)		(1,229	)
Property, plant and equipment reductions		25			16
Acquisitions, net of cash acquired		(639	)		(490	)
Contributions to investments		(728	)		(6,372	)
Proceeds from investments		606			8,399
Payments on Sea Launch guarantees		(448	)
Purchase of distribution rights					(151	)
Net cash (used)/provided by investing activities		(2,149	)		173
Cash flows – financing activities:
New borrowings		3,772			5
Debt repayments		(256	)		(616	)
Repayments of distribution rights financing					(210	)
Stock options exercised, other		8			43
Excess tax benefits from share-based payment arrangements		5			100
Employee taxes on certain share-based payment arrangements		(19	)		(81	)
Common shares repurchased		(50	)		(2,583	)
Dividends paid		(915	)		(901	)
Net cash provided/(used) by financing activities		2,545			(4,243	)
Effect of exchange rate changes on cash and cash equivalents		40			(26	)
Net increase/(decrease) in cash and cash equivalents		2,827			(2,856	)
Cash and cash equivalents at beginning of year		3,268			7,042
Cash and cash equivalents at end of period	$	6,095		$	4,186
Non-cash investing and financing activities:
Purchase of distribution rights	$	316		$	170

See Notes to Condensed Consolidated Financial Statements.

3

The Boeing Company and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Equity

(Unaudited)

	Boeing shareholders
(Dollars in millions, except per share data)	Common Stock		Additional Paid-In Capital			Treasury Stock			ShareValue Trust			Retained Earnings			Accumulated Other Comprehensive Loss			Non- controlling Interest			Total
Balance January 1, 2008	$	5,061	$	4,757		($	14,842	)	($	2,752	)	$	21,376		($	4,596	)	$	74		$	9,078
Net earnings													2,672						(2	)		2,670
Unrealized loss on derivative instruments, net of tax of $93																(159	)					(159	)
Unrealized loss on certain investments, net of tax of $61																(121	)					(121	)
Reclassification adjustment for losses realized in net earnings, net of tax of $(2)																4						4
Currency translation adjustment																(180	)					(180	)
Postretirement liability adjustment, net of tax of $(4,883)																(8,565	)					(8,565	)
Comprehensive expense																						(6,351	)
Share-based compensation and related dividend equivalents				243									(8	)								235
ShareValue Trust activity				(1,540	)					1,452												(88	)
Excess tax pools				99																		99
Treasury shares issued for stock options exercised, net				(9	)		53															44
Treasury shares issued for other share-based plans, net				(94	)		65															(29	)
Treasury shares repurchased							(2,937	)														(2,937	)
Treasury shares transfer							(97	)		97
Cash dividends declared ($1.62 per share)													(1,187	)								(1,187	)
Postretirement transition amount, net of tax of $50													(178	)		92						(86	)
Increase in noncontrolling interest																			80			80
Balance December 31, 2008	$	5,061	$	3,456		($	17,758	)	($	1,203	)	$	22,675		($	13,525	)	$	152		($	1,142	)
Net earnings													44						(1	)		43
Unrealized gain on derivative instruments, net of tax of ($82)																144						144
Unrealized gain on certain investments, net of tax of ($20)																32						32
Reclassification adjustment for losses realized in net earnings, net of tax of $(9)																14						14
Currency translation adjustment																147						147
Postretirement liability adjustment, net of tax of $(234)																367						367
Comprehensive income																						747
Share-based compensation and related dividend equivalents				184																		184
ShareValue Trust activity				392						(392	)
Excess tax pools				(1	)																	(1	)
Treasury shares issued for stock options exercised, net				(4	)		13															9
Treasury shares issued for other share-based plans, net				(71	)		62															(9	)
Treasury shares repurchased							(50	)														(50	)
Dividends related to share-based plans payout													(5	)								(5	)
Cash dividends declared ($0.84 per share)													(610	)								(610	)
Balance September 30, 2009	$	5,061	$	3,956		($	17,733	)	($	1,595	)	$	22,104		($	12,821	)	$	151		($	877	)

See Notes to Condensed Consolidated Financial Statements.

4

The Boeing Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Summary of Business Segment Data

(Unaudited)

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Revenues:
Commercial Airplanes	$	24,868		$	23,674		$	7,883		$	6,946
Integrated Defense Systems:
Boeing Military Aircraft		10,324			10,169			3,951			3,702
Network and Space Systems		8,492			8,485			2,711			2,987
Global Services and Support		6,298			5,352			2,082			1,808
Total Integrated Defense Systems		25,114			24,006			8,744			8,497
Boeing Capital Corporation		496			535			166			171
Other segment		125			527			51			300
Unallocated items and eliminations		(259	)		(497	)		(156	)		(621	)
Total revenues	$	50,344		$	48,245		$	16,688		$	15,293
Earnings/(loss) from operations:
Commercial Airplanes	$	(1,603	)	$	2,154		$	(2,837	)	$	394
Integrated Defense Systems:
Boeing Military Aircraft		1,160			929			486			388
Network and Space Systems		698			806			252			302
Global Services and Support		612			616			147			164
Total Integrated Defense Systems		2,470			2,351			885			854
Boeing Capital Corporation		112			143			39			37
Other segment		(105	)		(233	)		(36	)		(48	)
Unallocated items and eliminations		(471	)		(222	)		(202	)		(90	)
Earnings/(loss) from operations		403			4,193			(2,151	)		1,147
Other income/(loss), net		7			257			(4	)		55
Interest and debt expense		(229	)		(145	)		(92	)		(49	)
Earnings/(loss) before income taxes		181			4,305			(2,247	)		1,153
Income tax (expense)/benefit		(129	)		(1,565	)		687			(470	)
Net earnings/(loss) from continuing operations		52			2,740			(1,560	)		683
Net (loss)/gain on disposal of discontinued operations, net of taxes of $5, ($10), $2 and ($6)		(8	)		18			(4	)		12
Net earnings/(loss)	$	44		$	2,758		$	(1,564	)	$	695
Research and development expense, net:
Commercial Airplanes	$	4,642		$	2,108		$	3,272		$	705
Integrated Defense Systems:
Boeing Military Aircraft		430			361			143			121
Network and Space Systems		293			227			108			73
Global Services and Support		126			113			42			38
Total Integrated Defense Systems		849			701			293			232
Other segment		13			2			9
Total research and development expense, net	$	5,504		$	2,811		$	3,574		$	937

This information is an integral part of the Notes to Condensed Consolidated Financial Statements. See Note 15 for further segment results.

5

The Boeing Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Dollars in millions, except per share data)

(Unaudited)

Note 1 – Basis of Presentation

The condensed consolidated interim financial statements included in this report have been prepared by management of The Boeing Company (herein referred to as “Boeing”, the “Company”, “we”, “us”, or “our”). In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation are reflected in the interim financial statements. We have evaluated subsequent events through October 21, 2009, which is the date that these financial statements were issued. The results of operations for the period ended September 30, 2009, are not necessarily indicative of the operating results for the full year. The interim financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto included in our 2008 Annual Report on Form 10-K. Certain amounts have been reclassified to conform to the current period’s presentation. Effective January 1, 2009, we adopted a newly issued accounting standard which was retrospectively applied and requires the noncontrolling interest to be separately presented as a component of shareholders’ equity on the Condensed Consolidated Statements of Financial Position and Shareholders’ Equity.

Note 2 – Acquisition

On July 30, 2009, we acquired the business, assets and operations of Vought Aircraft Industries, Inc.’s (Vought) 787 business conducted at North Charleston, South Carolina. In connection with the acquisition, we paid cash consideration at closing of $592 and released Vought from its obligation to repay amounts of $416 previously advanced by us. Vought’s 787 business produces aft fuselage sections, including the fabrication, assembly and systems installation, for the 787 program. The results of operations from the acquisition date are included in our Commercial Airplanes’ segment. Management expects to complete the allocation process in the fourth quarter of 2009.

The preliminary allocation of the purchase price is as follows:

Net inventory	$	187
Property, plant and equipment		227
Goodwill		605
Finite-lived intangible assets1		50
Accounts payable		(24	)
Other accrued liabilities		(32	)
Other long-term liabilities		(5	)
Total net assets acquired	$	1,008

¹ The weighted average amortization period for finite-lived intangible assets is 17 years.

6

Note 3 – Earnings Per Share

The weighted average number of shares outstanding used to compute earnings per share are as follows:

(Shares in millions)	Nine months ended September 30		Three months ended September 30
	2009	2008	2009	2008
Weighted average shares outstanding	701.6	724.5	701.3	714.6
Participating securities	3.6	2.9		3.1
Basic weighted average shares outstanding	705.2	727.4	701.3	717.7
Dilutive potential common shares	2.9	6.8		4.2
Diluted weighted average shares outstanding	708.1	734.2	701.3	721.9

As a result of incurring a net loss for three months ended September 30, 2009, participating securities of 3.9 million and potential common shares of 2.5 million were excluded from diluted earnings per share because the effect would have been anti-dilutive.

Basic earnings per share is calculated by the sum of (1) net earnings less declared dividends and dividend equivalents related to share-based compensation divided by the basic weighted average shares outstanding and (2) declared dividends and dividend equivalents related to share-based compensation divided by the weighted average shares outstanding.

The weighted average number of shares outstanding, included in the table below, is excluded from the computation of diluted earnings per share because the average market price did not exceed the exercise/threshold price. However, these shares may be dilutive potential common shares in the future.

(Shares in millions)	Nine months ended September 30		Three months ended September 30
	2009	2008	2009	2008
Stock options	17.4	14.7	16.8	15.8
ShareValue Trust	13.1	12.6	13.1	12.6
Performance Awards	3.7	2.8	3.7	2.8
Performance Shares	0.8	0.7	0.8	0.7
Stock units	0.3	0.2	0.2	0.3

Note 4 – Income Taxes

The year-over-year tax rate variances are primarily due to lower pre-tax income in 2009 which was partially offset by research and development tax credit benefits that exist in 2009, but did not exist as of the third quarter of 2008. The year-to-date 2009 tax expense reflects discrete tax adjustments of $107 and a projected full year tax rate of 20%.

The years 2004-2006 are currently being examined by the Internal Revenue Service (IRS), and we have filed appeals with the IRS for 1998-2003. We are also subject to examination in major state and international jurisdictions for the 2001-2008 tax years, for which no individually material unrecognized tax benefits exist. We believe appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years.

7

The unrecognized tax benefits for the nine months ended September 30, 2009 increased by $209. This increase was primarily attributable to federal and state research and development tax credits.

Audit outcomes and the timing of audit settlements are subject to significant uncertainty. It is reasonably possible that within the next 12 months we will resolve some or all of the matters presently under consideration for 1998-2006 with the IRS. Depending on the timing and outcomes of the audit settlements, unrecognized tax benefits that affect the effective tax rate could increase earnings by up to $600 based on current estimates.

Note 5 – Inventories

Inventories consisted of the following:

	September 30 2009			December 31 2008
Long-term contracts in progress	$	14,829		$	14,051
Commercial aircraft programs1		18,162			19,309
Commercial spare parts, used aircraft, general stock materials and other		4,919			4,340
		37,910			37,700
Less advances and progress billings		(21,929	)		(22,088	)
	$	15,981		$	15,612

¹ Includes deferred production costs related to the 777 program of $612 and $1,223 and unamortized tooling related to the 777 program of $208 and $255 as of September 30, 2009 and December 31, 2008. Also includes work in process (including deferred production costs), supplier advances, and tooling and other non-recurring costs related to the 787 program of $2,828, $2,181 and $996 as of September 30, 2009 and $3,021, $2,548 and $755 as of December 31, 2008.

In August 2009, we concluded that the first three flight-test airplanes for the 787 program will not be sold as previously anticipated due to the inordinate amount of rework and unique and extensive modifications made to those aircraft. Therefore, $2,481 in costs previously recorded for the first three flight-test airplanes were reclassified from program inventory to Research and development expense during the third quarter of 2009. Costs incurred in August and September 2009 of $138 related to these flight-test airplanes were also included in research and development expense.

Delta launch program inventories that will be sold at cost to United Launch Alliance (ULA) under an inventory supply agreement that terminates on March 31, 2021 are included in long-term contracts in progress inventories. At September 30, 2009 and December 31, 2008, the inventory balance was $1,827 and $1,822, of which $1,119 relates to yet unsold launches at September 30, 2009. ULA is continuing to assess the future of the Delta II program. In the event ULA is unable to sell additional Delta II inventory, earnings could be reduced by up to $85. See Note 8.

Inventories included $235 subject to claims or other uncertainties relating to the A-12 program as of September 30, 2009 and December 31, 2008. See Note 14.

8

Note 6 – Investments

Our investments, which are recorded in Short-term investments or Investments, consisted of the following:

	September 30 2009		December 31 2008
Time deposits	$	350
Available-for-sale investments		148	$	352
Equity method investments		947		942
Other investments		26		45
Total investments	$	1,471	$	1,339

Available-For-Sale Investments

Our investments in available-for-sale debt and equity securities consisted of the following:

	September 30, 2009									December 31, 2008
	Cost or Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value		Cost or Amortized Cost		Gross Unrealized Gain	Gross Unrealized Loss			Fair Value
Debt:
Residential mortgage- backed securities	$	135			$	(22	)	$	113	$	285		$	(89	)	$	196
Other debt obligations		6				(1	)		5		172			(16	)		156
Equity		39	$	1		(10	)		30
Total	$	180	$	1	$	(33	)	$	148	$	457		$	(105	)	$	352

Debt securities that have been in a continuous unrealized loss position for 12 months or longer are as follows:

	September 30, 2009					December 31, 2008
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Residential mortgage-backed securities	$	113	$	(22	)	$	28	$	(14	)
Other debt obligations		5		(1	)		21		(6	)
Total	$	118	$	(23	)	$	49	$	(20	)

We believe that the unrealized losses, other than those included in the table below, are not other-than-temporary. The unrealized losses are driven by market illiquidity that has caused price deterioration. We use analytic tools to assess the fundamentals of these securities to identify their individual sources of risk and potential for other-than-temporary impairment. Our quarterly assessment includes review of current market liquidity, interest rate risk, extension risk, credit rating downgrades and credit default swap spreads, as well as analysis of performance of the underlying collateral. We do not have a foreseeable need to liquidate the portfolio and anticipate recovering the full cost of the securities either as market conditions improve, or as the securities mature.

Effective April 1, 2009, we adopted a newly issued accounting standard on the recognition of other-than-temporary impairments of debt securities. Upon initial adoption, the amount of credit losses

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recognized in retained earnings at March 31, 2009 was not material. Other-than-temporary impairment losses recognized in Net earnings, related to available-for-sale investments, from the effective date of April 1, 2009, were as follows:

	Six months ended September 30			Three months ended September 30
	2009			2009
Total gross unrealized losses on other-than-temporarily impaired securities	$	(57	)	$	(6	)
Portion of losses recognized in Comprehensive income (before taxes)		46			5
Net other-than-temporary-impairment losses recognized in Net earnings/(loss)	$	(11	)	$	(1	)

The net other-than-temporary impairment losses recognized in earnings relate to credit loss, which is the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The credit loss, which relates to certain residential mortgage-backed securities and certain other debt obligations, was determined through an income approach using prepayment speeds, default rates and default severity percentages as significant inputs.

Gross realized gains and losses on available-for-sale investment securities were not material for the nine and three months ended September 30, 2009 and 2008.

The contractual maturities of available-for-sale debt securities at September 30, 2009, were as follows:

	Cost		Fair Value
Due in 1 year or less	$	1	$	1
Due from 1 to 5 years		4		3
Due from 5 to 10 years		1		1
Due after 10 years		135		113
Total	$	141	$	118

Note 7 – Liabilities, Commitments and Contingencies

Environmental Matters

The following table summarizes environmental matter activity recorded during the nine months ended September 30, 2009 and 2008.

	Environmental Liabilities
	2009			2008
Beginning balance – January 1	$	731		$	679
Reductions for payments made		(52	)		(62	)
Changes in estimates		53			114
Ending balance – September 30	$	732		$	731

The liabilities recorded represent our best estimate of costs expected to be incurred to remediate, operate and maintain sites over periods of up to 30 years. It is reasonably possible that we may incur

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additional charges because of regulatory complexities, higher than expected costs and the risk of unidentified contamination. As part of our estimating process, we develop a range of reasonably possible alternate scenarios which include highest cost estimates to remediate identified contamination at all sites based on our experience and existing laws and regulations. At September 30, 2009 and December 31, 2008 our reasonably possible highest cost estimate for all remediation sites exceeded our recorded liabilities by $949 and $1,206.

Product Warranties

The following table summarizes product warranty activity recorded during the nine months ended September 30, 2009 and 2008.

	Product Warranty Liabilities
	2009			2008
Beginning balance – January 1	$	959		$	962
Additions for current year deliveries		126			128
Reductions for payments made		(172	)		(175	)
Changes in estimates		83			16
Ending balance – September 30	$	996		$	931

Discontinued Operations

As part of the 2004 purchase and sale agreement with General Electric Capital Corporation related to the sale of Boeing Capital Corporation’s (BCC) Commercial Financial Services business, BCC is involved in a loss sharing arrangement for losses on transferred portfolio assets, such as asset sales, provisions for loss or asset impairment charges offset by gains from asset sales. As of September 30, 2009 and December 31, 2008, our maximum exposure to loss associated with the loss sharing arrangement was $220 and $232. As of September 30, 2009 and December 31, 2008, the accrued liability under the loss sharing arrangement was $55 and $39.

Commercial Aircraft Commitments

In conjunction with signing a definitive agreement for the sale of new aircraft (Sale Aircraft), we have entered into specified-price trade-in commitments with certain customers that give them the right to trade in used aircraft upon the purchase of Sale Aircraft. The total contractual trade-in value was $538 and $1,045 as of September 30, 2009 and December 31, 2008. We anticipate that a significant portion of these commitments will not be exercised by customers.

The probability that trade-in commitments will be exercised is determined by using both quantitative information from valuation sources and qualitative information from other sources. The probability of exercise is continually assessed, taking into consideration the current economic environment. Trade-in commitments, which can be terminated by mutual consent with the customer, may be exercised only during the period specified in the agreement, and require advance notice by the customer. There were no probable contractual trade-in commitments as of September 30, 2009. Trade-in commitment agreements have expiration dates from 2010 through 2023.

Sea Launch

On June 22, 2009, the Sea Launch venture, in which Boeing Commercial Satellite Company (BCSC), a subsidiary of The Boeing Company, is a 40% partner with RSC Energia of Russia (25%), Aker ASA of

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Norway (20%), PO Yuzhmash (10%) and SDO Yuzhnoye (5%) of the Ukraine, filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware (the Chapter 11 Filing). The Chapter 11 Filing constituted an event of default or otherwise accelerated approximately $448 of outstanding indebtedness of Sea Launch for which we and an affiliate of one other Sea Launch partner had previously issued credit guarantees on a joint-and-several basis. On July 1, 2009, we paid the entire $448 due under our guarantee. Among other options, we have a right to reimbursement from Sea Launch as well as rights to reimbursement from the other Sea Launch partners, who are each obligated to reimburse us so that we contribute no more than our proportional ownership percentage (40% or $179) in Sea Launch of the aggregate guarantee payment obligations. On September 11, 2009, the other guarantor of Sea Launch’s debt executed a promissory note which obligates it to pay us $122 in three payments beginning in 2009 and ending in the fourth quarter of 2010. On October 19, 2009, we filed a Notice of Arbitration with the Stockholm Chamber of Commerce seeking reimbursement from the other Sea Launch partners of the remaining $147 related to our guarantee payment. We intend to pursue vigorously all of our rights and remedies against Sea Launch and the other Sea Launch partners.

As a result of the Sea Launch bankruptcy $523 of principal and interest associated with a loan by BCSC also become repayable by Sea Launch. Certain other Sea Launch partners have guaranteed this loan, and we believe we can recover the proportionate amounts due from such partners of $209. We intend to pursue vigorously all of our rights and remedies to recover amounts associated with this loan.

The following table summarizes receivables from Sea Launch for which we have recourse to the other Sea Launch partners:

(Dollars in millions)	Receivables		Established Reserves		Estimated Proceeds from Recourse
Receivables related to credit guarantee payments	$	448	$	179	$	269
Receivables related to partner loans (principal and interest)		523		314		209
	$	971	$	493	$	478

In the event we are unable to secure reimbursement from Sea Launch or certain Sea Launch partners of $269 related to our payment under the credit guarantees and $209 related to the previously made loans to Sea Launch, we could incur additional pre-tax charges of up to $478.

Sea Launch management continues to operate the business while seeking debtor-in-possession financing to address cash needs. In October 2009, the bankruptcy court granted Sea Launch a three month extension to file a reorganization plan.

C-17

As of September 30, 2009, we delivered 190 of the 205 C-17 aircraft currently under contract with the United States Air Force (USAF), with final deliveries scheduled for 2010. The 205 C-17 aircraft total includes the Fiscal Year 2008 order for 15 aircraft that the USAF placed on contract in February 2009. Through September 30, 2009, we have directed key suppliers to begin work on a total of 23 aircraft beyond the aircraft currently in backlog. The long-lead items are required to support 8 aircraft funded in the Fiscal Year 2009 supplemental defense spending bill, signed by the President of the United States in June 2009, anticipated international orders, and possible future funding for USAF orders in Fiscal Year 2010. Inventory expenditures and potential termination liabilities to suppliers totaled approximately $425 at September 30, 2009. Should additional orders not materialize, it is reasonably possible that we will decide in 2009 to complete production of the C-17. We are still evaluating the full

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financial impact of a potential production shut-down, including any recovery that would be available from the U.S. government. Such recovery from the U.S. government would not include the costs incurred by us resulting from our direction to suppliers to begin working on aircraft beyond the 205 currently under contract with the USAF.

Customer Financing Exposure

Aircraft financing is collateralized by security in the related asset. The value of the collateral is closely tied to commercial airline performance and may be subject to reduced valuation with market decline. Our financing portfolio has a concentration of various model aircraft. Aircraft financing carrying values related to major aircraft concentrations were as follows:

	September 30 2009		December 31 2008
717 Aircraft ($670 and $694 accounted for as operating leases)*	$	2,287	$	2,365
757 Aircraft ($721 and $780 accounted for as operating leases)*		920		991
767 Aircraft ($164 and $181 accounted for as operating leases)		488		540
MD-11 Aircraft ($412 and $536 accounted for as operating leases)*		412		536
737 Aircraft ($416 and $453 accounted for as operating leases)		594		464

* Out-of-production aircraft

Future Lease Commitments

As of September 30, 2009 and December 31, 2008, future lease commitments on aircraft and other commitments not recorded on the Condensed Consolidated Statements of Financial Position totaled $162 and $197. These lease commitments extend through 2020, and our intent is to recover these lease commitments through sublease arrangements. As of September 30, 2009 and December 31, 2008, Other accrued liabilities included $14 and $32 attributable to adverse commitments under these lease arrangements.

Financing Commitments

Financing commitments totaled $9,599 and $10,145 as of September 30, 2009 and December 31, 2008. We anticipate that a significant portion of these commitments will not be exercised by the customers as we continue to work with third party financiers to provide alternative financing to customers. However, there can be no assurances given recent capital market disruptions that we will not be required to fund greater amounts than historically required.

In connection with the formation of ULA, we and Lockheed Martin Corporation (Lockheed) each agreed to extend a line of credit to ULA of up to $200 to support its working capital requirements during the five-year period following December 1, 2006. ULA did not request any funds under the line of credit as of September 30, 2009. We and Lockheed have also each committed to provide ULA with up to $122 of additional capital contributions in the event ULA does not have sufficient funds to make a required payment to us under an inventory supply agreement. See Note 5.

We have entered into standby letters of credit agreements and surety bonds with financial institutions primarily relating to the guarantee of future performance on certain contracts. Contingent liabilities on outstanding letters of credit agreements and surety bonds aggregated approximately $6,602 and $5,763 as of September 30, 2009 and December 31, 2008.

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Satellites

Certain launch and satellite sales contracts include provisions that specify that we bear risk of loss associated with the launch phase through acceptance in orbit by the customer. We have historically purchased insurance to cover these exposures when allowed under the terms of the contract and when economically advisable. The current insurance market reflects high premium rates and also suffers from a lack of capacity to handle all insurance requirements. We make decisions on the procurement of insurance based on our analysis of risk. We did not procure full insurance for a launch that occurred during the second quarter of 2009 and there is a contractual launch scheduled for 2010 for which full insurance coverage may not be available or, if available, could be prohibitively expensive. We will continue to review this risk. We estimate that the potential uninsured amount for each launch could be approximately $360.

Note 8 – Arrangements with Off-Balance Sheet Risk

We enter into arrangements with off-balance sheet risk in the normal course of business, primarily in the form of guarantees.

Third-Party Guarantees

The following tables provide quantitative data regarding our third-party guarantees. The maximum potential payments represent a “worst-case scenario,” and do not necessarily reflect our expected results. Estimated proceeds from collateral and recourse represent the anticipated values of assets we could liquidate or receive from other parties to offset our payments under guarantees.

As of September 30, 2009	Maximum Potential Payments		Estimated Proceeds from Collateral/ Recourse		Carrying Amount of Liabilities*
Contingent repurchase commitments	$	3,938	$	3,921	$	7
Indemnifications to ULA**		807				19
Other credit guarantees		150		139		2
Residual value guarantees		51		44		10

As of December 31, 2008	Maximum Potential Payments		Estimated Proceeds from Collateral/ Recourse		Carrying Amount of Liabilities*
Contingent repurchase commitments	$	4,024	$	4,014	$	7
Indemnifications to ULA**		1,184				7
Credit guarantees related to the Sea Launch venture		451		271		180
Other credit guarantees		158		145		11
Residual value guarantees		51		47		10

* Amounts included in Other accrued liabilities

** Amount includes contributed Delta launch program inventory of $406 and $813, plus $348 related to the pricing of certain contracts and $53 and $23 related to miscellaneous Delta contracts at September 30, 2009 and December 31, 2008.

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Contingent Repurchase Commitments We have entered into contingent repurchase commitments with certain customers in conjunction with signing a definitive agreement for the sale of new aircraft (Sale Aircraft). Under these commitments, we agreed to repurchase the Sale Aircraft at a specified price, generally 10 years after delivery of the Sale Aircraft. Our repurchase of the Sale Aircraft is contingent upon a future, mutually acceptable agreement for the sale of additional new aircraft, and the subsequent exercise by the customer of its right to sell the Sale Aircraft to us. The repurchase price specified in contingent repurchase commitments is generally lower than the expected fair value at the specified repurchase date. Estimated Proceeds from Collateral/Recourse in the table above represent the lower of the contracted repurchase price or the expected fair value of each aircraft at the specified repurchase date.

Indemnifications to ULA We agreed to indemnify ULA against potential losses that ULA may incur in the event ULA is unable to obtain certain additional contract pricing from the USAF for four satellite missions. We believe ULA is entitled to additional contract pricing. In December 2008, ULA submitted a claim to the USAF to re-price the contract value for two of the four satellite missions covered by the indemnification. In March 2009, the USAF issued a denial of that claim and in June 2009, ULA filed an appeal. If ULA is unsuccessful obtaining additional pricing, we may be responsible for a portion of the shortfall and may record up to $386 in pre-tax losses associated with the four missions.

We agreed to indemnify ULA against losses in the event that costs associated with $1,360 of Delta launch program inventories included in contributed assets and $1,860 of Delta program inventories subject to an inventory supply agreement are not recoverable and allowable from existing and future orders. The term of the inventory indemnification extends to December 31, 2020. Since inception, ULA has sold $982 of inventories that were contributed by us.

Other Credit Guarantees We have issued credit guarantees, principally to facilitate the sale and/or financing of commercial aircraft. Under these arrangements, we are obligated to make payments to a guaranteed party in the event that lease or loan payments are not made by the original lessee or debtor or certain specified services are not performed. A substantial portion of these guarantees has been extended on behalf of original lessees or debtors with less than investment-grade credit. Our commercial aircraft credit-related guarantees are collateralized by the underlying commercial aircraft and certain other assets. Current outstanding credit guarantees expire within the next 11 years.

Residual Value Guarantees We have issued various residual value guarantees principally to facilitate the sale and financing of certain commercial aircraft. Under these guarantees, we are obligated to make payments to the guaranteed party if the related aircraft or equipment fair values fall below a specified amount at a future time. These obligations are collateralized principally by commercial aircraft and expire within the next 9 years.

Other Indemnifications

In conjunction with our sales of the Electron Dynamic Devices, Inc. and Rocketdyne Propulsion and Power businesses and the sale of our Commercial Airplanes facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma in 2005, we provided indemnifications to the buyers relating to pre-closing environmental contamination and certain other items. The terms of the indemnifications are indefinite. As it is impossible to assess whether there will be damages in the future or the amounts thereof (if any), we cannot estimate the maximum potential amount of future payments under these guarantees. Therefore, no liability has been recorded.

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Note 9 – Debt

On March 9, 2009, we filed a public shelf registration with the U.S. Securities and Exchange Commission for the issuance of an indeterminate amount of debt securities and common stock. On March 13, 2009, we issued notes totaling $1,850, which included $700 bearing an interest rate of 5% due March 15, 2014, $650 bearing an interest rate of 6% due March 15, 2019 and $500 bearing an interest rate of 6.875% due March 15, 2039. The net proceeds after deducting the discount, underwriting fees and issuance costs were $1,817. On July 28, 2009, we issued notes totaling $1,950, which included $750 bearing an interest rate of 3.5% due February 15, 2015, $750 bearing an interest rate of 4.875% due February 15, 2020 and $450 bearing an interest rate of 5.875% due February 15, 2040. The net proceeds after deducting the discount, underwriting fees and issuance costs were $1,914. We may redeem each series of notes issued in 2009 at any time prior to maturity, in whole or in part, upon at least 30 days notice, at a redemption price equal to the principal amount of the notes to be redeemed plus a make-whole premium, together with accrued interest on such notes to the redemption date. The notes are unsecured senior obligations and rank equally in right of payment with all our existing and future unsecured and unsubordinated indebtedness.

Note 10 – Postretirement Plans

The components of net periodic benefit cost are as follows:

	Nine months ended September 30						Three months ended September 30
Pension Plans	2009			2008			2009			2008
Components of net periodic benefit cost
Service cost	$	818		$	713		$	273		$	238
Interest cost		2,223			2,113			741			705
Expected return on plan assets		(2,803	)		(2,852	)		(935	)		(951	)
Amortization of prior service costs		182			154			61			50
Recognized net actuarial loss		486			295			162			99
Settlement/curtailment loss		2
Net periodic benefit cost	$	908		$	423		$	302		$	141
Net periodic benefit cost included in Earnings/(loss) from operations	$	656		$	583		$	230		$	176

	Nine months ended September 30						Three months ended September 30
Other Postretirement Benefit Plans	2009			2008			2009			2008
Components of net periodic benefit cost
Service cost	$	99		$	95		$	33		$	32
Interest cost		349			344			116			115
Expected return on plan assets		(4	)		(7	)		(1	)		(3	)
Amortization of prior service costs		(67	)		(70	)		(22	)		(23	)
Recognized net actuarial loss		71			64			24			21
Net periodic benefit cost	$	448		$	426		$	150		$	142
Net periodic benefit cost included in Earnings/(loss) from operations	$	466		$	418		$	163		$	132

A portion of net periodic benefit cost is allocated to production as product costs and may remain in inventory at the end of the reporting period.

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During the nine months ended September 30, 2009 and 2008, we made discretionary pension contributions of $60 and $531. During the nine months ended September 30, 2009 and 2008, we made contributions to our other postretirement benefit plans of $12 and $11.

Note 11 – Share-Based Compensation and Other Compensation Arrangements

Stock Options

On February 23, 2009, we granted to our executives 7,423,242 options with an exercise price equal to the fair market value of our stock on the date of grant. The stock options vest over a period of 3 years, with 34% vesting after the first year, 33% vesting after the second year and the remaining 33% vesting after the third year. The options expire 10 years after the date of grant. The fair value of stock options granted was estimated using the Black-Scholes option-pricing model with the following assumptions:

Grant Date	Expected Life	Expected Volatility		Expected Dividend Yield		Risk Free Interest Rate		Weighted- Average Grant Date Fair Value
2/23/2009	6 years	39.0	%	2.4	%	2.03	%	$	11.12

We determined the expected life of the 2009 stock option grant to be 6 years, calculated using the “simplified” method in accordance with the Securities and Exchange Commission Staff Accounting Bulletin 107, Valuation of Share-Based Payment Arrangements for Public Companies.

Restricted Stock Units

On February 23, 2009, we granted to our executives 2,144,501 restricted stock units (RSUs) with a fair value of $35.57 per share. The RSUs will vest and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date.

Performance Awards

On February 23, 2009, we also granted to our executives Performance Awards with the payout based on the achievement of financial goals for the three-year period ending December 31, 2011. The minimum payout is $0 and the maximum payout is $304.

Note 12 – Derivative Financial Instruments

Cash Flow Hedges

Our cash flow hedges include certain interest rate swaps, cross currency swaps, foreign currency forward contracts, foreign currency option contracts and commodity purchase contracts. Interest rate swap contracts under which we agree to pay fixed rates of interest are designated as cash flow hedges of variable-rate debt obligations. We use foreign currency forward and option contracts to manage currency risk associated with certain forecasted transactions, specifically sales and purchase commitments made in foreign currencies. Our foreign currency forward contracts hedge forecasted transactions principally occurring within five years in the future, with certain contracts hedging transactions up to 2021. We use commodity derivatives, such as fixed-price purchase commitments, to hedge against potentially unfavorable price changes for items used in production. These include commitments to purchase electricity at fixed prices through 2015.

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Fair Value Hedges

Interest rate swaps under which we agree to pay variable rates of interest are designated as fair value hedges of fixed-rate debt. Gains/(losses) of hedged items designated and qualifying in fair value hedges recognized in earnings for the nine and three months ended September 30, 2009 were not material.

Notional Amounts and Fair Values

The fair values of derivative instruments are recorded in the Condensed Consolidated Statements of Financial Position. The notional amounts and fair values were as follows:

	Notional amounts1				Other assets						Other accrued liabilities
	September 30 2009		December 31 2008		September 30 2009			December 31 2008			September 30 2009			December 31 2008
Derivatives designated as hedging instruments
Foreign exchange contracts	$	2,449	$	1,992	$	248		$	26		$	(25	)	$	(39	)
Interest rate contracts		817		817		38			48						(3	)
Commodity contracts		196		147								(88	)		(75	)
		3,462		2,956		286			74			(113	)		(117	)
Derivatives not receiving hedge accounting treatment
Foreign exchange contracts		610		646		38			42			(103	)		(128	)
Warrants				21					10
Total derivatives		4,072		3,623		324			126			(216	)		(245	)
Netting arrangements						(111	)		(64	)		111			64
Net recorded balance					$	213		$	62		$	(105	)	$	(181	)

¹ Notional amounts represent the gross contract/notional amount of the derivatives outstanding.

Gains/(losses) associated with our cash flow and undesignated hedging transactions and its effect on Accumulated other comprehensive loss or earnings during the nine and three months ended September 30, 2009 were as follows:

	Nine months ended			Three months ended			Location gains/(losses) are recognized
Effective portion recognized in other comprehensive income, net of taxes–
Foreign exchange contracts	$	146		$	69		Accumulated other comprehensive loss
Commodity contracts		(22	)		3		Accumulated other comprehensive loss
Ineffective portion recognized in earnings–
Foreign exchange contracts		37			4		Other income/(loss), net
Undesignated hedges recognized in earnings–
Foreign exchange contracts		(21	)		(5	)	Other income/(loss), net

Based on our portfolio of cash flow hedges, we expect to reclassify gains of $46 (pre-tax) during the next 12 months.

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We have derivative instruments with credit-risk-related contingent features. For foreign exchange contracts with original maturities of at least five years, our derivative counterparties could require settlement if we default on our 5-year credit facility, expiring November 2012. For commodity contracts, our counterparties could require collateral posted in an amount determined by our credit ratings. The fair value of foreign exchange and commodity contracts that have credit-risk-related contingent features that are in a liability position at September 30, 2009 is $88. At September 30, 2009, there were no aggregate derivative positions requiring the posting of collateral.

Note 13 – Fair Value Measurements

The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs.

				Fair Value Measurements at September 30, 2009
	Total			Level 1		Level 2			Level 3
Assets
Money market funds	$	2,940		$	2,940
Available-for-sale investments:
Debt:
Residential mortgage-backed securities		113				$	113
Other debt obligations		5							$	5
Equity		30			30
Derivatives		213					213
Total assets	$	3,301		$	2,970	$	326		$	5
Liabilities
Derivatives	$	(105	)			$	(105	)
Total liabilities	$	(105	)			$	(105	)
				Fair Value Measurements at December 31, 2008
	Total			Level 1		Level 2			Level 3
Assets
Money market funds	$	2,128		$	2,128
Available-for-sale debt investments:
Residential mortgage-backed securities		196				$	196
Other debt obligations		156					151		$	5
Derivatives		62					52			10
Total assets	$	2,542		$	2,128	$	399		$	15
Liabilities
Derivatives	$	(181	)			$	(181	)
Total liabilities	$	(181	)			$	(181	)

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Money market funds and equity securities are valued using a market approach based on the quoted market prices of identical instruments. Residential mortgage-backed securities are valued using an income approach based on prepayment speeds, yields, discount margin and collateral performance. The other debt securities are primarily valued using a market approach based on benchmark yields, reported trades and broker/dealer quotes.

Derivatives include foreign currency, commodity, interest rate contracts and warrants. Our foreign currency forward contracts are valued using an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount. Commodity derivatives are valued using an income approach based on the present value of the commodity index prices less the contract rate multiplied by the notional amount. The fair value of our interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve. The fair value of warrants is based on a third-party options model and principal inputs of stock price, volatility and time to expiry.

Assets that are measured at fair value on a nonrecurring basis were not material during the nine and three months ended September 30, 2009 and 2008.

Fair Value Disclosures

The following table presents our assets and liabilities that are not measured at fair value on a recurring basis. The carrying values and estimated fair values consisted of the following:

	September 30 2009						December 31 2008
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Assets
Accounts receivable, net	$	6,718		$	6,461		$	5,602		$	5,443
Notes receivable		1,300			1,330			950			954
Liabilities
Debt, excluding capital lease obligations		(10,973	)		(12,065	)		(7,441	)		(7,923	)
Accounts payable		(7,053	)		(6,934	)		(5,871	)		(5,871	)
Residual value and credit guarantees		(31	)		(18	)		(208	)		(52	)
Contingent repurchase commitments		(7	)		(58	)		(7	)		(38	)

The fair values of the Accounts receivable and Accounts payable are based on current market rates for loans of the same risk and maturities. The fair values of our variable rate notes receivable that reprice frequently approximate their carrying values. The fair values of fixed rate notes receivable are estimated using discounted cash flow analysis using interest rates currently offered on loans with similar terms to borrowers of similar credit quality. The fair value of our debt is based on current market yields for our debt traded in the secondary market. The fair values of the residual value guarantees and contingent repurchase commitments are determined using a Black Futures Options formula and includes such assumptions as the expected value of the aircraft on the settlement date, volatility of aircraft prices, time until settlement and the risk free discount rate. The fair value of the credit guarantees is estimated based on the expected cash flows of those commitments, given the creditor’s probability of default, and discounted using the risk free rate. With regard to financial instruments with off-balance sheet risk, it is not practicable to estimate the fair value of future financing commitments because the amount and timing of funding those commitments are uncertain.

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Note 14 – Legal Proceedings

Various legal proceedings, claims and investigations related to products, contracts and other matters are pending against us. Potentially material contingencies are discussed below.

We are subject to various U.S. government investigations, from which civil, criminal or administrative proceedings could result or have resulted. Such proceedings involve, or could involve claims by the government for fines, penalties, compensatory and treble damages, restitution and/or forfeitures. Under government regulations, a company, or one or more of its operating divisions or subdivisions, can also be suspended or debarred from government contracts, or lose its export privileges, based on the results of investigations. We believe, based upon current information, that the outcome of any such government disputes and investigations will not have a material adverse effect on our financial position, except as set forth below.

A-12 Litigation

In 1991, the U.S. Navy notified McDonnell Douglas Corporation (now one of our subsidiaries) and General Dynamics Corporation (together, the Team) that it was terminating for default the Team’s contract for development and initial production of the A-12 aircraft. The Team filed a legal action to contest the Navy’s default termination, to assert its rights to convert the termination to one for “the convenience of the government,” and to obtain payment for work done and costs incurred on the A-12 contract but not paid to date. As of September 30, 2009, inventories included approximately $585 of recorded costs on the A-12 contract, against which we have established a loss provision of $350. The amount of the provision, which was established in 1990, was based on McDonnell Douglas Corporation’s belief, supported by an opinion of outside counsel, that the termination for default would be converted to a termination for convenience, and that the best estimate of possible loss on termination for convenience was $350.

On August 31, 2001, the U.S. Court of Federal Claims issued a decision after trial upholding the government’s default termination of the A-12 contract. In 2003, the Court of Appeals for the Federal Circuit, finding that the trial court had applied the wrong legal standard, vacated the trial court’s 2001 decision and ordered the case sent back to that court for further proceedings. On May 3, 2007, the U.S. Court of Federal Claims issued a decision upholding the government’s default termination of the A-12 contract. We filed a Notice of Appeal on May 4, 2007 with the Court of Appeals for the Federal Circuit. On June 2, 2009, the Court of Appeals rendered an opinion affirming the trial court’s 2007 decision sustaining the government’s default termination. We believe that the ruling of the Court of Appeals upholding the default termination is erroneous and in conflict with the governing law. On August 14, 2009, we filed a Combined Petition for Panel Rehearing and for Rehearing En Banc in the Court of Appeals for the Federal Circuit. The Court has requested that the government file a response to our Combined Petition. The timing for a ruling on the Petition is uncertain.

We believe that the termination for default is contrary to law and fact and that the loss provision established by McDonnell Douglas Corporation in 1990, which was supported by an opinion from outside counsel, continues to provide adequately for the reasonably possible reduction in value of A-12 net contracts in process as of September 30, 2009. Final resolution of the A-12 litigation will depend on the outcome of further proceedings or possible negotiations with the U.S. government. If, after all judicial proceedings have ended, the courts determine, contrary to our belief, that a termination for default was appropriate, we would incur an additional loss of approximately $275, consisting principally of remaining inventory costs and adjustments, and, if the courts further hold that a money judgment should be entered against the Team, we would be required to pay the U.S. government one-half of the unliquidated progress payments of $1,350 plus statutory interest from February 1991 (currently totaling approximately $1,470). In that event, our loss would total approximately $1,681 in pre-tax charges.

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Should, however, the March 31, 1998 judgment of the U.S. Court of Federal Claims in favor of the Team be reinstated, we would be entitled to receive payment of approximately $1,137, including interest from June 26, 1991.

Employment and Benefits Litigation

On March 2, 2006, we were served with a complaint filed in the U.S. District Court for the District of Kansas, alleging that hiring decisions made by Spirit AeroSystems, Inc. (Spirit) near the time of our sale of the Wichita facility were tainted by age discrimination, violated Employee Retirement Income Security Act (ERISA), violated our collective bargaining agreements, and constituted retaliation. The case is brought as a class action on behalf of individuals not hired by Spirit. While we believe that Spirit has an obligation to indemnify Boeing for claims relating to the 2005 sales transaction, Spirit has refused to indemnify Boeing for all claims arising from employment activity prior to January 1, 2005. On June 4, 2008, claims by individuals who filed consents to join the Age Discrimination Employment Act collective action and were terminated by Boeing prior to January 1, 2005 were dismissed by stipulated order. On June 15, 2009, plaintiffs filed a motion seeking class certification for certain former Boeing employees at the Wichita, Tulsa and McAlester facilities over the age of 40 who were laid off between January 1, 2005 and July 1, 2005, and were not hired by Spirit on June 17, 2005. On July 31, 2009, Boeing filed motions opposing class certification and seeking dismissal of the ERISA and breach of contract claims. On August 14, 2009, Boeing filed a motion seeking dismissal, or in the alternative, decertification of the age claims. Plaintiffs’ reply brief on certification of ERISA §510 and Labor-Management Relations Act (LMRA) §301 classes was filed on August 28, 2009. Plaintiffs’ response to Defendants’ motion for summary judgment on Plaintiffs’ ERISA §510 and LMRA §301 claims was filed on September 11, 2009.

A second alleged class action involving our sale of the Wichita facility to Spirit was filed on February 21, 2007, in the U.S. District Court for the District of Kansas. The case is also brought under ERISA, and, in general, claims that we have not properly provided benefits to certain categories of former employees affected by the sale. On May 22, 2008, plaintiffs filed a third amended complaint and on June 3, 2008, filed a motion to certify a class. On July 14, 2008, the court granted class certification for the purpose of adjudicating liability for the class of employees who went to work for Spirit, and deferred class certification motions for the class of employees who did not go to work for Spirit.

On September 13, 2006, two UAW Local 1069 retirees filed a class action lawsuit in the U.S. District Court for the Middle District of Tennessee alleging that recently announced changes to medical plans for retirees of UAW Local 1069 constituted a breach of collective bargaining agreements under §301 of the LMRA and §502(a)(1)(B) of ERISA. On September 15, 2006, we filed a lawsuit in the U.S. District Court for the Northern District of Illinois against the International UAW and two retiree medical plan participants seeking a declaratory judgment confirming that we have the legal right to make changes to these medical benefits. On June 4, 2007, the Middle District of Tennessee ordered that its case be transferred to the Northern District of Illinois. The two cases were consolidated on September 24, 2007. On January 17, 2008, the court granted the UAW’s motion to amend the complaint to drop the retirees’ claim for vested lifetime benefits based on successive collective bargaining agreements and instead allege that the current collective bargaining agreement is the sole alleged source of rights to retiree medical benefits. Both parties filed Motions for Class Certification on November 16, 2007 and filed briefs on class certification on February 28, 2008. The parties filed cross-motions for summary judgment on May 27, 2008. On September 30, 2008, the court certified a class of retirees for all claims. On September 9, 2009, the court granted Boeing’s motion and ruled that the retiree medical benefits were not vested lifetime benefits and that the 2006 changes to benefits did not violate the 2005 collective bargaining agreement. On October 8, 2009, the plaintiffs filed a notice of appeal to the Seventh Circuit Court of Appeals.

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On October 13, 2006, we were named as a defendant in a lawsuit filed in the U.S. District Court for the Southern District of Illinois. Plaintiffs, seeking to represent a class of similarly situated participants and beneficiaries in the Boeing Company Voluntary Investment Plan (the VIP Plan), alleged that fees and expenses incurred by the VIP Plan were and are unreasonable and excessive, not incurred solely for the benefit of the VIP Plan and its participants, and were undisclosed to participants. The plaintiffs further alleged that defendants breached their fiduciary duties in violation of §502(a)(2) of ERISA, and sought injunctive and equitable relief pursuant to §502(a)(3) of ERISA. Plaintiffs filed a motion to certify the class, which we opposed. On December 14, 2007, the court granted plaintiffs leave to file an amended complaint, which complaint added our Employee Benefits Investment Committee as a defendant and included new allegations regarding alleged breach of fiduciary duty. The stay of proceedings entered by the court on September 10, 2007, pending resolution by the U.S. Court of Appeals for the Seventh Circuit of Lively v. Dynegy, Inc., was lifted on April 3, 2008, after notification that the Lively case had settled. On April 16, 2008, plaintiffs sought leave to file a second amended complaint, which we opposed, which would add investment performance allegations. On August 22, 2008, the court granted plaintiffs leave to file their second amended complaint to add investment performance allegations. On September 29, 2008, the court granted plaintiffs’ motion to certify the class of current, past and future participants or beneficiaries in the VIP Plan. On September 9, 2008, we filed a motion for summary judgment to dismiss claims arising prior to September 27, 2000 based on the ERISA statute of limitations. On October 14, 2008, we filed a petition for leave to appeal the class certification order to the Seventh Circuit Court of Appeals. The plaintiffs opposed this motion and it is currently pending before the court of appeals. On January 15, 2009, we filed a motion seeking dismissal of all claims as a matter of law. On August 10, 2009, the Seventh Circuit Court of Appeals granted Boeing’s motion for leave to appeal the class certification order. The district court entered a stay of proceedings in the trial court pending resolution of the class certification appeal.

BSSI/ICO Litigation

On August 16, 2004, our wholly owned subsidiary, Boeing Satellite Systems International, Inc. (BSSI) filed a complaint for declaratory relief against ICO Global Communications (Operations), Ltd. (ICO) in Los Angeles County Superior Court seeking a declaration that ICO’s prior termination of two contracts for convenience extinguished all claims between the parties. On September 16, 2004, ICO filed a cross-complaint alleging breach of contract, economic duress, fraud, unfair competition, and other claims. ICO added The Boeing Company as a defendant in October 2005 to some of these claims and also sued it for interference with contract and misappropriation of trade secrets. On January 13, 2006, BSSI filed a cross-complaint against ICO, ICO Global Communications (Holdings) Limited (ICO Holdings), ICO’s parent, and Eagle River Investments, LLC, parent of both ICO and ICO Holdings, alleging fraud and other claims. The trial commenced on June 19, 2008, with ICO seeking to recover approximately $2,000 in damages, including all monies paid to BSSI and Boeing Launch Services, plus punitive damages and other unspecified damages and relief.

On October 21, 2008, the jury returned a verdict awarding ICO compensatory damages of $371 plus interest, based upon findings of contract breach, fraud and interference with contract. On October 31, 2008, the jury awarded ICO punitive damages of $236. On January 2, 2009, the court entered judgment for ICO in the amount of $631 which included $24 in prejudgment interest.

On February 26, 2009 the trial court granted in part and denied in part post-trial motions we filed seeking to set aside the verdict. As a result, on March 3, 2009, the court entered an amended judgment for ICO in the amount of $604, which included $371 in compensatory damages, $207 in punitive damages and $26 in prejudgment interest. Post-judgment interest will accrue on the judgment at the rate of 10% per year (simple interest) from January 2, 2009. We filed a notice of appeal and ICO filed a notice of cross-appeal in March 2009. We believe that we have substantial arguments on appeal, which we intend to pursue vigorously.

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BSSI/Telesat Canada

On November 9, 2006, Telesat Canada (Telesat) and a group of its insurers served BSSI with an arbitration demand alleging breach of contract, gross negligence and willful misconduct in connection with the constructive total loss of Anik F1, a model 702 satellite manufactured by BSSI. Telesat and its insurers initially sought over $385 in damages and $10 in lost profits, but recently revised their demand to $263. BSSI has asserted a counterclaim against Telesat for $6 in unpaid performance incentive payments and also a $180 contingent counterclaim on the theory that any ultimate award to reimburse the insurers for their payments to Telesat could only result from Telesat’s breach of its contractual obligation to obtain a full waiver of subrogation rights barring recourse against BSSI. We believe that the claims asserted by Telesat and its insurers lack merit, but we have notified our insurance carriers of the demand. The arbitration has been stayed pending an application by Telesat to the Ontario Superior Court on a preliminary issue. The arbitration hearing remains scheduled for November 2010.

On April 26, 2007, a group of our insurers filed a declaratory judgment action in the Circuit Court of Cook County asserting certain defenses to coverage and requesting a declaration of their obligation under our insurance and reinsurance policies relating to the Telesat Anik F1 arbitration. On June 12, 2008, the court granted the insurers’ motion for summary judgment, concluding that our insurance policy excluded the kinds of losses alleged by Telesat. On January 16, 2009, the court granted Boeing’s motion for reconsideration, ruling in favor of Boeing to require the insurers to provide insurance coverage to defend the claim.

BSSI/SES New Skies

On January 30, 2007, the SES New Skies (New Skies) NSS-8 satellite, a Boeing 702 model spacecraft, was declared a loss when the Sea Launch Zenit-3SL vehicle carrying the satellite experienced an anomaly during the launch that destroyed the rocket and the payload. In the event of such a launch failure, New Skies had an option under the NSS-8 contract to order a replacement satellite. New Skies did not exercise the option. Instead, New Skies purported to cancel the contract on April 27, 2007, maintaining that discussions between the parties regarding the never-exercised option amounted to a repudiation by BSSI. We vigorously disputed that characterization.

On May 22, 2008 and January 29, 2009, we received a formal dispute notice from New Skies alleging that BSSI breached the NSS-8 contract by failing to timely deliver a satellite in orbit and repudiating the replacement satellite option. On May 11, 2009, SES New Skies filed a Request for Arbitration with the International Chamber of Commerce in London. The dispute notice and Request included neither a quantification of potential damages nor a sum certain demand. We believe that SES New Skies’ claims lack merit and intend to vigorously defend against them.

Note 15 – Business Segment Data

Effective January 1, 2009, certain programs were realigned between IDS segments. Business segment data for all periods presented have been adjusted to reflect the realignment.

Our primary profitability measurements to review a segment’s operating results are earnings from operations and operating margins. See page 5 for a Summary of Business Segment Data, which is an integral part of this note.

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Intersegment revenues, eliminated in Unallocated items and eliminations, are shown in the following table.

	Nine months ended September 30				Three months ended September 30
	2009		2008		2009		2008
Commercial Airplanes	$	586	$	1,076	$	184	$	743
Boeing Capital Corporation		65		67		21		26
Total	$	651	$	1,143	$	205	$	769

Unallocated items and eliminations includes costs not attributable to business segments. Unallocated items and eliminations also includes the impact of cost measurement differences between Generally Accepted Accounting Principles and federal cost accounting standards as well as intercompany profit eliminations. The most significant items not allocated to segments are shown in the following table.

	Nine months ended September 30						Three months ended September 30
Unallocated items and eliminations	2009			2008			2009			2008
Share-based plans	$	(140	)	$	(115	)	$	(24	)	$	(70	)
Deferred compensation		(134	)		136			(88	)		55
Pension		69			(194	)		24			(51	)
Postretirement		(61	)		(60	)		(17	)		(20	)
Capitalized interest		(42	)		(38	)		(15	)		(11	)
Other unallocated items and eliminations		(163	)		49			(82	)		7
Total	$	(471	)	$	(222	)	$	(202	)	$	(90	)

Assets	September 30 2009		December 31 2008
Commercial Airplanes	$	20,163	$	18,893
Integrated Defense Systems:
Boeing Military Aircraft		6,024		5,746
Network and Space Systems		7,362		7,177
Global Services and Support		3,888		3,559
Total Integrated Defense Systems		17,274		16,482
Boeing Capital Corporation		6,120		6,073
Other segment		1,366		1,207
Unallocated items and eliminations		13,744		11,124
Total assets	$	58,667	$	53,779
Liabilities
Commercial Airplanes	$	18,446	$	17,141
Integrated Defense Systems:
Boeing Military Aircraft		3,456		3,675
Network and Space Systems		944		1,239
Global Services and Support		1,390		1,352
Total Integrated Defense Systems		5,790		6,266
Boeing Capital Corporation		3,780		4,115
Other segment		810		845
Unallocated items and eliminations		30,718		26,554
Total liabilities	$	59,544	$	54,921

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

The Boeing Company

Chicago, Illinois

We have reviewed the accompanying condensed consolidated statement of financial position of The Boeing Company and subsidiaries (the “Company”) as of September 30, 2009, the related condensed consolidated statements of operations for the three-month and nine-month periods ended September 30, 2009 and 2008, the related condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2009 and 2008, and the related condensed consolidated statement of shareholders’ equity for the nine-month period ended September 30, 2009. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statement of financial position of the Company as of December 31, 2008, and the related consolidated statements of operations, shareholders’ equity and cash flows for the year then ended prior to retrospective adjustment for the adoption of the new accounting standard on noncontrolling interests (such consolidated financial statements are not presented herein); and in our report dated February 9, 2009 (which includes an explanatory paragraph relating to the Company’s change in its method of accounting for pension and postretirement benefits), we expressed an unqualified opinion on those consolidated financial statements. We also audited the adjustments that were applied to retrospectively adjust the December 31, 2008 consolidated statement of financial position (not presented herein). In our opinion, such adjustments are appropriate and have been properly applied to the previously issued consolidated statement of financial position and the consolidated statement of shareholders’ equity in deriving the accompanying retrospectively adjusted condensed consolidated statement of financial position as of December 31, 2008 and the condensed consolidated statement of shareholders’ equity for the year then ended.

/s/    Deloitte & Touche LLP

Chicago, Illinois

October 21, 2009

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FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY

Certain statements in this report may be “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based upon assumptions about future events that may not prove to be accurate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak to events only as of the date they are made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws. Specific factors that could cause actual results to differ materially from forward-looking statements include, but are not limited to, those set forth below and other important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission:

· the effect of economic conditions in the United States and globally;

· the impact on our accounts receivable, customer financing portfolios and allowance for losses of customer defaults and changes in customer credit ratings, credit default rates and collateral values;

· the impact on our revenues and operating results of changes to indices included in indexed price escalation clauses included in our contracts with commercial airplane and defense customers;

· the successful execution of our Commercial Airplanes and Integrated Defense Systems backlog;

· the effects of customers canceling, modifying and/or rescheduling contractual orders and advance payments;

· the timing and effects of any decisions to increase or decrease the rate of commercial airplane production;

· the timing and effects of decisions to complete or launch a Commercial Airplanes program;

· the ability to successfully develop and timely produce the 787 and 747-8 aircraft;

· the ability of our suppliers and, as applicable, subcontractors to successfully and timely perform their obligations;

· the effect on our revenues of political and legal processes; changing defense priorities; and associated budget reductions by U.S. and international government customers affecting Boeing defense programs;

· our relationship with our union-represented workforce and the negotiation of collective bargaining agreements;

· the impact of volatile fuel prices and the airline industry’s response;

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· the effect of trade and globalization on long-term growth in passenger and cargo traffic;

· the effect of world trade and credit availability on air cargo traffic;

· the effect of declines in aircraft valuations;

· the impact of airline traffic volumes and revenue yields on near-term global airline profitability;

· the impact on our revenues or operating results of airline bankruptcies;

· the availability of commercial and government financing and the extent to which we are called upon to fund outstanding financing commitments or satisfy other financing requests, and our ability to satisfy those requirements;

· the continuation of historical costs for fleet support services;

· the receipt of estimated award and incentive fees on U.S. government contracts;

· the future demand for commercial satellites and projections of future order flow;

· the potential for technical or quality issues on development programs, including the Airborne Early Warning and Control program, International KC-767 Tanker, other fixed-price development programs, or commercial satellite programs, to affect schedule and cost estimates, or cause us to incur a material charge or experience a termination for default;

· the outcome of any litigation and/or government investigation in which we are a party, and other contingencies;

· returns on pension fund assets, impacts of future interest rate changes on pension obligations and rising healthcare costs;

· our ability to access external capital resources to fund our operations;

· the amounts and effects of underinsured operations, including satellite launches;

· our ability to recover the proportionate amounts owed to us from the other Sea Launch partners; and

· the scope, nature or impact of acquisition or disposition activity and investment in any joint ventures/strategic alliances, including Sea Launch and United Launch Alliance, and indemnifications and guarantees related thereto.

Please see Part I, Item 1, “Business” and Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2008 and Part II, Item 1A, “Risk Factors” of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 for a description of risks and uncertainties that could cause our actual results to differ materially from the expectations reflected in our forward-looking statements. This report includes important information as to these risks in the “Legal Proceedings” and in the Notes to Condensed Consolidated Financial Statements included herein. Additional important information as to these risks is also included in this report in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Consolidated Operating Results

The following table summarizes key indicators of consolidated results of operations:

(Dollars in millions, except per share data)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Revenues	$	50,344		$	48,245		$	16,688		$	15,293
Earnings/(loss) from operations	$	403		$	4,193		$	(2,151	)	$	1,147
Operating margins		0.8	%		8.7	%		<12.9	%		7.5	%
Effective income tax rate		71.3	%		36.4	%		30.6	%		40.8	%
Net earnings/(loss) from continuing operations	$	52		$	2,740		$	(1,560	)	$	683
Diluted earnings/(loss) per share	$	0.06		$	3.76		$	(2.23	)	$	0.96

(Dollars in millions)	September 30 2009		December 31 2008
Contractual backlog	$	298,959	$	323,860
Unobligated backlog		21,054		28,165

Revenues

The following table summarizes revenues:

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Commercial Airplanes	$	24,868		$	23,674		$	7,883		$	6,946
Integrated Defense Systems		25,114			24,006			8,744			8,497
Boeing Capital Corporation		496			535			166			171
Other segment		125			527			51			300
Unallocated items and eliminations		(259	)		(497	)		(156	)		(621	)
Revenues	$	50,344		$	48,245		$	16,688		$	15,293

Revenues for the nine and three months ended September 30, 2009 increased by $2,099 million and $1,395 million, a 4% and 9% increase compared with the same periods in 2008. Commercial Airplanes revenues increased by $1,194 million and $937 million for the nine and three month periods compared with the same periods of the prior year primarily due to lower commercial airplane deliveries in 2008 due to a labor strike and supplier production challenges on customer furnished galleys for certain wide-body airplanes. The 2009 revenue increases from higher commercial airplanes deliveries were partially offset by decreases in commercial aviation services revenues and lower intercompany revenue in 2009 compared with 2008. Integrated Defense Systems (IDS) revenues increased by $1,108 million and $247 million primarily due to higher revenues in the Global Services and Support (GS&S) segment and the Boeing Military Aircraft (BMA) segment partially offset by lower Network and Space Systems revenues. Boeing Capital Corporation (BCC) revenues decreased by $39 million during the nine months primarily due to a decrease in the customer financing portfolio. Other segment revenues decreased by $402 million and $249 million partly due to higher revenues in the prior year from the sale of four C-17 aircraft held under operating lease. Lower Unallocated items and eliminations improved revenues by $238 million and $465 million primarily due to lower P-8A Poseidon

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program (P-8A) intercompany revenues recognized by Commercial Airplanes during the three months ended September 30, 2009 compared with the same periods in the prior year.

Earnings from Operations

The following table summarizes earnings from operations:

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Commercial Airplanes	$	(1,603	)	$	2,154		$	(2,837	)	$	394
Integrated Defense Systems		2,470			2,351			885			854
Boeing Capital Corporation		112			143			39			37
Other segment		(105	)		(233	)		(36	)		(48	)
Unallocated items and eliminations		(471	)		(222	)		(202	)		(90	)
Earnings/(loss) from operations	$	403		$	4,193		$	(2,151	)	$	1,147

Operating earnings for the nine and three months ended September 30, 2009 decreased by $3,790 million and $3,298 million compared with the same periods in 2008. Commercial Airplanes earnings decreased by $3,757 million and $3,231 million primarily due to $2,619 million of costs related to the first three 787 flight test aircraft included in research and development expense as a result of our determination in August 2009 that these aircraft could not be sold. The earnings decrease is also attributable to reach forward losses on the 747 program which grew by $1,352 million and $1,005 million during the nine and three months ended September 30, 2009. Lower commercial aviation services and intercompany earnings also contributed to lower 2009 earnings. These decreases were partially offset by higher commercial airplane deliveries in 2009 compared with 2008. IDS earnings increased by $119 million during the nine months, primarily due to higher earnings in the BMA segment resulting from a charge of $248 million on the Airborne Early Warning & Control (AEW&C) program in the second quarter of 2008, partially offset by lower earnings in the Network & Space Systems (N&SS) segment. Increased earnings for the three months were due to higher earnings in the BMA segment, partially offset by lower earnings in the N&SS and GS&S segments. BCC operating earnings decreased $31 million for the nine months compared with the same period in 2008 reflecting lower revenues, higher impairment expense and a provision for losses, partially offset by lower interest expense. Other segment losses decreased by $128 million for the nine months compared with the same period in 2008 primarily due to recognition of pre-tax expense of $82 million in the second quarter of the prior year to increase the allowance for losses on customer financing receivables related to lower U.S. airline customer credit ratings.

The most significant expense items not allocated to segments are shown in the table below.

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Share-based plans	$	(140	)	$	(115	)	$	(24	)	$	(70	)
Deferred compensation		(134	)		136			(88	)		55
Other unallocated items and eliminations		(205	)		11			(97	)		(4	)
Pension		69			(194	)		24			(51	)
Postretirement		(61	)		(60	)		(17	)		(20	)
Total	$	(471	)	$	(222	)	$	(202	)	$	(90	)

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Share-based plans expense in Unallocated items and eliminations is higher in the current year resulting from a decrease in the amount of intercompany allocations compared with the same periods in the prior year.

Deferred compensation expense increased by $270 million and $143 million for the nine and three months ended September 30, 2009 compared with the same periods in the prior year. The year-over-year increases are primarily driven by changes in our stock price and broad stock market conditions.

Other unallocated items and eliminations expense for the nine and three months ended September 30, 2009 increased by $216 million and $93 million compared with the same periods in 2008, primarily due to timing of intercompany expense allocations, elimination of profit on intercompany items and a more favorable insurance adjustment in the same periods of the prior year.

Unallocated pension and other postretirement expense represents the difference between costs recognized under Generally Accepted Accounting Principles in the consolidated financial statements and federal cost accounting standards required to be utilized by our business segments for U.S. government contracting purposes.

We recorded net periodic benefit cost related to pensions and other postretirement benefits of $1,356 million and $452 million for the nine and three months ended September 30, 2009 and $849 million and $283 million for the same periods of the prior year. The increase was primarily due to higher amortization of pension actuarial losses. Not all net periodic benefit cost is recognized in earnings in the period incurred because it is allocated to production as product costs and a portion remains in inventory at the end of the reporting period. A portion of pension and other postretirement expense is recorded in the business segments and the remainder is included in unallocated pension and other postretirement expense.

Earnings from operations included the following amounts allocated to business segments and Other unallocated items and eliminations.

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
Pension Plans	2009			2008			2009			2008
Net periodic benefit cost allocated to business segments		(725	)		(389	)		(254	)		(125	)
Net periodic benefit cost in Other unallocated items and eliminations		69			(194	)		24			(51	)
Net periodic benefit cost included in Earnings/(loss) from operations	$	(656	)	$	(583	)	$	(230	)	$	(176	)

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
Other Postretirement Benefit Plans	2009			2008			2009			2008
Net periodic benefit cost allocated to business segments		(405	)		(358	)		(146	)		(112	)
Net periodic benefit cost in Other unallocated items and eliminations		(61	)		(60	)		(17	)		(20	)
Net periodic benefit cost included in Earnings/(loss) from operations	$	(466	)	$	(418	)	$	(163	)	$	(132	)

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Other Earnings Items

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Earnings/(loss) from operations	$	403		$	4,193		$	(2,151	)	$	1,147
Other income/(loss), net		7			257			(4	)		55
Interest and debt expense		(229	)		(145	)		(92	)		(49	)
Earnings/(loss) before income taxes		181			4,305			(2,247	)		1,153
Income tax (expense)/benefit		(129	)		(1,565	)		687			(470	)
Net earnings/(loss) from continuing operations	$	52		$	2,740		$	(1,560	)	$	683

Other income for the nine and three months ended September 30, 2009 decreased by $250 million and $59 million compared with the same periods in 2008 primarily driven by a reduction in investment income as a result of lower interest rates and lower investment balances. Interest and debt expense increased by $84 million and by $43 million due to additional debt issued in 2009.

For a discussion related to Income Taxes see Note 4.

Backlog

Contractual backlog of unfilled orders excludes purchase options, announced orders for which definitive contracts have not been executed and unobligated U.S. and non-U.S. government contract funding. The decrease in contractual backlog during the nine months ended September 30, 2009 was primarily due to lower Commercial Airplanes backlog.

Unobligated backlog includes U.S. and foreign government definitive contracts for which funding has not been authorized. The decrease in unobligated backlog during the nine months ended September 30, 2009 is primarily due to a partial termination for convenience from the U.S. Army of the Future Combat Systems (FCS) System Development and Demonstration contract relating to Manned Ground Vehicles and associated systems and equipment and funding of existing multi-year contracts including the FCS, V-22, Chinook, Proprietary and Ground-Based Midcourse Defense (GMD) programs.

Segment Results of Operations

Commercial Airplanes

Business Environment and Trends

After several months of rapid deterioration during the first half of 2009, world Gross Domestic Product (GDP) growth forecasts are stabilizing. These forecasts continue to project a slow global economic recovery with world real GDP contracting by over 2% in 2009 and remaining below long-term trend growth in 2010.

The sharp economic decline is causing passenger traffic to contract. The International Civil Aviation Organization estimates passenger traffic grew 1% in 2008 with first half growth running fairly close to long-term trend. This was followed by a significant decline in the second half of 2008. There is further downward pressure on 2009 traffic growth. Current forecasts for 2009 global passenger traffic growth are for mid-single digit contraction similar to previous downturns (-3% in 2001 and 1991) followed by moderate growth in 2010. Monthly statistics indicate that world traffic contracted at a pace of approximately 7% in the first half of 2009.

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The unprecedented decline in world trade and sharp reduction in credit availability have hit air cargo more severely than passenger traffic. Although the rate of decline is stabilizing, air cargo contracted 25% in the first half of 2009 following a 6% decline in 2008. Full year 2009 air cargo traffic outlooks reflect the first contraction in global trade since 1982 with the International Air Transport Association (IATA) forecasting a 14% contraction in air cargo traffic.

The global airline profitability outlook has deteriorated significantly. Revenues have fallen faster than traffic as fuel surcharges have declined and airlines reduce fares to stimulate travel. In addition, premium class revenues have fallen more sharply than economy revenues due to cuts in business travel and business travelers buying down from premium cabins. Lower fuel prices and airline cost saving measures are only partially offsetting the decline in revenues. Following 2008 net losses of $17 billion, IATA now forecasts the global airline industry will lose $11 billion in 2009 and not return to profitability until 2011. In response to these large losses, airlines have raised $18 billion of cash from capital markets but the finances of many airlines remain under pressure.

In this challenging environment, airlines continue to adapt their operations to meet the realities of the market. Global passenger capacity was down about 3% in the first half of 2009. Capacity cuts are coming through a combination of frequency and route cuts in markets that are no longer profitable, lower daily airplane utilization (flight hours per day), and parking/scrapping of older generation airplanes. Airlines are also replacing older less fuel efficient airplanes, reducing non-fuel costs and finding new ways to partner through alliances or via mergers/acquisitions.

These conditions are causing customers to request cancellations, modifications, or rescheduling of their existing orders and advance payment schedules to meet revised fleet plans or address financing and cash flow issues. Whether such requests will result in a material adverse impact on our earnings, cash flow or financial position depends on a number of factors including the type of aircraft, how much compensation is paid to us for costs already incurred and our ability to reschedule other orders to replace those canceled, modified, or rescheduled.

Beyond the near-term market uncertainties, the long-term outlook for the industry remains resilient due to the fundamental drivers of air travel growth: economic growth and the increasing propensity to travel due to increased trade, globalization and improved airline services driven by liberalization of air traffic rights between countries. Our 20-year forecast is for a long-term average growth rate of 5% per year for passenger and cargo traffic based on a projected average annual worldwide real economic growth rate of 3%. Based on long-term global economic growth projections, and factoring in increased utilization of the worldwide airplane fleet and requirements to replace older airplanes, we project a $3.2 trillion market for 29,000 new airplanes over the next 20 years.

In 2009, in response to these market dynamics, we announced plans to reduce production rates on the 777 program and to delay planned increases to the production rates of the 747 and 767 programs. These changes are not expected to affect 2009 revenues but did reduce margins on airplane programs. Separately, changes in forecasted escalation price indices reduced margins on all programs for the nine months ended September 30, 2009. The reduction in these escalation indices had the effect of lowering estimated revenues for deliveries predominantly after 2009. The escalation indices are driven by commodity and other inflation price indices and could remain volatile in the current economic environment.

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Operating Results

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Revenues	$	24,868		$	23,674		$	7,883		$	6,946
(Loss)/earnings from operations	$	(1,603	)	$	2,154		$	(2,837	)	$	394
Operating margins		-6.4	%		9.1	%		-36.0	%		5.7	%

(Dollars in millions)	September 30 2009		December 31 2008
Contractual backlog	$	253,938	$	278,575

Revenues

Year over year changes in Revenue are shown in the following table:

(Dollars in millions)	Nine months ended September 30, 2009 vs. September 30, 2008			Three months ended September 30, 2009 vs. September 30, 2008
New airplane sales	$	1,648		$	999
Commercial aviation services business		(434	)		(85	)
Other		(20	)		23
Total	$	1,194		$	937

Revenues for the nine months ended September 30, 2009 increased by $1,194 million compared with the same period of 2008. This increase in revenues was primarily attributable to higher new airplane deliveries partially offset by lower commercial aviation services and intercompany revenues in 2009. The decrease in revenues from commercial aviation services business was driven by lower overall volume due to economic conditions.

Revenues for the three months ended September 30, 2009 increased by $937 million compared with the same period of 2008. This increase in revenue was primarily attributable to higher new airplane deliveries partially offset by lower commercial aviation services and intercompany revenues. The increase in new airplane deliveries reflects lower airplane deliveries in 2008 due to a labor strike and supplier production challenges on customer-furnished galleys for certain wide-body aircraft.

Commercial jet aircraft deliveries, including intercompany deliveries were as follows:

Program	737	747	767	777	Total
Deliveries during the first nine months of 2009	280	6	10	63	359
Deliveries during the first nine months of 2008	254	13	8	50	325
Deliveries during the third quarter of 2009	90		4	19	113
Deliveries during the third quarter of 2008	67	4	2	11	84
Cumulative deliveries as of 9/30/2009	3,036	1,416	979	811
Cumulative deliveries as of 12/31/2008	2,756	1,410	969	748

Earnings from Operations

Earnings from operations for the nine and three months ended September 30, 2009 decreased by $3,757 million and $3,231 million primarily due to the reclassification from inventory to research and

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development expense of $2,481 million of costs related to the three 787 flight test aircraft. $138 million of costs incurred on the first three flight test aircraft incurred in August and September 2009 also increased research and development expense and reduced earnings. The earnings’ decrease is also attributable to reach forward losses on the 747 program which grew by $1,352 million in 2009, of which $1,005 million was recorded in the third quarter of 2009, primarily due to increased production costs and the difficult market conditions affecting the 747-8. The $2,619 million of costs included in research and development expense for the first three flight-test 787 airplanes was a result of our determination in August 2009 that these aircraft could not be sold and was primarily responsible for an increase in research and development expense of $2,534 million and $2,567 million. Lower commercial aviation services revenues and margins reduced earnings by $288 million and $119 million. Higher infrastructure cost allocations related to the 787 and 747-8 schedule delays announced in 2008 and infrastructure costs incurred during the 2008 IAM strike reduced earnings by $173 million and $28 million. These decreases were partially offset by increased earnings of $717 million and $473 million from new airplane deliveries offset by lower intercompany revenues. Additionally, period and other costs increased for the nine month period by $127 million but decreased for the three month period by $17 million.

Backlog

The decrease in contractual backlog during the nine months ended September 30, 2009 compared with December 31, 2008 was due to deliveries in excess of orders, changes in projected revenue escalation and cancellations of orders.

A number of our customers may have contractual remedies that may be implicated by program delays. We continue to address customer claims and requests for other contractual relief as they arise. However, once orders are included in firm backlog, orders remain in backlog until canceled or fulfilled, although the value of orders is adjusted based upon changing revenue escalation assumptions and as changes to price and schedule are agreed to with customers.

Accounting Quantity

The accounting quantities, undelivered units under firm orders and number of cumulative firm orders were as follows:

	Program
As of 9/30/2009	737	747	767	777	787
Program accounting quantities	4,400	1,499	1,035	1,100	*
Undelivered units under firm orders1	2,118	107	57	303	850
Cumulative firm orders2	5,154	1,523	1,036	1,114
	Program
As of 6/30/2009	737	747	767	777	787
Program accounting quantities	4,400	1,499	1,023	1,050	*
Undelivered units under firm orders1	2,137	107	61	314	850
Cumulative firm orders2	5,083	1,523	1,036	1,106
	Program
As of 3/31/2009	737	747	767	777	787
Program accounting quantities	4,200	1,499	1,023	1,050	*
Undelivered units under firm orders1	2,203	110	67	331	878
Cumulative firm orders2	5,050	1,524	1,039	1,102

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	Program
As of 12/31/2008	737	747	767	777	787
Program accounting quantities	4,200	1,499	1,023	1,050	*
Undelivered units under firm orders1	2,270	114	70	350	910
Cumulative firm orders2	5,026	1,524	1,039	1,098

* The accounting quantity for the 787 program will be determined in the year of first airplane delivery.

¹ Undelivered units are not adjusted for cancellations subsequent to September 30, 2009, June 30, 2009, March 31, 2009 and December 31, 2008.

² Cumulative firm orders represent the cumulative number of commercial jet aircraft deliveries plus undelivered firm orders.

737 Program The accounting quantity for the 737 program increased by 200 units during the nine months ended September 30, 2009.

747 Program There was no change in the accounting quantity for the 747 program during the nine months ended September 30, 2009.

In the fourth quarter of 2008, we recorded a charge of $685 million to recognize a reach-forward loss. The charge was primarily related to higher than anticipated costs due to late changes to wing design which drove new load requirements into the fuselage and created other statement of work changes for our suppliers. During the first quarter of 2009, an additional charge of $347 million was recorded. This charge was primarily caused by a reduction in projected delivery price increases associated with escalation and an increase in estimated costs due to production rate changes.

During the three months ending September 30, 2009, we recorded an additional charge of $1,005 million. $643 million of the charge reflects higher estimated production costs, including both additional internal production costs and higher supplier expenses, attributable to greater than expected re-work and disruption in manufacturing due to late maturity of engineering designs. The remaining $362 million was primarily due to challenging market conditions and our related decision to defer a planned increase in the 747-8 production rate.

As announced on October 6, 2009, first flight of the 747-8 Freighter is expected to occur in the first quarter 2010 with the flight test program taking place in 2010. First delivery of the 747-8 Freighter is expected in the fourth quarter of 2010. First delivery of the Intercontinental passenger variant remains scheduled for the fourth quarter of 2011. A gap between the delivery of the last 747-400 and the first 747-8 will contribute to lower 747 program revenues until deliveries of the 747-8 begin.

767 Program The accounting quantity for the 767 program increased by 12 units during the three months ended September 30, 2009. In April 2009, we announced a delay in previous plans to increase production.

777 Program The accounting quantity for the 777 program increased by 50 units during the three months ended September 30, 2009. Delivery of the first 777 Freighter occurred in February 2009. In April 2009, we announced that we will lower the production rate on our 777 airplane program, affecting deliveries beginning in June 2010.

787 Program During the three months ended September 30, 2009, we concluded that the first three flight-test 787 aircraft could not be sold as previously anticipated due to the inordinate amount of rework and unique and extensive modifications made to those aircraft. Therefore costs of $2,481 million previously recorded as program inventory as of July 31, 2009 were reclassified to research and

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development expense. Costs incurred in August and September 2009 of $138 million related to these flight-test airplanes were also included in research and development expense. We believe that the other three additional 787 flight test aircraft are commercially saleable and we continue to include costs related to those aircraft in program inventory at September 30, 2009. If we determine that one or more of the other flight test aircraft cannot be sold we may incur additional charges.

We are currently implementing the aircraft modifications required in connection with the need to reinforce an area within the side-of-body section of the 787 aircraft, and we are in the final stages of assembly and planning for flight test. We continue to address other challenges associated with assembly of the initial airplanes, including management of our extended global supply chain, completion and integration of traveled work, weight and systems integration. We are also continuing efforts to satisfy customer mission and performance needs in light of the anticipated weight of their respective aircraft.

As announced on August 27, 2009, we currently expect the first flight of the 787 by the end of 2009 and first delivery in the fourth quarter of 2010. The new schedule reflects the required side-of-body modifications and the addition of several weeks of schedule margin to reduce flight test and certification risk. The current flight test and delivery schedules also reflect the cumulative impacts of disruption caused by the 2008 IAM strike, the requirement to replace certain fasteners in early production airplanes, parts unavailability, as well as the impact from the challenges mentioned in the paragraphs above. We continue to work with our customers and suppliers to assess the specific impacts of schedule changes, including delivery delays and supplier assertions associated with such changes. A number of our customers have contractual remedies for schedule delays and/or performance. We continue to address customer claims and requests for other contractual relief as they arise.

Additional Considerations

The 787 and 747-8 programs highlight the risks that are always inherent in new airplane programs and new derivative airplanes, particularly as both the 747-8 and the 787 begin the flight test and certification phases of program development. Costs related to development of new programs and derivative airplanes are expensed as incurred. Costs to produce new aircraft are included in inventory and accounted for using program accounting. Airplane programs have risk for reach-forward losses if our estimated production costs exceed our estimated program revenues for the accounting quantity. Generally commercial airplanes are sold on a firm fixed-price basis with an indexed price escalation clause and are often sold several years before scheduled delivery. Each customer purchase agreement contains an escalation clause to account for the effects of economic fluctuations over the period of time from airplane sale to airplane delivery. A price escalation formula based on pre-defined factors is used to determine the final price of the airplane at the time of customer delivery. While firm fixed-price contracts allow us to benefit from cost savings, they also expose us to the risk of cost overruns. Many new airplanes and derivatives have highly complex designs, utilize exotic materials and require extensive coordination and integration with supplier partners. As technical or quality issues arise, such as issues experienced on the 787 and 747-8 programs, we may experience schedule delays and higher costs to complete new programs and derivative aircraft. Additionally, price escalation factors may also impact margins by reducing the estimated price of airplanes delivered in the future. Changes to the program accounting quantity, production costs and rates, costs associated with increasing production capacity, learning curve, anticipated cost reductions, flight test and certification schedules, costs and schedule for derivative airplanes, and status of customer claims, supplier assertions and other contractual negotiations could also result in lower margins or a material charge if the program has or is determined to have a reach-forward loss. While we believe the cost and revenue estimates incorporated in the financial statements are appropriate, the technical complexity of these programs creates financial risk as additional completion costs may become necessary or scheduled delivery dates could be extended, which could trigger termination provisions, order cancellations or other financially significant exposure.

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Integrated Defense Systems

Business Environment and Trends

In April 2009, the U.S. Department of Defense (U.S. DoD) announced recommended changes for inclusion in the fiscal year 2010 budget. The President’s budget, submitted to Congress in May 2009, incorporated many of the U.S. DoD recommendations. If these changes are approved by Congress, future funding for a number of our programs including C-17, FCS, F-22, GMD and Transformational Satellite Communications System (TSAT) could be reduced. We will continue to evaluate the defense budget as it progresses through Congress.

IDS Realignment

Effective January 1, 2009, certain programs were realigned between IDS segments. Business segment data for all periods presented have been adjusted to reflect the realignment. See Note 15.

Operating Results

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Revenues	$	25,114		$	24,006		$	8,744		$	8,497
Earnings from operations	$	2,470		$	2,351		$	885		$	854
Operating margins		9.8	%		9.8	%		10.1	%		10.1	%

(Dollars in millions)	September 30 2009		December 31 2008
Contractual backlog	$	45,020	$	45,285
Unobligated backlog		20,777		27,719

Revenues

IDS revenues for the nine and three months ended September 30, 2009 increased by $1,108 million and $247 million, a 5% and 3% increase from the same periods in 2008, primarily due to higher revenues in the GS&S and BMA segments. IDS revenues for the three month period were impacted by lower N&SS segment revenues.

Earnings from Operations

IDS operating earnings for the nine and three months ended September 30, 2009 increased by $119 million and $31 million. Operating margins remained constant for the nine and three month periods. Increased earnings for the nine months were due to higher earnings in the BMA segment primarily resulting from a charge of $248 million recorded in the second quarter of 2008 on the AEW&C program, partially offset by lower earnings in the N&SS segment. Increased earnings for the three months ended September 30, 2009 were primarily due to higher earnings in the BMA segment, partially offset by lower earnings in the N&SS and GS&S segments.

Backlog

IDS total backlog was $65,797 million at September 30, 2009, lower by $7,207 million from $73,004 million at December 31, 2008. The decrease was partly due to a partial termination for convenience

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from the U.S. Army of the FCS System Development and Demonstration contract relating to Manned Ground Vehicles and associated systems and equipment and current year deliveries and sales on multi-year contracts awarded in prior years with the largest decreases in FCS, GMD and F/A-18 programs.

For further details on the changes between periods, refer to the discussions of the individual segments below.

Additional Considerations

Our business includes a variety of development programs which have complex design and technical challenges. Many of these programs have cost-type contracting arrangements. In these cases the associated financial risks are primarily in lower profit rates or program cancellation if milestones and technical progress are not accomplished. Examples of these programs include Airborne Laser, EA-18G, Family of Beyond Line-of-Sight Terminals, FCS, GMD, Joint Tactical Radio System, P-8A and Proprietary programs.

Some of our development programs are contracted on a fixed-price basis. Many of these programs have highly complex designs. As technical or quality issues arise, we may experience schedule delays and cost impacts, which could increase our estimated cost to perform the work or reduce our estimated price, either of which could result in a material charge. These programs are ongoing, and while we believe the cost and fee estimates incorporated in the financial statements are appropriate, the technical complexity of these programs creates financial risk as additional completion costs may become necessary or scheduled delivery dates could be extended, which could trigger termination provisions, the loss of satellite in-orbit incentive payments, or other financially significant exposure. These programs have risk for reach-forward losses if our estimated costs exceed our estimated contract revenues. Examples of these programs include AEW&C, International KC-767 Tanker, commercial and military satellites, Vigilare and High Frequency Modernisation.

Boeing Military Aircraft

Operating Results

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Revenues	$	10,324		$	10,169		$	3,951		$	3,702
Earnings from operations	$	1,160		$	929		$	486		$	388
Operating margins		11.2	%		9.1	%		12.3	%		10.5	%

(Dollars in millions)	September 30 2009		December 31 2008
Contractual backlog	$	26,112	$	25,710
Unobligated backlog		9,634		10,048

Revenues

BMA revenues for the nine and three months ended September 30, 2009 increased $155 million and $249 million, a 2% and 7% increase compared with the same periods in 2008. The increase for the nine months was primarily due to higher deliveries and volume on several rotorcraft programs, partly offset by lower volume on several global strike and weapons programs. The increase for the three months was primarily due to higher deliveries.

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Deliveries of units for new-build production aircraft, excluding remanufactures and modifications, were as follows:

	Nine months ended September 30		Three months ended September 30
	2009	2008	2009	2008
F/A-18 Models	36	33	13	12
T-45TS Goshawk	6	5	2	2
F-15E Eagle	10	11	4	7
C-17 Globemaster	12	12	5	4
KC-767 Tanker	1	2
AH-64 Apache	20	2	7	1
CH-47 Chinook	4	8	3	4
Total new-build production aircraft	89	73	34	30

Earnings from Operations

BMA operating earnings for the nine and three months ended September 30, 2009 increased by $231 million and $98 million, increases of 25% from the same periods in 2008. The increase for the nine months was primarily due to a charge of $248 million recorded on the AEW&C program in the second quarter of 2008 and increased cost estimates related to the International Association of Machinists and Aerospace Workers strike in the third quarter of 2008, partly offset by changes in contract and delivery mix. Increased earnings for the three months ended September 30, 2009 were partly due to higher deliveries and volume, changes in contract and delivery mix and the aforementioned strike.

Backlog

BMA total backlog was $35,746 million at September 30, 2009, virtually unchanged from December 31, 2008. Backlog increases due to current year orders for P-8 India, C-17 and Chinook aircraft were offset by revenues recognized on contracts received in prior years.

Additional Considerations

Items which could have a future impact on BMA operations include the following:

AEW&C During 2006, we recorded charges of $770 million and during the second quarter of 2008, we recorded a charge of $248 million related to revised cost and revenue estimates to complete the AEW&C programs in Australia and Turkey. The 2008 charge, primarily related to our program in Australia, was due to subsystem development issues on the electronic warfare and ground support systems and the additional time required for integration testing. These factors required a revised delivery schedule for the Australian aircraft. These delays are not expected to affect delivery schedules to our other AEW&C customers. The AEW&C development program, also known as Wedgetail in Australia, Peace Eagle in Turkey and Peace Eye in the Republic of Korea, consists of a 737-700 aircraft outfitted with a variety of command and control and advanced radar systems, some of which have never been installed on an airplane before. Wedgetail includes six aircraft and Peace Eagle and Peace Eye include four aircraft each. These are advanced and complex fixed-price development programs involving technical challenges at the individual subsystem level and in the overall integration of these subsystems into a reliable and effective operational capability. We believe that the cost and revenue estimates incorporated in the financial statements are appropriate; however, the technical complexity of the programs creates financial risk as additional completion costs may be necessary or scheduled delivery dates could be delayed.

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International KC-767 Tanker Program During the nine months ended September 30, 2009, the BMA segment recorded charges of $51 million related to this program. During the years ended December 31, 2008 and 2007, the BMA segment recorded charges of $85 million and $152 million related to this program. The 2007 charge was partially offset at the consolidated level. The International KC-767 Tanker program includes four aircraft for the Italian Air Force and four aircraft for the Japanese Air Self Defense Force. As of September 30, 2009, we delivered three tankers to Japan. These programs are ongoing, and while we believe the revenue and cost estimates incorporated in the financial statements are appropriate, the technical complexity of the programs creates financial risk as additional completion and development costs may be necessary or remaining scheduled delivery dates could be delayed.

C-17 See the discussion of C-17 in Note 7 Liabilities, Commitments and Contingencies.

Network and Space Systems

Operating Results

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Revenues	$	8,492		$	8,485		$	2,711		$	2,987
Earnings from operations	$	698		$	806		$	252		$	302
Operating margins		8.2	%		9.5	%		9.3	%		10.1	%

(Dollars in millions)	September 30 2009		December 31 2008
Contractual backlog	$	7,764	$	8,868
Unobligated backlog		10,662		16,981

Revenues

N&SS revenues for the nine and three months ended September 30, 2009 increased by $7 million and decreased by $276 million, an increase of 0% and decrease of 9% compared with the same periods in 2008. The decrease for the three months is primarily due to lower volume on the SBInet, GMD and FCS programs, partly offset by higher volume on several satellite programs. In addition, revenues for the three months included a Delta II commercial launch in 2008.

Earnings from Operations

N&SS operating earnings for the nine and three months ended September 30, 2009 decreased by $108 million and $50 million, a 13% and 17% decrease from the same periods in 2008. The decrease for the nine months is partly due to charges related to the Sea Launch bankruptcy. Earnings in first quarter of 2008 included a favorable settlement on a civil satellite program. The decrease for the three months was primarily due to lower revenues and change in contract mix.

Backlog

N&SS total backlog was $18,426 million at September 30, 2009 a decrease of 29% from December 31, 2008. The decrease is primarily due to a partial termination for convenience from the U.S. Army of the FCS System Development and Demonstration contract relating to Manned Ground Vehicles and associated systems and equipment and revenues recognized on FCS, GMD, and Proprietary programs.

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Additional Considerations

Items which could have a future impact on N&SS operations include the following:

Business Environment and Trends In June 2009, we received a partial termination for convenience from the U.S. Army of the FCS System Development and Demonstration contract relating to Manned Ground Vehicles and associated systems and equipment. We believe the final restructured FCS contract will negatively impact revenue and earnings in the N&SS segment going forward. In addition, we completed the TSAT risk reduction and system definition contract in July 2009 and do not anticipate a future TSAT space segment program competition. As a result of lower than anticipated FCS, GMD and TSAT revenue and earnings, we tested N&SS goodwill for impairment as of September 30, 2009. No impairment was indicated by our test. Additional recommended budgetary changes, if included in the budget and approved by Congress, could further impact N&SS programs. We will monitor the defense budget as it progresses through Congress, evaluate its impact on our programs, and test for impairment as appropriate.

United Launch Alliance On December 1, 2006, we completed the transaction with Lockheed Martin Corporation (Lockheed) to create a 50/50 joint venture named United Launch Alliance L.L.C. (ULA). ULA combines the production, engineering, test and launch operations associated with U.S. government launches of Boeing Delta and Lockheed Atlas rockets. In connection with the transaction, we initially contributed net assets of $914 million at December 1, 2006. The book value of our investment exceeds our proportionate share of ULA’s net assets. This difference will be expensed ratably in future years. Based on the adjusted contributions and the conformed accounting policies established by ULA, this amortization is expected to be approximately $15 million annually for the next 15 years.

In connection with the formation of ULA, we each have agreed to extend a line of credit to ULA of up to $200 million to support its working capital requirements during the 5 year period following December 1, 2006. We and Lockheed transferred performance responsibility for certain U.S. government contracts to ULA as of the closing date. We and Lockheed agreed to jointly guarantee the performance of those contracts to the extent required by the U.S. government. We and Lockheed have also each committed to provide ULA with up to $122 million of additional capital contributions in the event ULA does not have sufficient funds to make a required payment to us under an inventory supply agreement. See Note 5.

We agreed to indemnify ULA through December 31, 2020 against potential non-recoverability and non-allowability of $1,360 million of Boeing Delta inventories included in contributed assets plus $1,860 million of inventory subject to an inventory supply agreement which ends on March 31, 2021. Since inception, ULA has sold $982 million of inventories that were contributed by us. As part of its integration, ULA is continuing to assess the future of the Delta II program beyond what is currently on contract. In the event ULA is unable to sell additional Delta II inventory, earnings could be reduced by up to $85 million.

We agreed to indemnify ULA against potential losses that ULA may incur in the event ULA is unable to obtain certain additional contract pricing from the USAF for four satellite missions. We believe ULA is entitled to additional contract pricing. In December 2008, ULA submitted a claim to the USAF to re-price the contract value for two of the four satellite missions covered by the indemnification. In March 2009, the USAF issued a denial of that claim and in June 2009, ULA filed an appeal. If ULA is unsuccessful obtaining additional pricing we may be responsible for some of the shortfall and may record up to $386 million in pre-tax losses associated with the four missions.

Sea Launch See the discussion of Sea Launch in Note 7 Liabilities, Commitments and Contingencies.

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Satellites See the discussions of Boeing Satellite Systems International, Inc. (BSSI) in Note 14 Legal Proceedings and discussion of Satellite insurance risk in Note 7 Liabilities, Commitments and Contingencies.

Global Services and Support

Operating Results

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Revenues	$	6,298		$	5,352		$	2,082		$	1,808
Earnings from operations	$	612		$	616		$	147		$	164
Operating margins		9.7	%		11.5	%		7.1	%		9.1	%

(Dollars in millions)	September 30 2009		December 31 2008
Contractual backlog	$	11,144	$	10,707
Unobligated backlog		481		690

Revenues

GS&S revenues for the nine and three months ended September 30, 2009 increased by $946 million and $274 million, an increase of 18% and 15% compared with the same periods in 2008. The increases for both periods were primarily due to increased volume in the Integrated Logistics (IL) and Training Systems and Services.

Earnings from Operations

GS&S operating earnings for the nine and three months ended September 30, 2009 decreased by $4 million and $17 million compared with the same periods in 2008. Overall GS&S operating margins for the nine and three months ended September 30, 2009 decreased by 1.8% and 2.0% primarily due a contract adjustment and changes in contract mix.

Backlog

GS&S total backlog was $11,625 million at September 30, 2009, an increase of 2% from December 31, 2008. The increase was primarily due to significant growth in International Support Systems and Defense and Government Services divisions and partially offset by decreases in the IL and Maintenance, Modifications and Upgrades divisions.

Boeing Capital Corporation

Operating Results

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Revenues	$	496		$	535		$	166		$	171
Earnings from operations	$	112		$	143		$	39		$	37
Operating margins		23	%		27	%		23	%		22	%

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Revenues

BCC segment revenues consist principally of lease income from equipment under operating lease and interest from financing receivables and notes. BCC’s revenues for the nine and three months ended September 30, 2009, decreased $39 million and $5 million when compared with the same periods in 2008 primarily due to lower operating lease income resulting from a smaller portfolio of equipment under operating leases as a result of the return of aircraft and asset dispositions.

Operating Earnings

BCC’s operating earnings are presented net of interest expense, provision for (recovery of) losses, asset impairment expense, depreciation on leased equipment and other operating expenses. Operating earnings for the nine months ended September 30, 2009 decreased by $31 million due to lower revenues, higher impairment expense and a provision for losses partially offset by lower interest expense. Operating earnings for the three months ended September 30, 2009 increased $2 million due to lower interest expense partially offset by lower revenues, higher impairment expense and a provision for losses.

Financial Position

The following table presents selected financial data for BCC:

(Dollars in millions)	September 30 2009			December 31 2008
BCC customer financing and investment portfolio	$	6,114		$	6,023
Valuation allowance as a % of total receivables		2.0	%		2.1	%
Debt	$	3,495		$	3,652
Debt-to-equity ratio		5.0-to-1			5.0-to-1

BCC’s customer financing and investment portfolio at September 30, 2009 increased from December 31, 2008 due to the origination of notes receivable partially offset by normal portfolio run-off. At September 30, 2009 and December 31, 2008, BCC had $460 million and $685 million of assets that were held for sale or re-lease, of which $431 million and $305 million had either executed term sheets with deposits or firm contracts to be sold or placed on lease. In March 2009, Mexicana Group committed to lease 25 717 aircraft, including 8 of which were placed on lease and 11 that were held for sale or re-lease at September 30, 2009. The remaining 6 aircraft are currently on lease with Midwest Airlines (Midwest) as of September 30, 2009. In May 2009, BCC agreed to a restructuring of lease terms with Midwest under which Midwest is scheduled to return the remaining aircraft by the end of the current year. We do not expect that the return of these aircraft as a result of this restructuring will have a material effect on our financial position, results of operations or cash flow. Aircraft subject to leases with a carrying value of approximately $346 million are scheduled to be returned off lease in the next 12 months. These aircraft are being remarketed or the leases are being extended and aircraft subject to leases with a carrying value of approximately $179 million had either executed term sheets with deposits or firm contracts at September 30, 2009.

Restructurings and Restructuring Requests

As of September 30, 2009, BCC had received a number of requests from both domestic and foreign airlines to reduce lease or rental payments or to otherwise restructure obligations. Whether such requests will result in a material adverse impact on our earnings, cash flow or financial position depends on a number of factors including whether the request is granted, the type of aircraft, the collateral value and market rental rates of the returned aircraft.

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Other Segment

(Dollars in millions)	Nine months ended September 30						Three months ended September 30
	2009			2008			2009			2008
Revenues	$	125		$	527		$	51		$	300
Loss from operations	$	(105	)	$	(233	)	$	(36	)	$	(48	)

Revenues for the nine and three months ended September 30, 2009 decreased by $402 million and $249 million compared with the same periods of 2008 primarily due to the sale of 4 C-17 aircraft in 2008 held under operating lease, three of which were sold in the third quarter of 2008. Other segment losses for the nine and three months ended September 30, 2009 decreased by $128 million and $12 million compared with the same periods of 2008. The decrease for the nine months ended September 30, 2009 was primarily due to recognition of pre-tax expense of $82 million in the third quarter of 2008 to increase the allowance for losses on customer financing receivables related to lower U.S. airline customer credit ratings.

Liquidity and Capital Resources

Cash Flow Summary

(Dollars in millions)	Nine months ended September 30
	2009			2008
Net earnings	$	44		$	2,758
Non-cash items		1,668			1,288
Changes in working capital		679			(2,806	)
Net cash provided by operating activities		2,391			1,240
Net cash (used)/provided by investing activities		(2,149	)		173
Net cash provided/(used) by financing activities		2,545			(4,243	)
Effect of exchange rate changes on cash and cash equivalents		40			(26	)
Net increase/(decrease) in cash and cash equivalents		2,827			(2,856	)
Cash and cash equivalents at beginning of year		3,268			7,042
Cash and cash equivalents at end of period	$	6,095		$	4,186

Operating Activities Net cash provided by operating activities increased by $1,151 million to $2,391 million during the nine months ended September 30, 2009 compared with the nine months ended September 30, 2008. The increase versus the prior period reflects a lower rate of growth in working capital investments and lower pension contributions in 2009. The reclassification of costs related to the first three 787 flight test aircraft from inventory to research and development expense and reach forward losses on the 747 program reduced earnings and working capital balances but did not affect cash flows.

Investing Activities Cash used by investing activities totaled $2,149 million during the nine months ended September 30, 2009 compared with $173 million provided during the same period in 2008. In the nine months ended September 30, 2009, we made net contributions of $122 million to investments, while in the corresponding period in 2008, investments provided $2,027 million, representing a change of $2,149 million. On July 30, 2009, we acquired the business, assets and operations of Vought Aircraft

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Industries, Inc.’s (Vought) 787 business conducted at North Charleston, SC and paid cash consideration at closing of $592 million, subject to a post-closing adjustment. On July 1, 2009, we paid $448 million to satisfy guarantees of Sea Launch indebtedness.

Financing Activities Cash provided by financing activities totaled $2,545 million during the nine months ended September 30, 2009 compared with $4,243 million used during the nine months ended September 30, 2008, primarily due to proceeds from borrowings of $3,772 million in 2009. There were no material debt issuances during the nine months ended September 30, 2008. There was a decrease in common shares repurchased of $2,533 million.

During the nine months ended September 30, 2009, we repaid $256 million of debt, including scheduled repayments of $241 million of debt held at BCC, excluding intercompany debt. The recorded balance of debt as of September 30, 2009 was $11,038 million, of which $973 million was classified as short-term. This includes $3,395 million of debt recorded at BCC, excluding intercompany debt, of which $926 million was classified as short-term.

During the nine months ended September 30, 2009, we repurchased 1,173,152 shares at an average price of $42.94 in our open market share repurchase program and 429,245 shares transferred to us from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock during the period. During the nine months ended September 30, 2008, we repurchased 34,506,913 shares at an average price of $75.37 in our open market share repurchase program, 1,462,776 shares at an average price of $64.95 as part of the ShareValue Trust distribution, and 3,740 shares in stock swaps.

Credit Ratings Our credit ratings are summarized below:

	Fitch	Moody’s	Standard & Poor’s
Long-term:
Boeing/BCC	A+	A2	A
Short-term:
Boeing/BCC	F1	P-1	A-1

On January 29, 2009, Standard & Poor’s (S&P) affirmed Boeing’s and BCC’s A+ credit rating but changed its outlook from stable to negative, citing the challenging commercial aviation environment. On April 10, 2009, S&P placed Boeing’s and BCC’s A+ credit rating on credit watch with negative implications. The rating for short-term borrowing was reaffirmed at A-1. On April 30, 2009, Fitch Ratings affirmed Boeing’s and BCC’s A+ credit rating but changed its outlook from stable to negative. On July 29, 2009, S&P lowered Boeing’s and BCC’s long-term ratings from A+ to A. On October 14, 2009, Moody’s affirmed Boeing’s and BCC’s A2 and P-1 ratings, but changed its outlook from neutral to negative.

Capital Resources We believe we have substantial borrowing capability. We and BCC have commercial paper programs that continue to serve as significant potential sources of short-term liquidity. As of September 30, 2009, neither we nor BCC had any outstanding commercial paper issuances. Currently, we have $3,000 million ($1,500 million exclusively available for BCC) of unused borrowing on revolving credit line agreements. We anticipate that these credit lines will primarily serve as backup liquidity to support possible commercial paper borrowings in 2009. BCC has a $5,000 million shelf registration statement that was declared effective on November 12, 2008 under which it may offer debt securities. BCC has not issued any debt securities under this registration statement, and the entire $5,000 million remains available for issuance. In the event BCC elects to issue any debt securities under this registration statement, the availability of such funding will depend on investor demand and market conditions.

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On March 9, 2009, we filed a public shelf registration with the U.S. Securities and Exchange Commission for the issuance of an indeterminate amount of debt securities and common stock. On March 13, 2009 and July, 28, 2009, we issued notes totaling $1,850 and $1,950 million under the registration statement. The net proceeds after deducting the discount, underwriting fees and issuance costs were $1,817 and $1,914 million.

We believe our ability to access external capital resources should be sufficient to satisfy existing short-term and long-term commitments and plans. In the event we require additional funding to support strategic business opportunities, commercial aircraft financing commitments, unfavorable resolution of loss contingencies, or other business requirements, we expect to meet increased funding requirements by issuing commercial paper or term debt. At this point in time, our access to liquidity sources has not been materially impacted by the current credit environment, and we do not expect that it will be materially impacted in the near future. There can be no assurance that the cost or availability of future borrowings, if any, under our commercial paper program, in the debt markets or our credit facilities will not be materially impacted by further capital market disruptions.

We had negative Shareholders’ equity as a result of the remeasurement of our pension assets and obligations at September 30, 2009 and December 31, 2008. We do not expect negative Shareholders’ equity to affect our ability to pay dividends or comply with debt covenants. However, additional deterioration in the funded status of our pension plans may result in a requirement to make additional contributions to those plans in future years.

Required pension contributions for U.S. and non-U.S. plans in 2009 are not expected to exceed $50 million. Through September 2009, we made pension contributions of $60 million. We expect to make a discretionary contribution to our pension plans during the fourth quarter of 2009. We are considering whether to make this contribution in cash or shares of Boeing stock. If we decide to contribute common stock the amount of the contribution could exceed our previously announced plan to contribute approximately $500 million to our pension plans in 2009.

As of September 30, 2009, we continue to be in full compliance with all covenants contained in our debt agreements.

Off-Balance Sheet Arrangements

We are a party to certain off-balance sheet arrangements including certain guarantees. For discussion of these arrangements, see Note 8.

Contingent Obligations

We have significant contingent obligations that arise in the ordinary course of business, which include the following:

Legal Various legal proceedings, claims and investigations are pending against us. Legal contingencies are discussed in Note 14, including our contesting the default termination of the A-12 aircraft, litigation/arbitration involving BSSI and employment and benefits litigation brought by several of our employees.

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $732 million at September 30, 2009. For additional information, see Note 7.

Income Taxes We have recorded a net liability of $1,662 million at September 30, 2009 for uncertain tax positions. For further discussion of income taxes, see Note 4.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes to our market risk since December 31, 2008.

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures.

Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls as of September 30, 2009 and have concluded that these disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) 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 2009 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

Santa Susana Field Laboratory

We possess a National Pollutant Discharge Elimination System (NPDES) permit, issued by the California Regional Water Quality Control Board, Los Angeles Region (Regional Board), which limits the permissible level of certain constituents in surface water discharged from various outfalls at our Santa Susana Field Laboratory site in Simi Valley, California. On June 11, 2008, the Regional Board issued a Notice of Violation informing us that the Board has identified 24 discharge violations from our self-monitoring reports covering the period October 1, 2006, through March 31, 2008, and in subsequent communications we have been informed that the Board believes there may be 35 exceedences through February 28, 2009. Each violation, if established, could give rise to assessment of an administrative penalty of up to $10,000, or $25,000 if the matter is ultimately resolved by the California Department of Justice, plus possible additional assessments based upon the volume of water discharged.

Currently, we are involved in a number of additional legal proceedings. For a discussion of contingencies related to legal proceedings, see Note 14 to our Condensed Consolidated Financial Statements, which is hereby incorporated by reference.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2008, other than the risk factors updated in Part II, Item 1A, Risk Factors in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009.

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

The following table provides information about purchases we made during the quarter ended September 30, 2009 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act:

Issuer Purchases of Equity Securities

(Dollars in millions except per share data)

	(a)	(b)		(c)	(d)
	Total Number of Shares Purchased(1)	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 Purchased Under the Plans or Programs(2)
7/1/2009 thru 7/31/2009	31,510	$	42.72		$	3,610
8/1/2009 thru 8/31/2009	1,270	$	43.24		$	3,610
9/1/2009 thru 9/30/2009	12,315	$	50.08		$	3,610
Total	45,095	$	44.74

⁽¹⁾ We purchased an aggregate of 45,095 shares transferred to us from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock during the period. We made no other share repurchases during the quarter ended September 30, 2009.

⁽²⁾ On October 29, 2007, the Board approved the repurchase of up to $7 billion of common stock (the Program). Unless terminated earlier by a Board resolution, the Program will expire when we have used all authorized funds for repurchase.

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Item 6. Exhibits

(3)	Articles of Incorporation and By-Laws.
	(i)     By-Laws of The Boeing Company, as amended and restated October 7, 2009.
(4)	Instruments Defining the Rights of Security Holders, Including Indentures.
	Pursuant to Item 601(b)(4)(iii) of Regulation S-K, we are not filing certain instruments with respect to our debt, as the total amount of securities currently provided for under each of such instruments does not exceed 10 percent of our total assets on a consolidated basis. We hereby agree to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.
(10)	Material Contracts.
	(i)     Asset Purchase Agreement by and between Vought Aircraft Industries, Inc. and BCACSC, Inc. dated as of July 6, 2009.
(15)	Letter from Independent Registered Public Accounting Firm regarding unaudited interim financial information.
(31)(i)	Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
(31)(ii)	Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
(32)(i)	Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
(32)(ii)	Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
(101.INS)	XBRL Instance Document
(101.SCH)	XBRL Taxonomy Extension Schema Document
(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

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Signature

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.

	THE BOEING COMPANY
	(Registrant)
October 21, 2009	/S/    ROBERT J. PASTERICK
(Date)	Robert J. Pasterick
	Vice President Finance
	& Corporate Controller
	(Chief Accounting Officer)

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EX-3.I

EXHIBIT (3)(i)

BY-LAWS

OF

THE BOEING COMPANY

(as amended and restated October 7, 2009)

THE BOEING COMPANY

BYLAWS

TABLE OF CONTENTS

ARTICLE I
Stockholders’ Meetings
			Page
Section	1.	Annual Meetings	1
Section	2.	Special Meetings	1
Section	3.	Place of Meeting	1
Section	4.	Notice of Meetings	1
Section	5.	Waivers of Notice	2
Section	6.	Quorum	2
Section	7.	Proxies	2
	7.1	Appointment	2
	7.2	Delivery to Corporation; Duration	2
Section	8.	Inspectors of Election	3
	8.1	Appointment	3
	8.2	Duties	3
	8.3	Determination of Proxy Validity	3
Section	9.	Fixing the Record Date	3
	9.1	Meetings	3
	9.2	Consent to Corporate Action Without a Meeting	3
	9.3	Dividends, Distributions, and Other Rights	4
	9.4	Voting List	4
Section	10.	Action By Stockholders Without a Meeting	4
Section	11.	Notice of Nominations and Other Stockholder Business; Required Vote for Directors; Director Qualification	4
		11.1.A Annual Meetings of Stockholders	4
		11.1.B Special Meetings of Stockholders	6
		11.1.C General	7
	11.2	Required Vote for Directors	7
	11.3	Director Qualification: Submission of Questionnaire, Representation and Agreement	7
Section	12.	Notice to Corporation	8

i

ARTICLE II
Board of Directors
Section	1.	Number and Term of Office	8
Section	2.	Nomination and Election	8
	2.1	Nomination	8
	2.2	Election	8
Section	3.	Place of Meeting	8
Section	4.	Annual Meeting	8
Section	5.	Stated Meetings	9
Section	6.	Special Meetings	9
	6.1	Convenors and Notice	9
	6.2	Waiver of Notice	9
Section	7.	Quorum and Manner of Acting	9
Section	8.	Chairman of the Board of Directors	9
Section	9.	Resignations	9
Section	10.	Removal of Directors	9
Section	11.	Filling of Vacancies Not Caused by Removal	10
Section	12.	Directors’ Fees	10
Section	13.	Action Without a Meeting	10
ARTICLE III
Board of Directors Committees
Section	1.	Audit Committee	10
Section	2.	Other Committees	10
	2.1	Committee Powers	10
	2.2	Committee Members	10
Section	3.	Quorum and Manner of Acting	11
ARTICLE IV
Officers and Agents:
Terms, Compensation, Removal, Vacancies
Section	1.	Officers	11
Section	2.	Term of Office	11
Section	3.	Salaries of Elected Officers	11
Section	4.	Bonuses	11

ii

Section	5.	Removal of Elected and Appointed Officers	11
Section	6.	Vacancies	11
ARTICLE V
Officers’ Duties and Powers
Section	1.	Chairman of the Board of Directors	12
Section	2.	President	12
Section	3.	Chief Executive Officer	12
Section	4.	Vice Presidents and Controller	12
Section	5.	Secretary	12
Section	6.	Treasurer	12
Section	7.	Additional Powers and Duties	13
Section	8.	Disaster Emergency Powers of Acting Officers	13
ARTICLE VI
Stock and Transfers of Stock
Section	1.	Stock Certificates	13
Section	2.	Transfer Agents and Registrars	13
Section	3.	Transfers of Stock	14
Section	4.	Lost Certificates	14
ARTICLE VII
Miscellaneous
Section	1.	Fiscal Year	14
Section	2.	(Repealed)	14
Section	3.	Signing of Negotiable Instruments	14
Section	4.	Indemnification of Directors and Officers	14
	4.1	Right to Indemnification	14
	4.2	Right of Indemnitee to Bring Suit	15
	4.3	Nonexclusivity of Rights	15
	4.4	Insurance, Contracts, and Funding	15
	4.5	Persons Serving Other Entities	15
	4.6	Indemnification of Employees and Agents of the Corporation	16
	4.7	Procedures for the Submission of Claims	16

iii

ARTICLE VIII
Amendments
Section	1.	Amendment of the By-Laws: General	16
Section	2.	Amendments as to Compensation and Removal of Officers	16

iv

BY-LAWS

OF

THE BOEING COMPANY

ARTICLE I

Stockholders’ Meetings

SECTION 1. Annual Meetings.

The Annual Meeting of the stockholders shall be held on such date and at such time as the Board of Directors shall determine, for the election of directors and the transaction of such other business as may come before the meeting.

SECTION 2. Special Meetings.

A special meeting of stockholders may be called at any time by the Board of Directors, or by stockholders holding together at least twenty-five percent (25%) of the outstanding shares of stock entitled to vote, except as otherwise provided by statute or by the Certificate of Incorporation or any amendment thereto.

SECTION 3. Place of Meeting.

All meetings of the stockholders of the Corporation shall be held at such place or places, if any, within or without the State of Delaware as may from time to time be fixed by the Board of Directors or as shall be specified or fixed in the respective notices or waivers of notice thereof.

SECTION 4. Notice of Meetings.

Except as otherwise required by statute and as set forth below, notice of each annual or special meeting of stockholders shall be given to each stockholder of record entitled to vote at such meeting not less than thirty (30) nor more than sixty (60) (or the maximum number permitted by applicable law) days before the meeting date. If the Corporation has an Interested Stockholder as defined in Article EIGHTH of the Certificate of Incorporation, notice of each special meeting of stockholders shall be given to each stockholder of record entitled to vote at such meeting not less than fifty-five (55) nor more than sixty (60) (or the maximum number permitted by applicable law) days before the meeting date, unless the calling of such meeting is ratified by the affirmative vote of a majority of the Continuing Directors as defined in Article EIGHTH of the Certificate of Incorporation, in which case notice of such special meeting shall be given to each stockholder of record entitled to vote at such meeting not less than thirty (30) nor more than sixty (60) (or the maximum number permitted by applicable law) days before the meeting date. Such notice shall be given by delivering to each stockholder a written or printed notice thereof either personally or by mailing such notice in a postage-prepaid envelope addressed to the stockholder’s address as it appears on the stock books of the Corporation or by transmitting the notice to the stockholder in any other manner permitted by Delaware law. Except as otherwise required by statute, no publication of any notice of a meeting of stockholders shall be required. Every notice of a meeting of stockholders shall state the place, if any (or the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person), date, and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Notices are deemed given (i) if by mail, when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation, or, if a stockholder shall have filed with the Secretary a written request that notices to such stockholder be mailed to some other address, then directed to such stockholder at such other address; (ii) if by facsimile, when directed to a number at which the stockholder has consented to receive notice; (iii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive such notice; (iv) if by posting on an electronic network together with a separate notice to the stockholder of such specific posting, upon the later to occur of (A) such posting and (B) the giving of such separate notice of such posting; and (v) if by any other form of electronic transmission, when directed to the stockholder as required by law and, to the extent required by applicable law, in the manner consented to by the stockholder. An affidavit of the mailing or other means of giving any notice of any stockholders’ meeting, executed by the Secretary, Assistant Corporate Secretary or any transfer agent of the Corporation giving the notice, shall be prima facie evidence of the giving of such notice. Notice shall be deemed to have been given to all stockholders of record who share an address if notice is given in accordance with the “householding” rules set forth in Rule 14a-3(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 233 of the Delaware General Corporation Law.

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SECTION 5. Waivers of Notice.

Whenever any notice is required to be given to any stockholder under the provisions of these By-Laws, the Certificate of Incorporation, or the Delaware General Corporation Law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. The attendance of a stockholder at a meeting, in person or by proxy, or waiver by electronic transmission, shall constitute a waiver of notice of such meeting, except when a stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

SECTION 6. Quorum.

At all meetings of stockholders, except when otherwise provided by statute or by the Certificate of Incorporation or any amendment thereto, or by these By-Laws, the presence, in person or by proxy duly authorized, of the holders of one-third of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business; and except as otherwise provided by statute or rule of law, or by the Certificate of Incorporation or any amendment thereto, or by these By-Laws, the vote, in person or by proxy, of the holders of a majority of the shares constituting such quorum shall be binding upon all stockholders of the Corporation. In the absence of a quorum, a majority of the shares present in person or by proxy and entitled to vote may adjourn any meeting, from time to time but not for a period of more than thirty (30) days at any one time, until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally called. Unless otherwise provided by statute, no notice of an adjourned meeting need be given.

SECTION 7. Proxies.

7.1 Appointment.

Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy. Such authorization may be accomplished (a) by the stockholder or such stockholder’s authorized officer, director, employee, or agent executing a writing or causing his or her signature to be affixed to such writing by any reasonable means, including facsimile signature, or (b) by transmitting or authorizing the transmission of a telegram, cablegram, or other means of electronic transmission to the intended holder of the proxy or to a proxy solicitation firm, proxy support service, or similar agent duly authorized by the intended proxy holder to receive such transmission; provided, that any such telegram, cablegram, or other electronic transmission must either set forth or be accompanied by information from which it can be determined that the telegram, cablegram, or other electronic transmission was authorized by the stockholder. Any copy, facsimile telecommunication, or other reliable reproduction of the writing or transmission by which a stockholder has authorized another person to act as proxy for such stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication, or other reproduction shall be a complete reproduction of the entire original writing or transmission.

7.2 Delivery to Corporation; Duration.

A proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting or the delivery to the Corporation of the consent to corporate action in writing. A proxy shall become invalid three (3) years after the date of its execution, unless otherwise provided in the proxy. A proxy with respect to a specified meeting shall entitle the holder thereof to vote at any reconvened meeting following adjournment of such meeting but shall not be valid after the final adjournment thereof.

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SECTION 8. Inspectors of Election.

8.1 Appointment.

In advance of any meeting of stockholders, the Board of Directors of the Corporation shall appoint one or more persons to act as inspectors of election at such meeting and to make a written report thereof. The Board of Directors may designate one or more persons to serve as alternate inspectors to serve in place of any inspector who is unable or fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chairman of such meeting shall appoint one or more persons to act as inspector at such meeting.

8.2 Duties.

The inspectors of election shall (a) ascertain the number of shares of the Corporation outstanding and the voting power of each such share; (b) determine the shares represented at the meeting and the validity of proxies and ballots; (c) count all votes and ballots; (d) determine and retain for a reasonable period of time a record of the disposition of any challenges made to any determination by them; and (e) certify their determination of the number of shares represented at the meeting and their count of the votes and ballots. Each inspector shall, before entering upon the discharge of his or her duties, take and sign an oath to faithfully execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors may appoint or retain other persons or entities to assist them in the performance of their duties.

8.3 Determination of Proxy Validity.

The validity of any proxy or ballot executed for a meeting of stockholders shall be determined by the inspectors of election in accordance with the applicable provisions of the Delaware General Corporation Law as then in effect. In determining the validity of any proxy transmitted by telegram, cablegram, or other electronic transmission, the inspectors shall record in writing the information upon which they relied in making such determination.

SECTION 9. Fixing the Record Date.

9.1 Meetings.

For the purpose of determining stockholders entitled to notice of and to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall be not fewer than thirty (30) nor more than sixty (60) (or the maximum number permitted by applicable law) days before the date of such meeting. If the Corporation has an Interested Stockholder as defined in Article EIGHTH of the Certificate of Incorporation, the record date for each special meeting of stockholders shall be not fewer than fifty-five (55) nor more than sixty (60) (or the maximum number permitted by applicable law) days before the meeting date, unless the calling of such meeting is ratified by the affirmative vote of a majority of the Continuing Directors, as defined in Article EIGHTH of the Certificate of Incorporation. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of and to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

9.2 Consent to Corporate Action Without a Meeting.

For the purpose of determining the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) (or the maximum number permitted by applicable law) days after the date on which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by Chapter 1 of the Delaware General Corporation Law as now or hereafter amended, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the records of proceedings of meetings of stockholders. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail,

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return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by Chapter 1 of the Delaware General Corporation Law as now or hereafter amended, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

9.3 Dividends, Distributions, and Other Rights.

For the purpose of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion, or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) (or the maximum number permitted by applicable law) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

9.4 Voting List.

At least ten (10) days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting shall be made, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. This list shall be open to examination by any stockholder, for any purpose germane to the meeting, for a period of ten (10) days prior to the meeting, either (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting, or (ii) during ordinary business hours at the principal place of business of the Corporation. The list shall also be produced and kept at such meeting for inspection by any stockholder who is present.

SECTION 10. Action by Stockholders Without a Meeting.

Subject to the provisions of Article NINTH of the Certificate of Incorporation, any action which could be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, are (a) signed by the holders of outstanding stock having not fewer than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and (b) delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the records of proceedings of meetings of stockholders. Delivery made to the Corporation’s registered office shall be by hand or by certified mail or registered mail, return receipt requested. Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless written consents signed by a sufficient number of stockholders to take such action are delivered to the Corporation, in the manner required by this Section, within sixty (60) (or the maximum number permitted by applicable law) days of the date of the earliest dated consent delivered to the Corporation in the manner required by this Section 10. The validity of any consent executed by a proxy for a stockholder pursuant to a telegram, cablegram, or other means of electronic transmission transmitted to such proxy holder by or upon the authorization of the stockholder shall be determined by or at the direction of the Secretary of the Corporation. A written record of the information upon which the person making such determination relied shall be made and kept in the records of the proceedings of the stockholders. Any such consent shall be inserted in the minute book as if it were the minutes of a meeting of stockholders. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

SECTION 11. Notice of Nominations and Other Stockholder Business; Required Vote for Directors; Director Qualification.

11.1 Notice of Nominations and Other Stockholder Business.

A. Annual Meetings of Stockholders.

1. Nominations of persons for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (a) as specified in the Corporation’s notice of meeting (or any supplement thereto); (b) by or at the direction of the Board of Directors or any committee thereof; or (c) by any stockholder of the Corporation who (i) was a stockholder of record at the time the notice provided for

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in this By-Law is delivered to the Secretary of the Corporation, (ii) is entitled to vote at the meeting, and (iii) complies with the notice procedures set forth in this By-Law as to such nomination or other business; clause (c) shall be the exclusive means for a stockholder to make nominations or submit proposals for other business (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the Corporation’s notice of meeting) before an annual meeting of stockholders.

2. Without qualification, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to Section 11.1.A(1)(c), the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business (other than the nominations of persons for election to the Board of Directors) must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the close of business on the one hundred and twentieth (120th) day and not later than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting and the tenth (10th) day following the day on which public announcement of the date of such annual meeting is first made by the Corporation. In no event shall the postponement of a meeting as to which notice has been sent to stockholders commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. To be in proper form, such stockholder’s notice (whether given pursuant to this Section 11.1.A(2) or Section 11.1.B) to the Secretary of the Corporation must: (a) set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal for other business is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, if any, (ii) (A) the class or series and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder and such beneficial owner, if any, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of shares of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder and such beneficial owner, if any, and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder and such beneficial owner, if any, has a right to vote any shares of any security of the Corporation, (D) any short interest in any security of the Corporation (for purposes of this By-Law a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder and such beneficial owner, if any, that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder and such beneficial owner, if any, is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, and (G) any performance-related fees (other than an asset-based fee) that such stockholder and such beneficial owner, if any, is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, all such information to be provided as of the date of such notice, including, without limitation, any such interests held by members of such stockholder’s and such beneficial owner’s, if any, immediate family sharing the same household (which information shall be supplemented by such stockholder and such beneficial owner, if any, not later than ten (10) days after the record date for the annual meeting to disclose such ownership as of the record date), (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal of other business and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, and (iv) a representation (A) that the stockholder is a holder of record of stock of the Corporation entitled to vote at such annual meeting and intends to appear in person or by proxy at the annual meeting to propose such business or nomination and (B) whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (y) otherwise to solicit proxies from stockholders in support of such proposal or nomination; (b) if the notice relates to any business other than the nomination of a director or directors that the stockholder proposes to bring before the annual meeting, set forth (i) a

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brief description of the business desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these By-Laws, the language of the proposed amendment), the reasons for conducting such business at the annual meeting and any material interest of such stockholder and beneficial owner, if any, in such business and (ii) a description of all agreements, arrangements, and understandings between such stockholder and beneficial owner, if any, and their respective affiliates and associates, and any other person or persons (including their names) acting in concert therewith in connection with the proposal of such business by such stockholder; (c) set forth, as to each person, if any, whom the stockholder proposes to nominate for election or reelection to the Board of Directors (i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act, (ii) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected and a statement whether such person, if elected, intends to tender, promptly following such person’s election or reelection, an irrevocable resignation effective upon such person’s failure to receive the required vote for reelection at the next meeting at which such person would face reelection and upon acceptance of such resignation by the Board of Directors, and (iii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or any other person or persons (including their names) acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or any other person or persons (including their names) acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and (d) with respect to each nominee for election or reelection to the Board of Directors, include the completed and signed questionnaire, representation and agreement required by Section 11.3. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

3. Notwithstanding anything in the second sentence of Section 11.1.A(2) to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased effective at the annual meeting and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

B. Special Meetings of Stockholders.

Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the special meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting at which directors are to be elected pursuant to the Corporation’s notice of special meeting (a) by or at the direction of the Board of Directors or any committee thereof or stockholders pursuant to Article 1, Section 2 hereof, or (b) provided that the Board of Directors or stockholders pursuant to Article 1, Section 2 hereof has determined that directors shall be elected at such special meeting, by any stockholder of the Corporation who (i) is a stockholder of record at the time the notice provided for in this By-Law is delivered to the Secretary of the Corporation and at the time of the special meeting, (ii) is entitled to vote at the special meeting, and (iii) complies with the notice procedures set forth in this By-Law as to such nomination. In the event the Corporation calls a special meeting for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by Section 11.1.A(2) (including the completed and signed questionnaire, representation and agreement required by Section 11.3) shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the close of business on the one hundred and twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting and the tenth (10th) day following the

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day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such special meeting. In no event shall the postponement of a special meeting as to which notice has been sent to stockholders commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

C. General.

1. Only such persons who are nominated in accordance with the procedures set forth in this By-Law shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-Law. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the chairman of the meeting shall have the power and duty (a) to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this By-Law (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by Section 11.1.A(2)(a)(iv)) and (b) if any proposed nomination or business was not made or proposed in compliance with this By-Law, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this By-Law, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this By-Law, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager, or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the annual or special meeting and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the annual or special meeting.

1. For purposes of this By-Law, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press, or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

2. Notwithstanding the foregoing provisions of this By-Law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this By-Law; provided, however, that any references in these By-Laws to the Exchange Act are not intended to and shall not limit the requirements applicable to any nominations or proposals as to any other business to be considered pursuant to this By-Law (including Section 11.1A(1)(c) or Section 11.1B). Nothing in this By-Law shall be deemed to affect any rights (a) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Certificate of Incorporation, or these By-Laws.

11.2 Required Vote for Directors.

A nominee for director shall be elected to the Board of Directors if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election; provided, however, that the directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the Secretary of the Corporation receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder nominees for director set forth in Section 11.1 of this By-law and (ii) such nomination has not been withdrawn by such stockholder on or prior to the tenth day preceding the date the Corporation first mails its notice of meeting for such meeting to stockholders. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. Votes cast shall exclude abstentions with respect to that director’s election.

11.3 Director Qualification: Submission of Questionnaire, Representation, and Agreement.

To be eligible to be a nominee for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 11.1) to the Secretary of the Corporation at the principal executive offices of the Corporation a written questionnaire with respect to the

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background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary of the Corporation upon written request), that such person (a) is not and will not become a party to (i) any agreement, arrangement, or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law; (b) is not and will not become a party to any agreement, arrangement, or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement, or indemnification in connection with service or action as a director that has not been disclosed therein; and (c) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

SECTION 12. Notice to Corporation.

Any written notice required to be delivered by a stockholder to the Corporation pursuant to Section 11.1 of this Article I or Section 2.1 of Article II of these By-Laws must be given, either by personal delivery or by registered or certified mail, postage prepaid, to the Secretary of the Corporation at the Corporation’s executive offices in the City of Chicago, State of Illinois.

ARTICLE II

Board of Directors

SECTION 1. Number and Term of Office.

The number of directors shall be eleven (11), but the number may be increased, or decreased to not less than three (3), from time to time, either by the directors by adoption of a resolution to such effect or by the stockholders by amendment of these By-Laws in accordance with Article VIII. At each annual meeting of stockholders, each director shall be elected to hold office until the next annual meeting or until his or her successor shall be elected and qualified or until his or her earlier resignation or removal.

SECTION 2. Nomination and Election.

2.1 Nomination. Only persons who are nominated in accordance with Article I, Section 11 of these By-Laws shall be eligible for election as directors.

2.2 Election. At each election of directors by stockholders, the persons who are elected in accordance with Article I, Section 11 of these By-Laws shall be the directors.

SECTION 3. Place of Meeting.

Meetings of the Board of Directors, or of any committee thereof, may be held either within or without the State of Delaware.

SECTION 4. Annual Meeting.

Each year the Board of Directors shall meet in connection with the annual meeting of stockholders for the purpose of electing officers and for the transaction of other business. No notice of such annual meeting is required. Such annual meeting may be held at any other time or place which shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or in a consent and waiver of notice thereof, signed by all the directors.

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SECTION 5. Stated Meetings.

The Board of Directors may, by resolution adopted by affirmative vote of a majority of the whole Board of Directors, from time to time appoint the time and place for holding stated meetings of the Board of Directors, if by it deemed advisable; and such stated meetings shall thereupon be held at the time and place so appointed, without the giving of any special notice with regard thereto. In case the day appointed for a stated meeting shall fall upon a legal holiday, such meeting shall be held on the next following day, not a legal holiday, at the regularly appointed hour. Except as otherwise provided in these By-Laws, any and all business may be transacted at any stated meeting.

SECTION 6. Special Meetings.

6.1 Convenors and Notice.

Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board of Directors or any two (2) directors. Notice of a special meeting of the Board of Directors, stating the place, day, and hour of the meeting, shall be given to each director in writing (by mail, wire, facsimile, or personal delivery) or orally (by telephone or in person).

6.2 Waiver of Notice.

With respect to a special meeting of the Board of Directors, a written waiver, signed by a director, or waiver by electronic transmission, shall be deemed equivalent to notice to that director. A director’s attendance at a meeting shall constitute that director’s waiver of notice of such meeting, except when the director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting was not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the waiver of notice of such meeting.

SECTION 7. Quorum and Manner of Acting.

Except as herein otherwise provided, forty percent (40%) of the total number of directors fixed by or in the manner provided in these By-Laws at the time of any stated or special meeting of the Board of Directors or, if vacancies exist on the Board of Directors, forty percent (40%) of such number of directors then in office; provided, however, that such number may not be less than one-third of the total number of directors fixed by or in the manner provided in these By-Laws, shall constitute a quorum for the transaction of business; and, except as otherwise required by statute or by the Certificate of Incorporation or any amendment thereto, or by these By-Laws, the act of a majority of the directors present at any such meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present may adjourn any meeting, from time to time, until a quorum is present. No notice of any adjourned meeting need be given.

SECTION 8. Chairman of the Board.

The Chairman of the Board shall preside, when present, at all meetings of the Board of Directors, except as otherwise provided by law.

SECTION 9. Resignations.

Any director of the Corporation may resign at any time by giving written notice or notice by electronic transmission thereof to the Secretary of the Corporation. Such resignation shall take effect at the time specified therefor or if the time is not specified, upon delivery thereof; and, unless otherwise specified with respect thereto, the acceptance of such resignation shall not be necessary to make it effective.

SECTION 10. Removal of Directors.

Any directors may be removed with or without cause by the affirmative vote of the holders of record of a majority of the outstanding shares of stock entitled to vote, at a meeting of stockholders called for that purpose; and the vacancy on the Board of Directors caused by any such removal may be filled by the stockholders at such meeting or at any subsequent meeting.

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SECTION 11. Filling of Vacancies Not Caused by Removal.

In case of any increase in the number of directors, or of any vacancy created by death or resignation, the additional director or directors may be elected or, as the case may be, the vacancy or vacancies may be filled, either (a) by the Board of Directors at any meeting, (i) if the Corporation has an Interested Stockholder as defined in Article EIGHTH of the Certificate of Incorporation, by the affirmative vote of a majority of the Continuing Directors, as defined in Article EIGHTH of the Certificate of Incorporation, or (ii) if the Corporation does not have an Interested Stockholder, by the affirmative vote of a majority of the remaining directors, though less than a quorum or (b) by the stockholders entitled to vote, either at an annual meeting or at a special meeting thereof called for that purpose, by the affirmative vote of a majority of the outstanding shares entitled to vote at such meeting.

SECTION 12. Directors’ Fees.

The Board of Directors shall have authority to determine from time to time the amount of compensation that shall be paid to its members for attendance at meetings of the Board of Directors or of any committee of the Board of Directors.

SECTION 13. Action Without a Meeting.

Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.

ARTICLE III

Board of Directors Committees

SECTION 1. Audit Committee.

In addition to any committees appointed pursuant to Section 2 of this Article, there shall be an Audit Committee, appointed annually by the Board of Directors, consisting of at least three (3) directors who are not members of management. It shall be the responsibility of the Audit Committee to review the scope and results of the annual independent audit of books and records of the Corporation and its subsidiaries and to discharge such other responsibilities as may from time to time be assigned to it by the Board of Directors. The Audit Committee shall meet at such times and places as the members deem advisable, and shall make such recommendations to the Board of Directors as they consider appropriate.

SECTION 2. Other Committees.

2.1 Committee Powers. The Board of Directors may appoint standing or temporary committees and invest such committees with such powers as it may see fit, with power to subdelegate such powers if deemed desirable by the Board of Directors; but no such committee shall have the power or authority of the Board of Directors to adopt, amend, or repeal these By-Laws or approve, adopt, or recommend to the stockholders of the Corporation any action or matter expressly required by the Certificate of Incorporation, these By-Laws or the Delaware General Corporation Law to be submitted to stockholders for approval.

2.2 Committee Members. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

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SECTION 3. Quorum and Manner of Acting.

A majority of the number of directors composing any committee of the Board of Directors, as established and fixed by resolution of the Board of Directors, shall constitute a quorum for the transaction of business at any meeting of such committee but, if less than a majority are present at a meeting, a majority of such directors present may adjourn the meeting from time to time without further notice. The act of a majority of the members of a committee present at a meeting at which a quorum is present shall be the act of such committee.

ARTICLE IV

Officers and Agents: Terms, Compensation, Removal, Vacancies

SECTION 1. Officers.

The elected officers of the Corporation shall be a Chairman of the Board of Directors (who shall be a director) and, at the discretion of the Board of Directors, a President (who shall be a director), and one or more Vice Presidents (each of whom may be assigned by the Board of Directors or the Chief Executive Officer an additional title descriptive of the functions assigned to such officer and one or more of whom may be designated Executive or Senior Vice President). The Board of Directors may also elect one or more Vice Chairmen. The Board of Directors shall also designate either the Chairman of the Board of Directors or the President as the Chief Executive Officer of the Corporation. The Board of Directors shall appoint a Controller, a Secretary, and a Treasurer. Any number of offices, whether elective or appointive, may be held by the same person. The Chief Executive Officer may, by a writing filed with the Secretary, designate titles as officers for employees and agents and appoint Assistant Secretaries and Assistant Treasurers as, from time to time, may appear to be necessary or advisable in the conduct of the affairs of the Corporation and may, in the same manner, terminate or change such titles.

SECTION 2. Term of Office.

So far as practicable, all elected officers shall be elected at the annual meeting of the Board of Directors in each year, and shall hold office until the annual meeting of the Board of Directors in the next subsequent year and until their respective successors are chosen. The Controller, Secretary, and Treasurer shall hold office at the pleasure of the Board of Directors.

SECTION 3. Salaries of Elected Officers.

The salaries paid to the elected officers of the Corporation shall be authorized or approved by the Board of Directors.

SECTION 4. Bonuses.

None of the officers, directors, or employees of the Corporation or any of its subsidiary corporations shall at any time be paid any bonus or share in the earnings or profits of the Corporation or any of its subsidiary corporations except pursuant to a plan approved by affirmative vote of two-thirds of the members of the Board of Directors.

SECTION 5. Removal of Elected and Appointed Officers.

Any elected or appointed officer may be removed at any time, either for or without cause, by affirmative vote of a majority of the whole Board of Directors, at any meeting called for the purpose.

SECTION 6. Vacancies.

If any vacancy occurs in any office, the Board of Directors may elect or appoint a successor to fill such vacancy for the remainder of the term.

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ARTICLE V

Officers’ Duties and Powers

SECTION 1. Chairman of the Board.

The Chairman of the Board of Directors shall preside, when present, at all meetings of the stockholders (except as otherwise provided by statute) and at all meetings of the Board of Directors. The Chairman shall have general power to execute bonds, deeds, and contracts in the name of the Corporation; to affix the corporate seal; to sign stock certificates; and to perform such other duties and services as shall be assigned to or required of the Chairman by the Board of Directors.

SECTION 2. President.

The President shall have general power to execute bonds, deeds, and contracts in the name of the Corporation and to affix the corporate seal; to sign stock certificates; during the absence or disability of the Chairman of the Board of Directors, to exercise the Chairman’s powers and to perform the Chairman’s duties; and to perform such other duties and services as shall be assigned to or required of the President by the Board of Directors; provided, that if the office of President is vacant, the Chairman shall exercise the duties ordinarily exercised by the President until such time as a President is elected or appointed.

SECTION 3. Chief Executive Officer.

The officer designated by the Board of Directors as the Chief Executive Officer of the Corporation shall have general and active control of its business and affairs. The Chief Executive Officer shall have general power to appoint or designate all employees and agents of the Corporation whose appointment or designation is not otherwise provided for and to fix the compensation thereof, subject to the provisions of these By-Laws; to remove or suspend any employee or agent who shall not have been elected or appointed by the Board of Directors or other body; to suspend for cause any employee, agent, or officer, other than an elected officer, pending final action by the body which shall have appointed such employee, agent, or officer; and to exercise all the powers usually pertaining to the office held by the Chief Executive Officer of a corporation.

SECTION 4. Vice Presidents and Controller.

The several Vice Presidents and the Controller shall perform all such duties and services as shall be assigned to or required of them, from time to time, by the Board of Directors or the Chief Executive Officer, respectively.

SECTION 5. Secretary.

The Secretary shall attend to the giving of notice of all meetings of stockholders and of the Board of Directors and shall keep and attest true records of all such proceedings. The Secretary shall have charge of the corporate seal and have authority to attest any and all instruments or writings to which the same may be affixed and shall keep and account for all books, documents, papers, and records of the Corporation relating to its corporate organization. The Secretary shall have authority to sign stock certificates and shall generally perform all the duties usually appertaining to the office of secretary of a corporation. In the absence of the Secretary, an Assistant Secretary or Secretary pro tempore shall perform the duties of the Secretary.

SECTION 6. Treasurer.

The Treasurer shall have the care and custody of all moneys, funds, and securities of the Corporation, and shall deposit or cause to be deposited all funds of the Corporation in accordance with directions or authorizations of the Board of Directors or the Chief Executive Officer. The Treasurer shall have power to sign stock certificates, to indorse for deposit or collection, or otherwise, all checks, drafts, notes, bills of exchange, or other commercial paper payable to the Corporation, and to give proper receipts or discharges therefor. In the absence of the Treasurer, an Assistant Treasurer shall perform the duties of the Treasurer.

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SECTION 7. Additional Powers and Duties.

In addition to the foregoing especially enumerated duties and powers, the several officers of the Corporation shall perform such other duties and exercise such further powers as may be provided in these By-Laws or as the Board of Directors may from time to time determine, or as may be assigned to them by any superior officer.

SECTION 8. Disaster Emergency Powers of Acting Officers.

If, as a result of a disaster or other state of emergency, the Chief Executive Officer is unable to perform the duties of that office, (a) the powers and duties of the Chief Executive Officer shall be performed by the employee with the highest base salary who shall be available and capable of performing such powers and duties and, if more than one such employee has the same base salary, by the employee whose surname begins with the earliest letter of the alphabet among the group of those employees with the same base salary; (b) the officer performing such duties shall continue to perform such powers and duties until the Chief Executive Officer becomes capable of performing those duties or until the Board of Directors shall have elected a new Chief Executive Officer or designated another individual as Acting Chief Executive Officer; (c) such officer shall have the power in addition to all other powers granted to the Chief Executive Officer by these By-Laws and by the Board of Directors to appoint an acting President, acting Vice President - Finance, acting Controller, acting Secretary, and acting Treasurer, if any of the persons duly elected to any such office is not, by reason of such disaster or emergency, able to perform the duties of such office, each of such acting appointees to serve in such capacities until the officer for whom the appointee is acting becomes capable of performing the duties of such office or until the Board of Directors shall have designated another individual to perform such duties or have elected another person to fill such office; (d) any such acting officer so appointed shall be entitled to exercise all powers vested by these By-Laws or the Board of Directors in the duly elected officer for whom the acting officer is acting; and (e) anyone transacting business with the Corporation may rely upon a certification by any two (2) officers of the Corporation that a specified individual has succeeded to the powers of the Chief Executive Officer and that such person has appointed other acting officers as herein provided and any person, firm, corporation, or other entity to which such certification has been delivered by such officers may continue to rely upon it until notified of a change in writing signed by two (2) officers of the Corporation.

ARTICLE VI

Stock and Transfers of Stock

SECTION 1. Stock Certificates.

The shares of the stock of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by certificate until such certificate is surrendered to the Corporation. Every holder of stock of the Corporation represented by a certificate shall be entitled to a certificate, signed by the Chairman of the Board of Directors or the President or a Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, certifying the number of shares owned by the stockholder in the Corporation. Any and all of the signatures on a certificate may be a facsimile. If any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent, or registrar at the date of issue.

SECTION 2. Transfer Agents and Registrars.

The Board of Directors may, in its discretion, appoint responsible banks or trust companies in the Borough of Manhattan, in the City of New York, State of New York, and in such other city or cities as the Board of Directors may deem advisable, from time to time, to act as transfer agents and registrars of the stock of the Corporation; and, when such appointments shall have been made, no stock certificate shall be valid until countersigned by one of such transfer agents and registered by one of such registrars.

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SECTION 3. Transfers of Stock.

Shares of stock may be transferred by delivery of the certificates therefor, accompanied either by an assignment in writing on the back of the certificates or by written power of attorney to sell, assign, and transfer the same, signed by the record holder thereof (or, with respect to uncertificated shares, by delivery of duly executed instructions or in any other manner permitted by law), but no transfer shall affect the right of the Corporation to pay any dividend upon the stock to the holder of record thereof, or to treat the holder of record as the holder in fact thereof for all purposes, and no transfer shall be valid, except between the parties thereto, until such transfer shall have been made upon the books of the Corporation.

SECTION 4. Lost Certificates.

The Board of Directors may provide for the issuance of new certificates of stock or uncertificated shares to replace certificates of stock lost, stolen, mutilated, or destroyed, or alleged to be lost, stolen, mutilated, or destroyed, upon such terms and in accordance with such procedures as the Board of Directors shall deem proper and prescribe.

ARTICLE VII

Miscellaneous

SECTION 1. Fiscal Year.

The fiscal year of the Corporation shall be the calendar year.

SECTION 2. (Repealed in its entirety by vote of the stockholders, May 5, 1975.)

SECTION 3. Signing of Negotiable Instruments.

All bills, notes, checks, or other instruments for the payment of money shall be signed or countersigned by such officer or officers and in such manner as from time to time may be prescribed by resolution (whether general or special) of the Board of Directors.

SECTION 4. Indemnification of Directors and Officers.

4.1 Right to Indemnification.

Each person who was or is made a party to or is threatened to be made a party to or is otherwise involved (including, without limitation, as a witness) in any actual or threatened action, suit, or proceeding, whether civil, criminal, administrative, or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or that, being or having been such a director or officer or an employee of the Corporation, he or she is or was serving at the request of an executive officer of the Corporation as a director, officer, employee, or agent of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as such a director, officer, employee, or agent or in any other capacity while serving as such a director, officer, employee, or agent, shall be indemnified and held harmless by the Corporation to the full extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), or by other applicable law as then in effect, against all expense, liability, and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) actually and reasonably incurred or suffered by such indemnitee in connection therewith, and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the indemnitee’s heirs, executors, and administrators; provided, however, that except as provided in Section 4.2 with respect to proceedings seeking to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part

14

thereof) was authorized or ratified by the Board of Directors. The right to indemnification conferred in this Section 4.1 shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer or former director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Section 4.1 or otherwise; and provided, further, that an advancement of expenses shall not be made if the Board of Directors makes a good faith determination that such payment would violate law or public policy.

4.2 Right of Indemnitee to Bring Suit.

If a claim under Section 4.1 is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be paid the expenses of prosecuting or defending such suit. The indemnitee shall be presumed to be entitled to indemnification under this Section 4 upon submission of a written claim (and, in an action brought to enforce a claim for an advancement of expenses, where the required undertaking has been tendered to the Corporation), and thereafter the Corporation shall have the burden of proof to overcome the presumption that the indemnitee is not so entitled. Neither the failure of the Corporation (including the Board of Directors, independent legal counsel, or the stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances, nor an actual determination by the Corporation (including the Board of Directors, independent legal counsel, or the stockholders) that the indemnitee is not entitled to indemnification shall be a defense to the suit or create a presumption that the indemnitee is not so entitled.

4.3 Nonexclusivity of Rights.

The rights to indemnification and to the advancement of expenses conferred in this Section 4 shall not be exclusive of any other right that any person may have or hereafter acquire under any statute, provisions of the Certificate of Incorporation, these By-Laws, any agreement, vote of stockholders or disinterested directors, or otherwise. Neither any amendment to or repeal of this Section 4 or of any of the procedures established by the Board of Directors pursuant to Section 4.7, nor the adoption of any provision of the Certificate of Incorporation or these By-Laws, nor, to the fullest extent permitted by law, any modification of law, shall eliminate or reduce the effect of the right or protection of any indemnitee to indemnification and to the advancement of expenses in accordance with the provisions hereof and thereof with respect to any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any acts or omissions of such indemnitee occurring prior to such amendment or repeal.

4.4 Insurance, Contracts, and Funding.

The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee, or agent of the Corporation or another corporation, partnership, joint venture, trust, or other enterprise against any expense, liability, or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability, or loss under the Delaware General Corporation Law. The Corporation may, without further stockholder approval, enter into contracts with any indemnitee in furtherance of the provisions of this Section 4 and may create a trust fund, grant a security interest, or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification as provided in this Section 4.

4.5 Persons Serving Other Entities.

Any person who is or was a director, officer, or employee of the Corporation who is or was serving (i) as a director or officer of another corporation of which a majority of the shares entitled to vote in the election of its directors is held by the Corporation or (ii) in an executive or management capacity in a partnership, joint venture, trust, or other enterprise of which the Corporation or a wholly owned subsidiary of the Corporation is a general partner or has a majority ownership shall be deemed to be so serving at the request of an executive officer of the Corporation and entitled to indemnification and advancement of expenses under Section 4.1.

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4.6 Indemnification of Employees and Agents of the Corporation.

The Corporation may, by action of the Board of Directors, authorize one or more executive officers to grant rights to advancement of expenses to employees or agents of the Corporation on such terms and conditions as such officer or officers deem appropriate under the circumstances. The Corporation may, by action of the Board of Directors, grant rights to indemnification and advancement of expenses to employees or agents or groups of employees or agents of the Corporation with the same scope and effect as the provisions of this Section 4 with respect to the indemnification and advancement of expenses of directors and officers of the Corporation; provided, however, that an undertaking shall be made by an employee or agent only if required by the Board of Directors.

4.7 Procedures for the Submission of Claims.

The Board of Directors may establish reasonable procedures for the submission of claims for indemnification pursuant to this Section 4, determination of the entitlement of any person thereto, and review of any such determination. Such procedures shall be set forth in an appendix to these By-Laws and shall be deemed for all purposes to be a part hereof.

ARTICLE VIII

Amendments

SECTION 1. Amendment of the By-Laws: General.

Except as herein otherwise expressly provided, the By-Laws of the Corporation may be altered or repealed in any particular and new By-Laws, not inconsistent with any provision of the Certificate of Incorporation or any provision of law, may be adopted, either by

A. the affirmative vote of the holders of record of a majority in number of the shares present in person or by proxy and entitled to vote at an annual meeting of stockholders or at a special meeting thereof, the notice of which special meeting shall include the form of the proposed alteration or repeal or of the proposed new By-Laws, or a summary thereof; or

B. either by

i. the affirmative vote of a majority of the whole Board of Directors at any meeting thereof, or

ii. the affirmative vote of all the directors present at any meeting at which a quorum, less than a majority, is present;

provided, in either of the latter cases, that the notice of such meeting shall include the form of the proposed alteration or repeal or of the proposed new By-Laws, or a summary thereof; and provided, further, that Article I, Section 11.2 of these By-Laws may be amended only as set forth in Section 1.A of this By-Law, except that any amendment required by law or necessary or desirable to cure an administrative or technical deficiency may be made as provided in Section 1.B of this By-Law.

SECTION 2. Amendments as to Compensation and Removal of Officers.

Notwithstanding anything contained in these By-Laws to the contrary, the affirmative vote of the holders of record of a majority of the Voting Stock, as defined in Article FOURTH of the Certificate of Incorporation, at a meeting of stockholders called for the purpose, shall be required to alter, amend, repeal, or adopt any provision inconsistent with Sections 3, 4 and 5 of Article IV of these By-Laws, notice of which meeting shall include the form of the proposed amendment, or a summary thereof.

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EX-10.I

EXHIBIT (10)(i)

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

VOUGHT AIRCRAFT INDUSTRIES, INC.

AND

BCACSC, INC.

Dated as of July 6, 2009

TABLE OF CONTENTS

ARTICLE I DEFINITIONS		1
Section 1.1	Definitions	1
Section 1.2	Construction	19
ARTICLE II PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES		20
Section 2.1	Purchase of Assets and Assumption of Certain Liabilities	20
Section 2.2	Purchased and Excluded Assets	20
Section 2.3	Assumed and Excluded Liabilities	24
ARTICLE III AGGREGATE CONSIDERATION AND CLOSING		26
Section 3.1	Closing	26
Section 3.2	Aggregate Consideration	26
Section 3.3	Estimated Aggregate Consideration Adjustment	26
Section 3.4	Aggregate Consideration Adjustment	27
Section 3.5	Allocation of Aggregate Consideration	28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER		29
Section 4.1	Organization and Qualification	29
Section 4.2	Authorization; Enforceability	30
Section 4.3	No Conflicts	30
Section 4.4	Financial Information	31
Section 4.5	Absence of Certain Developments	31
Section 4.6	Absence of Undisclosed Liabilities	32
Section 4.7	Title; Sufficiency and Condition of Assets	32
Section 4.8	Inventory	33
Section 4.9	Real Property	33
Section 4.10	Intellectual Property	34
Section 4.11	Contracts	36
Section 4.12	Litigation	38
Section 4.13	Permits; Compliance with Laws	39
Section 4.14	Environmental, Health and Safety Laws	40
Section 4.15	Tax Matters	42
Section 4.16	Employee Benefit Plans; Employment Matters	43
Section 4.17	Suppliers	45
Section 4.18	Insurance	45
Section 4.19	Certain Transactions	46
Section 4.20	Broker’s Fees	46
Section 4.21	Security Clearance	46
Section 4.22	Site Development and Incentive Agreement; FILOT Agreement	46
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER		47
Section 5.1	Organization and Qualification	47
Section 5.2	Authority; Enforceability	47
Section 5.3	No Conflicts	47

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Section 5.4	Broker’s Fees	48
Section 5.5	Litigation	48
ARTICLE VI COVENANTS		48
Section 6.1	Appropriate Actions; Further Assurances	48
Section 6.2	Conduct of Business by Seller Until Closing	49
Section 6.3	Consents and Governmental Authorizations	51
Section 6.4	Access and Information	53
Section 6.5	Exclusivity	54
Section 6.6	Public Announcements	54
Section 6.7	Transaction Expenses	54
Section 6.8	Notices of Certain Matters	55
Section 6.9	Confidentiality	55
Section 6.10	Non-Solicitation	56
Section 6.11	Intracompany Work Orders	57
Section 6.12	Purchased Intellectual Property	57
Section 6.13	Insurance	58
Section 6.14	Litigation Support	58
Section 6.15	Transfer of Governmental Authorizations	59
Section 6.16	787 Supply Agreement	59
Section 6.17	Delivery of Financial Information	59
Section 6.18	Cash Management	59
Section 6.19	Title Insurance	60
Section 6.20	Letters of Credit; Surety Bond	60
Section 6.21	Lender Waiver	60
ARTICLE VII TAX MATTERS		61
Section 7.1	Liability for Taxes	61
Section 7.2	Tax Return Filing	62
Section 7.3	Tax Contests; Audit Responsibilities	62
Section 7.4	Cooperation	63
Section 7.5	Transfer Taxes	64
ARTICLE VIII EMPLOYEE MATTERS		64
Section 8.1	Employment	64
Section 8.2	Non-Union Employees	65
Section 8.3	Union Employees	66
Section 8.4	Workers’ Compensation Claims	67
Section 8.5	WARN Act Notification	67
Section 8.6	Employee Benefits	68
Section 8.7	No Right to Employment	68
Section 8.8	Code Section 409A	68
ARTICLE IX CONDITIONS PRECEDENT		69
Section 9.1	Conditions to Obligations of Buyer	69
Section 9.2	Conditions to Obligations of Seller	71

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ARTICLE X TERMINATION		73
Section 10.1	Termination	73
Section 10.2	Effect of Termination	74
ARTICLE XI INDEMNIFICATION		74
Section 11.1	Survival	74
Section 11.2	Indemnification by Seller	75
Section 11.3	Indemnification by Buyer	80
Section 11.4	Third Party Claims	80
Section 11.5	Limitations on Indemnification Liability	82
Section 11.6	Treatment of Indemnification Payments	83
Section 11.7	Exclusive Remedy	83
ARTICLE XII GENERAL PROVISIONS		84
Section 12.1	Notices	84
Section 12.2	Severability; Specific Enforcement	85
Section 12.3	Amendments	85
Section 12.4	Assignment; Beneficiaries	86
Section 12.5	Counterparts; Facsimiles	86
Section 12.6	Descriptive Headings	86
Section 12.7	Governing Law; Forum Selection	86
Section 12.8	WAIVER OF JURY TRIAL	86
Section 12.9	Entire Agreement	87
Section 12.10	Waivers	87
Section 12.11	NO ADDITIONAL REPRESENTATION OR WARRANTIES	87
Section 12.12	Disclosure Schedules	87
Section 12.13	No Recourse	88

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EXHIBITS

	Form of Termination and Mutual Release Agreement
	Form of Bill of Sale, Assignment and Assumption Agreement
	Form of Intellectual Property Assignment
	Form of Intellectual Property License Agreement
	Form of Engineering Services Agreement
Exhibit F	Form of Transition Services Agreement
Exhibit G	Form of SOW Supply Agreement
Exhibit H	Form of Facilities Bill of Sale, Assignment and Assumption Agreement
Exhibit I	Form of North Charleston Sublease Assumption
Exhibit J	Form of GA Sublease Assumption
Exhibit K	Form of SOW Side Letter
Exhibit L	Form of 747 Amendment
Exhibit M	Form of 767 Amendment
Exhibit N	Form of 777 Amendment
Exhibit O	Form of SOW Warranty Agreement
Exhibit P	Form of SOW Administrative Agreement
Appendix A	Adjusted Net Investment Worksheet

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DISCLOSURE SCHEDULES

Schedule 1.1A	Background Inventions of Seller
Schedule 1.1B	Background Proprietary Information of Seller
Schedule 1.1C	Outstanding Encumbrances
Schedule 1.1D	Permitted Encumbrances
Schedule 1.1E	Retained Employees
Schedule 2.2(a)(i)	Purchased Contracts
Schedule 2.2(a)(ii)	Tangible Personal Property
Schedule 2.2(b)(viii)	Governmental Authorizations
Schedule 2.2(b)(xvii)	Certain Real Property
Schedule 2.2(b)(xix)	Excluded Tangible Property
Schedule 2.3(a)(ii)	Assumed Employee Liabilities
Schedule 4.3(a)	Required Consents
Schedule 4.3(b)	No Conflicts
Schedule 4.4	Financial Information
Schedule 4.5	Absence of Certain Developments
Schedule 4.6	Undisclosed Liabilities
Schedule 4.7	Title, Sufficiency and Condition of Assets
Schedule 4.8	Inventory
Schedule 4.10(a)	Intellectual Property
Schedule 4.10(b)	Inbound License Agreements
Schedule 4.10(c)	Infringement
Schedule 4.10(d)	Confidentiality and Assignment Agreements
Schedule 4.10(e)	Software
Schedule 4.10(f)	Information Technology Systems
Schedule 4.11(a)(i)	Material Contracts
Schedule 4.11(a)(ii)	Material Contracts
Schedule 4.11(a)(iii)	Material Contracts
Schedule 4.11(a)(iv)	Material Contracts
Schedule 4.11(a)(v)	Material Contracts
Schedule 4.11(a)(vi)	Material Contracts
Schedule 4.11(a)(vii)	Material Contracts
Schedule 4.11(a)(viii)	Material Contracts
Schedule 4.11(a)(ix)	Material Contracts
Schedule 4.11(a)(x)	Material Contracts
Schedule 4.11(a)(xi)	Material Contracts
Schedule 4.11(a)(xii)	Material Contracts
Schedule 4.11(b)	Material Contracts
Schedule 4.11(c)	Material Contracts
Schedule 4.11(e)	Material Contracts
Schedule 4.12	Litigation
Schedule 4.13	Material Governmental Authorizations
Schedule 4.14(a)	On-Site Waste Disposal Activities and Operations; On-Site Sale, Treatment, Processing, Recycling or Disposal of Hazardous Waste
Schedule 4.14(b)	Underground Storage Tanks, Sumps or Wells

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Schedule 4.14(c)	Compliance with Environmental Laws
Schedule 4.14(d)	Environmental Permits and Environmental Disclosure Reports
Schedule 4.14(e)	Release or Threatened Release of Hazardous Material
Schedule 4.14(f)	Hazardous Material Emanating from Property or Purchased Assets
Schedule 4.14(g)	Environmental Claims
Schedule 4.14(h)	Environmental Restrictions on the Use of Property
Schedule 4.15	Tax Matters
Schedule 4.15(g)	Partnership Interests
Schedule 4.16(a)	Employee Benefit Plans
Schedule 4.16(c)	Retiree Medical or Other Welfare Benefits
Schedule 4.16(d)	Pension and Multiemployer Plans
Schedule 4.16(f)	Employees on Leave
Schedule 4.16(h)	Employee Controversies
Schedule 4.16(i)	Collective Bargaining Agreements
Schedule 4.16(m)	Participating Employees
Schedule 4.17	Suppliers
Schedule 4.18	Insurance
Schedule 4.19	Affiliate Transactions
Schedule 4.20	Broker’s Fees
Schedule 4.21	Security Clearances
Schedule 5.3	No Conflicts
Schedule 5.4	Brokers’ Fees
Schedule 6.2(a)	Conduct of Business
Schedule 6.2(b)(i)	Exceptions to Conduct of Business
Schedule 6.2(b)(ii)	Exceptions to Conduct of Business
Schedule 6.2(b)(iii)	Exceptions to Conduct of Business
Schedule 6.2(b)(iv)	Exceptions to Conduct of Business
Schedule 6.2(b)(v)	Exceptions to Conduct of Business
Schedule 6.2(b)(vi)	Exceptions to Conduct of Business
Schedule 6.2(b)(vii)	Exceptions to Conduct of Business
Schedule 6.2(b)(viii)	Exceptions to Conduct of Business
Schedule 6.2(b)(ix)	Exceptions to Conduct of Business
Schedule 6.2(b)(x)	Exceptions to Conduct of Business
Schedule 6.2(b)(xi)	Exceptions to Conduct of Business
Schedule 6.2(b)(xii)	Exceptions to Conduct of Business
Schedule 6.10(c)(i)	Seller Engineering Employees
Schedule 6.10(c)(ii)	Excluded Engineering Employees
Schedule 6.20	Guarantees
Schedule 7.5	Transfer Taxes
Schedule 8.1(a)(i)	Employees of the Business
Schedule 8.1(a)(ii)	Seller Employees Who Are No Longer Employees
Schedule 8.4	Open Workers’ Compensation Claims
Schedule 11.4(e)	Settlements

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT, dated as of July 6, 2009 (this “Agreement”), is entered into by and between Vought Aircraft Industries, Inc., a Delaware corporation (“Seller”), and BCACSC, Inc., a Delaware corporation (“Buyer”).

WHEREAS, Seller is engaged in the business (the “Business”) of designing (including initial design, design related to build, certification, and testing), manufacturing (including procurement, fabrication, and assembly (including structures assembly, systems assembly, and integration)), and supporting aft fuselage sections 47 and 48 and the aft 48 (in each case, including spare parts) for the 787 program (the “787 Program”) of The Boeing Company, a Delaware corporation and the parent corporation of Buyer (“Boeing”), pursuant to the General Terms Agreement, BCA-65572-0026, and Special Business Provisions, MS-65572-0030, between Seller and Boeing, dated as of July 7, 2005, as amended by Amendment No. 1 dated as of November 15, 2006, as further amended by Amendment No. 2 dated as of November 30, 2006, as further amended by Amendment No. 3 dated as of June 24, 2009, as further amended by Amendment No. 4 dated as of November 13, 2007, as further amended by Amendment No. 5 dated as of July 1, 2008, as further amended by Amendment No. 8 dated as of April 17, 2009, and as otherwise further amended from time to time in accordance with its terms (the “787 Supply Agreement”); and

WHEREAS, this Agreement contemplates a transaction in which (i) Buyer will acquire all of the business, assets and operations used in the Business (other than the Excluded Assets, as specified herein), and will assume the liabilities of the Business (other than the Excluded Liabilities, as specified herein), all on the terms and subject to the conditions set forth in this Agreement, and (ii) pursuant to and on the terms set forth in the Termination and Mutual Release Agreement, each of Boeing and Seller, on behalf of themselves and each of their respective Subsidiaries, will terminate the 787 Supply Agreement and release Claims and resolve any and all rights and obligations owed to each other related to the 787 Supply Agreement as described therein.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the value, receipt and sufficiency of which are acknowledged, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. For purposes of this Agreement, the following terms have the meanings set forth below:

“401(k) Plan” is defined in Section 4.16(b) of this Agreement.

“747 Amendment” is defined in Section 9.1(e)(xiii) of this Agreement.

“767 Amendment” is defined in Section 9.1(e)(xiv) of this Agreement.

“777 Amendment” is defined in Section 9.1(e)(xv) of this Agreement.

“787 Design Build Guide” is defined in the definition of Required by Boeing in Section 1.1 of this Agreement.

“787 Program” is defined in the Recitals to this Agreement.

“787 Supply Agreement” is defined in the Recitals to this Agreement.

“Absent Employees” is defined in Section 8.2(b) of this Agreement.

“Accounts Receivable” is defined in Section 2.2(a)(v) of this Agreement.

“Acquisition Proposal” is defined in Section 6.5 of this Agreement.

“Additional Restricted Employees” means all Persons employed by the Business after the Closing Date (other than any Transferred Employees).

“Adjusted Net Investment Amount” means, as of any date, (i)(A) the aggregate amount (without duplication) of all investments made and expenses incurred or accrued by Seller and its Subsidiaries in connection with the 787 Program at any time as of such date, minus (B) the sum of, without duplication, (u) the aggregate amount of payments and advances made on or prior to such date by Buyer or its Affiliates to Seller pursuant to the 787 Supply Agreement, (v) grants made to Seller by the State of South Carolina under the Site Development and Incentive Agreement on or prior to such date, (w) the accounts payable of Seller in respect of amounts referred to above in clause (i)(A) that constitute Assumed Liabilities as of such date, (x) to the extent included in the amount in clause (i)(A) above, the Milledgeville direct labor and Milledgeville capex line items on Appendix A, (y) to the extent included in the amount in clause (i)(A) above, the Dallas IT equipment line item on Appendix A, and (z) to the extent included in the amount in clause (i)(A) above, the corporate G&A line item on Appendix A through March 29, 2009, in the case of each of the foregoing clauses, determined and calculated in accordance with the calculation of the Adjusted Net Investment Amount estimated as of March 29, 2009, set forth on Appendix A, and determined in accordance with the Agreed Methodology, plus (ii) fifty percent (50%) of the amount of the G&A Costs properly allocable to the Business; provided, that in no event shall the amount determined pursuant to the foregoing clause (ii) exceed the G&A Cost Cap.

“Affiliate” means with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with such Person or entity.

“Aggregate Consideration” is defined in Section 3.2 of this Agreement.

“Agreed Methodology” means the practices, policies and methodologies set forth on Annex I to Appendix A (including methodologies, consistently applied, in allocating general and administrative and other indirect costs) that were used by Seller in determining and calculating the estimated amount of the Adjusted Net Investment Amount as of March 29, 2009, which estimate is reflected on Appendix A (it being acknowledged that (i) the purpose of the

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adjustment to the Closing Payment Amount pursuant to Section 3.4 is to ensure an accurate calculation of the Closing Adjusted Net Investment Amount, consistent with the calculation of the estimated Adjusted Net Investment Amount as of March 29, 2009, as reflected on Appendix A, rather than to change or challenge the practices, policies or methodologies set forth on Annex I to
Appendix A, (ii) for purposes of calculating the Closing Adjusted Net Investment Amount, indirect costs of the 787 Program for the period between March 29, 2009 and the Closing will be limited to the categories of indirect costs listed in or reflected on Appendix A, which shall be allocated using the same practices, policies and methodologies set forth on Annex I to Appendix A, and (iii) for the avoidance of doubt, direct costs, expenses and investments reflected in the Adjusted Net Investment Amount shall be limited to such costs, expenses and investments made or incurred by Seller for the 787 Program).

“Agreement” is defined in the Preamble to this Agreement.

“Allocation Statement” is defined in Section 3.5(a) of this Agreement.

“Anti-Bribery Laws” is defined in Section 4.13(c) of this Agreement.

“Apportioned Tax” means any Tax relating to any Purchased Asset (including any additional Tax determined subsequent to the Closing Date) that is due or becomes due without acceleration for any Straddle Period; provided, however, that any Tax that is an Assumed Liability will not be an Apportioned Tax.

“Apportioned Taxes Claim” is defined in Section 7.3(c) of this Agreement.

“Arbitrator” is defined in Section 11.5(b) of this Agreement.

“Assets” means all assets, properties and rights of every kind (whether tangible or intangible), including real and personal property.

“Assumed Liabilities” is defined in Section 2.3(a) of this Agreement.

“Background Invention(s)” is defined in the 787 Supply Agreement and, with respect to Seller, includes those inventions listed on Schedule 1.1A.

“Background Proprietary Information” is defined in the 787 Supply Agreement and, with respect to Seller, includes that proprietary information listed on Schedule 1.1B.

“Base Adjusted Net Investment Amount” is Four Hundred Seventy-Six Million Dollars ($476,000,000.00).

“BCA” is defined in Section 6.10(c) of this Agreement.

“Bill of Sale, Assignment and Assumption Agreement” is defined in Section 9.1(e)(ii) of this Agreement.

“BIS” is defined in Section 6.3(c) of this Agreement.

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“Boeing” is defined in the Recitals to this Agreement.

“Boeing Guaranty” means that certain Guaranty, executed as of the date hereof, by Boeing in favor of and for the benefit of Seller.

“Business” is defined in the Recitals to this Agreement.

“Business Books and Records” is defined in Section 2.2(a)(xi) of this Agreement.

“Business Day” means any day that is not a Saturday, Sunday or any other day on which banks are required or authorized by Law to be closed in New York City, New York.

“Buyer” is defined in the Preamble to this Agreement.

“Buyer Cure Period” is defined in Section 10.1(b)(ii) of this Agreement.

“Buyer 401(k) Plan” is defined in Section 8.6(b) of this Agreement.

“Buyer Indemnified Person” is defined in Section 11.2(a) of this Agreement.

“CERCLA” is defined in the definition of Environmental Laws in Section 1.1 of this Agreement.

“Chosen Courts” is defined in Section 12.7 of this Agreement.

“Claims” means any and all claims (including any cross-claim or counterclaim), causes of action, suits, charges, complaints, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding) and disputes, whenever or however arising.

“Closing” is defined in Section 3.1 of this Agreement.

“Closing Adjusted Net Investment Amount” is defined in Section 3.4(a) of this Agreement.

“Closing Date” is defined in Section 3.1 of this Agreement.

“Closing Payment Amount” is defined in Section 3.2 of this Agreement.

“COBRA” is defined in Section 4.16(c) of this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended, and all Laws promulgated pursuant thereto or in connection therewith.

“Collective Bargaining Agreement” means any collective bargaining agreement or labor agreement with the Union representing Transferred Employees, including any amendments, supplements, letters and memoranda of understanding.

“Confidential Information” is defined in Section 6.9(a) of this Agreement.

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“Confidentiality and Assignment Agreements” is defined in Section 4.10(d) of this Agreement.

“Consent” means any approval, consent, permission, waiver or authorization from any Person other than a Governmental Entity.

“Contract” means any contract, agreement, commitment or undertaking (whether written or oral).

“Control” (including the terms “Controlled by” and “under common Control with”) means, as used with respect to any Person, possession of power or authority (directly or indirectly or as a trustee or executor) to direct or cause the direction of management or policies of such Person (whether through ownership of voting securities, as trustee or executor, by Contract or otherwise).

“Copyrights” means any and all of the following, and all rights arising out of or associated therewith, in each case, in any jurisdiction in the world: original works of authorship (whether copyrightable or not); copyrights, including unregistered and common law rights therein; moral or economic rights of authors; copyright registrations; and applications to register copyrights.

“Covered Product” means any product that is the same type of product as a Product that was designed, manufactured or sold by Seller or a supplier of Seller pursuant to or in contemplation of the 787 Supply Agreement prior to the Closing (a “Pre-Closing Product”) including (y) a product that was designed by Seller or a supplier of Seller prior to the Closing pursuant to or in contemplation of the 787 Supply Agreement and manufactured or sold after the Closing, and (z) a product manufactured or sold after the Closing that uses a method or process of design or manufacture that was created prior to the Closing by Seller or a supplier of Seller pursuant to or in contemplation of the 787 Supply Agreement for the same type of product as a Pre-Closing Product, in each case regardless of whether such product or type of product had been manufactured or sold prior to the Closing; provided, however, that (i) any product designed prior to the Closing will not constitute a Covered Product following any change to the specifications or design of such product made following the Closing to the extent (A) prior to the Closing, the manufacture, sale or use of such product did not result in, or would not, if such product had been manufactured, sold or used at such time, have resulted in, the infringement or unlawful use of any Intellectual Property right and (B) the manufacture, sale or use of such product following such change results in the infringement or unlawful use of any Intellectual Property right and such infringement or unlawful use would not have occurred but for such change, and (ii) any product manufactured prior to the Closing will not, following any change made following the Closing to a method or process used in connection with the manufacture of such product prior to the Closing, constitute a Covered Product to the extent (A) prior to the Closing, the manufacture, sale or use of such product did not result in, or would not, if such product had been manufactured, sold or used at such time, have resulted in, the infringement or unlawful use of any Intellectual Property right and (B) the manufacture, sale or use of such product following such change results in the infringement or unlawful use of any Intellectual Property right and such infringement or unlawful use would not have occurred but for such change. For the purpose of the foregoing, a product is the “same type of product as a Pre-Closing Product” if

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such product is (i) manufactured, used and sold as, on or in connection with a Program Aircraft and (ii) such product and any Pre-Closing Product have the same specifications, design, form, fit and function; provided, however, that such product shall continue to constitute the “same type of product as a Pre-Closing Product” notwithstanding any post-Closing change to the specifications, design, form, fit or function or method or process of manufacturing such product unless (A) prior to the Closing, the manufacture, sale or use of such product did not result in, or would not, if such product had been manufactured, sold or used at such time, have resulted in, the infringement or unlawful use of any Intellectual Property right and (B) the manufacture, sale or use of such product following such change results in the infringement or unlawful use of any Intellectual Property right and such infringement or unlawful use would not have occurred but for such change.

“DOJ” means the United States Department of Justice.

“Dollars” and the symbol “$” each means the lawful currency of the United States.

“Employee Benefit Plans” is defined in Section 4.16(a) of this Agreement.

“Employees” means those individuals employed by Seller in North Charleston, South Carolina (as reflected in Seller’s payroll system for the North Charleston Facility) who are employed primarily in connection with the Business as of the Closing Date and are set forth on Schedule 8.1(a)(i) (as updated pursuant to this Agreement), including individuals stationed with or assigned to subcontractors of the Business (including field service, surveillance and quality control personnel) or assigned to Buyer’s manufacturing facilities, other than the Retained Employees. Employees shall also include the employees of Seller set forth on Schedule 6.10(c)(ii) and any employees hired by Seller in the normal course of business, in compliance with this Agreement, to serve in North Charleston, South Carolina primarily in connection with the Business during the period beginning on the date hereof and ending on the Closing Date.

“Encumbrance” means any mortgage, lien, pledge, encumbrance (including, in the case of real property, easements, rights of way, covenants, leases, licenses, zoning and setback requirements and other variances), security interest, deed of trust, option, encroachment, order, decree, judgment lien, charge or other third-party rights of any kind, including in the case of Intellectual Property, license rights or ownership interests other than those arising pursuant to a Purchased Contract.

“Engineering Services Agreement” is defined in Section 9.1(e)(v) of this Agreement.

“Environmental Claim” means any Claim, or any written notice of violation, citation or other similar written communication alleging a violation of or Liability under any Environmental Law, any government-mandated investigative, enforcement, cleanup, removal, containment, remedial, or other governmental or regulatory action or proceeding threatened in writing, instituted or completed pursuant to any applicable Environmental Law, against Seller and/or the Business with respect to any condition, use or activity of the Purchased Assets or at the North Charleston Real Property and/or the North Charleston Facility and any Claim, or any written allegation, demand, suit, tender, recovery or contribution action threatened or made by any person against Seller or against or with respect to the Purchased Assets, including any condition,

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use or activity of the Purchased Assets or at the North Charleston Real Property and/or the North Charleston Facility relating to Losses resulting from or in any way arising in connection with any Hazardous Material or breach of Environmental Law during Seller’s use or occupancy of the North Charleston Real Property and/or the North Charleston Facility.

“Environmental Insurance Policy” is defined in Section 6.13(c) of this Agreement.

“Environmental Laws” means any Law or Order that pertains to pollution control or natural resource or environmental protection, including Laws and Orders relating to (i) the manufacture, processing, use, distribution, treatment, storage, disposal, generation or transportation of Hazardous Materials; (ii) air, surface, ground, water or noise pollution; (iii) any Release; (iv) the protection of wildlife, endangered species, wetlands or other natural resources; and (v) the protection of the health and safety of employees; including the following statutes and regulations adopted thereunder: (A) the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq. (“CERCLA”); (B) the Solid Waste Disposal Act, as amended by the Resource Conservation Recovery Act and the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. § 6901 et seq. (“RCRA”); (C) the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. § 1251 et seq.; (D) the Clean Air Act, as amended, 42 U.S.C. § 7401 et seq.; (E) the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. (“TSCA”); (F) the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; (G) the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq. (“HMTA”); (H) the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; (I) the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; and (J) the Occupational Safety and Health Act, 19 U.S.C. § 6251 et seq.

“Environmental Permit” is defined in Section 4.14(d) of this Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and all Laws promulgated pursuant thereto or in connection therewith.

“ERISA Affiliate” means any trade or business that is treated as a single employer with Seller under Sections 414(b), (c) or (m) of the Code or that must be aggregated with Seller under Section 414(o) of the Code.

“Estimated Adjusted Net Investment Amount” is defined in Section 3.3(a) of this Agreement.

“Estimated Preliminary Statement” is defined in Section 3.3(a) of this Agreement.

“Excluded Assets” is defined in Section 2.2(b) of this Agreement.

“Excluded Contracts” is defined in Section 2.2(b)(vi) of this Agreement.

“Excluded Liabilities” is defined in Section 2.3(b) of this Agreement.

“Facilities” means all plants, offices, manufacturing facilities, stores, warehouses, administration buildings and related facilities and fixtures owned or leased on the date hereof (and those owned or leased after the date hereof but on or before the Closing) by Seller and

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located on the North Charleston Real Property; provided that the term “Facilities” shall not include any plants, offices, manufacturing facilities, stores, warehouses, administration buildings and related facilities and fixtures located on the Pad Premises, as such term is defined in the GA Sublease and more particularly described in Exhibit B of the GA Sublease.

“Facilities Bill of Sale, Assignment and Assumption Agreement” is defined in Section 9.1(e)(ix) of this Agreement.

“FILOT Agreement” means that certain Fee Agreement by and among Charleston County, South Carolina, Seller, GA and Boeing, which was authorized by Ordinance of Charleston County, South Carolina passed and approved as of December 19, 2006.

“Final Statement” is defined in Section 3.4(c) of this Agreement.

“Financial Information” is defined in Section 4.4 of this Agreement.

“Force Majeure Event” is defined in the definition of Material Adverse Effect in Section 1.1 of this Agreement.

“FTC” means the United States Federal Trade Commission.

“G&A Cost Cap” means two million five hundred thousand Dollars ($2,500,000.00) plus an amount equal to (i) two million five hundred thousand Dollars ($2,500,000.00) multiplied by (ii) the number of days elapsed between June 28, 2009 and the Closing Date, divided by 92.

“G&A Costs” means the corporate general and administrative costs and costs associated with shared services incurred by Seller and/or its Subsidiaries during the period beginning on (and including) March 30, 2009 and ending on (and including) the Closing Date and allocated to the Business conducted at the North Charleston Facility, in each case in accordance with the Agreed Methodology.

“GA” means Global Aeronautica, LLC, a Delaware limited liability company.

“GAAP” means United States generally accepted accounting principles, consistently applied.

“GA Sublease” means that certain Pad Sublease by and between Seller and GA, effective as of August 25, 2006, pursuant to which GA subleases a portion of the North Charleston Real Property from Seller, as more specifically defined and set forth therein.

“GA Sublease Assumption” is defined in Section 9.1(e)(xi) of this Agreement.

“Governmental Authorization” means any permit, consent, license, certificate, franchise, permission, variance, clearance, registration, qualification, authorization or approval issued, granted, given or otherwise made available by or under the authority of any Governmental Entity or pursuant to any Law, including any Environmental Permit.

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“Governmental Entity” means the United States, any state or other political subdivision thereof and any other foreign or domestic Person exercising or having the authority to exercise executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of the United States or any foreign Person, any state of the United States or any other political subdivision of any of the foregoing.

“Ground Lease” means that certain Charleston International Airport Ground Lease Agreement by and between the Charleston County Aviation Authority, as lessor, and SCPR, as lessee, dated as of August 25, 2006.

“Guarantees” is defined in Section 6.20 of this Agreement.

“Hazardous Material” means each and every element, compound, chemical mixture, contaminant, pollutant, material or other substance that is defined, determined or identified as hazardous or toxic under any Environmental Law or the Release of which is prohibited or regulated under any Environmental Law, including (i) any “hazardous substance,” “extremely hazardous substance” or “pollutant or contaminant” as those terms are defined in CERCLA; (ii) any “hazardous waste” as that term is defined in RCRA; (iii) any “hazardous material” as that term is defined in the HMTA; (iv) any “chemical substance or mixture” as that term is defined in TSCA; (v) petroleum and petroleum products and byproducts; (vi) asbestos; and (vii) radioactive or explosive materials.

“Hire Date” is defined in Section 8.2 of this Agreement.

“HMTA” is defined in the definition of Environmental Laws in Section 1.1 of this Agreement.

“Inbound License Agreement” means each Purchased Contract (other than a Material Contract) pursuant to which Seller receives a license to Intellectual Property.

“Income Tax” or “Income Taxes” means any income, alternative minimum, accumulated earnings, personal holding company, franchise, capital, single business, net worth, gross receipts or similar taxes, including any estimated tax, interest, penalties or additions to tax or additional amounts in respect to the foregoing, including any transferee or secondary liability for any such tax and any Liability assumed by agreement or arising as a result of being or ceasing to be a member of any affiliated group, or being included or required to be included in any Income Tax Return relating thereto.

“Income Tax Return” means, with respect to any Income Tax, any information return for such Income Tax, and any return, report, statement, declaration, claim for refund or document filed or required to be filed under the Law for such Income Tax.

“Indebtedness” means, with respect to a Person, all Liabilities and obligations of such Person (i) for borrowed money (including all accrued and unpaid interest and all prepayment penalties or premiums in respect thereof) or issued in substitution for or exchange of indebtedness for borrowed money; (ii) for any indebtedness evidenced by notes, debentures, bonds or other similar instruments (including all accrued and unpaid interest and all prepayment

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penalties or premiums in respect thereof); (iii) under any conditional sale, title retention or similar arrangement, or with respect to any deferred purchase price of any Assets or services (but excluding trade accounts payable arising in the ordinary course of business consistent with past practice); (iv) to reimburse any obligor on any letter of credit or similar credit transaction securing obligations of any Person, to the extent such letter of credit or similar obligation has been drawn; (v) to pay rent or other amounts under any lease of real or personal property that is required to be classified or accounted for as a capital lease in accordance with GAAP; (vi) constituting a guarantee of any Liabilities or obligations of any other Persons of the type described in the foregoing clauses (i) through (v); and (vii) any liability or obligation of the type described in the foregoing clauses (i) through (v) of any other Person, secured by an Encumbrance on any of such Person’s Assets.

“Indemnified Persons” is defined in Section 11.3(a) of this Agreement.

“Indemnifying Person” is defined in Section 11.4(a) of this Agreement.

“Initial Restricted Employees” means the Transferred Employees.

“Intellectual Property” means any and all of the following, and all rights arising out of or associated therewith, in each case in any jurisdiction in the world: (i) Patents; (ii) Copyrights, (iii) Trademarks; (iv) Trade Secrets; (v) Software; (vi) rights to use the names, likenesses and other personal characteristics of any individual, including rights of privacy and publicity; and (vii) all other intellectual property or industrial property rights.

“Intellectual Property Assignments” is defined in Section 9.1(e)(iii) of this Agreement.

“Intellectual Property License Agreement” is defined in Section 9.1(e)(iv) of this Agreement.

“Interim Financial Information” is defined in Section 6.17 of this Agreement.

“Inventory” is defined in Section 2.2(a)(iii) of this Agreement.

“IRS” means the U.S. Internal Revenue Service.

“Joint SBP Activity Invention(s)” is defined in the 787 Supply Agreement.

“Joint SBP Activity Proprietary Information” is defined in the 787 Supply Agreement.

“Knowledge” means, with respect to Seller, the actual knowledge of (i) Kevin McGlinchey, Keith Howe, Jeff McRae, Ron Muckley, Susie Kent, Joy Romero, Tom Mann, Casey Litaker and Ron Vuz for all purposes hereunder; (ii) for purposes of Section 4.10 only, Bryan Tutor, Seturah Foxx and Tom Stubbins; (iii) for purposes of Section 4.9(c)(iii) only, Jerry Edmondson; (iv) for purposes of Sections 4.9 and 4.11 only, Randy Smith, (v) for purposes of Section 4.11 only, Pat Russell, George Briggs, Cliff Collier and Tom Stubbins; (vi) for purposes of Section 4.12 only, Seturah Foxx; (vii) for purposes of Section 4.13 only, Jerry Edmondson, (viii) for purposes of Section 4.14 only, Joanne Romano; (ix) for purposes of Section 4.15 only, Bob Roofner; (x) for purposes of Sections 2.3(a)(ii), 2.3(b)(ii) and 4.16 only, Cliff Collier and

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Seturah Foxx; and (xi) for purposes of Section 4.18 only, Doug McLean, and, with respect to Buyer, the actual knowledge of Bryan Gerard, Henry Knies, Anthony Fisher, Joseph Lower and Edward Neveril.

“Laws” means all foreign, federal, state, regional, county and local constitutions, statutes, laws (including common laws), ordinances, regulations, rules, resolutions, Orders, tariffs, writs, injunctions, awards (including awards of any arbitrator), judgments and decrees of any and all Governmental Entities and the terms of any Governmental Authorizations.

“Legal Proceeding” means any Claim commenced, brought, conducted or heard by or before, any court or other Governmental Entity or any arbitrator or arbitration panel.

“Lender Waiver” is defined in Section 6.21 of this Agreement.

“Liability” means any and all debts, liabilities, guarantees, assurances, commitments and obligations, whether asserted or unasserted, matured or unmatured, liquidated or unliquidated, known or unknown, due or to become due.

“Licensed Intellectual Property” means Intellectual Property licensed to Seller pursuant to a Purchased Contract.

“LOI” means that certain letter of intent dated as of April 17, 2009 by and between Seller and Boeing.

“Losses” means any and all losses, Liabilities, Claims, damages (including consequential, special, punitive, exemplary and incidental damages), penalties, fines, amounts paid in settlement, taxes, liens, costs and expenses (including interest, penalties, reasonable attorneys’ and accountants’ fees and disbursements and all amounts paid in investigation, defense or settlement of any of the foregoing) or diminution of value, of any nature whatsoever, including any of the foregoing or portion thereof that may occur after the Closing but relate to the period prior to the Closing.

“Material Adverse Effect” means any effect that (i) is, or is reasonably likely to be, materially adverse to the operations, properties, assets, Liabilities, financial condition or results of operations of the Business, taken as a whole, or (ii) would be reasonably expected to materially impede or delay Seller’s ability to consummate the transactions contemplated by this Agreement in accordance with its terms and applicable Laws or otherwise to perform its obligations hereunder; provided that, in the case of each of clause (i) and (ii) above, any effect to the extent resulting from any of the following shall not be taken into account in determining whether any Material Adverse Effect has occurred or whether a Material Adverse Effect would be reasonably likely to occur: (A) changes in economic, business, financial or political conditions that affect the industries in which the Business operates so long as such changes do not have a materially disproportionate effect on the Business, (B) acts of terrorism or war, (C) any adverse effect, event, occurrence, development, circumstance, change or condition to the extent relating to or arising out of (I) the design, manufacture, production, sale, operation and support of the 787 aircraft program by any Person other than Seller, (II) any actual or alleged breach of the 787 Supply Agreement or any Seller Supply Agreement (other than those arising from bad faith or willful misconduct of Seller) or (III) any customer, supplier, contractor or

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sub-contractor (in each case, other than Seller) or supplier contract, subcontract agreement or raw materials relating to the 787 aircraft program or (D) any Excluded Liability to the extent not impairing the Business from and after the Closing. In connection with determining whether any Material Adverse Effect has occurred or would be reasonably likely to occur as a result (in whole or in part) of Seller or the Purchased Assets suffering a Force Majeure Event, the effects resulting from such Force Majeure Event shall be taken into account notwithstanding the limitations set forth in clause (C) above. For purposes of this definition, “Force Majeure Event” means any act of God, flood, fire, hurricane or other casualty, earthquake, or any other events or circumstances not within the reasonable control of Seller that are substantially similar to any of the foregoing (other than any matter described in clause (A) and (B)), in each case occurring after the date of this Agreement.

“Material Contract” is defined in Section 4.11(a) of this Agreement.

“Minimum Terms and Conditions of Employment” is defined in Section 8.2(a) of this Agreement.

“Multiemployer Plan” is defined in Section 4.16(d) of this Agreement.

“Neutral Auditor” is defined in Section 3.4(c) of this Agreement.

“New Seller Engineering Employees” means the engineering employees who are first employed by Seller or any of its Subsidiaries in Seller’s Dallas, Texas facilities after the Closing Date (other than Seller Engineering Employees).

“Non-Assigned Contract” is defined in Section 6.3(b) of this Agreement.

“Non-Disclosure Agreement” means that certain Non-Disclosure Agreement, dated as of March 17, 2009, by and between Seller and Boeing.

“North Charleston Facility” means the Facilities in North Charleston, South Carolina.

“North Charleston Real Property” means the parcel of real property which is subject to the North Charleston Sublease.

“North Charleston Sublease” means that certain Ground Sublease by and between Seller and South Carolina Public Railways (“SCPR”), dated as of August 25, 2006, pursuant to which Seller subleases the parcel of real property on which the North Charleston Facility is located.

“North Charleston Sublease Assumption” is defined in Section 9.1(e)(x) of this Agreement.

“Objection Notice” is defined in Section 3.4(b) of this Agreement.

“Offer” is defined in Section 8.1(a) of this Agreement.

“Offer Consideration Period” is defined in Section 8.2(a) of this Agreement.

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“Open Source Software” means Software that is “open source” or “copyleft” as those terms are commonly understood in the Software industry, including any Software that is: (i) distributed pursuant to a license or other agreement that requires licensees to disclose or otherwise make available the source code for any software incorporating or using such licensed software or developed using such licensed software, or to distribute or make available such software on terms specified in such license or agreement; (ii) subject to the GNU General Public License (GPL) or the GNU Lesser General Public License (LGPL) (in each case any version thereof) or any license approved by the Open Source Initiative (as of the date hereof set forth at http://opensource.org/licenses/index.html); or (iii) listed in the Free Software Directory maintained by the Free Software Foundation (in cooperation with the United Nations Education, Scientific and Cultural Organization (UNESCO)) (as of the date hereof set forth at http://directory.fsf.org/).

“Order” means any award, final decision, injunction, judgment, order, decree, ruling or verdict entered, issued, made or rendered by any court, administrative agency or other Governmental Entity, or by any arbitrator or arbitration panel.

“Outstanding Encumbrances” means those Encumbrances identified on Schedule 1.1C.

“Party” means, individually, either of Buyer or Seller, and “Parties” means all of the foregoing collectively.

“Patents” means any and all of the following, and all rights arising out of or associated therewith, in each case, in any jurisdiction in the world: patents and patent applications (including reissues, re-examinations, divisions, renewals, extensions, provisionals, continuations and continuations-in-part); inventions (whether or not patentable and whether or not reduced to practice); invention disclosures; inventor’s certificates; moral or economic rights of inventors; industrial designs; and all registrations and applications thereof.

“Pay-off Amount” is defined in Section 9.1(d) of this Agreement.

“Pay-off Letter” is defined in Section 9.1(d) of this Agreement.

“Permitted Encumbrance” means (i) Encumbrances identified on Schedule 1.1D; (ii) warehouse, mechanics’, materialmen’s and similar liens imposed by Law arising in the ordinary course of business, with respect to amounts not yet due and payable or amounts being contested in good faith through appropriate proceedings initiated after the date hereof in compliance with this Agreement; (iii) liens for Taxes not yet due and payable or being contested in good faith through appropriate proceedings initiated after the date hereof in compliance with this Agreement and for which adequate reserves have been established in accordance with GAAP; (iv) with respect to the North Charleston Real Property, (x) any easement, covenant, condition, restriction or Encumbrance of record, which exceptions are identified on or attached to Schedule 1.1D, (y) any conditions or defects that are shown on the survey prepared by HGBD Surveyors, LLC dated May 18, 2009, and (z) such other Encumbrances that do not impair the current use or occupancy of the assets subject thereto; and (v) orders and decrees that do not impair the current use or occupancy of the assets subject thereto.

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“Person” means an individual, corporation, partnership, limited liability company, joint venture, trust, trustee, unincorporated organization or other entity, including a Governmental Entity.

“Post-Closing Period” is defined in Section 7.1(a) of this Agreement.

“Preliminary Statement” is defined in Section 3.4(a) of this Agreement.

“Pre-Closing Period” is defined in Section 7.1(a) of this Agreement.

“Pre-Closing Product” is defined in the definition of Covered Product in Section 1.1 of this Agreement.

“Product” is defined in the 787 Supply Agreement.

“Program Aircraft” means a (i) commercial transport aircraft having a current model designation of 787 as of Closing and (ii) any derivative thereof, as such term is commonly understood in the commercial aircraft industry.

“Purchased Assets” is defined in Section 2.2(a) of this Agreement.

“Purchased Contracts” is defined in Section 2.2(a)(i) of this Agreement.

“Purchased Intellectual Property” means: (i) all of the Intellectual Property listed on Schedule 4.10(a) that is identified on Schedule 4.10(a) as Purchased Intellectual Property; (ii) Seller’s rights in Joint SBP Activity Invention(s); (iii) Seller’s rights in Joint SBP Activity Proprietary Information; (iv) Vought SBP Activity Invention(s); (v) Vought SBP Activity Proprietary Information; (vi) all other Intellectual Property owned by Seller, as of the date hereof or any time prior to the Closing, that was developed (or is being developed) by or for Seller primarily for the Business (including Seller’s engineering work and engineering resources, certification work, design work and data of the Business developed (or being developed) primarily for the Business); and (vii) all rights associated with any of the foregoing, including the right to sue and collect for past or future infringement, misappropriation or other unauthorized use thereof, any and all corresponding rights that, now or hereafter, may be secured throughout the world and all copies and tangible embodiments of any of the foregoing, and all goodwill associated or arising in connection with any of the foregoing, in each case, other than the Licensed Intellectual Property. Without limiting the generality of the foregoing, “Purchased Intellectual Property” shall also include all of the following due or payable at Closing or thereafter (A) any income, royalties, credits, prepaid expenses, deferred charges, advance payments, security deposits, prepaid items, deposits and claims for refunds or reimbursements, in each case, relating to any of the Purchased Intellectual Property, (B) all Claims, rights and remedies of Seller against any third parties arising out of or relating to any of the Purchased Intellectual Property, and (C) all rights under or pursuant to any warranties, representations and guarantees made by suppliers, manufacturers, contractors or other Persons under Purchased Contracts in connection with any products or services provided to Seller with respect to any Purchased Intellectual Property.

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“Qualified Representations” means those representations and warranties set forth in: the second sentence of Section 4.3(a); Section 4.3(b); Section 4.5(a); clause (b) of Section 4.8; Section 4.11(a)(vi); Section 4.11(e); the first and third sentences of Section 4.13(b); Section 4.13(c); the lead-in paragraph of Section 4.14; Section 4.16(h); Section 4.16(l); clause (iii) of Section 4.17; and the penultimate sentence of Section 4.18.

“RCRA” is defined in the definition of Environmental Laws in Section 1.1 of this Agreement.

“Referenced Definition” is defined in Section 1.2(f) of this Agreement.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, discarding, depositing, dispersing, migration, burying, abandoning or disposing into the environment of any Hazardous Materials that is prohibited under any applicable Environmental Law.

“Representative” means, with respect to a particular Person, any director, manager, member, officer, employee, agent, consultant, advisor, Affiliate, financing source or other representative of such Person, including legal counsel, accountants and financial advisors.

“Required by Boeing” means, for the purposes of Section 11.2(c), any such specification (subject to paragraph (F) of Section 11.2(c)), design, design or specification change or method or process of design or manufacturing (or any change thereto) that was (i) expressly set forth in (A) a written 787 loads, methods and allowables document issued by Boeing or its Affiliates or (B) a written 787 common architecture design guide (the “787 Design Build Guide”) issued by Boeing or its Affiliates, in each case as revised prior to the Closing by Boeing or its Affiliates pursuant to subsequently issued written versions of any such document or design guide, (ii) expressly set forth in any written change order initiated and issued by Boeing or its Affiliates, except to the extent that (x) such change order is modified as a direct result of collaboration with Seller and (y) the misappropriation, infringement or unlawful use in question is attributable to the modification to such change order that resulted from such collaboration, or (iii) developed or adopted by a design or configuration team chaired by a Boeing employee and comprised of Boeing employees and employees of Seller and/or other 787 team members and subsequently either (x) approved by a Design Decision Board that included a Boeing employee, which approval was documented in an issued written Program Design Decision Memorandum, or (y) expressly set forth in any issued 787 Design Build Guide.

“Resolution Period” is defined in Section 3.4(b) of this Agreement.

“Restricted Period” in defined in Section 6.10(a) of this Agreement.

“Retained Employees” means those individuals set forth on Schedule 1.1E.

“Retained Intellectual Property” is defined in Section 2.2(b)(xi) of this Agreement.

“Review Period” is defined in Section 3.4(b) of this Agreement.

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“SCPR” is defined in the definition of North Charleston Sublease in Section 1.1 of this Agreement.

“Seller” is defined in the Preamble to this Agreement.

“Seller Contract” means any Contract to which Seller is a party.

“Seller Cure Period” is defined in Section 10.1(b)(i) of this Agreement.

“Seller Engineering Employees” means the engineering employees who are employed by Seller or any of its Subsidiaries in Seller’s Dallas, Texas facilities as of the Closing Date and set forth on Schedule 6.10(c)(i) (which Schedule will be updated at Closing to reflect new hires) excluding the engineering employees set forth on Schedule 6.10(c)(ii).

“Seller 401(k) Plan” is defined in Section 8.6(b) of this Agreement.

“Seller Indemnified Persons” is defined in Section 11.3(a) of this Agreement.

“Seller Senior Credit Agreement” means that certain Credit Agreement, dated as of December 22, 2004, among Seller, as borrower, the several lenders party thereto, Lehman Commercial Paper Inc., as administrative agent, JPMorgan Chase Bank, N.A., as syndication agent and Goldman Sachs Credit Partners L.P., as documentation agent.

“Seller Supply Agreements” means the supplier and sub-contractor agreements entered into by Seller in connection with the Business.

“Site Development and Incentive Agreement” means (i) that certain Project Emerald Confidential Site Development and Incentive Agreement by and among Seller, on behalf of Project Emerald, the South Carolina Department of Commerce, SCPR, Charleston County, South Carolina and the Charleston County Airport District and (ii) that certain Confidential Initial Site Development and Incentive Agreement between Seller on behalf of itself and two other entities; the South Carolina Department of Commerce; SCPR; Charleston County, South Carolina and the Charleston County Airport District, dated November 29, 2004.

“Software” means any and all software of any type (including programs, applications, middleware, utilities, tools, drivers, firmware, microcode, scripts, batch files, JCL files, instruction sets and macros) and in any form (including source code, object code and executable code), databases and associated data and related documentation, and all rights arising out of or associated with any of the foregoing, in each case in any jurisdiction in the world.

“SOW Administrative Agreement” is defined in Section 9.1(e)(xvii) of this Agreement.

“SOW Side Letter” is defined in Section 9.1(e)(xii) of this Agreement.

“SOW Supply Agreement” is defined in Section 9.1(e)(viii) of this Agreement.

“SOW Warranty Agreement” is defined in Section 9.1(e)(xvi) of this Agreement.

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“Special Initiatives Agreement” means that certain special initiatives letter agreement dated as of April 17, 2009 by and between Seller and Boeing.

“Straddle Period” means any Tax year or period beginning on or before the Closing Date and ending after the Closing Date.

“Subsidiary” or “Subsidiaries” means, with respect to any Person, any corporation, limited liability company, partnership or other legal entity of which such Person (either alone or through or together with any other Subsidiary) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests the holder of which is generally entitled to vote for the election of the board of directors or other governing body of such corporation, limited liability company, partnership or other legal entity.

“Supplied Product” is defined in Section 11.2(c) of this Agreement.

“Supplier Infringement Claim” is defined in Section 11.2(c) of this Agreement.

“Tangible Personal Property” is defined in Section 2.2(a)(ii) of this Agreement.

“Tax” or “Taxes” means a tax or taxes of any kind or nature, or however denominated, including Liability for federal, state, local or foreign sales, use, transfer, registration, ad valorem, business and occupation, value added, excise, severance, natural resources, environmental, stamp, premium, windfall profit, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee, fee in-lieu of a Tax or other withholding, or other tax, of any kind whatsoever, whether disputed or not, including any interest, penalties or additions to tax or additional amounts in respect to the foregoing, including any transferee or secondary Liability for a tax and any Liability assumed by agreement or arising as a result of being or ceasing to be a member of any affiliated group, or being included or required to be included in any tax return relating thereto; provided, however, that “Tax” or “Taxes” shall not include any Income Taxes or Transfer Taxes.

“Tax Authority” means any Governmental Entity having the power to regulate, impose or collect Taxes, including the IRS and any state department of revenue.

“Tax Benefit” is defined in Section 11.5(b) of this Agreement.

“Tax Benefit Objection Notice” is defined in Section 11.5(b) of this Agreement.

“Tax Returns” means, with respect to any Tax, any information return for such Tax, and any return, report, statement, declaration, claim for refund or document filed or required to be filed under the Law for such Tax; provided, however, that “Tax Returns” shall not include any “Income Tax Returns.”

“Terminating Buyer Breach” is defined in Section 10.1(b)(ii) of this Agreement.

“Terminating Seller Breach” is defined in Section 10.1(b)(i) of this Agreement.

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“Termination and Mutual Release Agreement” is defined in Section 6.16 of this Agreement.

“Third Party Claim” is defined in Section 11.4(a) of this Agreement.

“Trademarks” means any and all of the following, and all rights arising out of or associated therewith, in each case, in any jurisdiction in the world: trademarks; service marks; certification marks; trade names; corporate names; domain names; logos; trade dress; and other protectable indicia of source or origin, including unregistered and common law rights in the foregoing; all translations, adaptations, derivations and combinations of any of the foregoing; all goodwill associated with each of the foregoing; and all registrations of and applications to register any of the foregoing.

“Trade Secrets” means any and all of the following, and all rights associated therewith, in each case, in any jurisdiction in the world: trade secrets; know-how; and other confidential or proprietary information; in each case in any form or medium, and which in each case may include research and development plans or results, formulas, compositions, manufacturing and production processes and techniques, manufacturing plans, setup methodologies, facilities and process flow, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, financial reports and information, and business and marketing plans and proposals.

“Transaction Documents” means, collectively, this Agreement, including the Schedules and Exhibits to this Agreement, the Bill of Sale, Assignment and Assumption Agreement, the Intellectual Property Assignments, the Transition Services Agreement, the Intellectual Property License Agreement, the Engineering Services Agreement, the SOW Supply Agreement, the Termination and Mutual Release Agreement, the North Charleston Sublease Assumption, the GA Sublease Assumption, the Facilities Bill of Sale, Assignment and Assumption Agreement, the Boeing Guaranty, the SOW Side Letter, the SOW Warranty Agreement, the SOW Administrative Agreement, the 747 Amendment, the 767 Amendment, the 777 Amendment and every other Contract, certificate, instrument and document executed and delivered at the Closing in accordance with Sections 9.1 and 9.2 hereof.

“Transaction Expenses” means, as to a Party, the fees, costs and expenses incurred by such Party and its Affiliates in connection with the investigation, diligence, negotiation, preparation, execution and delivery of this Agreement and the Transaction Documents, and performance of the transactions contemplated hereby and thereby, including accounting, legal, consulting and other professional service fees, expenses and disbursements of consultants, advisors, financing sources (including any cost, expense, fee, premium or penalty associated with the Lender Waiver) and other Representatives, but excluding any Transfer Taxes.

“Transfer Taxes” means all transfer, documentary, sales, use, stamp, registration and other such similar Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the transactions contemplated hereby; provided, however, that for the avoidance of doubt “Transfer Taxes” shall not include any Income Taxes payable by reason of the transactions contemplated by this Agreement.

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“Transferred Employees” is defined in Section 8.1 of this Agreement.

“Transferred Permits” is defined in Section 2.2(a)(vii) of this Agreement.

“Transition Services Agreement” is defined in Section 9.1(e)(vi) of this Agreement.

“TSCA” is defined in the definition of Environmental Laws in Section 1.1 of this Agreement.

“UE Offer” is defined in Section 8.3(c) of this Agreement.

“Union” means the District Lodge 96 of the International Association of Machinists and Aerospace Workers.

“Union Employees” is defined in Section 8.2(f) of this Agreement.

“United States” and “U.S.” each means the United States of America.

“Vought SBP Activity Invention(s)” is defined in the 787 Supply Agreement.

“Vought SBP Activity Proprietary Information” is defined in the 787 Supply Agreement.

“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended.

“Wetlands Permit” is defined in Section 6.3(d) of this Agreement.

Section 1.2 Construction. For purposes of this Agreement:

(a) Whenever the context requires, the singular number will include the plural, and vice versa, the masculine gender will include the feminine and neuter genders, the feminine gender will include the masculine and neuter genders, and the neuter gender will include masculine and feminine genders.

(b) The words “include” and “including,” and variations thereof, will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words “without limitation.”

(c) Except as otherwise indicated, all references in this Agreement to “Schedules,” “Sections” and “Exhibits” are intended to refer to Schedules, Sections and Exhibits to this Agreement.

(d) The terms “hereof,” “hereunder,” “herein” and words of similar import will refer to this Agreement as a whole and not to any particular provision of this Agreement.

(e) Each Party has participated in the drafting of this Agreement, which each Party acknowledges is the result of extensive negotiations between the Parties, and consequently, this Agreement will be interpreted without reference to any rule or precept of Law to the effect that any ambiguity in a document be construed against the drafter.

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(f) To the extent any definition provided in Section 1.1 refers to a definition in the 787 Supply Agreement (each, a “Referenced Definition”) and the applicable Referenced Definition has embedded in it other definitions from the 787 Supply Agreement, then for purposes of interpreting the Referenced Definition such embedded definitions shall have the meanings ascribed to such terms in the 787 Supply Agreement.

(g) For the avoidance of doubt, “representations and warranties” will not be deemed to be “agreements” between the Parties for purposes of Sections 9.1(b), 9.2(b), 10.1(c), 11.2(a)(ii) and 11.3(a)(ii).

ARTICLE II

PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES

Section 2.1 Purchase of Assets and Assumption of Certain Liabilities. Upon the terms and subject to the conditions of this Agreement and the other Transaction Documents, on the Closing Date:

(a) Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase and acquire from Seller, the Purchased Assets, free and clear of all Encumbrances, other than Permitted Encumbrances; and

(b) Buyer shall assume, and agree to perform, pay and discharge, the Assumed Liabilities.

Section 2.2 Purchased and Excluded Assets.

(a) The “Purchased Assets” shall mean all of Seller’s right, title and interest in and to the Assets that are owned, leased, licensed, used or held for use by Seller in connection with the Business (other than the Excluded Assets), in each case wherever located, including the following:

(i) (A) the written Seller Contracts relating to the Business that are both (1) in effect as of the date hereof and (2) set forth on Schedule 2.2(a)(i) and (B) any written Contract primarily related to the Business entered into by Seller between the date hereof and the Closing in compliance with this Agreement (the “Purchased Contracts”);

(ii) all machinery, equipment, equipment subassemblies, tools, spare and replacement parts, packaging materials, storage and shipping materials, vehicles, computer hardware and other hardware (including servers, routers, desktops, laptops, peripherals and mobile computing devices), trade fixtures, furniture, furnishings, office equipment and supplies, telephone and communications equipment and any other fixed assets or tangible personal property used or held for use in connection with the Business, including in each case those items listed on Schedule 2.2(a)(ii), and including all of the foregoing located at the North Charleston Facility (the “Tangible Personal Property”);

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(iii) all inventory, including raw materials, work-in-process and finished goods inventories, tooling and supplies used or held for use in connection with the Business and including any of the foregoing held in consignment, bailment, or other similar arrangement by any third party or Affiliates of Seller in connection with the Business (the “Inventory”), in each case as in existence on the Closing Date;

(iv) the North Charleston Facility (including all buildings, structures and improvements thereon and all fixtures attached thereto), but excluding the North Charleston Real Property;

(v) all rights to payments arising out of Purchased Contracts and all accounts and notes receivable of the Business (except to the extent arising under any Excluded Contract), however arising, including, in each case, all rights, Claims and remedies relating thereto and any related deposits, security and collateral therefor (“Accounts Receivable”), in each case as in existence on the Closing Date;

(vi) all of the Purchased Intellectual Property;

(vii) except as set forth on Schedule 2.2(b)(viii), all Governmental Authorizations used or held for use by Seller in connection with the operation of the Business at the North Charleston Facility and all pending applications therefor or renewals thereof (the “Transferred Permits”);

(viii) all credits, prepaid expenses and other items, deferred charges, advance payments, security (including with respect to any wetland permit) and other deposits (including in respect of bonding obligations of the Business) and claims for refunds or reimbursements, in each case, relating to the Business or any of the Purchased Assets or Assumed Liabilities (except to the extent arising under any Excluded Contract);

(ix) all Claims, rights and remedies of Seller against any third parties arising out of or relating to any of the Purchased Assets or Assumed Liabilities;

(x) all rights under or pursuant to any warranties, representations and guarantees made by suppliers, manufacturers, contractors or other Persons in connection with any products or services provided to Seller in connection with the Business or with respect to any Purchased Asset (except to the extent arising under any Excluded Contract);

(xi) all books, records, ledgers, files, documents, correspondence, lists (including supplier lists and records), files, plats, specifications, surveys, drawings, advertising and promotional materials, reports (including manufacturing, research and development and production reports and records), testing results, certification materials, service and warranty records, quality records related to Products delivered to Boeing prior to the Closing Date, equipment logs, environmental, safety and health plans, policies and procedures, copies of all personnel records related to Transferred Employees (subject to Buyer obtaining any releases required by applicable Law from the Transferred Employees), and other materials and information (in whatever medium) in each case, to the extent relating exclusively to the Business or to any of the Assumed Liabilities, Purchased Assets or Purchased Intellectual Property (the “Business Books and Records”), in each case, as in existence as of the Closing Date; provided that Seller may retain, subject to Section 6.9, copies of the foregoing; and

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(xii) all goodwill associated or arising in connection with the Business or any of the Purchased Assets, and to the extent assignable, IP addresses, telephone and fax numbers and listings for the (789) prefix.

(b) Excluded Assets. Notwithstanding the foregoing, except to the extent of rights expressly provided in the Transition Services Agreement, the Engineering Services Agreement, the SOW Supply Agreement and the Intellectual Property License Agreement, Seller will retain all right, title and interest in and to, and the Purchased Assets will not consist of, all of Seller’s right, title and interest in and to the following assets, rights or properties (the “Excluded Assets”):

(i) except as set forth in Section 6.13, all cash or cash equivalents, including all marketable securities, certificates of deposit and other similar liquid Assets, at the time of the Closing;

(ii) all bank and other depository accounts and safe deposit boxes of Seller;

(iii) all refunds of and credits for Taxes, Income Taxes and other Tax assets and Tax loss carry forwards relating to any period or portion thereof ending on or prior to the Closing Date;

(iv) any Employee Benefit Plans (including any Multiemployer Plan) and Assets (including any related insurance proceeds) of, or any rights of Seller in, the Employee Benefit Plans and any Contracts that constitute (or provide for services under) Employee Benefit Plans;

(v) any of Seller’s corporate charters, franchises, seals, minute books, equity record books and other similar documents relating to the organization, governance and existence of Seller or any of its Subsidiaries;

(vi) any Contract that is not a Purchased Contract, including any Collective Bargaining Agreement, and all rights arising under such Contracts (collectively, the “Excluded Contracts”);

(vii) except as set forth on Schedule 2.2(a)(ii) and other than Purchased Intellectual Property, Seller’s business, assets and operations (including all assets, properties and other rights used or held for use in connection with engineering, design, supply management and business management activities) located or conducted at its Milledgeville, Georgia and Dallas, Texas facilities;

(viii) the Governmental Authorizations, pending applications therefor or renewals thereof, set forth on

Schedule 2.2(b)(viii);

(ix) all insurance policies of Seller related to the Business and, subject to Section 6.13, any Claims or rights thereunder;

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(x) any intercompany Accounts Receivable between Seller and Seller’s Affiliates (other than Wesco Holdings, Inc. and its Subsidiaries);

(xi) (a) all Intellectual Property owned by Seller (including Background Proprietary Information of Seller and Background Invention(s) of Seller) other than the Purchased Intellectual Property and (b) all other Intellectual Property of Seller (including Background Proprietary Information of Seller and Background Invention(s) of Seller) other than the Purchased Intellectual Property (collectively, the “Retained Intellectual Property”);

(xii) all Tax and Income Tax books and records and all Income Tax Returns and Tax Returns of Seller;

(xiii) any securities, shares of capital stock or equity or other ownership interest of Seller in any other Person (including any Subsidiary);

(xiv) all books, records, ledgers, files, documents, correspondence, lists (including supplier lists and records), files, plats, specifications, surveys, drawings, advertising and promotional materials, reports (including manufacturing, research and development and production reports and records), testing results, certification materials, service and warranty records, equipment logs, copies of all personnel records related to Transferred Employees (for whom any release required by applicable Law has not been obtained), and other materials and information (in whatever medium), other than the Business Books and Records;

(xv) except as set forth on Schedule 2.2(a)(ii) and other than Purchased Intellectual Property, Business Books and Records and Purchased Contracts, all Assets, properties and other rights used or held for use in connection with the provision of services and conduct or performance of support functions (and the conduct or performance of functions and other activities relating to such services and functions) provided to the North Charleston Facility and the Business by the other facilities, businesses and operational or business units of Seller, including information technology, human resources, supply chain management, configuration management, benefits administration, payroll, accounting, treasury, legal, management, and other general and administrative services, as well as any other services to be provided pursuant to the Transition Services Agreement or the Engineering Services Agreement;

(xvi) all rights and Claims in respect of, arising out of or relating to any Excluded Liability;

(xvii) any interest in real property (other than the North Charleston Real Property and any interest set forth on Schedule 2.2(b)(xvii));

(xviii) the Transaction Documents, the Non-Disclosure Agreement, the Special Initiatives Agreement, and all rights or Claims of Seller arising under or relating to the foregoing documents and agreements; and

(xix) the tangible property and other assets set forth in Schedule 2.2(b)(xix).

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Section 2.3 Assumed and Excluded Liabilities.

(a) The “Assumed Liabilities” shall consist of any and all Liabilities of Seller to the extent arising out of, relating to or resulting from the Business (other than the Excluded Liabilities and any and all Liabilities of Seller arising out of or related to Seller’s provision of services or products to, or other dealings with, the Business from and after the Closing), including:

(i) any and all Liabilities of Seller arising out of, relating to, or incurred pursuant to, the Purchased Contracts (including any and all Seller Supply Agreements that are Purchased Contracts);

(ii) any obligations of Seller set forth in Schedule 2.3(a)(ii) or assumed by Buyer pursuant to Article VIII, in each case related to the employment of Employees who become Transferred Employees, including any obligations of Seller (A) for accrued salaries, wages and bonuses owed or payable to Transferred Employees (and related withholdings and payroll Taxes); (B) for accrued but unpaid or unused vacation of Transferred Employees; and (C) for reimbursable business expenses of Transferred Employees incurred in the ordinary course of business consistent with past practice (other than the Excluded Liabilities described in Section 2.3(b)(ii)); and

(iii) South Carolina personal property Taxes.

(b) Excluded Liabilities. Notwithstanding anything to the contrary, Buyer shall not assume or otherwise be obligated to pay, perform or discharge the following Liabilities, except to the extent accrued in the categories listed in Appendix A and in the Adjusted Net Investment Amount on the Final Statement (all of such Liabilities not so assumed by Buyer being referred to herein as the “Excluded Liabilities”):

(i) any and all Environmental Claims (whether asserted before or after the Closing) arising out of, relating to or resulting from the conduct of the Business prior to the Closing;

(ii) subject to Article VIII, any and all Claims by or for the benefit of any current or former employee of the Business (whether asserted before or after the Closing) and not disclosed on the Disclosure Schedules arising out of, relating to or resulting from (A) any tort of which Seller has Knowledge committed by Seller against any employee of Seller, or breach or default by Seller of any Contract between Seller and any of its employees, of which Seller has Knowledge, or violation of any Law by Seller relating to the employment of the current or former employee asserting such Claim of which Seller has Knowledge or (B) any actual or alleged discrimination by the Company, any of its Subsidiaries or their respective supervisory employees against any such employee, in the case of each of clause (A) and clause (B), to the extent such Claim is asserted prior to the Closing or relates to conduct of Seller occurring before the Closing;

(iii) subject to Schedule 2.3(a)(ii) and Article VIII, any and all Claims arising out of, relating to or resulting from a Collective Bargaining Agreement between the Union and Seller other than any such Claims involving recall rights of laid-off employees after the Closing;

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(iv) except for Liabilities under or pursuant to any Purchased Contracts and except to the extent set forth in Schedule 2.3(a)(ii) or Article VIII or pursuant to the Transition Services Agreement, any and all Liabilities arising out of, relating to or resulting from any Employee Benefit Plan, any offer letter or any employee-related program, policy, funding vehicle or Contract with any employee of Seller maintained or implemented by Seller or any of its Affiliates, whether such Liability arises prior to, on or after the Closing Date;

(v) any and all Liabilities, whether such Liabilities arise prior to, on or after the Closing Date, arising out of, relating to or resulting from (A) any Multiemployer Plan of Seller or in which Seller participates (including any withdrawal Liability or other Liability related to unfunded or under-funded benefits), or (B) any obligation of Seller to provide or make available post-retirement welfare benefits or welfare benefit coverage to any current or former officer, director, stockholder or employee of the Business or Seller;

(vi) any and all Liabilities of Seller arising out of, relating to or resulting from Taxes and Income Taxes allocable to Seller under Section 7.1 hereof (except for Assumed Liabilities under Section 2.3(a)(ii) and Section 2.3(a)(iii));

(vii) any Indebtedness, including any Guarantees not listed on Schedule 6.20 or otherwise permitted hereunder;

(viii) any and all Liabilities (other than Liabilities disclosed hereunder or in the Disclosure Schedules hereto and other than Liabilities to the extent arising out of, relating to or resulting from any infringement, misappropriation or unlawful use of any Intellectual Property of any Person by Seller in the operation of the Business prior to the Closing) arising out of, relating to or resulting from any violation of Law by Seller prior to the Closing to the extent that such Liabilities exceed, in the aggregate, $10,000,000;

(ix) any and all Liabilities not arising out of, relating to or resulting from the Business;

(x) except to the extent set forth in Schedule 2.3(a)(ii) or Article VII or pursuant to the Transition Services Agreement, any and all Liabilities of Seller to the extent arising out of, relating to or resulting from the Excluded Assets set forth in Sections 2.2(b)(i), (ii), (v), (vi), (vii), (ix), (x), (xi)(b), (xiii), and (xviii) (other than Liabilities for which Buyer is expressly liable pursuant to the Transition Services Agreement, the Engineering Services Agreement, the Intellectual Property License Agreement, and with respect to recall rights under the Collective Bargaining Agreement after the Closing); and

(xi) any and all Liabilities of Seller arising out of, relating to or resulting from the Excluded Assets described in Sections 2.2(b)(viii), (xi)(a), (xv) and (xvii) to the extent not related to the conduct of the Business prior to the Closing.

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ARTICLE III

AGGREGATE CONSIDERATION AND CLOSING

Section 3.1 Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) will occur as promptly as practicable, but (subject to the proviso below) in no event more than three (3) Business Days, following the satisfaction or waiver of all conditions to the Closing set forth in Article IX (other than any of such conditions that by its nature is to be satisfied at the Closing, but subject to the satisfaction or waiver of such condition), at 10:00 a.m., local time, at the offices of Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York 10022, or at such other place on such other date as the Parties may agree in writing; provided that the Closing shall not occur prior to the thirteenth (13th) Business Day following the date hereof, unless otherwise agreed by the Parties in writing. The date on which the Closing actually occurs will be referred to as the “Closing Date,” and the Closing will be deemed effective as of 11:59 p.m., Eastern Daylight Time, on the Closing Date.

Section 3.2 Aggregate Consideration. Subject to the terms and conditions contained in this Agreement and the Termination and Mutual Release Agreement, at the Closing, Buyer shall pay to Seller an amount equal to Five Hundred Ninety-Eight Million Dollars ($598,000,000.00) (the “Closing Payment Amount”), which amount shall be subject to adjustment as provided in Section 3.3 below, by wire transfer of immediately available funds to the account designated in writing by Seller (the Closing Payment Amount, together with the aggregate amount of the Assumed Liabilities, sometimes being referred to herein as the “Aggregate Consideration”); provided, that, in the event that any Indebtedness remains outstanding under the Seller Senior Credit Facility as of the Closing Date, a portion of the Closing Payment Amount equal to the Pay-off Amount will be paid by Buyer for the account of Seller to the agent under the Seller Senior Credit Facility by wire transfer of immediately available funds to the account designated in the Pay-off Letter and such payment shall be deemed to constitute payment to Seller of a portion of the Closing Payment Amount equal to the Pay-off Amount.

Section 3.3 Estimated Aggregate Consideration Adjustment.

(a) No later than five (5) Business Days prior to the Closing Date, Seller shall deliver to Buyer a written statement (the “Estimated Preliminary Statement”), prepared in good faith and in accordance with the Agreed Methodology, setting forth an estimate of the Closing Adjusted Net Investment Amount (the “Estimated Adjusted Net Investment Amount”) in the same detail as reflected on Appendix A and including a reasonable explanation of any new line item categories not shown on Appendix A.

(b) If the Estimated Adjusted Net Investment Amount exceeds the Base Adjusted Net Investment Amount, the Closing Payment Amount shall be increased dollar-for-dollar by the amount of such excess, and if the Estimated Adjusted Net Investment Amount is less than the Base Adjusted Net Investment Amount, the Closing Payment Amount shall be reduced dollar-for-dollar by the amount of such shortfall.

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Section 3.4 Aggregate Consideration Adjustment.

(a) Buyer shall deliver, or cause to be delivered, to Seller as soon as practicable, but in no event more than ninety (90) days after the Closing Date, a preliminary written statement (the “Preliminary Statement”) setting forth the Adjusted Net Investment Amount as of the Closing Date (the “Closing Adjusted Net Investment Amount”), which amount shall be determined in accordance with the Agreed Methodology.

(b) Seller shall have sixty (60) days to review the Preliminary Statement from the date of its receipt thereof (the “Review Period”). During the Review Period, Seller shall have reasonable access during normal business hours to the books and records of the Business (and to the non-privileged work papers of Buyer relating to the Business or the Purchased Assets that were used in preparing the Preliminary Statement) to the extent required in connection with such review, subject to Section 6.9. If Seller objects to any aspect of the Preliminary Statement, Seller shall deliver a written notice of objection (the “Objection Notice”) to Buyer at or prior to the expiration of the Review Period; provided that Seller may so object to the Preliminary Statement based only on the existence of mathematical errors therein, on the failure of the Preliminary Statement (or the calculations contained therein and determinations made in connection therewith) to be prepared or determined in accordance with the Agreed Methodology, or any other failure of Buyer to have complied with this Section 3.4, and on no other basis. The Objection Notice shall specify any adjustment to the Preliminary Statement proposed by Seller and the basis therefor, including in each case the specific items proposed to be adjusted (to the extent determinable), the specific Dollar amount of each such adjustment and an explanation of how such proposed adjustment was calculated. If Seller delivers an Objection Notice to Buyer prior to the expiration of the Review Period as provided in this Section 3.4(b), Buyer and Seller shall, for a period of thirty (30) days thereafter (the “Resolution Period”), exchange reasonably detailed explanations of any disagreement and attempt to resolve the matters properly contained therein, and any written resolution, signed by each of Buyer and Seller, as to any such matter shall be final, binding, conclusive and non-appealable for purposes of this Section 3.4. Except to the extent properly challenged in an Objection Notice as provided in this Section 3.4(b), or in the event Seller does not deliver an Objection Notice to Buyer as provided in this Section 3.4(b) prior to the expiration of the Review Period, Seller shall be deemed to have agreed to the Preliminary Statement in its entirety, which Preliminary Statement or undisputed portions thereof (as the case may be) shall be final, binding, conclusive and non-appealable for purposes of this Section 3.4.

(c) If, at the conclusion of the Resolution Period, Buyer and Seller have not reached an agreement with respect to all disputed matters properly contained in the Objection Notice, then within ten (10) Business Days thereafter, Buyer and Seller shall submit for resolution those of such matters remaining in dispute to PricewaterhouseCoopers LLC, or if such firm is unavailable or unwilling to so serve, to a mutually acceptable nationally recognized independent accounting firm (the “Neutral Auditor”). The Neutral Auditor shall resolve (based solely on the written presentations of Buyer and Seller and not by independent review) only those matters submitted to it in accordance with the first sentence of this Section 3.4(c). The resolution of any such disputed matter by the Neutral Auditor shall be limited (i) to whether the Preliminary Statement and the calculations contained therein and determinations made in connection therewith were prepared, calculated and determined with respect to such disputed

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matter in accordance with the Agreed Methodology and this Section 3.4; and (ii) if the Preliminary Statement has not been so prepared or if necessary to correct any mathematical error in computing the Adjusted Net Investment Amount, to modifying the Preliminary Statement and the calculations of the Closing Adjusted Net Investment only to the extent necessary to reflect the recalculation of such disputed matter in accordance with such Agreed Methodology. Buyer and Seller shall direct the Neutral Auditor to render a resolution of all such disputed matters within thirty (30) days after its engagement or such other period as is agreed upon in writing by Buyer and Seller. With respect to each disputed item, Buyer and Seller shall instruct the Neutral Auditor not to assign a value greater than the greatest value for such item assigned by Buyer, on the one hand, or Seller, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or Seller, on the other hand. The resolution of the Neutral Auditor shall be set forth in a written statement delivered to each of the Parties and shall be final, binding, conclusive and non-appealable for all purposes hereunder. The Preliminary Statement, once modified and/or agreed to in accordance with Section 3.4(b) or this Section 3.4(c), shall become the “Final Statement.”

(d) All fees and expenses relating to the work performed by the Neutral Auditor shall be split equally between the Parties, and each of them shall promptly advance to the Neutral Auditor such Party’s share of the expected fees and expenses (including any initial engagement fee) of the Neutral Auditor (as determined by the Neutral Auditor) upon the request of the Neutral Auditor. Except as provided in the preceding sentence, all other costs and expenses incurred by the Parties in connection with resolving any dispute hereunder before the Neutral Auditor shall be borne by the Party incurring such cost and expense.

(e) Amounts payable pursuant to the determination of the Closing Adjusted Net Investment Amount on the Final Statement will be paid as follows:

(i) If the Closing Adjusted Net Investment Amount as stated on the Final Statement is less than the Estimated Adjusted Net Investment Amount, then Seller shall pay to Buyer the amount by which such Closing Adjusted Net Investment Amount is less than the Estimated Adjusted Net Investment Amount, by wire transfer of immediately available funds to the account designated by Buyer in writing, within three (3) Business Days after the date on which the Preliminary Statement becomes the Final Statement.

(ii) If the Closing Adjusted Net Investment Amount as stated on the Final Statement is greater than the Estimated Adjusted Net Investment Amount, then Buyer shall pay to Seller the amount by which such Closing Adjusted Net Investment Amount is greater than the Estimated Adjusted Net Investment Amount, by wire transfer of immediately available funds to the account designated by Seller in writing, within three (3) Business Days after the date on which the Preliminary Statement becomes the Final Statement.

Section 3.5 Allocation of Aggregate Consideration.

(a) Within one hundred and twenty (120) days after the Closing Date, Buyer will provide to Seller its proposed allocation for tax purposes of the Aggregate Consideration (and all other capitalizable costs). The Aggregate Consideration shall be allocated among (i) the Purchased Assets, (ii) the termination of the 787 Supply Agreement and release of Claims and

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resolution of any and all rights and obligations owed to by each of Seller and Boeing to the other related to the 787 Supply Agreement pursuant to the Termination and Mutual Release Agreement, and (iii) the other rights granted by or agreements of Seller pursuant to the other Transaction Documents. The amount allocated to the Purchased Assets shall be set forth on IRS Form 8594 and any required exhibits thereto, prepared in accordance with Section 1060 of the Code (the “Allocation Statement”).

(b) Seller will review the Allocation Statement and, to the extent Seller in good faith disagrees with the content of the Allocation Statement, Seller will, within sixty (60) days after receipt of the Allocation Statement, provide written notice to Buyer of such disagreement or will be deemed to have indicated its concurrence therewith. Buyer and Seller will attempt in good faith to resolve any such disagreement. If Buyer and Seller are unable to reach a good faith agreement as to the content of the Allocation Statement within thirty (30) days after Buyer’s receipt of Seller’s written notice of disagreement, Buyer and Seller will each file its own IRS Form 8594 using its own allocation statement consistent with its own allocation of the Aggregate Consideration.

(c) If Seller and Buyer agree on the Allocation Statement or any modification thereof, Seller and Buyer will report the allocation of the total consideration among the Purchased Assets in a manner consistent with such Allocation Statement or modification and will act in accordance with such Allocation Statement in the preparation and timely filing of all Income Tax Returns (including Form 8594 with their respective federal Income Tax Returns for the taxable year that includes the Closing Date and any other forms or statements required by the Code, the IRS or any applicable Tax Authority). Seller and Buyer agree to promptly provide the other Party with any additional information and reasonable assistance required to complete Form 8594 or compute Income Taxes arising in connection with (or otherwise affected by) the transaction contemplated hereunder.

(d) Buyer and Seller will promptly inform each other in writing of any challenge by any Governmental Entity to any allocation made pursuant to this Section 3.5 and each agrees to consult with and keep the other informed with respect to the status of, and any discussion, proposal or submission with respect to, any such challenge.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as follows:

Section 4.1 Organization and Qualification. Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Seller has the requisite corporate power and authority to own, lease, sublease or otherwise hold and operate the Purchased Assets and to carry on the Business as presently conducted. Seller is duly qualified or licensed and is in good standing to do business in each jurisdiction where Seller conducts its business or where the character of the properties owned, leased, subleased or operated by Seller or the nature of its business makes such qualification, licensing or good standing necessary, except where the failure to be so qualified, licensed or in good standing would not have and

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would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Seller has made available to Buyer complete and correct copies of the certificate of incorporation and bylaws of Seller.

Section 4.2 Authorization; Enforceability. Seller has the requisite corporate power and authority to enter into, execute and deliver this Agreement and each other Transaction Document to which it is a party, to perform all of the obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and each other Transaction Document to which it is a party, the performance of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action, and no other corporate action or proceeding is necessary to authorize the execution and delivery of this Agreement and each other Transaction Document to which Seller is a party, the performance of its obligations hereunder and thereunder or the consummation of the transactions contemplated hereby and thereby. This Agreement has been, and each of the other Transaction Documents to which Seller is a party will have been at the Closing, duly authorized, executed and delivered by Seller and, assuming due authorization, execution and delivery by Buyer, this Agreement constitutes, and each of the other Transaction Documents will constitute at Closing, Seller’s valid and binding obligation, enforceable against it in accordance with its respective terms, subject only to (i) applicable bankruptcy, insolvency, reorganization and moratorium Laws and other Laws of general application affecting enforcement of creditors’ rights generally and (ii) rules or Laws governing specific performance, injunctive relief and other equitable remedies.

Section 4.3 No Conflicts.

(a) Neither the execution and delivery of this Agreement or the other Transaction Documents to which Seller is a party nor the performance by Seller hereunder and thereunder conflicts or will conflict with or result in a material breach or violation of any of the terms or provisions of its organizational documents or result in the material breach or violation of any of the terms or provisions of, or constitute a default under, or accelerate the performance required by the terms of any Seller Contract, except as would not reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby, nor will any such action result in any material violation of the provisions of any material Law. The execution and delivery by Seller of this Agreement and the other Transaction Documents to which Seller is a party and the performance by Seller of its obligations hereunder and thereunder will not require any additional consent or approval of, or any filing or registration with, any creditor of Seller, any Governmental Entity or any party to any Material Contract, except for the Consents and Governmental Authorizations set forth on Schedule 4.3(a), and except as would not reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby. Neither the execution and delivery by Seller of this Agreement and the other Transaction Documents to which Seller is a party nor the performance by Seller hereunder and thereunder require the Consent (either as a matter of law, contractual obligation or otherwise) of any of Seller’s stockholders.

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(b) The consummation of the transactions contemplated by this Agreement and the other Transaction Documents will not (i) conflict with, violate or result in a breach of any term or provision of Seller’s organizational documents, (ii) materially conflict with or violate any Law applicable to the Business, or by which any Purchased Asset is bound or affected, (iii) result in the creation of any material Encumbrance on the Business or any material Purchased Asset, or (iv) except as provided on Schedule 4.3(b), require any Consent or approval under, result in any material breach of or any loss of any material benefit under, or modify, accelerate or terminate any rights or obligations under, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any right of termination, vesting, amendment, acceleration or cancellation pursuant to, any Material Contract or material Transferred Permit.

Section 4.4 Financial Information. The calculation of the Adjusted Net Investment Amount as of March 29, 2009 attached hereto as Appendix A reflects numbers used to prepare Seller’s GAAP financials and was prepared in accordance with (a) the books and records of Seller and its Subsidiaries and (b) the accounting practices, policies and methodologies used by Seller in preparing its internal, unaudited financial statements. Schedule 4.4 sets forth copies of internal, unaudited balance sheets of the Business as of December 31, 2007 and 2008 and the three (3)-month period ended March 29, 2009 and the related statements of income and cash flows for the periods then ended and Seller’s estimate of the Adjusted Net Investment Amount as of December 31, 2008 and 2007 (together with the internal, unaudited balance sheets of the Business as of April 26, 2009 and May 31, 2009 and the related statements of income and cash flows for the periods then ended, the “Financial Information”). The Financial Information was prepared in the ordinary course of business in accordance with (A) the books and records of Seller and its Subsidiaries and (B) the accounting practices, policies and methodologies used by Seller in preparing its internal, unaudited financial statements. Buyer acknowledges that the Financial Information was not prepared in accordance with GAAP, does not include all of the information required to be provided on a balance sheet or statement of income or cash flow prepared in accordance with GAAP, includes estimates (which were based upon assumptions that management believed to be reasonable at the time made) and does not purport to present fairly the financial position, results of operations or cash flows of the Business but does represent Seller’s good faith estimate of the Adjusted Net Investment Amount as of March 29, 2009.

Section 4.5 Absence of Certain Developments. Except as set forth on Schedule 4.5, from January 1, 2009 through the date of this Agreement:

(a) Seller has conducted the Business, in all material respects, in the ordinary course of business consistent with past practice;

(b) none of the Purchased Assets has sustained or incurred any material loss or damage (whether or not insured against) on account of fire, flood, accident or other calamity;

(c) Seller has not moved any material tangible Assets or transferred or relocated any employees of the Business or limited or transitioned any material business activities utilized in satisfying its obligations under the 787 Supply Agreement, in each case, from the North Charleston Facility to any other location, except for such Assets, employees or business activities that have been subsequently returned to the North Charleston Facility as of the date of this Agreement;

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(d) Seller has not adopted, materially increased, terminated, materially amended or otherwise materially modified any Employee Benefit Plan other than in the ordinary course of business consistent with past practice or as required by applicable Law;

(e) Seller has not changed any accounting methods or practices (including any change in depreciation or amortization policies or rates);

(f) Seller has not entered into any Contracts or transactions or changed, modified or amended any Contracts or transactions with any of Seller’s Affiliates that are involved in the Business or any directors, managers, officers or employees of the Business;

(g) Seller has not taken any action which, if taken after the date hereof, would be a breach of Section 6.2(b) (other than Section 6.2(b)(viii)); and

(h) Seller has not committed to, or entered into any Contract to, do any of the foregoing.

Section 4.6 Absence of Undisclosed Liabilities. As of December 31, 2008, Seller had no material Liabilities that would be included in the Assumed Liabilities and would be required to be reflected in balance sheets (including the notes thereto) of the Business prepared in accordance with GAAP, other than such Liabilities reflected on Schedule 4.6. Since December 31, 2008, Seller has not incurred any material Liabilities that would be included in the Assumed Liabilities and would be required to be reflected in balance sheets (including, as of the date of this Agreement, the notes thereto) prepared in accordance with GAAP, except (a) as disclosed on Schedule 4.6 or the other Schedules hereto, (b) Liabilities incurred in the ordinary course of business since December 31, 2008 (to the Knowledge of Seller, as of the date of this Agreement, none of which is a Liability for breach of warranty, tort or infringement), or (c) Liabilities under the Transaction Documents.

Section 4.7 Title; Sufficiency and Condition of Assets. Except as disclosed on Schedule 4.7, Seller owns all right, title and interest in and to all material Assets owned, leased, licensed, used or held for use by Seller in connection with the Business (other than any Intellectual Property or any Licensed Intellectual Property, both of which are addressed in Section 4.10, and any Excluded Assets), free and clear of all Encumbrances, except Permitted Encumbrances and Outstanding Encumbrances. Upon delivery of the Purchased Assets to Buyer and payment to Seller of the Closing Payment Amount, Buyer will acquire good and valid title to such Purchased Assets (other than any Intellectual Property or any Licensed Intellectual Property, both of which are addressed in Section 4.10) free and clear of all Encumbrances, except Permitted Encumbrances and Outstanding Encumbrances and Encumbrances created by Buyer. Except as disclosed on Schedule 4.7, the Purchased Assets, together with the Assets used to provide services under the Transaction Documents, and the rights granted to Buyer under this Agreement and the other Transaction Documents, constitute all material Assets (other than any Intellectual Property or any Licensed Intellectual Property, both of which are addressed in Section 4.10, and any Excluded Assets) necessary to conduct the Business substantially as conducted by Seller as of the date of this Agreement. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, all Tangible Personal Property included in the Purchased Assets, taken as a whole, is in reasonable operating condition and repair (after allowing for ordinary wear and tear).

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Section 4.8 Inventory. Except as described on Schedule 4.8, all Inventory (a) was acquired or produced in the ordinary course of business consistent with past practice; (b) contains all appropriate forms of identification necessary to be in material compliance with applicable Laws requiring configuration records to be maintained with respect to such Inventory; and (c) is free and clear of all Encumbrances, except for Permitted Encumbrances and Outstanding Encumbrances.

Section 4.9 Real Property.

(a) Seller does not own fee simple title to, or hold any leasehold interest in, any real property used or held for use by Seller in connection with the Business, except as set forth in Schedule 4.11(a)(vii).

(b) North Charleston Sublease.

(i) Seller has a valid subleasehold interest in and to the North Charleston Real Property free and clear of any Encumbrances, except for Permitted Encumbrances and Outstanding Encumbrances.

(ii) Other than the interest granted to GA under the GA Sublease, Seller is in full and complete possession of the North Charleston Real Property described in the North Charleston Sublease and, other than the interest granted to GA under the GA Sublease, Seller has neither assigned nor sublet any portion thereof.

(iii) Except pursuant to the Seller Senior Credit Agreement, Seller has not assigned its interest as sub ground lessee (as defined in the North Charleston Sublease) under the North Charleston Sublease to any other party.

(iv) To Seller’s Knowledge, there are no third parties with (A) rights of first refusal to lease the North Charleston Real Property that have not either waived or released such rights, or (B) other rights to lease the North Charleston Real Property, that have not either waived or released such rights.

(c) Facilities. Other than with respect to Facilities contained within the area subject to the GA Sublease:

(i) Except to the extent leased pursuant to a Material Contract, Seller owns the Facilities free and clear of any Encumbrances except for Permitted Encumbrances and Outstanding Encumbrances.

(ii) To Seller’s Knowledge, the Facilities are connected to and/or serviced by water, sewage disposal, waste disposal, gas and electric service for the Business’ operations therein.

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(d) GA Sublease. The GA Sublease (i) has been duly authorized, validly executed and delivered by Seller and (ii) is valid and in full force and effect in accordance with its terms against Seller. There is not any existing material default or event of default (or event that with notice or lapse of time, or both, would constitute a default) of the GA Sublease by Seller.

(e) Ground Lease.

(i) To Seller’s Knowledge, (A) the Ground Lease has been duly authorized, validly executed and delivered by the parties thereto, (B) the Ground Lease is valid and in full force and effect in accordance with its terms against the parties thereto, and (C) there is not, under such Ground Lease, any existing material default or event of default (or event that with notice or lapse of time, or both, would constitute a default) by the parties to the Ground Lease.

(ii) To Seller’s Knowledge, as of the date of this Agreement, the Ground Lease has not been modified, orally or in writing, since execution, and no modifications are requested or pending in writing.

(iii) To Seller’s Knowledge, there is no dispute in writing between the Charleston County Aviation Authority and SCPR concerning the Ground Lease.

(iv) Seller has completed, or caused the completion of, all construction obligations of “Operator” under the Ground Lease, including those set forth in Section 4.06(D) of the Ground Lease.

Section 4.10 Intellectual Property.

(a) Schedule 4.10(a) sets forth a complete and accurate list as of the date of this Agreement of all of the following Intellectual Property that is included in the Purchased Intellectual Property or the Intellectual Property licensed to Buyer under the Intellectual Property License Agreement: (i) all patented or registered Intellectual Property; (ii) all pending patent applications or other applications for registration of Intellectual Property; and (iii) all material Software (other than firmware). Schedule 4.10(a) also includes an indication of whether each listed item constitutes Purchased Intellectual Property or Retained Intellectual Property.

(b) Other than such right, title and interest that is owned or licensed by Buyer and its Affiliates, Seller owns all right, title and interest in and to all of the Purchased Intellectual Property and Intellectual Property licensed to Buyer under the Intellectual Property License Agreement, including the Intellectual Property set forth on Schedule 4.10(a), free and clear of (i) all security interests, pledges or other consensual liens granted by Seller and (ii) to the Knowledge of Seller, all other Encumbrances, except, in the case of the foregoing clauses (i) and (ii), for Permitted Encumbrances and Outstanding Encumbrances. To the Knowledge of Seller, Seller possesses a valid and enforceable right to use the Licensed Intellectual Property. Except as set forth on Schedule 4.10(b), each Inbound License Agreement constitutes a legal, valid, binding and enforceable obligation of Seller and, to Seller’s Knowledge, of the other party or parties thereto and is enforceable in accordance with its terms, subject only to applicable bankruptcy, insolvency, reorganization and moratorium Laws and other Laws of general

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application affecting enforcement of creditors’ rights generally. Except for the Intellectual Property used by Seller to provide services pursuant to the Transition Services Agreement, the Intellectual Property licensed to Buyer pursuant to the Intellectual Property License Agreement and the Purchased Intellectual Property, together with any Licensed Intellectual Property and the other rights granted to Buyer under the Transaction Documents, includes all of the material Intellectual Property necessary to the conduct of the Business as currently conducted by Seller. None of Section 4.10(b) is intended to address infringement or misappropriation of Intellectual Property of any Person because those issues are addressed exclusively in Section 4.10(c).

(c) To the Knowledge of Seller in each case (i) Seller has not, in the operation of the Business, in any material respect infringed, misappropriated or otherwise made any unlawful or unauthorized use of any Intellectual Property of any Person, (ii) the operation of the Business as currently conducted does not, in any material respect infringe, misappropriate or otherwise make any unlawful or unauthorized use of any Intellectual Property of any Person, and (iii) the products sold and services performed by Seller in connection with the Business do not, and the manufacture, use, or sale of such products or performance of such services does not, in any material respect infringe, misappropriate or otherwise make any unlawful or unauthorized use of any Intellectual Property of any Person. To the Knowledge of Seller, Seller has not, as of the date of this Agreement or in the past five (5) years immediately preceding the date of this Agreement, received any written notices or other communications claiming, alleging or suggesting infringement, misappropriation or other unlawful or unauthorized usage of any Intellectual Property of any Person with respect to the Business (including any demands or offers to license any Intellectual Property from any Person). The Parties agree that Seller shall have no liability for breaches of the two preceding sentences to the extent any infringement, misappropriation or unlawful use of any Intellectual Property of any Person would not have occurred if Seller had signed Contracts noted as unsigned on Schedule 2.2(a)(i). To Seller’s Knowledge, no other Person is infringing, misappropriating or otherwise making any unlawful or unauthorized use of any Licensed Intellectual Property for which Seller has the right to enforce or any Purchased Intellectual Property.

(d) Seller has used commercially reasonable efforts to protect the confidentiality of any Purchased Intellectual Property of a confidential nature (including Trade Secrets and source code). Without limiting the generality of the foregoing, Seller has, and uses commercially reasonable efforts to enforce, a policy requiring, each (i) employee, individual consultant and individual contractor involved in design or development relating to the 787 Program to execute a written agreement protecting the confidentiality of any information of a confidential nature and requiring such Person to assign all Intellectual Property related to the Business to Seller (“Confidentiality and Assignment Agreements”) (the forms of which are set forth on Schedule 4.10(d)), and (ii) employee, individual consultant of Seller working onsite at Seller’s facility and individual contractor of Seller working onsite at Seller’s facility that has access to material confidential information relating to the 787 Program to execute a Confidentiality and Assignment Agreement. Without limiting the generality of the foregoing, to the Knowledge of Seller, except as set forth on Schedule 4.10(d), (A) all current and former employees, individual consultants and individual contractors of Seller involved in design or development relating to the 787 Program have executed agreements substantially the same in substance as the Confidentiality and Assignment Agreements and (B) all current and former employees of Seller, individual consultants of Seller working onsite at Seller’s facility and

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individual contractors of Seller working onsite at Seller’s facility that have access to material confidential information relating to the 787 Program have executed agreements substantially the same in substance as the Confidentiality and Assignment Agreements. None of the Purchased Intellectual Property has been adjudged invalid or unenforceable, and to the Knowledge of Seller, all of the Purchased Intellectual Property that is referred to in Section 4.10(a)(i) is valid, enforceable and subsisting. Seller has not, as of the date of this Agreement or during the five-year period immediately preceding the date of this Agreement, received any written notice or other written communication claiming, alleging or suggesting that any of the Purchased Intellectual Property is invalid or unenforceable.

(e) Except as set forth on Schedule 4.10(e), none of the Software included in the Purchased Intellectual Property incorporates or links to any Open Source Software.

(f) Seller has all material information technology systems sufficient to operate the Business as it is currently conducted.

Section 4.11 Contracts.

(a) For purposes of this Agreement, each of the following shall constitute a “Material Contract”:

(i) each Purchased Contract relating to the employment (whether on a full-time, part-time, consulting or other basis) of any Employee of the Business, and any “stay pay,” termination, change of control or other Contract pursuant to which Seller is or may become obligated to make any severance, termination or relocation payment to any current or former Employee of the Business who earns or earned an annual base salary of more than $60,000 or for which the cost of such severance, termination or relocation payment would exceed $30,000;

(ii) except to the extent included elsewhere in this Section 4.11(a), each Purchased Contract relating in a material manner or primarily to the acquisition, use, transfer, development, ownership, sharing or license of any Intellectual Property material to the conduct of the Business (other than nondisclosure agreements);

(iii) each Purchased Contract creating or relating to any partnership, limited liability company or joint venture or similar venture or arrangement;

(iv) each Purchased Contract with any customer or production supplier that involves, or would reasonably be expected to involve (assuming delivery of eighty-four (84) shipsets per year), the payment or expenditure in excess of $2,000,000;

(v) each Purchased Contract not with customers or production suppliers that may not be terminated (without penalty) by Seller within thirty (30) days after the delivery of a termination notice by Seller and contemplating or involving, or reasonably anticipated to involve, (A) the payment or delivery by or to the Business of cash or other consideration in an amount or having a value in excess of $250,000 in the aggregate in any calendar year; (B) the performance by or for the Business of services in an amount or having a value in excess of $250,000 in the aggregate in any calendar year; or (C) the sale, lease or other disposition by or to the Business of goods, supplies, products and/or other Assets in an amount or having a value in excess of $250,000 in the aggregate in any calendar year;

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(vi) each Seller Contract imposing any material, explicit restriction on the right or ability of (A) the Business to (1) compete with, or solicit the services or employment of, any other Person; (2) sell any product or other Asset, or perform any services anywhere in the world; (3) acquire any product or other Asset or any services from any other Person, sell any product or other Asset to or perform any services for any other Person, or transact business with any other Person; or (4) develop, use, sell, enforce or license any Intellectual Property material to the Business (other than nondisclosure agreements); or (B) Buyer to own and operate the 787 Program as currently conducted;

(vii) each Purchased Contract under which Seller (A) leases or subleases any real property or (B) leases or subleases any buildings, structures, improvements or appurtenances, in whole or in part, from any other Person involving lease payments or other consideration in excess of $100,000 per annum;

(viii) each Purchased Contract with (A) any Affiliate of Seller (other than any employee of Seller) or (B) any of the Persons identified on Schedule 4.11(a)(viii);

(ix) each note, debenture, bond, indenture, guarantee, loan, credit or financing agreement, instrument or other evidence of, or Contract for, Indebtedness of Seller secured by or providing Encumbrances on the Purchased Assets, and each Purchased Contract for borrowed money (including for future loans, credit or financing);

(x) any Contract, the primary subject matter of which is confidentiality, nondisclosure or similar agreement with respect to confidentiality arrangements executed by or on behalf of Seller with respect to the Business pursuant to which any third party owes an obligation of confidentiality to Seller in relation to the Business;

(xi) each Purchased Contract which creates, or may create, an Encumbrance on any Purchased Asset in an amount or with a value in excess of $50,000; and

(xii) each Purchased Contract set forth on Schedule 4.11(a)(xii).

(b) Except as set forth on Schedule 4.11(b) and other than with respect to the 787 Supply Agreement: (i) each Material Contract is in full force and effect and (ii) each Material Contract constitutes a legal, valid, binding and enforceable obligation of Seller and, to Seller’s Knowledge, of the other party or parties thereto and is enforceable in accordance with its terms, subject only to applicable bankruptcy, insolvency, reorganization and moratorium Laws and other Laws of general application affecting enforcement of creditors’ rights generally.

(c) Except as set forth on Schedule 4.11(c) and other than with respect to the 787 Supply Agreement: (i) Seller has not violated or breached in any material respect or committed any material default under, any Material Contract (in each case, with or without notice or lapse of time or both), nor is it in receipt of any written Claim of such default or breach; and (ii) to the Knowledge of Seller, no other Person has violated or breached in any material respect, or committed any material default under, any Material Contract (in each case, with or without notice or lapse of time or both).

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(d) Other than under the 787 Supply Agreement, no event or development has occurred, and no fact, circumstance or condition exists, that (with or without notice or lapse of time or both) has (i) resulted in a material violation or breach of any provision of any Material Contract by Seller; (ii) given any Person the right to declare a material default or exercise any remedy for breach under any Material Contract; (iii) given any Person the unilateral right to accelerate the maturity of material obligations pursuant to any Material Contract; or (iv) give any Person the right to cancel, terminate or modify, in any material respect, any Material Contract.

(e) Schedule 4.11(e) provides a list of all written Material Contracts (including all amendments thereto and excluding purchase orders issued pursuant to Material Contracts otherwise disclosed on such schedule) and a summary description of all material terms of any oral or unwritten Contract constituting a Material Contract (including any oral or unwritten amendments thereto), in each case as of the date of this Agreement. A true, correct and complete copy of each such written Material Contract (including all amendments thereto) has been made available to Buyer.

Section 4.12 Litigation.

(a) As of the date of this Agreement, (i) there is not pending or, to Seller’s Knowledge, threatened in writing against Seller or the Business any Legal Proceeding (other than any investigation by any Governmental Authority) at law or in equity before any court, tribunal, governmental body, agency or official or any arbitrator relating to the Business or the Purchased Assets (including any such Legal Proceeding which would affect the North Charleston Real Property or Seller’s right to occupy or utilize all or any portion of the North Charleston Real Property in accordance with the North Charleston Sublease, including any such proceeding under or in connection with the exercise or threat of exercise of eminent domain power), and (ii) to the Knowledge of Seller, there is no pending or threatened investigation of Seller by any Governmental Authority relating to the Business, in each case that would reasonably be expected to affect the legality, validity or enforceability against Seller of this Agreement or Seller’s ability to perform its obligations hereunder, or that is reasonably likely to result in Losses in excess of $50,000. As of the date of this Agreement, there is no Legal Proceeding pending or, to Seller’s Knowledge, threatened orally or in writing against Seller that would, if adversely determined, reasonably be expected to prevent or materially delay consummation of the transactions contemplated hereby.

(b) As of the date of this Agreement, (i) there is no Legal Proceeding, formal Claim or formal written ethics complaint pending or, to Seller’s Knowledge, threatened in writing against the Business, or for which the Business is obligated to indemnify a third party pursuant to a written agreement; and (ii) neither the Business nor the Purchased Assets is subject to any outstanding Order, other than, for the purposes of clauses (i) and (ii) of this sentence, any matter in which the Losses asserted or for which the amount in question does not exceed $50,000. As of the date of this Agreement, there are no formal internal investigations or inquiries related to the Business being conducted (a) by Seller’s board of directors (or any committee thereof) or (b) by the Business (or by Seller on behalf of the Business) or any third

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party at the request of the Business (or by Seller on behalf of the Business) for which Seller has engaged outside legal counsel or other outside advisors or consultants concerning financial, accounting, Tax, Income Tax, material violation of Law or fraudulent conduct.

Section 4.13 Permits; Compliance with Laws.

(a) Schedule 4.13 sets forth a list of all material Governmental Authorizations of Seller used in or held for use by Seller in connection with the Business and all pending applications therefor or renewals thereof as of the date of this Agreement. Seller is in possession of all material Governmental Authorizations, and has made all material filings, applications and registrations with any Governmental Entity, in each case that are necessary for Seller to own, lease, use and/or operate the Purchased Assets, in order to carry on the Business substantially as it is being conducted as of the date hereof, and all such Government Authorizations are, in all material respects, valid and in full force and effect.

(b) Seller is not in material conflict with, or in material default or violation of, (i) any Law applicable to the Business or by which any Purchased Asset is bound or (ii) any Governmental Authorization. Except as necessary to transfer Permits because of a change of ownership, none of the Transferred Permits will become terminable, in whole or in part, as a result of the transactions contemplated by this Agreement, except as would not, individually or in the aggregate, have a Material Adverse Effect. During the two (2) year period immediately preceding the date of this Agreement, Seller has not received any written warning, notice of violation, notice of revocation or other written communication from or on behalf of any Governmental Entity, alleging (A) any material violation of any Governmental Authorization (other than violations that have been remedied and with respect to which, to the Knowledge of Seller, no Person, as of the date of this Agreement, has a right of action against Seller) or (B) that Seller requires any material Governmental Authorization for the Business as currently conducted that is not currently held by it. As of the date of this Agreement, to the Knowledge of Seller, no investigation or inquiry by any Governmental Entity with respect to the Business is pending or threatened, in each case with respect to any alleged or claimed violation of Law applicable to the Business or by which any material Purchased Asset is bound or affected.

(c) Seller and, to Seller’s Knowledge, managers, officers, employees, Affiliates and authorized agents of the Business and any other Person associated with or acting on behalf of Seller with respect to the Business, in each case, relating to conduct or actions taken on behalf of the Business, are in material compliance with all applicable legal requirements under (i) the Foreign Corrupt Practices Act (15 U.S.C. §§ 78dd-1, et seq.) and (ii) all international anti-bribery and other Laws applicable to the Business relating to corruption, bribery, ethical business conduct, money laundering, political contributions, gifts and gratuities to public officials and private persons, and Laws requiring the disclosure of agency relationships or commissions and the anticorruption rules of any international financial institutions with which it does business (collectively, the “Anti-Bribery Laws”). During the two (2) year period prior to the date of this Agreement, Seller has not received any written communication from any Governmental Entity that alleges that Seller, any manager, officer, employee, Affiliate or authorized agents of the Business or any other Person acting on behalf of Seller with respect to the Business is, or may be, in violation of, or has, or may have, any material Liability under, the Anti-Bribery Laws.

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(d) Seller is not a “Specially Designated National” or other “Blocked Person” identified by the United States government, nor a Person that is owned or controlled by or acts on behalf of a “Specially Designated National” or “Blocked Person.” To Seller’s Knowledge, none of Seller’s brokers or any manager, officer, employee or authorized agent of the Business, and none of the funds or other assets to be transferred hereunder are the property of, or beneficially owned, directly or indirectly, by any “Specially Designated National” or “Blocked Person,” nor, to the Knowledge of Seller, are such funds or other assets the proceeds of any specified unlawful activity as defined by 18 U.S.C. § 1956(c)(7). With respect to the Business, Seller has not engaged in or, to Seller’s Knowledge, facilitated any prohibited transactions in violation of any Law with any “Specially Designated National” or other “Blocked Person” without proper prior authorization from the United States government.

(e) The representations and warranties set forth in this Section 4.13 do not apply to matters that are the subject of Employee Benefit Plans and Employment Matters (which are addressed in Section 4.16).

(f) If any matter is addressed in both Section 4.10(c) and Section 4.13, then the knowledge qualifiers contained in Section 4.10(c) shall qualify the relevant provisions of Section 4.13 to the same extent as qualified in Section 4.10(c).

Section 4.14 Environmental, Health and Safety Laws. Except for those matters that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:

(a) Except as set forth on Schedule 4.14(a), the North Charleston Real Property and the tangible Purchased Assets (including the North Charleston Facility) have not been used during the period of Seller’s ownership, lease, occupancy or operation for landfill, dumping or other on-site waste disposal activities, or operations, or for the on-site sale, treatment, processing, recycling or disposal of any Hazardous Material.

(b) To Seller’s Knowledge, except as set forth on Schedule 4.14(b), there are no underground storage tanks, sumps or wells on, in, or incorporated into the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility).

(c) Except as set forth on Schedule 4.14(c), Seller and its use and operation of the North Charleston Real Property and the tangible Purchased Assets (including the North Charleston Facility) comply, in all material respects, with, and have at all times during the period of their occupancy and use of the North Charleston Real Property and the tangible Purchased Assets (including the North Charleston Facility) complied, in all material respects, with, all Environmental Laws and no Liability has arisen under Environmental Laws related to Seller or its use or operation of the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility).

(d) All material Governmental Authorizations required by or issued pursuant to any Environmental Law (collectively, the “Environmental Permits”) for the ownership, use or operation of the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility) of the Business are presently maintained in full force and effect.

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Schedule 4.14(d) contains a true and complete listing of all material Environmental Permits and environmental disclosure reports held or made by Seller with respect to the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility). Except as set forth on Schedule 4.14(d), the Business and Seller’s use and operation of the North Charleston Real Property and the tangible Purchased Assets (including the North Charleston Facility) comply, in all material respects, with, and during the last two (2) years have at all times complied, in all material respects, with, all Environmental Permits.

(e) Except as set forth on Schedule 4.14(e), excluding permitted or authorized Releases arising during the ordinary course of business consistent with past practice, to Seller’s Knowledge there neither is, nor has been, any Release or threatened Release of Hazardous Material from, in, on, or to the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility).

(f) Except as set forth on Schedule 4.14(a), to Seller’s Knowledge there are no Hazardous Materials emanating from the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility) as of the date of this Agreement exceeding applicable regulatory thresholds.

(g) During the last two (2) years, Seller has not received written notice of any material Environmental Claim related to the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility). With the exception of items listed in Schedule 4.14(g), during the last two (2) years, Seller has not received written notice of any pending or threatened investigation or inquiry concerning: (i) the presence or release of any Hazardous Material on, in, incorporated into, emanating from or otherwise associated with the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility), or associated with the transport, treatment, storage, recycling or disposal of Hazardous Materials generated at the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility) to or at any off-site location, or (ii) any alleged violation of or any alleged Liability under any Environmental Law arising out of or in any way connected with operations or activities at the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility), or the transport, treatment, storage, recycling or disposal of Hazardous Materials generated at the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility) to or at any off-site location. Except as specifically disclosed in the environmental disclosure documents listed in Schedule 4.14(g), Seller has no Knowledge of any facts or circumstances concerning any alleged violation or Liability arising under or related to any Environmental Law which would reasonably be expected to result in an Environmental Claim against the owner of the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility).

(h) Except as set forth on Schedule 4.14(h), to the Knowledge of Seller, except for land use zoning and Federal Aviation requirements on height and non-interference with the adjoining regional aviation activities or for Permitted Encumbrances, no action has been taken by any Governmental Entity pursuant to the provisions of any Environmental Law specifically to restrict the use of the North Charleston Real Property or the tangible Purchased Assets (including the North Charleston Facility).

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(i) Seller has made available to Buyer all non-privileged documents, correspondence, pleadings, reports, assessments, analytical results and Environmental Permits concerning Environmental Laws, Hazardous Materials, or other environmental subjects that affect the North Charleston Real Property, the tangible Purchased Assets (including the North Charleston Facility), the Assumed Liabilities or the Business in Seller’s possession or control.

Section 4.15 Tax Matters.

(a) Except with respect to the 2008 Income Tax Returns, Seller has filed all Tax Returns and Income Tax Returns required to be filed under applicable Laws with respect to Taxes and Income Taxes, the nonpayment of which could result in an Encumbrance on the Purchased Assets. All such returns were correct and complete in all material respects and have been prepared in all material respects in compliance with all applicable Laws insofar as such Tax Returns and Income Tax Returns relate to Taxes and Income Taxes, the nonpayment of which could result in an Encumbrance on the Purchased Assets. All Taxes and Income Taxes due and owing by Seller (whether or not shown on any Tax Return or Income Tax Return), the nonpayment of which could result in an Encumbrance on the Purchased Assets, have been timely paid, except as set forth on Schedule 4.15.

(b) Seller has withheld and timely paid all material Taxes (including sales and use Taxes) and Income Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, equity holder, or other Person or third party with respect to the Business or the Purchased Assets, except as set forth on Schedule 4.15.

(c) Except with respect to the 2008 Income Tax Returns, Seller is not currently the beneficiary of any extension of time within which to file any Tax Return in connection with or relating to the Business and the Purchased Assets.

(d) There are no Encumbrances for Taxes or Income Taxes (other than such taxes that are not yet due and payable or that are being contested in good faith through appropriate proceedings) upon any of the Purchased Assets. All Taxes or Income Taxes with respect to the Business or the Purchased Assets that are being contested are set forth on Schedule 4.15.

(e) No foreign, federal, state, or local Tax audits or administrative or judicial Tax or Income Tax proceedings have been threatened (in writing) or, to Seller’s Knowledge, are pending or being conducted with respect to Taxes of Seller, the nonpayment of which could result in an Encumbrance on the Purchased Assets. Seller has not received from any foreign, federal, state, or local Tax Authority (including jurisdictions where Seller has not filed Tax Returns or Income Tax Returns) any notice of deficiency or proposed adjustment for any amount of Tax or Income Tax proposed, asserted or assessed by any Tax Authority against Seller, the nonpayment of which could result in an Encumbrance on the Purchased Assets.

(f) Seller is a “United States person” within the meaning of the Code.

(g) Seller does not treat any of the Purchased Contracts that are being transferred (or assumed) by Buyer pursuant to this Agreement as a partnership for Income Tax purposes. Schedule 4.15(g) sets forth all partnership interests for U.S. federal income tax purposes that are Purchased Assets.

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(h) Notwithstanding the foregoing, no representation or warranty in this Section 4.15 is given or shall be deemed to relate or pertain to the Assumed Liabilities in Section 2.3(a)(iii) hereof.

Section 4.16 Employee Benefit Plans; Employment Matters.

(a) Schedule 4.16(a) lists as of the date of this Agreement, with respect to the Employees, (i) all employee benefit plans within the meaning of Section 3(3) of ERISA, (ii) each loan from Seller or any Subsidiary of Seller to an Employee, (iii) all stock option, stock purchase, phantom stock, stock appreciation right, stock-based compensation, supplemental retirement, severance, sabbatical, employee relocation, cafeteria benefit (Section 125 of the Code), dependent care (Section 129 of the Code), life insurance or accident insurance plans, programs or arrangements, (iv) all bonus or incentive, pension, profit sharing, savings, retirement, or deferred compensation plans, programs and arrangements, (v) other fringe and employee benefit plans, programs or arrangements that apply to senior management and that do not generally apply to all employees, and (vi) any employment or service agreements (excluding any offer letters other than those providing severance pay, acceleration or post-termination benefits or bonus arrangements other than those set forth in Schedule 4.16(m)) or severance agreements for the benefit of, or relating to, any present or former director, officer, employee, or consultant under which any of Seller or any Subsidiary of Seller could reasonably be expected to have any Liability or obligation (all of the foregoing described in clauses (i) through (vi) collectively, the “Employee Benefit Plans”).

(b) Prior to the date of this Agreement, Seller has provided or made available to Buyer, a correct and complete copy of each of the Employee Benefit Plans and any related plan documents (including any material employee communications of Seller relating to the Employee Benefit Plans that have been distributed since January 1, 2007 (or since January 1, 2008 with respect to any defined benefit pension plan), summary plan descriptions and summaries of material modifications) and has provided or made available to Buyer correct and complete copies of the most recent Form 5500 reports (other than with respect to any defined benefit pension plan). Any Employee Benefit Plan intended to be qualified under Section 401(a) of the Code that includes a qualified cash or deferred arrangement (each a “401(k) Plan”) (i) has obtained from the IRS a current favorable determination letter issued to Seller as to its qualified status under the Code, (ii) has been established under a standardized master and prototype or volume submitter plan for which a current favorable IRS advisory letter or opinion letter has been obtained by the plan sponsor and is valid as to the adopting employer, or (iii) has time remaining under applicable Laws to apply for a determination or opinion letter or to make any amendments necessary to obtain a favorable determination or opinion letter. Seller has also provided to Buyer a correct and complete copy of the most recent IRS determination letter, advisory letter or opinion letter issued with respect to each 401(k) Plan. To Seller’s Knowledge nothing has occurred since the issuance of each such letter that could reasonably be expected to cause the loss of the Tax-qualified status of any 401(k) Plan subject to Section 401(a) of the Code or an applicable trust under Section 501(a) of the Code.

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(c) Except as set forth on Schedule 4.16(c), none of the Employee Benefit Plans promises or provides retiree medical or other retiree welfare benefits to any Person other than as required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) or applicable state law.

(d) Except as set forth in Schedule 4.16(d), neither Seller nor any ERISA Affiliate sponsors, maintains, participates in, contributes to, or is required to participate in or contribute to a pension plan (within the meaning of Section 3(2) of ERISA) for the benefit of Employees that is subject to Title IV or Part 3 of Title 1 of ERISA or Section 412 of the Code. In connection with the Business, neither Seller nor any ERISA Affiliate is a party to, or has made any contribution to or otherwise incurred any obligation under, any “multiemployer plan” as such term is defined in Section 3(37) of ERISA (a “Multiemployer Plan”) or any “multiple employer plan” as such term is defined in Section 413(c) of the Code to which Seller has any Liability (contingent or otherwise).

(e) No payment or benefit which will or may be made by Seller or any Subsidiary of Seller as a result of or in connection with the consummation of the transactions contemplated by this Agreement with respect to any Employee who is a “disqualified individual” (as such term is defined in Treasury Regulation Section 1.280G-I) could reasonably be expected to constitute an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code).

(f) Schedule 4.16(f) identifies, as of the date of this Agreement, the Employees who are absent from active work because of disability or other leave, the nature of such leave (e.g., short-term or long-term disability), and the expected length of the leave.

(g) Each material Employee Benefit Plan that is a nonqualified deferred compensation plan subject to Section 409A of the Code has been operated and administered in good faith material compliance with Section 409A of the Code from the period beginning January 1, 2005 through the date hereof.

(h) In connection with the Business, Seller is in compliance in all material respects with all currently applicable Laws respecting employment, discrimination in employment, terms and conditions of employment, worker classification (including the proper classification of workers as independent contractors and consultants), wages, hours and withholding of Income Taxes and employment Taxes (including unemployment and social security obligations), including the Fair Labor Standards Act and the Immigration Reform and Control Act. There are no controversies pending or, to Seller’s Knowledge, threatened, between Seller and any Employees, which controversies have or could reasonably be expected to result in a Legal Proceeding or Claim before any Governmental Entity.

(i) Except as disclosed on Schedule 4.16(i), Seller is not a party to or bound by any Collective Bargaining Agreement or other labor union Contract covering any Employees, and no Collective Bargaining Agreement covering any Employees is being negotiated by Seller. There is no pending demand for recognition or any other request or demand from a labor organization for representative status with respect to any Employees. To Seller’s Knowledge, there are no activities or proceedings of any labor union to organize the Employees. There is no labor dispute, strike or group work stoppage against Seller pending or to Seller’s Knowledge

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threatened that would materially interfere with the Business. Neither Seller nor to Seller’s Knowledge, any of Seller’s Employees has been found by the National Labor Relations Board or any comparable Governmental Entity in the past two (2) years to have committed an unfair labor practice in connection with the operation of the Business. To Seller’s Knowledge, there is no charge or complaint against Seller by the National Labor Relations Board or any comparable Governmental Entity pending or threatened in connection with the Business.

(j) Schedule 8.1(a)(i) contains a listing, of all Employees, including their job titles and whether Seller treats the Employees as exempt or non-exempt under the Fair Labor Standards Act. To Seller’s Knowledge, no Employee is in material violation of any term of any employment agreement, patent disclosure agreement, non-competition agreement, or any restrictive covenant to a former employer relating to the right of any such Employee to be employed by Seller because of the nature of the business conducted or presently proposed to be conducted by Seller or to the use of Intellectual Property of others. No officer or manager who is an Employee has given notice of termination or resignation to Seller, nor does Seller otherwise have Knowledge that any such officer or manager intends to terminate his or her employment with Seller. Schedule 8.1(a)(i) contains the current base salary or wage rate and the bonus earned in 2008 by all Employees. To Seller’s Knowledge, the employment of each of the Employees is on an “at will” basis, and except as set forth in Schedule 4.16(a), Seller has not knowingly entered into any agreement that would negate “at will” employment or require any particular form or period of notice prior to terminating the employment of any such Employees, except as may be required by applicable Law.

(k) Seller has made available to Buyer a summary or copy of Seller’s standard severance policy, if any.

(l) With respect to the Business, Seller is in compliance in all material respects with the WARN Act, and all similar state or local Laws. Seller has not caused any Employees to suffer an “employment loss” (as defined in the WARN Act) during the 90-day period prior to the date of this Agreement.

(m) Schedule 4.16(m) identifies each Employee that is entitled to participate in Seller’s “Management Incentive Plan,” Seller’s “Gaining Ground” program or an enhanced version of Seller’s “Gaining Ground” program and identifies the applicable plan or program and the applicable bonus target percentages, if any, for each such Employee.

Section 4.17 Suppliers. Schedule 4.17 sets forth (i) a complete and correct list of the twenty (20) largest suppliers (each measured by Dollar volume of revenue) of the Business during the last completed fiscal year and the current year-to-date period ended April 30, 2009, (ii) the amount of such business done (by Dollar volume of revenue) with each such supplier during such periods and (iii) a complete and correct list of all material written Claims made by each such supplier since January 1, 2007 alleging breach of, or entitlement to a price adjustment or other additional consideration pursuant to, the applicable Seller Supply Agreement.

Section 4.18 Insurance. As of the date of this Agreement, Seller currently maintains or is provided the insurance coverage related to the Business and the Purchased Assets listed in Schedule 4.18. As of the date of this Agreement, to Seller’s Knowledge, all such policies are

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valid and effective. As of the date of this Agreement, there is no Claim pending under any such policies, or any circumstance where coverage has been questioned, denied or disputed by the underwriters of such policies. As of the date of this Agreement, all premiums due and payable under all such policies have been paid, Seller is in material compliance with all disclosure obligations thereunder the absence of which could be reasonably expected to result in a denial of coverage, and Seller is otherwise in material compliance in all respects with the terms of such policies. As of the date of this Agreement, Seller has not been notified in writing of any threatened termination of, other than in connection with ordinary renewal notices, or material premium increase with respect to, any such policies of insurance maintained by Seller.

Section 4.19 Certain Transactions. Schedule 4.19 sets forth a description of all agreements and arrangements relating to the Business or included in the Purchased Assets between Seller, on the one hand, and any of Seller’s Affiliates involved in the Business or, officers or employees of the Business, on the other hand (other than employment agreements between Seller and employees of the Business).

Section 4.20 Broker’s Fees. Except as set forth on Schedule 4.20, Seller has no Liability or obligation to pay any fees or commissions to any broker, finder or similar agent in connection with the transactions contemplated by this Agreement or any other Transaction Document.

Section 4.21 Security Clearance. Except as may be prohibited by the National Industrial Security Program Operating Manual, Schedule 4.21 sets forth all facility and personnel security clearances held by Seller related to the Business or the Purchased Assets as of the date of this Agreement. Except as set forth in Schedule 4.21, to Seller’s Knowledge, there is no proposed or threatened termination or invalidation of any facility or personnel security clearances held by Seller related to the Business or the Assets as of the date of this Agreement.

Section 4.22 Site Development and Incentive Agreement; FILOT Agreement.

(a) As of December 31, 2008, (i) Seller has 329 employees that are counted as employees for purposes of meeting the minimum employment level, subject to the wage and fringe benefit requirements, all as identified in Exhibit B to the Site Development and Incentive Agreement, and 68 of such employees that are considered as “Badged Personnel” pursuant to Section 6.1 of the Site Development and Incentive Agreement and (ii) Seller has expended $237,769,169 in “Investment” as defined in Section 11-41-30(4) of the South Carolina Code, as amended.

(b) As of March 29, 2009, (i) Seller has 536 employees that are counted as employees for purposes of meeting the minimum employment level, subject to the wage and fringe benefit requirements, all as identified in Exhibit B to the Site Development and Incentive Agreement, and 62 of such employees that are considered as “Badged Personnel” pursuant to Section 6.1 of the Site Development and Incentive Agreement and (ii) Seller has expended $238,168,845 in “Investment” as defined in Section 11-41-30(4) of the South Carolina Code, as amended.

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(c) As of March 29, 2009, Seller has acquired $213,749,228 of “Economic Development Property” as defined in the FILOT Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as follows:

Section 5.1 Organization and Qualification. Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware.

Section 5.2 Authority; Enforceability. Buyer has the requisite corporate power and authority to enter into, execute and deliver this Agreement and each other Transaction Document to which it is a party, to perform all of the obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and each other Transaction Document to which it is a party, the performance of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action, and no other corporate action or proceeding is necessary to authorize the execution and delivery of this Agreement and each other Transaction Document to which Buyer is a party, the performance of its obligations hereunder and thereunder or the consummation of the transactions contemplated hereby and thereby. This Agreement has been, and each of the other Transaction Documents to which it is party will have been at the Closing, duly authorized, executed and delivered by Buyer and, assuming due authorization, execution and delivery by Seller, this Agreement constitutes, and each of the documents contemplated hereby will constitute at the Closing, its valid and binding obligation, enforceable against it in accordance with its respective terms, subject only to (a) applicable bankruptcy, insolvency, reorganization and moratorium Laws and other Laws of general application affecting enforcement of creditors’ rights generally and (b) rules or Laws governing specific performance, injunctive relief and other equitable remedies.

Section 5.3 No Conflicts.

(a) The execution and delivery by Buyer of this Agreement and each of the other Transaction Documents to which it is a party, the performance of and compliance with the respective terms and provisions hereof and thereof and the consummation by Buyer of the transactions contemplated hereby and thereby, do not and will not: (i) conflict with, or violate any provision of the certificate of incorporation, by-laws or any other organizational or governance document of Buyer; or (ii) subject to obtaining the Governmental Authorizations set forth on Schedule 5.3, conflict with or violate any Law.

(b) Except as set forth on Schedule 5.3, the execution and delivery by Buyer of this Agreement and each of the other Transaction Documents to which it is a party, the performance of and compliance with the respective terms and provisions hereof and thereof, and the consummation by Buyer of the transactions contemplated hereby and thereby, do not and will not require any Consent or Governmental Authorization from, or filing with or notification to, any Person not a party to this Agreement.

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Section 5.4 Broker’s Fees. Except as set forth on Schedule 5.4, Buyer has no Liability or obligation to pay any fees or commissions to any broker, finder or similar agent in connection with the transactions contemplated by this Agreement or any other Transaction Document.

Section 5.5 Litigation. No action, suit or proceeding is pending or threatened to restrain, prohibit or otherwise challenge the enforceability, consummation, legality or validity of this Agreement or any other Transaction Document or would reasonably be expected to affect Buyer’s ability to perform its obligations hereunder, other than any Claim as would not, individually or in the aggregate, have a material adverse effect on Buyer’s ability to consummate the transactions contemplated hereby in accordance with the terms hereof and applicable Laws.

ARTICLE VI

COVENANTS

Section 6.1 Appropriate Actions; Further Assurances. Upon the terms and subject to the conditions set forth in this Agreement, Buyer and Seller shall each use all commercially reasonable efforts to take, or cause to be taken, all actions, and do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement as soon as practicable after the date hereof; provided that nothing in this Section 6.1 shall require Buyer to waive any of the conditions set forth in Section 9.1 or require Seller to waive any of the conditions set forth in Section 9.2. Without limiting the generality of the foregoing, Seller shall from time to time when reasonably requested by Buyer, whether at or after the Closing, and without further consideration, promptly execute and deliver, or cause to be executed and delivered, all such documents necessary to (i) vest in Buyer all right, title and interest in and to the Purchased Assets, in accordance with this Agreement and (ii) perfect and record the sale of the Purchased Assets to Buyer in accordance with the terms of this Agreement. If Seller determines within one hundred eighty (180) days after the Closing that it has failed to deliver to Buyer any of the Purchased Assets (including any Purchased Intellectual Property) in the possession of Seller, Seller shall deliver such Asset(s) (or a copy of such Purchased Intellectual Property) promptly as reasonably practicable to Buyer. If Buyer accurately determines within one hundred eighty (180) days after the Closing that (x) any Assets of Seller in Seller’s possession were not delivered to Buyer at Closing but should have been so delivered because such Assets fall within the definition of “Purchased Assets,” then Buyer shall provide written notice to Seller and Seller shall deliver such Asset(s) promptly as reasonably practicable to Buyer or (y) a copy of any Purchased Intellectual Property in Seller’s possession was not delivered to Buyer at Closing, then Buyer shall provide written notice to Seller and Seller shall deliver a copy of such Purchased Intellectual Property promptly as reasonably practicable to Buyer. The Parties hereby agree that any restrictions on Buyer contained in Contracts between Seller and Buyer or any Affiliate of Buyer disclosed or required to be disclosed by Seller pursuant to Section 4.11(a)(vi)(B) shall be of no further force or effect from and after the Closing Date; provided that any Affiliate of Buyer that is a party thereto agrees to the termination of such restrictions.

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Section 6.2 Conduct of Business by Seller Until Closing.

(a) From the date of this Agreement until the Closing, except with the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), and except as set forth on Schedule 6.2(a), Seller shall (i) conduct the Business and use and/or hold for use the Purchased Assets only in the ordinary course of business, consistent with past practice; (ii) use commercially reasonable efforts to (A) preserve intact the Business and the Purchased Assets, (B) maintain and operate the tangible Purchased Assets in reasonable operating condition and repair (after allowing for ordinary wear and tear), (C) keep available the services of the present employees working for the Business (regardless of where located), (D) maintain in all material respects the goodwill associated with the Business (subject to Buyer’s compliance with the terms of the 787 Supply Agreement) and its existing relationships with the customers, suppliers and distributors of the Business; and (E) keep in full force and effect all liability insurance and bonds comparable in amount and scope of coverage to that currently maintained by Seller for the Business, the Purchased Assets, or the Assumed Liabilities; (iii) use commercially reasonable efforts to pay trade payables (other than trade payables being disputed by Seller in good faith) of the Business in the ordinary course of business consistent with past practice (including with respect to the timing of such payments); (iv) use commercially reasonable efforts to continue to prosecute any pending patent applications included in the Purchased Intellectual Property; and (v) to the extent that doing so does not hinder the timely prosecution of patent applications included in the Purchased Intellectual Property, consult with Buyer on Seller’s responses to office actions with respect to such patent applications and consider in good faith Buyer’s comments with respect to such responses. In addition, between the date hereof and the Closing, Seller shall use commercially reasonable efforts to arrange for all or substantially all hazardous waste stored in the 90-day hazardous waste storage area at the North Charleston Facility as of the date that is three (3) days prior to the Closing to be shipped off-site prior to the Closing.

(b) Without limiting the generality of the foregoing, from the date of this Agreement until the Closing, unless otherwise expressly required by this Agreement or with the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), Seller shall not, except as set forth on Schedule 6.2(b):

(i) Except as required by Law, (A) increase the salary, wages or other compensation or fringe benefits of any current Employee or officer of the Business; (B) grant or increase any severance or termination pay (other than in accordance with Seller’s normal severance practices in effect on the date of this Agreement) to, or enter into any severance Contract with, any Employee or officer of the Business, or enter into any employment Contract with any Employee or officer of the Business; (C) establish, adopt, enter into or amend any Employee Benefit Plan or other arrangement applicable solely to the Business or, except pursuant to an employee benefit plan generally applicable to employees of Seller, grant or increase any benefit to an Employee (it being understood and agreed by the Parties that, except with respect to matters set forth on Schedule 6.2(b), if Seller takes any of the foregoing actions described in this clause (C) (whether or not with respect to an Employee Benefit Plan or arrangement solely applicable to the Business), such actions shall not be taken into account in determining an Employee’s terms and conditions of employment for purposes of Sections 8.2 and 8.3); or (D) except as set forth on Schedule 6.2(b)(i), hire, promote or terminate any officer

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or supervisory or management level Employee of the Business, except in each case as may be required to comply with applicable Law or an Employee Benefit Plan or Seller Contract in existence as of the date hereof;

(ii) with respect to the Business, the Purchased Assets or the Assumed Liabilities, make any loan, advance or capital contribution to, or any investment in, or acquire, by merging or consolidating with, by purchasing any of the Assets or securities of or by any other manner, directly or indirectly, any business or any Person, or otherwise acquire any Assets other than in the ordinary course of business consistent with past practice;

(iii) sell, lease, license, exchange, mortgage, pledge, transfer, encumber or otherwise dispose of any of the Purchased Assets or any interest therein, or permit any of the Purchased Assets to be subject to or become subject to any Encumbrance, except for (A) sales of Inventory in the ordinary course of business consistent with past practice and (B) Outstanding Encumbrances, Permitted Encumbrances and Encumbrances under the Seller Supply Agreements;

(iv) other than as required to perform under a Material Contract in existence as of the date hereof, move any tangible Assets (other than those that are de minimis in the aggregate in monetary value) or employees of the Business or transition any business activities (other than immaterial business activities) utilized in satisfying its obligations under the 787 Supply Agreement from the North Charleston Facility to any other location;

(v) knowingly abandon any patent application included in the Purchased Intellectual Property;

(vi) with respect to the Business, the Purchased Assets or the Assumed Liabilities, change any accounting methods, practices, principles or policies, other than as required by applicable Law or GAAP, or make or rescind any election relating to Taxes, settle or compromise any Legal Proceeding or other controversy relating to Taxes that could reasonably be expected to result in an adverse effect on Buyer or the Business after the Closing Date;

(vii) with respect to the Business, the Purchased Assets or the Assumed Liabilities, make or agree to make any capital expenditures (other than as required pursuant to any Contract in existence on the date hereof or executed hereafter in accordance with Section 6.2(b)(viii) of this Agreement) in an amount exceeding the amount provided in the Business’s 2009 Capital Asset Plan set forth on Schedule 6.2(b)(vii);

(viii) except as otherwise prohibited by this Section 6.2(b), enter into any Contract (A) that would be deemed to be a Material Contract if such Contract had existed on the date hereof, other than (1) purchase orders pursuant to an existing Contract that are subject to customary terms and conditions (which include the applicable existing Contract), which, in the case of Contracts with production suppliers, would not commit the Business with respect to more than thirty (30) shipsets in the aggregate (measured since inception of such Contract), or (2) in the case of Contracts not with production suppliers, any Contract entered into in the ordinary course of business consistent with past practice and customary terms and conditions (which include the applicable existing Contract) that does not involve an amount in excess of $250,000

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in the aggregate, or (B) with a new supplier of the Business that may not be terminated (without penalty) by Seller within thirty (30) days after the delivery of a termination notice by Seller or that involves an amount in excess of $100,000;

(ix) (A) assign or expressly (whether orally or in writing), or intend by its conduct to, waive or release any rights or Claims arising out of or relating to the Business (1) with value to the Business in excess of $100,000 individually or $250,000 in the aggregate with respect to non-recurring Claims, (2) with respect to recurring Claims involving production suppliers, with value to the Business in excess of $10,000 per shipset individually or (3) with any of the suppliers set forth on Schedule 6.2(b)(ix), or (B) modify or amend in any material respect or terminate or renew any Purchased Contract (except as may be expressly required by such Purchased Contract in consultation with Buyer);

(x) commence, settle or compromise, or agree to the entry of any Order in respect of, any Claim or Legal Proceeding relating to the Business or any material Purchased Asset (including any outstanding Claims with suppliers of the Business to the extent the same relates to or would constitute an Assumed Liability);

(xi) with respect to the Business, the Purchased Assets or the Assumed Liabilities, make any payment to or enter into any Seller Contract with an Affiliate other than pursuant to Seller Contracts existing as of the date hereof and the provision of benefits under Employee Benefit Plans existing as of the date hereof;

(xii) enter into any Contract that would expressly limit the freedom of the Business (except for Seller’s applicable counterparty(ies) to any such Contract) to compete in any line of business or with any Person or in any area; or

(xiii) authorize, commit or agree to do any of the foregoing.

Section 6.3 Consents and Governmental Authorizations.

(a) Promptly after the date hereof, Seller and Buyer shall (i) use commercially reasonable efforts to give all notices required to be given to third parties in connection with the transactions contemplated hereby, (ii) use commercially reasonable efforts to obtain prior to the Closing all Consents and Governmental Authorizations identified or required to be identified on Schedule 4.3, and (iii) cooperate with and assist the other Party (including by providing to any Governmental Entity at the reasonable request of the other Party, information relating to such Party or its business or the Business, the Transaction Documents or the transactions contemplated thereby) in obtaining promptly, and in any event prior to Closing, all Consents and Governmental Authorizations identified or required to be identified on Schedule 4.3 and Schedule 5.3. Except as may be required pursuant to Section 6.21 in connection with the Lender Waiver, the foregoing shall not require any Party to make any payment to any Person in order to obtain any Consent with respect to any Purchased Contract. Notwithstanding anything to the contrary set forth herein, the Parties acknowledge and agree that Seller is responsible for obtaining the Lender Waiver and, unless otherwise agreed by Buyer, Buyer is not obligated to make any financial accommodation in connection with obtaining the Lender Waiver.

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(b) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign at Closing any Purchased Contract or any Claim or right or any benefit arising thereunder or resulting therefrom if an attempted assignment or transfer thereof without the consent of a third party would constitute a breach or default thereof or give rise to a right of termination or cancellation thereunder (any such Contract, Claim or right that constitutes a Purchased Contract shall be referred to as a “Non-Assigned Contract,” provided that the Site Development and Incentive Agreement shall not constitute a Non-Assigned Contract). Seller and Buyer shall continue to use commercially reasonable efforts for one hundred and eighty (180) days following the Closing Date to obtain the Consents necessary to assign or transfer any of the Non-Assigned Contracts. After the Closing, Seller shall not modify, amend, terminate or renew any Non-Assigned Contract (except as may be expressly required by such Non-Assigned Contract) without first obtaining the written consent of Buyer (which consent may be withheld in Buyer’s sole discretion). If such Consent is obtained following Closing, within such one hundred and eighty (180) day period or thereafter, the applicable Non-Assigned Contract shall be deemed to have been automatically assigned and/or transferred to Buyer on the terms set forth in this Agreement with respect to the other Non-Assigned Contracts transferred and assumed at the Closing. If such Consent is not obtained, Seller and Buyer will cooperate with each other, in all commercially reasonable respects, to design an arrangement pursuant to which Buyer will receive all rights and benefits under such Non-Assigned Contract and, subject to receiving such rights and benefits, perform all of the obligations under such Non-Assigned Contract that are necessary for Buyer to be entitled to receive such rights and benefits. The Parties acknowledge and agree that (x) this Section 6.3(b) shall in no way diminish or negate the Parties’ respective obligations set forth in clauses (i), (ii) and (iii) in Section 6.3(a) and (y) the Non-Assigned Contracts constitute Purchased Contracts if and only if the arrangements and procedures agreed to by the Parties in this Section 6.3(b) provide Buyer the rights and benefits of any such Non-Assigned Contracts.

(c) Buyer and Seller will, as promptly as practicable, but in no event later than fifteen (15) Business Days following the execution and delivery of this Agreement, file with the United States Department of Commerce Bureau of Industry and Security (“BIS”) a request to transfer License Number D405984 from Seller to Buyer, together with the necessary supporting documents, pursuant to Export Administration Regulations Section 750.10. If BIS requests additional information or documentation, Buyer and Seller shall use commercially reasonable efforts to promptly provide such requested information to BIS in order to facilitate obtaining a validated letter from BIS authorizing the transfer.

(d) Promptly after the Closing, Seller and Buyer shall use commercially reasonable efforts to obtain the consent of the Charleston County Aviation Authority to satisfy all outstanding requirements of Special Condition h of Department of the Army Permit No. 2004-1N-402 (the “Wetlands Permit”), it being understood and agreed that the cooperation of the Charleston County Aviation Authority, as owner of the North Charleston Real Property, will be necessary in order to meet the requirements of Special Condition h. It is specifically agreed that Seller will use commercially reasonable efforts, at Buyer’s expense, to (i) make available to Buyer (and consent to any consultant disclosure to Buyer of) all files and current personnel necessary to its development of the application and plans for the Wetlands Permit and coordination and approval of such plans and terms with the Charleston County Aviation Authority and (ii) direct its applicable current personnel to assist Buyer in communications with

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the Charleston County Aviation Authority requesting approval and filing of papers necessary to satisfy Special Condition h. It is further understood and agreed that Buyer (i) shall be responsible for all costs of preparing and recording any necessary deed restrictive covenants or conservation easements in a form acceptable to the Department of the Army and (ii) shall be responsible for any costs of maintaining the preserved wetlands and upland buffers in compliance with all applicable Law following the Closing for so long as Buyer is a sub-tenant on the North Charleston Real Property.

Section 6.4 Access and Information.

(a) Except as may be (i) prohibited by applicable Law, (ii) prohibited by the terms of any existing Seller Contract, or (iii) required to preserve legal privilege, Seller shall, upon reasonable notice from Buyer, (A) afford to Buyer and its Representatives reasonable access to the Purchased Assets and Seller’s books, records, officers, employees, advisors, counsel, facilities, properties, documents and other information with respect to the Business; provided such access will be during normal business hours and such other times as are reasonable and will be structured so as to not unreasonably interfere with the conduct of the Business or the Purchased Assets; and (B) provide access to Buyer, as soon as reasonably practicable upon Buyer’s reasonable request, to make copies of such books, records, documents and information. If Seller reasonably determines (after consultation with outside counsel) that any requested disclosure would cause any loss of a legal or other privilege or require consent under any Seller Contract, (1) Seller shall provide Buyer with details regarding the type and nature of the information that is prohibited from being disclosed, including to which Sections of this Agreement such information relates and the monetary amount involved (to the extent that Seller is able to provide such details without compromising such attorney-client privilege or violating such confidentiality agreement), and (2) the Parties shall use commercially reasonable efforts to make appropriate alternative disclosure arrangements (e.g., the entry into an appropriate joint defense agreement in connection with affording access to such information) or to obtain any such required consent. Buyer, at its sole cost and expense and in its sole discretion, may engage an environmental consultant to conduct a Phase I environmental investigation with respect to the North Charleston Facility, on or prior to the Closing Date, upon at least five (5) Business Days prior written notice to Seller; provided that, notwithstanding any provision herein to the contrary, Buyer shall not be permitted to conduct (x) any Phase II environmental investigation or (y) any investigation or testing involving physically invasive sampling of soil, ground water or other substances.

(b) Except as may be (i) prohibited by applicable Law, (ii) prohibited by the terms of any existing Contract of Buyer, or (iii) required to preserve legal privilege, for six (6) years from and after the Closing Date, Buyer shall, upon reasonable notice from Seller, afford to Seller and its Representatives reasonable access to (and the ability to make copies of) all of the Business Books and Records existing as of the Closing Date and, subject to the reasonable discretion of Buyer, the other books and records of Buyer and its Subsidiaries relating to the conduct of the Business following the Closing; provided such access will be during normal business hours and such other times as are reasonable and will be structured so as to not unreasonably interfere with the conduct of the Business; and provided further that Seller and Buyer are not engaged in litigation or any other dispute resolution process (including any claim for indemnification hereunder), and there does not exist any threatened or pending Claim

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(whether written or oral) between the Parties, with respect to the Business or the transactions contemplated by this Agreement or such documents do not relate to the subject matter of such litigation or other proceedings or pending or threatened Claim. If Buyer reasonably determines (after consultation with outside counsel) that any requested disclosure would cause any loss of a legal or other privilege or require consent under any Contract of Buyer, (A) Buyer shall provide Seller with details regarding the type and nature of the information that is prohibited from being disclosed, including to which Sections of this Agreement such information relates and the monetary amount involved (to the extent that Buyer is able to provide such details without compromising such attorney-client privilege or violating such confidentiality agreement) and (B) the Parties shall use commercially reasonable efforts to make appropriate alternative disclosure arrangements (e.g., the entry into an appropriate joint defense agreement in connection with affording access to such information) or to obtain any such required consent.

Section 6.5 Exclusivity. From the date hereof through the Closing or until such time as this Agreement shall have been terminated pursuant to Article X, Seller will not, nor will Seller authorize any Affiliate or Representative of Seller to, and Seller will instruct its Affiliates or Representatives not to (a) directly or indirectly solicit, initiate, encourage or participate in any way in (including by way of furnishing confidential information), or take any other action that facilitates any discussion, inquiry, offer, proposal, negotiation or other communication with any Person or group (other than Buyer or its Representatives) relating to, or that could reasonably be expected to result in, any merger, consolidation, sale, exchange or other disposition of any substantial portion of the assets outside of the ordinary course of business or equity interests of or any business combination, recapitalization, liquidation, dissolution or other similar transaction (or any combination of any of the foregoing) relating to the disposition of all, or substantially all, or any substantial portion of, the Business or the Purchased Assets (each, an “Acquisition Proposal”); (b) disclose, directly or indirectly, to any Person known to Seller to be considering an Acquisition Proposal any information concerning Seller, the Business or any of the Purchased Assets; or (c) enter into, continue or participate in any discussions, negotiations or other communications, or enter into any understanding, Contract or commitment, with any third party relating to, or take any action in furtherance of, any written Acquisition Proposal received by Seller. Seller will as promptly as practicable (and in any event within three (3) Business Days) notify Buyer of any Acquisition Proposal. Seller shall be responsible for any breach of this Section 6.5 by any of its Affiliates or Representatives.

Section 6.6 Public Announcements. Each of the Parties shall, to the extent reasonably practicable and only as permitted by applicable Law, consult with each other before issuing, and shall provide each other with the opportunity to review and comment upon, any press release or other public announcement or statement with respect to this Agreement or the transactions contemplated hereunder (it being understood that, notwithstanding anything in Section 6.9 or the Non-Disclosure Agreement to the contrary, neither Party shall be required to obtain the consent of the other Party to make any such press release or other public announcement or statement unless such release or announcement discloses any Confidential Information of the other Party).

Section 6.7 Transaction Expenses. Except as expressly set forth herein, each Party shall bear its own Transaction Expenses.

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Section 6.8 Notices of Certain Matters. From the date of this Agreement until the Closing, Buyer and Seller shall each promptly notify the other in writing of any pending or, to the Knowledge of such Party, threatened, Legal Proceeding (a) challenging or seeking damages in connection with the transactions contemplated hereunder or (b) seeking to restrain or prohibit the consummation of the transactions contemplated hereunder. The Parties shall reasonably cooperate with each other in defending against any such Legal Proceeding, including seeking to have vacated or reversed any stay or temporary restraining order entered in connection therewith by any court or other Governmental Entity.

Section 6.9 Confidentiality.

(a) From and after the Closing, neither Buyer nor Seller shall, and each of Buyer and Seller shall cause their respective Affiliates and Representatives not to, without first obtaining the written consent of the other Party (which consent may be withheld in such Party’s sole discretion) disclose to any Person (other than such Party’s Representatives) (i) any confidential or proprietary information received from the other Party in connection with the transactions contemplated hereby, (ii) in the case of Seller, any confidential or proprietary information that Seller has that is contained in the Purchased Assets or that relates to the Business and (iii) the Transaction Documents and any of the terms, conditions, negotiations or other information with respect hereto and thereto or the transactions contemplated hereby and thereby (collectively, the “Confidential Information”), whether furnished or available before or after the Closing, whether documentary, electronic or oral, whether labeled or otherwise identified as confidential, and regardless of the form of communication or the manner in which it is or was furnished. Notwithstanding the foregoing, either Buyer or Seller or their respective Affiliates may disclose such Confidential Information as they determine in good faith is required by applicable Law, the rules or regulations of any national securities exchange (or the terms of any outstanding securities of the disclosing Party) or by oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, but only to the extent so required, or in connection with any Claim, Legal Proceeding, Tax matter or dispute between the Parties with respect to this Agreement or any of the Transaction Documents. If either Buyer or Seller or their respective Affiliates are required (by oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process) to disclose any Confidential Information, such disclosing Party shall, to the extent practicable, provide the non-disclosing Party with prompt written notice (but in any event not less than ten (10) days advance notice) of any such requirement so that the non-disclosing Party shall have an opportunity to seek a protective order or other appropriate remedy. The disclosing Party shall disclose only that portion of the Confidential Information or other information that is reasonably necessary to disclose in order to comply with such requirement. Notwithstanding the foregoing, in the event that either Buyer or Seller or their respective Affiliates are required to disclose any Confidential Information, such disclosing Party shall exercise their reasonable efforts to preserve the confidentiality of such Confidential Information, including by cooperating with the non-disclosing Party (at the non-disclosing Party’s cost and expense) to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded such Confidential Information, as reasonably requested by the non-disclosing Party. Notwithstanding the foregoing, (i) following Closing, Buyer shall not be prohibited from disclosing to any Person any information included in the Purchased Assets or relating to the Business (other than

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non-public Transaction Documents and the terms and conditions thereof and other non-public information relating to the transactions contemplated hereby) and (ii) the obligations of the Parties under this Section shall expire on the second anniversary of the Closing Date; provided that, with respect to any Confidential Information that is a trade secret of Seller, Buyer or the Business under applicable Law, the obligations of the Parties under this Section shall apply for so long as the owner of such Confidential Information maintains such Confidential Information as a trade secret under applicable Law. Effective as of the Closing, the Non-Disclosure Agreement shall terminate and shall no longer be enforceable against any party thereto. In the event of any ambiguity or conflict between the terms and conditions of this Section 6.9(a) and the terms and conditions of any other Transaction Document or other written agreement between Seller and Buyer and/or Boeing, the terms and conditions of such other Transaction Document or agreement shall control.

(b) Promptly following the reasonable request of Buyer, Seller or any of its Subsidiaries shall use commercially reasonable efforts to enforce all Contracts, the primary subject matter of which is confidentiality, nondisclosure or similar agreements with respect to confidentiality arrangements executed by or on behalf of Seller during the two (2) year period immediately preceding the date of this Agreement in connection with the consideration of the sale of Seller (including with respect to the sale of the Business), to the extent that Buyer or any of its Affiliates is not a party to, or an assignee of rights under, such Contracts (or otherwise an intended third-party beneficiary of such Contracts), with respect to the confidential information of Buyer or any of its Affiliates relating to the Business or the Purchased Assets, on behalf of and at the reasonable direction of Buyer, provided that Buyer shall be solely responsible for the cost and expense of such enforcement and any Liability relating thereto.

Section 6.10 Non-Solicitation.

(a) Seller shall not, whether directly or indirectly, during the period beginning on the Closing Date and ending on the second anniversary of the Closing Date (such period, the “Restricted Period”), (i) solicit the employment of, or hire, any Initial Restricted Employee without the prior written consent of Buyer, provided, however, that Seller shall not be in breach of its non-solicitation obligation set forth in the foregoing clause (i) solely as a result of any general solicitation advertisements that are not targeted at any Initial Restricted Employees, but Seller shall be prohibited from hiring any Initial Restricted Employees who respond to such general solicitation advertisements not targeted at the Initial Restricted Employees; or (ii) take any action which is intended to induce any Initial Restricted Employee to leave his or her employ with the Business.

(b) Seller shall not, whether directly or indirectly, during the Restricted Period solicit the employment of any Additional Restricted Employee without the prior written consent of Buyer; provided, however, that Seller shall not be in breach of its non-solicitation obligation under this Section 6.10(b) solely as a result of any general solicitation advertisements that are not targeted at any Additional Restricted Employees and Seller shall not be prohibited from hiring any Additional Restricted Employees who respond to such general solicitation advertisements not targeted at the Additional Restricted Employees.

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(c) Except as provided in the Transition Services Agreement, Boeing Commercial Airplanes (“BCA”) shall not, and Buyer shall not on behalf of BCA, whether directly or indirectly, during the Restricted Period, (i) solicit the employment of, or hire, any Seller Engineering Employees without the prior written consent of Seller, provided, however, that Buyer shall not be in breach of its non-solicitation obligation set forth in the foregoing clause (i) solely as a result of any general solicitation advertisements that are not targeted at any Seller Engineering Employees, but Buyer shall be prohibited from hiring any Seller Engineering Employee who respond to such general solicitation advertisements; or (ii) take any action which is intended to induce any Seller Engineering Employee to leave his or her employ with Seller.

(d) Except as provided in the Transition Services Agreement, BCA shall not, and Buyer shall not on behalf of BCA, whether directly or indirectly, during the Restricted Period, solicit the employment of any New Seller Engineering Employees without the prior written consent of Seller; provided, however, that Buyer shall not be in breach of its non-solicitation obligation under this Section 6.10(d) solely as a result of any general solicitation advertisements that are not targeted at any New Seller Engineering Employees and Buyer shall not be prohibited from hiring any New Seller Engineering Employees who respond to such general solicitation advertisements not targeted at the New Seller Engineering Employees.

(e) If Buyer or Seller breaches any the restrictive covenants set forth in this Section 6.10, then the non-breaching Party shall have the following rights and remedies against the breaching Party, each of which shall be independent of the others and severally enforceable, and each of the following rights and remedies is in addition to, and not in lieu of, any other rights and remedies otherwise available to such non-breaching Party at Law or in equity for such actions: (i) the right and remedy to have the restrictive covenant in this Section 6.10 specifically enforced against such breaching Party, including temporary restraining orders and injunctions by any court of competent jurisdiction, it being agreed by the Parties that any breach of this Section 6.10 would cause irreparable injury to the non-breaching Party and that money damages would not provide an adequate remedy to the non-breaching Party, and (ii) the right and remedy to collect from the breaching Party any such Losses incurred by the non-breaching Party as a result of enforcing this Section 6.10.

(f) Each Party agrees that, in the event a court of competent jurisdiction declares there has been a breach by such Party of this Section 6.10, the term of any such term or covenant so breached shall be automatically extended with respect to such Party for a period of time of the violation from the date on which such breach ceases.

Section 6.11 Intracompany Work Orders. Seller shall cancel any work orders existing between the Business and the other businesses and facilities of Seller in existence on the Closing Date. Such intracompany work orders shall be replaced with purchase orders agreed by Seller and Buyer pursuant to the SOW Supply Agreement and the Transition Services Agreement.

Section 6.12 Purchased Intellectual Property. Except as expressly provided in this Agreement or in any other Transaction Document, (a) Seller has no right to use any of the Purchased Intellectual Property from and after the Closing and (b) Buyer has no right to use any of the Retained Intellectual Property from and after the Closing. Effective as of the Closing, except for the rights expressly provided in the Transaction Documents, any and all rights and/or licenses (whether express or implied) of Seller or any of its Affiliates arising from or related to any of the Purchased Intellectual Property are hereby terminated.

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Section 6.13 Insurance.

(a) Seller will use commercially reasonable efforts to keep insurance policies currently maintained related to the Business, the Purchased Assets and current or former employees, or replacements therefor, in full force and effect through the Closing Date. Buyer shall become solely responsible for all insurance coverage after the Closing Date with respect to the Business and the Purchased Assets.

(b) From and after the Closing Date, none of Buyer or its Affiliates will have any rights with respect to any of Seller’s insurance policies, except that, following Closing, (i) Seller shall pay to Buyer all insurance proceeds (after deducting the out-of-pocket costs and expenses incurred following Closing in connection with such claim and obtaining such proceeds) that it receives following the date hereof to the extent relating to the Business, any of the Purchased Assets or any of the Assumed Liabilities with respect to any claims made by Seller prior to Closing under any policies of insurance of Seller in effect prior to the Closing, other than any such proceeds received in respect of any Excluded Liability, and (ii) at the written request of Buyer, Seller shall, at the cost and expense of Buyer, use commercially reasonable efforts to seek recovery on behalf of Buyer under such insurance policies (to the extent permitted under such insurance policies), subject to any deductible or self-retention or other policy requirement or limit; provided that this Section 6.13 shall not require Seller to initiate, engage in or threaten litigation with any Person, including any of its insurance carriers.

(c) Seller shall use reasonable efforts to cause the Premises Pollution Liability Policy No. PPL G23794603 001 issued by Illinois Union Insurance Company (the “Environmental Insurance Policy”) to be endorsed to add Buyer and Boeing, effective as of the Closing, as additional insureds with full unencumbered rights therein, but only with respect to Liabilities arising out of the ownership, operation, maintenance or use of the “covered locations” as defined in the Environmental Insurance Policy. Seller shall provide written confirmation of the insurer’s acceptance of the foregoing obligation, assuming such acceptance is received, following Seller’s receipt thereof from the insurer. Seller will use commercially reasonable efforts to keep the Environmental Insurance Policy in full force and effect through the full term of the Environmental Insurance Policy and will provide Buyer with ninety (90) days prior written notice before amending, commuting, terminating or otherwise changing the Environmental Insurance Policy (it being understood that the expiration of the Environmental Insurance Policy by its terms, or erosion of aggregate limits resulting from claims activity, will not constitute any such action).

Section 6.14 Litigation Support. Subject to Section 6.4(b) with respect to books and records of Buyer and its Subsidiaries related to the conduct of the Business following the Closing, in the event and for so long as either Party is actively contesting or defending against any Claim brought by a third party in connection with any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act or transaction involving the Business, the other Party shall reasonably cooperate with the contesting or defending Party and its counsel in the contest or defense, make available its personnel and

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provide such access to its non-privileged books and records as may be reasonably requested in connection with the contest or defense, at the sole cost and expense of the contesting or defending Party (unless such contesting or defending Party is entitled to indemnification therefor under Article XI, in which case, the costs and expense shall be borne by the Indemnifying Persons to the extent provided in Article XI). Notwithstanding the foregoing, this Section 6.14 shall not apply to pending or threatened Claims (whether written or oral) with respect to which the Parties are in dispute with each other.

Section 6.15 Transfer of Governmental Authorizations. Seller shall use commercially reasonable efforts to assist Buyer, upon Buyer’s reasonable request, in providing notices and otherwise taking actions required to transfer or reissue any Governmental Authorizations as a result of or in furtherance of the transactions contemplated by this Agreement. Seller shall use commercially reasonable efforts to cooperate with Buyer, upon Buyer’s reasonable request, to provide information necessary to apply for the transfer or reissuance of such Governmental Authorizations. Notwithstanding anything to the contrary in Section 6.9 or the Non-Disclosure Agreement, Buyer and Seller shall, after reasonable prior notice to and consultation with the other Party, be permitted to provide confidential or proprietary information of the other Party to Governmental Entities to the extent necessary to transfer or reissue any Governmental Authorization to Buyer.

Section 6.16 787 Supply Agreement. At the Closing, Seller shall, and Buyer shall cause Boeing to, enter into a termination agreement in the form of Exhibit A attached hereto (the “Termination and Mutual Release Agreement”), pursuant to which the 787 Supply Agreement will be terminated simultaneously with the Closing, except as provided in the Termination and Mutual Release Agreement.

Section 6.17 Delivery of Financial Information. From the date of this Agreement until the Closing, Seller will deliver to Buyer (i) an updated calculation of the Adjusted Net Investment Amount, as of the last day of each month ended after the date hereof and (ii) the internal, unaudited balance sheets of the Business and the related statements of income and cash flows of the Business as of the last day of each monthly reporting period ended after June 1, 2009 (collectively, the “Interim Financial Information”), within thirty (30) days after the conclusion of each month. The Interim Financial Information will be prepared in accordance with (a) the Business Books and Records and (b) the accounting practices, policies and methodologies used by Seller in preparing its internal, unaudited financial statements attached to Schedule 4.4.

Section 6.18 Cash Management.

(a) The Parties agree that (i) Seller will be liable for payment of, and will fund all amounts in respect of, all checks issued by Seller relating to the Purchased Contracts that are outstanding as of the Closing Date and presented for payment after the Closing Date in disbursement accounts of Seller or any of its Affiliates and (ii) Buyer will be liable for payment of, and will fund all amounts in respect of, all checks relating to the Purchased Contracts that are not yet outstanding as of the Closing Date and presented for payment after the Closing Date.

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(b) (i) Seller will, and will cause its Subsidiaries to, promptly pay to Buyer the amount of any payments under the Purchased Contracts received by Seller or any of its Subsidiaries after the Closing Date, whether received in lock boxes, via wire transfer or otherwise, and (ii) Buyer will, and will cause its Subsidiaries to, promptly pay to Seller the amount of any payments in respect of the Excluded Assets received by Buyer or any of its Affiliates after the Closing Date, whether received in lock boxes, via wire transfer or otherwise.

Section 6.19 Title Insurance. In the event Buyer elects to obtain a leasehold title insurance policy for the interest to be acquired by Seller in the North Charleston Real Property, Seller shall, at Buyer’s cost and expense, reasonably cooperate with Buyer in providing consents and otherwise taking actions required to issue any such policy.

Section 6.20 Letters of Credit; Surety Bond. Schedule 6.20 sets forth each of the surety bonds and letters of credit made or provided by Seller and its Affiliates (or any of them) for the benefit of the Business (the “Guarantees”) outstanding as of the date of this Agreement. Buyer and Seller shall each use its commercially reasonable efforts (which shall not require any modifications of the terms of the underlying obligations) to cause Buyer or one or more of its Affiliates to be substituted in all respects for Seller and its Affiliates effective as of the Closing Date, in respect of all obligations of Seller and its Affiliates under each of the Guarantees. If Buyer is unable to effect such a substitution with respect to any such Guarantee after using its commercially reasonable efforts to do so, then Buyer shall (i) obtain letters of credit, on terms and from financial institutions reasonably satisfactory to Seller, with respect to the obligations covered by each of the Guarantees for which Buyer does not effect such substitution in an amount equal to the amount of each such Guarantee identified by Seller to Buyer in writing prior to the Closing and (ii) until Buyer obtains such letters of credit referred to in the foregoing clause (i), not, and not permit the Business or any of Buyer’s Affiliates to renew or extend the term of, or increase its obligations under, or transfer to another third party, any Contract underlying such Guarantee. From the date of this Agreement until the Closing, Seller shall not enter into or modify or amend any Guarantee without first consulting with Buyer.

Section 6.21 Lender Waiver. From the date hereof until the earlier to occur of (i) the Closing and (ii) the termination of this Agreement pursuant to Article X, Seller will, and will cause its Subsidiaries to, use their commercially reasonable efforts to obtain such written waiver from the Required Lenders (as defined in the Seller Senior Credit Agreement) of the covenant in Section 7.5(b) of the Seller Senior Credit Agreement as is necessary to permit consummation of the transactions contemplated hereby on terms reasonably acceptable to Seller (the “Lender Waiver”), including (a) making senior management of Seller and its Subsidiaries reasonably available to respond to questions and other requests for information from such lenders, (b) using commercially reasonable efforts to negotiate the definitive documentation for the Lender Waiver, (c) using commercially reasonable efforts to procure other definitive financing documents or other reasonably requested certificates or documents, including comfort letters, customary certificates (including a certificate of the chief financial officer of Seller with respect to solvency matters) and legal opinions and (d) using commercially reasonable efforts to satisfy on a timely basis all agreed upon conditions under the documents entered into by Seller or its Subsidiaries in connection with obtaining the Lender Waiver (excluding any document to which Boeing or any of its Subsidiaries is a party). Seller shall keep Buyer reasonably informed on a current basis of any material development relating to the Lender Waiver and the status of Seller’s efforts to obtain the Lender Waiver.

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ARTICLE VII

TAX MATTERS

Section 7.1 Liability for Taxes.

(a) Seller is responsible for and will timely pay any Taxes arising or resulting from or in connection with the conduct of the Business or the ownership or use of the Purchased Assets attributable to any Tax period ending on or before the Closing Date (a “Pre-Closing Period”) other than any Assumed Liability. Buyer is responsible for and will timely pay any Taxes arising or resulting from or in connection with the conduct of the Business or the ownership or use of the Purchased Assets attributable to any Tax period beginning after the Closing Date (a “Post-Closing Period”) and any Taxes that are an Assumed Liability.

(b) The Parties agree that any Apportioned Taxes, and any refund, rebate or similar payment received by Seller or Buyer for any Apportioned Taxes, will be apportioned between Seller and Buyer as follows:

(i) For Apportioned Taxes measured by the amount or level of any item (including such taxes as are measured by the value of intangibles), Seller is responsible for the amount of such Apportioned Taxes that are determined by multiplying (A) the amount or level of such items immediately prior to the Closing, by (B) a fraction, the numerator of which is the number of calendar days in the portion of the Straddle Period ending on the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period.

(ii) For all Apportioned Taxes not described in clause (i), Seller is responsible for the amount of such Apportioned Taxes that are determined by multiplying (A) the amount of such Apportioned Taxes for the entire Straddle Period, by (B) a fraction, the numerator of which is the number of calendar days in the portion of the Straddle Period ending on the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period.

(iii) All Apportioned Taxes that are not the responsibility of Seller pursuant to Section 7.1(b)(i) through Section 7.1(b)(ii) hereof shall be the responsibility of Buyer.

(c) For the avoidance of doubt, Seller and Buyer are each responsible for their own Income Taxes arising out of their conduct of the Business or their ownership or use of the Purchased Assets, including Income Taxes arising out of the transactions contemplated in this Agreement.

(d) Notwithstanding any other provision contained in this Agreement (including the limitations set forth in Sections 11.2 or 11.3), any obligation arising out of this Section 7.1 will not be subject to any limits of minimum or maximum amounts, measurement of aggregate amount of Losses or any limit of time.

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Section 7.2 Tax Return Filing.

(a) Seller will prepare and file all Tax Returns required to be filed for any Pre-Closing Period with respect to the Business and the Purchased Assets, including such Tax Returns that are required to be filed after the Closing Date. Seller will properly prepare and file such Tax Returns no later than the due dates thereof, as such dates may be extended, in accordance with past practice to the extent permitted by applicable Law. Seller will pay all Taxes and other payments required to be paid for periods covered by such Tax Returns at the time such Tax Returns are filed.

(b) Buyer will prepare and file all Tax Returns required to be filed for any Post-Closing Period and any Straddle Period (or portion thereof) for which Seller is not required to file a Tax Return pursuant to Section 7.2(a) with respect to the Business and the Purchased Assets.

(c) In the event that either Seller or Buyer is liable pursuant to Section 7.1 for any Taxes paid by the other Party with respect to any Tax Return, reimbursement shall be made within ten (10) days after receipt of a request for such reimbursement and documentation reasonably evidencing such payment obligation.

(d) For the avoidance of doubt, Seller and Buyer are each responsible for the preparation and filing of their own Income Tax Returns and payment of Income Taxes required to be paid for periods covered by such Income Tax Returns.

Section 7.3 Tax Contests; Audit Responsibilities.

(a) Seller shall have the right to control the conduct of any investigation, audit or other proceeding by or with any Governmental Entity with respect to Taxes for which Seller is responsible under Section 7.1(a). Buyer shall have the right to control the conduct of any investigation, audit or other proceeding by or with any Governmental Entity with respect to Taxes for which Buyer is responsible under Section 7.1(a). If the settlement or final determination of any proceeding described in this subsection could reasonably be expected to have an adverse effect on Taxes of the other Party, the controlling Party shall not consent to the settlement or final determination of such proceeding without the other Party’s written consent, which consent shall not be unreasonably delayed, conditioned or withheld.

(b) Each of Buyer and Seller agree to give written notice to the other of any notification of an investigation, audit or other proceeding by or with any Governmental Entity with respect to any Taxes allocated to the other pursuant to this Article VII within 15 days after its receipt of such notification by the Governmental Entity.

(c) Buyer shall control any investigation, audit or other proceeding by or with a Governmental Entity with respect to Apportioned Taxes (an “Apportioned Taxes Claim”), provided, that (i) the Buyer shall keep Seller informed regarding the progress and substantive aspects of any Apportioned Taxes Claim, including providing Seller with all written materials relating to such Tax proceeding received from the relevant Governmental Entity and all written materials submitted to such taxing authority by the Buyer, (ii) Seller shall be entitled to participate in any Apportioned Taxes Claim, including having an opportunity to comment on any

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written materials prepared in connection with any Apportioned Taxes Claim and attending any conferences relating to any Apportioned Taxes Claim and (iii) Buyer shall not consent to the settlement or final determination in such proceeding without the Seller’s prior written consent, which consent shall not be unreasonably delayed, conditioned or withheld. Each Party shall bear its own costs for participating in such Tax contest.

(d) Any net refunds and credits attributable to the payment of Taxes that are the responsibility of Seller pursuant to Section 7.1 shall be for the account of Seller. Any net refunds and credits attributable to the payment of Taxes that are the responsibility of Buyer pursuant to Section 7.1 shall be for the account of Buyer.

Section 7.4 Cooperation.

(a) Each of Seller and Buyer shall:

(i) provide assistance to each other Party as reasonably requested in preparing and filing Tax Returns and Income Tax Returns with respect to the Business and the Purchased Assets and responding to audits or disputes with Governmental Authorities;

(ii) make available to each other Party as reasonably requested all information, records, and documents relating to Taxes concerning the Business or the Purchased Assets, provided that no Party shall be required to provide any Income Tax Return or related work papers unless the other Party can show reasonable good cause for needing such information in connection with any audit or examination of any Income Taxes of the Business and such information is not otherwise available to the requesting Party without providing an Income Tax Return or related work papers; and

(iii) retain any books and records that could reasonably be expected to be necessary or useful in connection with any preparation by any other party of any Tax Return or Income Tax Return, or for any audit, examination, or proceeding relating to Taxes or Income Taxes. Such books and records shall be retained until the expiration of the applicable statute of limitations (including extensions thereof) or applicable time for any appeals, if relevant.

(b) On or before the Closing Date, each of Buyer and Seller will work together to obtain and/or furnish to the other Party any applicable forms, certificates, or other information that is requested by a Party to obtain any exemption or reduction from Transfer Taxes or other Taxes. Buyer shall provide a properly completed sales Tax manufacturing/resale exemption certificate to Seller within a reasonable period of time after the Closing Date, and Seller shall accept such certificate for purposes of filing the Transfer Tax Returns under Section 7.5 hereof, provided such certificate is provided to Seller within a reasonable period of time after the Closing Date.

(c) Seller and Buyer agree that they will cooperate in the transition of payroll tax withholding and reporting and will seek to accomplish such transition in a manner that will minimize the tax effect on any Transferred Employees, to the extent administratively practicable, but Buyer will determine in its sole discretion whether to elect to be the “successor employer” for purposes of Section 3121 of the Code.

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Section 7.5 Transfer Taxes. Notwithstanding any requirement of Law, and notwithstanding anything else to the contrary in this Agreement except for Buyer’s obligation to provide a properly completed sales Tax manufacturing/resale exemption certificate to Seller under Section 7.4(b) hereof, Buyer and Seller will each be responsible for one half of any and all Transfer Taxes. The Party required under applicable Laws to file any necessary Transfer Tax Returns shall file such Transfer Tax Returns no later than the due dates thereof, as such dates may be extended. Seller agrees that it will file (a) any applicable deed recording fee return (and any attachments and exhibits thereto) with respect to the South Carolina real property, and (b) any applicable South Carolina sales Tax Return that is to be filed with respect to the transaction contemplated by this Agreement. Buyer and Seller agree that the fair market value of the real property and tangible personal property subject to Transfer Taxes shall be determined as set forth in Schedule 7.5. All Transfer Taxes required to be paid will be paid by the Parties at the time Transfer Tax Returns are filed.

ARTICLE VIII

EMPLOYEE MATTERS

Section 8.1 Employment. Schedule 8.1(a)(i) contains the names of all employees of the Business as of the date of this Agreement employed by Seller in North Charleston, South Carolina (as reflected in Seller’s payroll system for the North Charleston Facility) and any employees of the Business stationed with or assigned to subcontractors of the Business (including field service, surveillance and quality control personnel) or assigned to Buyer’s manufacturing facilities as of the date of this Agreement. Seller shall deliver to Buyer an updated Schedule 8.1(a)(i) at least ten (10) days prior to the Closing Date. Seller will have provided the following information to Buyer with respect to each such employee as of the date hereof (which information will be updated at least ten (10) days prior to the Closing Date): employee name, employee number, job title, job code, work location, service start date, date of birth, home address, shift, current base salary (hourly rate for non-exempt employees), any additives to such base salary such as shift differentials or cost of living adjustments, citizenship status, whether such employee is on active status or a leave of absence, and the names of any employees for which Seller is in the process of terminating. Schedule 8.1(a)(ii) contains the names, job titles and work locations of all employees who are currently employed by Seller who are no longer Employees and who are not Retained Employees, but who were employed by Seller at the North Charleston Facility primarily in connection with the Business as of January 1, 2009. Prior to the Closing, Buyer shall extend an offer of employment (each an “Offer” and collectively, the “Offers”) to each Employee set forth on such updated Schedule 8.1(a)(i) other than the Retained Employees and the employees for which Seller is in the process of terminating, as provided in this Article VIII. Employees who accept such Offer of employment from Buyer and whose employment with the Business continues with Buyer as of the applicable Hire Date shall be referred to herein as “Transferred Employees.” In the event Buyer does not extend an Offer to an Employee set forth on Schedule 8.1(a)(i) (as such schedule is updated pursuant to this Section 8.1) (other than Retained Employees), or revokes such an Offer prior to the Closing, then notwithstanding any other provision of this Agreement to the contrary, Buyer shall be responsible for all costs and Liabilities with respect to such Employee that arise from conduct of Buyer or any of its Affiliates or from the termination of employment of such Employee by Seller immediately prior to, on or after the Closing Date or from any tort or discrimination Claims brought by such Employee against Seller.

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Section 8.2 Non-Union Employees.

(a) The Offers shall provide each Employee with a consideration period that is no less than one week (the “Offer Consideration Period”). The Offers shall provide that as of the Hire Date, the applicable Employee’s terms and conditions of employment will include (i) the same or a more favorable base wage and (ii) overall compensation and employee benefits that are substantially comparable in the aggregate to the terms of the Employee’s employment with Seller in existence immediately prior to the Hire Date (collectively, “Minimum Terms and Conditions of Employment”). As of the Hire Date and, except as otherwise provided herein, for a period of not less that twelve (12) months after the Closing Date, the employment of Transferred Employees shall be on terms and conditions no less favorable than the Minimum Terms and Conditions of Employment. “Hire Date” shall mean (A) with respect to Employees who are not Absent Employees and who will become Transferred Employees, 12:01 a.m. Eastern Time on the Closing Date or (B) with respect to Absent Employees, 12:01 a.m. Eastern Time on the first business day the applicable Absent Employee returns to active employment from leave. Buyer shall notify Seller of the acceptance and rejections of Offers of employment that have been received from each of the Employees (x) on at least a weekly basis during the Offer Consideration Period and (y) in total within three (3) Business Days following the end of the Offer Consideration Period.

(b) Except as described in the next sentence of this Section 8.2(b), the employment of each Transferred Employee (including any Employee, other than an Absent Employee, who is absent from active employment and receiving workers’ compensation benefits or is on short-term disability or approved leave of absence) with Seller shall cease immediately prior to the Hire Date, and the employment of each such Transferred Employee with Buyer shall commence immediately upon the Hire Date. In the case of any Employee who is absent from active employment on long-term disability, and who receives and accepts an Offer from Buyer prior to the Closing (the “Absent Employees”), the employment of such individual with Buyer shall commence upon the date of his or her return to active work, and such Employee shall become a Transferred Employee as of such date. Notwithstanding anything in this Agreement to the contrary, no personnel records with respect to a Transferred Employee will be transferred to Buyer until the applicable Hire Date with respect to each such Transferred Employee. Buyer shall be permitted to seek any releases required by applicable Law from the employees of Seller set forth on Schedule 8.1(a)(i) with respect to such employees’ medical records prior to the Closing Date (provided that Buyer shall not condition any Offers on an Employee furnishing any such release), and Buyer shall be permitted to view and make copies of such medical records with respect to an employee once such employee has signed such release.

(c) The vacation program adopted by Buyer for the Transferred Employees shall recognize years of service with Seller for purposes of computing vacation benefits. Buyer shall assume and be responsible for, and shall give full credit for, all vacation benefits of the Transferred Employees accrued but not taken as of the Closing Date. Seller shall have no responsibility or Liability for any vacation benefits of the Transferred Employees on or after the Closing Date, including vacation benefits accrued prior to the Closing Date. Buyer and Seller acknowledge and agree that Buyer shall not assume any Liabilities for vacation benefits accrued through the Closing Date for any Employee that does not become a Transferred Employee.

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(d) Excluding defined benefit pension and retiree medical plans, Buyer shall recognize the service start date of each Transferred Employee as set forth in Schedule 8.1(a)(i) for all purposes, including membership, vesting, benefit accrual rate and entitlement to benefits under Buyer’s relevant employee benefit plans, except to the extent it would result in the duplication of benefits. Seller shall provide each Transferred Employees the opportunity to retire as an active employee of Seller under the Employee Benefit Plans for a 90-day grace period following Closing if such Transferred Employee would have otherwise been eligible to retire. For purposes of early retirement under Seller’s defined benefit pension plans, Seller shall treat Transferred Employees as having been laid off.

(e) Each Transferred Employee (and his or her eligible dependents, as applicable), shall be immediately eligible as of the relevant Hire Date to participate in and accrue benefits under Buyer’s employee benefit plans, which apply to Transferred Employees. With respect to each Transferred Employee (and his or her eligible dependents, as applicable), Buyer shall cause such plans to (i) waive any eligibility periods, evidence of insurability or pre-existing condition limitations and (ii) honor any deductibles, co-payments, co-insurance or out-of-pocket expenses paid or incurred by such employee, including with respect to his or her dependents, under comparable Employee Benefit Plans of Seller during the plan year in which the relevant Hire Date occurs.

(f) The second and third sentences of Section 8.2(a) and Section 8.2(e) shall not apply with respect to any Employee that, as of immediately prior to the Closing Date, is covered by a Collective Bargaining Agreement (the “Union Employees”). For the avoidance of doubt, in no event shall Buyer be required to provide Union Employees the Minimum Terms and Conditions of Employment, and the provisions of Section 8.2(b) shall apply only to those Union Employees who accept offers of employment from Buyer.

Section 8.3 Union Employees.

(a) Buyer will not assume, and will not be bound by, the terms and obligations of the relevant Collective Bargaining Agreement with respect to the Union Employees as a successor or assign of Seller. However, on the Closing Date, Buyer agrees to recognize the Union as the representative of the Union Employees at the Union’s request, to comply with its good-faith bargaining obligations, and to otherwise comply with its obligations under the National Labor Relations Act.

(b) Unless otherwise agreed by Buyer and the Union, for a period of no less than twelve (12) months following the Closing Date, Buyer shall agree to honor all recall rights held by any current or former employees of the Business under the Collective Bargaining Agreement between Seller and the Union dated as of November 7, 2008.

(c) Only if (i) Buyer does not extend an offer (a “UE Offer”) to such Union Employee (other than union employees whom Seller is in the process of terminating); (ii) Buyer revokes a UE Offer made to such Union Employee prior to the Closing; or (iii) a Union

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Employee rejects the UE Offer and the UE Offer to such Union Employee provided (1) wages that are less favorable than the Union Employee’s wages immediately prior to the Closing and (2) compensation and benefits that are, overall, less than substantially comparable in the aggregate to the Union Employee’s compensation and benefits prior to Closing, then Buyer shall be responsible for all costs and Liabilities with respect to any Union Employee who does not become a Transferred Employee that arise from conduct of Buyer or any of its Affiliates or from the termination of employment of such Union Employee by Seller immediately prior to, on or after the Closing Date or from any tort or discrimination Claims brought by such Union Employee against Seller.

Section 8.4 Workers’ Compensation Claims. Seller shall be responsible for and shall, as described herein, pay Losses incurred in connection with those workers’ compensation claims identified on Schedule 8.4. Schedule 8.4 provides a list of all workers’ compensation claims of Employees and former Employees filed with a Governmental Entity which remain open as of the Closing Date, for which Seller will retain liability (excluding any further liabilities on existing claims, except as provided below). As of the Closing Date, with the exception of the claims identified on Schedule 8.4, Buyer will be responsible and liable for all workers’ compensation claims of Employees and former Employees based on injuries or illnesses that arise or have arisen out of, and in the course of, employment with the Business. However, Buyer shall assume any additional liability for matters on Schedule 8.4 where the condition, injury or illness subject of such claim recurred or was aggravated after the Closing Date and such additional liability is incurred as a result of such recurrence or aggravation. To the extent that any Law prevents Buyer from assuming any workers’ compensation obligation directly, Buyer shall reimburse Seller’s costs with respect to any such workers’ compensation Losses.

Section 8.5 WARN Act Notification. Seller shall, as soon as practicable following the Closing, provide Buyer with a schedule setting forth the name and work location of each employee of the Business who terminated employment within the six month period prior to the Closing Date. In the event of any “plant closing” or “mass layoff” with respect to the Business, as defined by the WARN Act, or any state or local Law equivalent, that shall occur on or after the Closing Date due to any actions taken by Buyer, Buyer shall comply with all of the requirements of the WARN Act and any applicable state and local Law equivalent, and shall assume any and all Liabilities with respect thereto. Buyer shall indemnify and hold harmless Seller with respect to any Liabilities under the WARN Act and similar applicable state and local Laws arising from (i) any actions taken by Buyer with respect to the Transferred Employees on or after the Closing Date (including any Liabilities caused by “employment losses” due to the actions of Buyer with respect to the Transferred Employees on or after the Closing Date that trigger the WARN Act when aggregated with any “employment losses” with respect to the Business on or prior to the Closing Date) or (ii) Buyer’s breach of Sections 8.2 or 8.3 and/or claims by any Employee that Buyer’s Offer pursuant to Sections 8.2 or 8.3 is not sufficiently comparable to avoid an “employment loss” under the WARN Act and similar applicable state and local Laws (including any Liabilities caused by “employment losses” due to the actions of Buyer with respect to the Transferred Employees on or after the Closing Date that trigger the WARN Act when aggregated with any “employment losses” with respect to the Business on or prior to the Closing Date).

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Section 8.6 Employee Benefits.

(a) COBRA. Buyer shall, effective commencing on the applicable Hire Date, be responsible for compliance with the requirements of COBRA, including the provision of continuation coverage, with respect to the Transferred Employees, and their spouses and dependents, for whom a qualifying event occurs on or after the Transferred Employees’ respective Hire Dates. If Seller complies with the notification requirements of COBRA with respect to a Transferred Employee, Buyer shall be responsible for the provision of COBRA continuation coverage, if any, to such Transferred Employee, and such Transferred Employee’s spouse and dependents, arising as a result of his or her transfer of employment from Seller to Buyer hereunder.

(b) 401(k) Plan. Seller shall fully vest Transferred Employees in their accounts held under Seller’s Savings and Investment Plan (the “Seller 401(k) Plan”) as of the Closing Date. Seller shall reasonably cooperate with Buyer to establish participation by Transferred Employees in Buyer’s tax-qualified defined contribution plan or plans with a cash deferred feature (the “Buyer 401(k) Plan”) for the benefit of each Transferred Employee who was eligible to participate in the Seller 401(k) Plan as soon as practicable after the Closing Date. As soon as practicable after the Closing Date, Seller shall make distributions from the Seller 401(k) Plan available to Transferred Employees and the Buyer 401(k) Plan shall accept such distribution as a rollover contribution if permitted under the terms of the Buyer 401(k) Plan and if so directed by the Transferred Employee. Seller shall make any contributions to Seller 401(k) Plan relating to the Transferred Employees that were due and payable by Seller on or before the Closing Date including those on behalf of Transferred Employees without regard to whether such individuals were employed on the last day of the plan year.

Section 8.7 No Right to Employment. Nothing in this Article VIII restricts the right of Buyer or any of its Affiliates to terminate the employment of any Transferred Employee after the Closing. The provisions of this Article VIII are solely for the benefit of the Parties to this Agreement, and no employee or former employee or any other individual associated therewith or any employee benefit plan or trustee thereof shall be regarded for any purpose as a third party beneficiary of this Agreement, and nothing herein shall be construed as an amendment to any employee benefit plan for any purpose. To the extent Buyer complies with its obligations under this Article VIII, nothing in this Article VIII shall be construed to limit the right of Buyer or any of its Affiliates to amend or terminate any employee benefit plan.

Section 8.8 Code Section 409A. The Transferred Employees shall not be deemed to have incurred a “separation from service” for purposes of Code Section 409A as a result of their transfer of employment from Seller to Buyer hereunder.

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ARTICLE IX

CONDITIONS PRECEDENT

Section 9.1 Conditions to Obligations of Buyer. The obligations of Buyer to effect the Closing and the consummation of the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Closing of each of the following conditions, any or all of which may be waived in writing by Buyer, in whole or in part, to the extent permitted by applicable Law:

(a) Seller Representations and Warranties. (i) Each of the representations and warranties of Seller contained in Sections 4.1, 4.2, 4.19 and 4.20 shall be true and correct in all material respects as of the date hereof and the Closing Date as though made on and as of such dates (except (x) for representations and warranties that by their express terms address matters only as of a particular date, which representations and warranties shall be true and correct in all material respects as of such date and (y) to the extent that such representations and warranties are qualified by the term “Material Adverse Effect,” in which case such representations and warranties shall be true and correct in all respects); and (ii) each of the representations and warranties of Seller contained in this Agreement (other than the representations and warranties contained in Sections 4.1, 4.2, 4.19 and 4.20) shall be true and correct in all respects as of the date hereof and the Closing Date as though made on and as of such dates (except for representations and warranties that by their express terms address matters only as of a particular date, which representations and warranties shall be true and correct in all respects as of such date), except where the failure of such representations and warranties (without giving effect to any of the “Material Adverse Effect” qualifiers contained therein) to be so true and correct would not, in the aggregate, have or reasonably be expected to have a Material Adverse Effect.

(b) Agreements and Covenants. Seller shall have performed and complied with, in all material respects, all agreements and covenants required by this Agreement to be performed or complied with by Seller on or prior to the Closing Date.

(c) No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any Material Adverse Effect or any fact, event, change, development or effect that, individually or when taken together with all other facts, events, changes, developments or effects, has had or would reasonably be expected to have a Material Adverse Effect.

(d) Consents. Seller shall have delivered to Buyer a pay-off letter from the agent under the Seller Senior Credit Agreement, in customary form and otherwise reasonably acceptable to Buyer (or such other evidence reasonably acceptable to Buyer) (such pay-off letter or other evidence being referred to as the “Pay-off Letter”), providing that the Encumbrances to which the Purchased Assets are subject under the Seller Senior Credit Agreement, the Loan Documents (as defined in the Seller Senior Credit Agreement) and the Joinder Agreement by and among certain lenders, Seller and Lehman Commercial Paper Inc. dated May 6, 2008 will be released upon payment of a sum certain specified in the Pay-off Letter (the “Pay-off Amount”) to such agent under the Seller Senior Credit Agreement.

(e) Deliveries. Seller shall have delivered or caused to be delivered to Buyer:

(i) a certificate executed by a duly authorized executive officer of Seller to the effect that each of the conditions specified in Sections 9.1(a) and 9.1(b) are satisfied in all respects;

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(ii) a counterpart of the bill of sale and assignment and assumption agreement in the form attached as Exhibit B (the “Bill of Sale, Assignment and Assumption Agreement”), duly executed by Seller;

(iii) a counterpart of the Intellectual Property assignment(s) in the form(s) attached hereto as Exhibit C (the “Intellectual Property Assignment”), duly executed by Seller;

(iv) a counterpart of the Intellectual Property license agreement in the form attached hereto as Exhibit D (the “Intellectual Property License Agreement”), duly executed by Seller;

(v) a counterpart of the engineering services agreement in the form attached hereto as Exhibit E (the “Engineering Services Agreement”), duly executed by Seller;

(vi) a counterpart of the transition services agreement in the form attached hereto as Exhibit F (the “Transition Services Agreement”), duly executed by Seller;

(vii) a counterpart of the Termination and Mutual Release Agreement, duly executed by the parties thereto other than Buyer and Boeing;

(viii) a counterpart to the supply agreement in the form attached hereto as Exhibit G (the “SOW Supply Agreement”), duly executed by Seller;

(ix) a counterpart of the bill of sale and assignment and assumption agreement with respect to the Facilities in the form attached as Exhibit H (the “Facilities Bill of Sale, Assignment and Assumption Agreement”), duly executed by Seller;

(x) a counterpart of the North Charleston Sublease Assumption in the form attached as Exhibit I (the “North Charleston Sublease Assumption”), duly executed by Seller;

(xi) a counterpart of the GA Sublease Assumption in the form attached as Exhibit J (the “GA Sublease Assumption”), duly executed by Seller;

(xii) a counterpart of the side letter regarding the SOW Supply Agreement, in the form attached as Exhibit K (the “SOW Side Letter”), duly executed by Seller;

(xiii) counterparts of Amendments to certain Master Program Contracts (MPC); Amendment # 6 to MPC FZ-641900-8981N (747 Empennage) and Amendment # 6 to MPC VR-747010-8984N (747 Fuselage), in the forms attached as Exhibit L (the “747 Amendment”), duly executed by Seller;

(xiv) counterparts of Amendments to certain Master Program Contracts (MPC); Amendment # 5 to MPC VR-567866-8988N (767 Doors), Amendment # 10 to MPC FZ-641600-8981N (767 Horizontals), Amendment # 5 to MPC VZ-785548-8981N (767 WCS), and Amendment # 4 to MPC FZ-641800-8981N (48 Section), in the forms attached as Exhibit M (the “767 Amendment”), duly executed by Seller;

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(xv) counterparts of Amendments to certain Master Program Contracts (MPC); Amendment # 4 to MPC VZ-641700-8981N (777 Flaps) and Amendment # 3 to MPC VZ-620700-8981N (777 Spoilers), in the forms attached as Exhibit N (the “777 Amendment”), duly executed by Seller;

(xvi) a counterpart of the warranty agreement related to the SOW Supply Agreement, in the form attached as Exhibit O (the “SOW Warranty Agreement”), duly executed by Seller;

(xvii) a counterpart of the administrative agreement regarding the SOW Supply Agreement, in the form attached as Exhibit P (the “SOW Administrative Agreement”), duly executed by Seller; and

(xviii) an affidavit sworn under penalty of perjury, setting forth Seller’s United States tax identification number and certifying that Seller is not a “foreign person” within the meaning of Section 1445 of the Code.

(f) No Order. No Governmental Entity or federal or state court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Order (whether temporary, preliminary or permanent), in any case which is in effect and that prevents or prohibits the consummation of the transactions contemplated hereunder; provided that Buyer shall have used all commercially reasonable efforts to cause any such Order to be vacated or lifted.

(g) No Legal Proceeding. No Legal Proceeding shall be pending by the DOJ, FTC or any authority, agency, department, board, commission or instrumentality of any state of the United States that regulates competition or that has the power to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade which seeks to prevent, prohibit or make illegal the transactions contemplated by this Agreement.

Section 9.2 Conditions to Obligations of Seller. The obligations of Seller to effect the Closing and the consummation of the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Closing of the following conditions, any or all of which may be waived in writing by Seller, in whole or in part, to the extent permitted by applicable Law:

(a) Buyer Representations and Warranties. (i) Each of the representations and warranties of Buyer contained in Sections 5.1, 5.2 and 5.4 shall be true and correct in all material respects as of the date hereof and the Closing Date as though made on and as of such dates (except (x) for representations and warranties that by their express terms address matters only as of a particular date, which representations and warranties shall be true and correct in all material respects as of such date and (y) to the extent that such representations and warranties are qualified by the term “material adverse effect,” in which case such representations and warranties shall be true and correct in all respects) and (ii) each of the representations and warranties of Buyer contained in this Agreement (other than the representations and warranties contained in Sections 5.1, 5.2 and 5.4) shall be true and correct in all respects as of the date hereof and the Closing Date as though made on and as of such dates (except for representations and warranties that by their express terms address matters only as of a particular date, which

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representations and warranties shall be true and correct in all respects as of such date), except where the failure of such representations and warranties (without giving effect to any of the “material adverse effect” qualifiers contained therein) to be so true and correct would not, in the aggregate, have or reasonably be expected to have a material adverse effect on Buyer’s ability to consummate the transactions contemplated hereby in accordance with the terms hereof and applicable Laws.

(b) Agreements and Covenants. Buyer shall have performed and complied with, in all material respects, all agreements and covenants required by this Agreement to be performed or complied with by Buyer on or prior to the Closing Date.

(c) Deliveries. Buyer shall have delivered or caused to be delivered to Seller:

(i) a certificate executed by a duly authorized executive officer of Buyer to the effect that each of the conditions specified in Sections 9.2(a) and(b) are satisfied in all respects;

(ii) a duly executed counterpart of the Bill of Sale, Assignment and Assumption Agreement;

(iii) a duly executed counterpart of the Intellectual Property Assignment;

(iv) a counterpart of the Intellectual Property License Agreement duly executed by Boeing Management Company;

(v) a counterpart to the Termination and Mutual Release Agreement duly executed by Boeing;

(vi) a duly executed counterpart of the Engineering Services Agreement;

(vii) a duly executed counterpart of the Transition Services Agreement;

(viii) a counterpart of the SOW Supply Agreement duly executed by Boeing;

(ix) a counterpart of the SOW Side Letter duly executed by Boeing;

(x) a counterpart of the SOW Warranty Agreement duly executed by Boeing;

(xi) a counterpart of the SOW Administrative Agreement duly executed by Boeing;

(xii) a counterpart of the 747 Amendment duly executed by Boeing;

(xiii) a counterpart of the 767 Amendment duly executed by Boeing;

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(xiv) a counterpart of the 777 Amendment duly executed by Boeing; and

(xv) a duly executed counterpart of the Facilities Bill of Sale, Assignment and Assumption Agreement.

(d) No Order. No Governmental Entity or federal or state court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Order (whether temporary, preliminary or permanent), in any case which is in effect and that prevents or prohibits the consummation of the transactions contemplated hereunder; provided that Seller shall have used all commercially reasonable efforts to cause any such Order to be vacated or lifted.

(e) Waiver Under Seller Senior Credit Facility. Seller shall have received the Lender Waiver.

(f) No Legal Proceeding. No Legal Proceeding shall be pending by the DOJ, FTC or any authority, agency, department, board, commission or instrumentality of any state of the United States that regulates competition or that has the power to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade which seeks to prevent, prohibit or make illegal the transactions contemplated by this Agreement.

ARTICLE X

TERMINATION

Section 10.1 Termination. This Agreement may be terminated at any time (except where otherwise indicated in this Section 10.1) prior to the Closing Date:

(a) by mutual written consent of Buyer and Seller;

(b) (i) by Buyer, prior to Closing, by written notice to Seller from Buyer if (A) there is any material breach of any representation, warranty, covenant or agreement on the part of Seller set forth in this Agreement, such that the conditions specified in Section 9.1(a) or Section 9.1(b) would not be satisfied at the Closing (a “Terminating Seller Breach”), except that, if such Terminating Seller Breach is an unintentional or inadvertent breach of a representation, warranty, covenant or agreement and is curable by Seller through the exercise of its reasonable best efforts, then, for a period of up to ten (10) days after receipt by Seller of notice from Buyer of such breach, but only as long as Seller continues to use its reasonable best efforts to cure such Terminating Seller Breach (the “Seller Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Seller Breach is not cured within the Seller Cure Period, or (B) the consummation of the transactions contemplated hereby is permanently enjoined, prohibited or otherwise restrained by the terms of a final, non-appealable Order of a Governmental Entity; provided that, in the case of the forgoing clause (A), Buyer is not then in material breach of any of its obligations under this Agreement;

(ii) by Seller, prior to Closing, by written notice to Buyer from Seller if (A) there is any material breach of any representation, warranty, covenant or agreement on the part of Buyer set forth in this Agreement, such that the conditions specified in Section 9.2(a) or

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Section 9.2(b) would not be satisfied at the Closing (a “Terminating Buyer Breach”), except that, if such Terminating Buyer Breach is an unintentional or inadvertent breach of a representation, warranty, covenant or agreement and is curable by Buyer through the exercise of its reasonable best efforts, then, for a period of up to ten (10) days after receipt by Buyer of notice from Seller of such breach, but only as long as Buyer continues to use its reasonable best efforts to cure such Terminating Buyer Breach (the “Buyer Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Buyer Breach is not cured within the Buyer Cure Period, or (B) the consummation of the transactions contemplated hereby is permanently enjoined, prohibited or otherwise restrained by the terms of a final, non-appealable Order of a Governmental Entity; provided that, in the case of the forgoing clause (A), Seller is not then in material breach of any of its obligations under this Agreement; or

(c) by either Buyer or Seller, if the Closing shall not have been consummated by August 31, 2009, upon delivery of written notice signed by Buyer or Seller, as applicable, to the other Party; provided, however, that the right to terminate this Agreement under this Section 10.1(c) shall not be available to a Party, in the event that such Party is in material breach of any covenant or agreement under or contained in this Agreement.

Section 10.2 Effect of Termination. In the event of termination of this Agreement as provided in Section 10.1, this Agreement shall forthwith become null and void and there shall be no Liability or obligation on the part of Buyer or Seller or any of their respective Representatives except (a) nothing herein shall relieve any Party from Liability for any breach of any representation, warranty, covenant or agreement in this Agreement prior to the date of termination; (b) each Party shall be entitled to any and all remedies at law and in equity for any such breach and (c) this Article X and Article XII of this Agreement shall remain in full force and effect and survive any termination of this Agreement; provided, however, that, in the event this Agreement is terminated pursuant to Section 10.1, the Parties acknowledge that it is the intention of the Parties that no Party shall have any remedy or right to recover for any Losses resulting from any breach of any representation or warranty contained herein unless such breach was intentional or willful on the part of the breaching Party. In determining Losses recoverable by a Party for the other Party’s breach, the Parties acknowledge and agree that such Losses shall not be limited to reimbursement of expenses or out-of-pocket costs and shall include the benefit of the bargain lost by such Party.

ARTICLE XI

INDEMNIFICATION

Section 11.1 Survival. All of the representations and warranties contained in this Agreement will survive until the date that is thirteen (13) months after the Closing Date, except that (a) the representations and warranties contained in Sections 4.1 (Organization and Qualification), 4.2 (Authority; Enforceability), the first sentence of Section 4.7, the first sentence of Section 4.10(b), Sections 4.19 (Certain Transactions), 4.20 (Broker’s Fees), 5.1 (Organization and Qualification), 5.2 (Authority; Enforceability) and 5.4 (Broker’s Fees) will survive the Closing indefinitely, and (b) the representations and warranties contained in the first two sentences of Section 4.10(c) will survive the Closing until the date that is twenty-four (24) months after the Closing Date, and (c) the representations and warranties contained in Section 4.15

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(Tax Matters) will survive the Closing until sixty (60) days following expiration of the applicable statute of limitations (as may be extended by agreement with any Governmental Entity); provided, however, that no representation or warranty set forth in this Agreement will expire or terminate with respect to any breach or inaccuracy to the extent such inaccuracy or breach thereof results from or arises out of any fraud by Seller in connection with this Agreement. All covenants and other agreements contained in this Agreement will survive the Closing indefinitely unless otherwise provided in accordance with their respective terms; provided, that the covenants and agreements contained in Sections 6.1 and 6.2 will survive until a date that is twenty-four (24) months after the Closing Date. Seller’s indemnification obligation in Section 11.2(c) will survive until the date that is thirty-six (36) months after the Closing Date. Notwithstanding anything herein to the contrary, each representation, warranty, covenant or agreement which is the subject of one or more Claims for indemnification pursuant to this Article XI asserted in writing prior to the expiration of the applicable survival period set forth above will survive with respect to only such Claim or Claims until the final resolution thereof. No Claim for indemnification for breach of any representation, warranty, covenant or agreement shall be made after the survival date, if any, applicable to such representation, warranty, covenant or agreement.

Section 11.2 Indemnification by Seller.

(a) Seller hereby agrees (subject to the terms of this Article XI) to indemnify, defend and hold harmless Buyer and its successors and permitted assigns, and each of their respective Affiliates, equityholders, officers, directors, managers, members, employees and Representatives (each, a “Buyer Indemnified Person”) for, from and against any and all Losses imposed upon or incurred by Buyer Indemnified Persons, or any of them, to the extent arising out of or resulting from any and all of the following (whether or not arising out of any Third Party Claims): (i) any inaccuracy as of the Closing Date in, or any breach of, a representation or warranty contained in Article IV of this Agreement; (ii) any breach by Seller of, or any failure by Seller to perform or comply with, any covenant or agreement contained in this Agreement; and (iii) any of the Excluded Liabilities. For purposes of determining the amount of any Loss incurred in connection with any inaccuracy or a breach of a representation or warranty under this Section 11.2(a) or whether such inaccuracy or breach has occurred, in each case (other than with respect to the Qualified Representations), all references to “materiality” or “Material Adverse Effect” or other similar terms shall be disregarded.

(b) Notwithstanding the foregoing provisions of this Section 11.2 to the contrary, (i) except with respect to any Loss that arises out of a breach of Section 4.1, Section 4.2, the first sentence of Section 4.7, the first sentence of Section 4.10(b), Section 4.15, Section 4.19 and/or Section 4.20, with respect to Seller’s obligation to indemnify Buyer Indemnified Persons for Losses pursuant to Section 11.2(a)(i) (other than with respect to the first two sentences of Section 4.10(c) which are addressed in Section 11.2(b)(ii) below) and, solely with respect to clause (C) below, Section 11.2(a)(ii) (as applied solely to a breach of Section 6.1 and no other covenant or agreement herein): (A) Seller will not be required to indemnify Buyer Indemnified Persons until such Losses in the aggregate exceed $10,000,000 and in such case Seller will, subject to clause (i)(C) of this Section 11.2(b) and Section 11.5, be required to indemnify Buyer Indemnified Persons for the amount of such Losses in excess of $10,000,000; (B) no individual Claim (or series of related Claims or repetitive or multiple Claims from the

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same source) by Buyer Indemnified Persons may be asserted unless and until the aggregate amount of Losses that would be payable pursuant to such Claim (or series of related Claims or repetitive or multiple Claims from the same source) exceeds an amount equal to $50,000; and (C) the aggregate amount to be paid by Seller to Buyer Indemnified Persons will not exceed an amount equal to $60,000,000 (it being understood that any Losses indemnified pursuant to Section 11.2(a)(i) (with respect only to the first two sentences of Section 4.10(c)) or Section 11.2(c) shall also be applied toward such $60,000,000 after $40,000,000 in Losses have been paid pursuant to Section 11.2(b)(ii)); and (ii) with respect to Seller’s obligations to indemnify Buyer Indemnified Persons for Losses pursuant to Section 11.2(a)(i) (with respect only to the first two sentences of Section 4.10(c)) and Section 11.2(c), (A) Seller will not be required to indemnify Buyer Indemnified Persons until such Losses in the aggregate exceed $10,000,000 and in such case Seller will, subject to clause (ii)(C) of this Section 11.2(b) and Section 11.5, be required to indemnify Buyer Indemnified Persons for the amount of such Losses in excess of $10,000,000; (B) no individual Claim (or series of related Claims or repetitive or multiple Claims from the same source) by Buyer Indemnified Persons may be asserted unless and until the aggregate amount of Losses that would be payable pursuant to such Claim (or series of related Claims or repetitive or multiple Claims from the same source) exceeds an amount equal to $50,000; and (C) the aggregate amount to be paid by Seller to Buyer Indemnified Persons will not exceed an amount equal to $100,000,000 (it being understood that any Losses indemnified pursuant to Section 11.2(a)(i) (other than with respect to the first two sentences of Section 4.10(c) and Section 11.2(a)(ii) (as applied solely to a breach of Section 6.1 and no other covenant or agreement herein) shall also be applied toward such $100,000,000).

(c) Seller hereby agrees (subject to the terms of this Article XI) to indemnify, defend and hold harmless each Buyer Indemnified Person for, from and against any and all Losses imposed upon or incurred by Buyer Indemnified Persons, or any of them, to the extent arising out of or resulting from (whether or not arising out of any Third Party Claims) any (A) misappropriation of any trade secret of any Person arising from the conduct of the Business or the conduct of any supplier of Seller prior to the Closing or (B) infringement or unlawful use of any United States or foreign Intellectual Property right (including any right in a Patent, Copyright, industrial design or semiconductor mask work), which, in the case of any industrial design or patent, was either issued as of the date of this Agreement or issues after the date of this Agreement from an application that was pending as of the date of this Agreement (including all foreign counterparts of each of the foregoing (whether or not such foreign counterpart was filed or issued as of the date of this Agreement)) or, in the case of any other Intellectual Property, was in existence on the Closing, in each case: (i) arising out of the design, manufacture or sale of Products by or for Seller pursuant to the 787 Supply Agreement prior to the Closing, including to the extent attributable to Intellectual Property or Products delivered by a supplier of Seller (or other activities of such supplier) (“Supplied Products”); (ii) arising out of the use or sale of Supplied Products (including Products included in the Purchased Assets) by or for a Buyer Indemnified Person or a customer of a Buyer Indemnified Person or an operator of a Program Aircraft; and (iii) arising out of the manufacture, use or sale of any Covered Products by or for a Buyer Indemnified Person or a customer of a Buyer Indemnified Person or an operator of a Program Aircraft; provided, however, that notwithstanding any provision hereof to the contrary, Seller’s indemnification obligations under this Section 11.2(c) shall not extend to any Losses due to misappropriation, infringement or unlawful use of any Intellectual Property or Intellectual Property right:

(A)

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(1) with respect to Third Party Claims for misappropriation, infringement or unlawful use (excluding a Claim by a supplier to the Business for misappropriation, infringement or unlawful use attributable to Intellectual Property or Products delivered by, or other activities of, such supplier) to the extent attributable to Intellectual Property of, or Products delivered by, or other activities of, a supplier to the Business, except to the extent such misappropriation, infringement or unlawful use arises out of or results from such supplier’s compliance with any specification, design, design or specification change or any method or process of design or manufacturing (and changes thereto) required by Seller, in which case Seller will (to the extent provided above in this Section 11.2(c) and subject to Section 11.2(b) and the other provisions of this Article XI) indemnify the Buyer Indemnified Persons for such misappropriation, infringement or unlawful use, subject to paragraphs (B)-(G) below; provided that (I) Seller shall (subject to the last two sentences of this paragraph (1)) have no obligation to indemnify any Buyer Indemnified Person hereunder to the extent that such Buyer Indemnified Person is entitled to indemnification for, or is otherwise entitled to recover in respect of, such misappropriation, infringement or unlawful use pursuant to a Purchased Contract, as in effect immediately prior to the Closing (without giving effect to any waiver, amendment, release or modification occurring following Closing), and (II) to the extent that Seller would otherwise be required to indemnify any Buyer Indemnified Person for the entire amount of Losses (subject to Section 11.2(b) and the other provisions of this Article XI) due to such misappropriation, infringement or unlawful use and is not relieved of such obligation pursuant to this clause (A)(1) because the specifications, designs, design or specification changes, methods or processes of design or manufacturing (and changes thereto) were required by Seller (subject to paragraphs (B)-(G) below), Seller will (subject to Section 11.2(b) and the other provisions of this Article XI) indemnify such Buyer Indemnified Person for fifty percent (50%) of the amount of such Losses attributable to such misappropriation, infringement or unlawful use in the event that (x) the provisions of the Purchased Contract providing for indemnification or other right to recovery with respect to such misappropriation, infringement or unlawful use of Intellectual Property rights have expired post-Closing under the terms of such Purchased Contract (as in effect immediately prior to the Closing) or (y) such Purchased Contract is unilaterally terminated by such supplier or performance of such indemnification and other provisions giving rise to such recovery are excused and, as a result, the applicable intellectual property indemnification provision(s) and the other provisions giving rise to such recovery are terminated or excused, unless (i) any Buyer Indemnified Person breaches such Purchased Contract following the Closing and such breach is determined by an arbitrator or court of competent jurisdiction or by agreement of such Buyer Indemnified Person and Seller to be a basis for such termination or excused performance or (ii) no Claim for indemnification is tendered to such supplier prior to such supplier’s notification to any Buyer Indemnified Person of such termination or Claim of excused performance and one of the following two conditions is satisfied: (a) such termination or Claim of excused performance (1) was induced by any Buyer Indemnified Person through a threatened breach or termination of the applicable Purchased Contract or (2) occurred following a proposal by any Buyer Indemnified Person to modify the terms of such Purchased Contract (including pricing or work scope) in a manner that has a material and adverse net economic effect on such supplier; or (b) the work scope, pricing or other material terms have been modified from the terms existing in the applicable Purchased Contract as of immediately prior to the Closing, in which case Seller shall have no obligation to

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indemnify any Buyer Indemnified Person hereunder. Notwithstanding the foregoing, in the circumstance in which the Buyer Indemnified Persons are not entitled to indemnification for misappropriation, infringement or unlawful use of Intellectual Property rights as a result of the operation of clause (I) of the proviso of the immediately preceding sentence, if any Buyer Indemnified Person has used reasonable best efforts (which shall in all events include filing and pursuing arbitration or litigation to final award or judgment) to collect the indemnification owed by any such supplier pursuant to such Purchased Contract and is not able to recover one hundred percent (100%) of the amount of the award or judgment against such supplier, Seller will (subject to Section 11.2(b) and the other provisions of this Article XI) indemnify such Buyer Indemnified Person for fifty percent (50%) of the amount of such shortfall in such recovery by such Buyer Indemnified Person. In addition, if, in such circumstance, such Buyer Indemnified Person and such supplier reach a proposed written settlement in an amount less than one hundred percent (100%) of the indemnification claim and Seller has consented to such settlement (which consent may be withheld in Seller’s sole discretion), then Seller will (subject to Section 11.2(b) and the other provisions of this Article XI) indemnify such Buyer Indemnified Person for fifty percent (50%) of the amount of such shortfall in such recovery by such Buyer Indemnified Person;

(2) with respect to a Claim brought by a supplier to the Business for misappropriation, infringement or unlawful use of Intellectual Property rights to the extent attributable to Intellectual Property or Products delivered by, or other activities of, such supplier (a “Supplier Infringement Claim”), except to the extent such misappropriation, infringement or unlawful use arises out of or results from Seller’s failure to flow down the 787 Supply Agreement Intellectual Property provisions to such supplier pursuant to the terms of the 787 Supply Agreement (or include in the relevant Purchased Contract substantially comparable Intellectual Property provisions); provided that at the time of such Supplier Infringement Claim, such supplier remains a supplier to the Business, with work scope, pricing and other material terms substantially equivalent in the aggregate to those that are set forth in the applicable Purchased Contract, as in effect immediately prior to the Closing. Notwithstanding the foregoing, with respect to any Supplier Infringement Claim for which the Buyer Indemnified Persons are entitled to indemnification, Seller will (subject to Section 11.2(b) and the other provisions of this Article XI) indemnify any Buyer Indemnified Person for fifty percent (50%) of the amount of such Losses attributable to the misappropriation, infringement or unlawful use giving rise to such Supplier Infringement Claim to the extent (i) any Buyer Indemnified Person breaches the applicable Purchased Contract following the Closing and such breach is determined (either by an arbitrator or court of competent jurisdiction or by agreement of such Buyer Indemnified Person and Seller) to be a basis for such Supplier Infringement Claim, (ii) such Supplier Infringement Claim (x) was induced by any Buyer Indemnified Person through a threatened breach or termination of the applicable Purchased Contract or (y) occurred following proposal by any Buyer Indemnified Person to modify the terms of the applicable Purchased Contract (including pricing or work scope) in a manner that has a material and adverse net economic effect on such supplier or (iii) the work scope, pricing or other material terms have been modified from the terms in the applicable Purchased Contract as of immediately prior to the Closing. For purposes of this Section 11.2(c), a Buyer Indemnified Person’s failure to cure an alleged pre-Closing breach by Seller of a Purchased Contract or the failure to modify Seller’s pre-Closing conduct that resulted in a pre-Closing breach shall not constitute a breach of such Purchased Contract by such Buyer Indemnified Person following the Closing. Seller will

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(subject to Section 11.2(b) and the other provisions of this Article XI) indemnify any Buyer Indemnified Person for fifty percent (50%) of the amount of Losses incurred by such Buyer Indemnified Person attributable to any misappropriation, infringement or unlawful use giving rise to a Supplier Infringement Claim to the extent that Seller did flow down the 787 Supply Agreement Intellectual Property provisions required to be flowed down by the 787 Supply Agreement (or included in the relevant Purchased Contract substantially comparable Intellectual Property provisions) but a pre-Closing breach of such Purchased Contract by Seller rendered such provisions unenforceable as determined by an arbitrator or court of competent jurisdiction or by agreement of such Buyer Indemnified Person and Seller. To the extent that Seller did flow down the 787 Supply Agreement Intellectual Property provisions required to be flowed down by the 787 Supply Agreement (or include in the relevant Purchased Contract substantially comparable Intellectual Property provisions) and did not breach such Purchased Contract, Seller will not be required to indemnify any Buyer Indemnified Person hereunder;

(B) to the extent attributable to any specification (subject to paragraph (F) below), design, design or specification change or any method or process of design or manufacturing (and changes thereto) Required by Boeing;

(C) to the extent attributable to Boeing’s collaboration in the specific aspect of the specification (subject to the proviso in paragraph (F) below), design, design or specification change or any method or process of design or manufacturing (or change thereto) that is a direct cause of such misappropriation, infringement or unlawful use and such misappropriation, infringement or unlawful use is attributable to such specific aspect that resulted from such collaboration, in which case Seller will (subject to Section 11.2(b) and the other provisions of this Article XI) indemnify the Buyer Indemnified Person for fifty percent (50%) of the amount of such Losses attributable to such misappropriation, infringement or unlawful use;

(D) to the extent attributable to the use or sale of such Product, Covered Product or Supplied Product in combination with other items when such misappropriation, infringement or unlawful use would not have occurred but for such combination, except where such combination is contemplated by the 787 Supply Agreement or is reasonably contemplated by the Parties given the intended use of such item;

(E) owned by any Buyer Indemnified Person other than consultants of Boeing or its Affiliates;

(F) to the extent attributable to a design of Seller, if such misappropriation, infringement or unlawful use could not be avoided as a result of the specifications Required by Boeing; provided, however, that (i) to the extent such misappropriation, infringement or unlawful use could have been avoided through the use of commercially reasonable efforts by Seller, Seller will (subject to Section 11.2(b) and the other provisions of this Article XI) indemnify the Buyer Indemnified Person for such Losses attributable to such misappropriation, infringement or unlawful use and (ii) to the extent such misappropriation, infringement or unlawful use could have been avoided through the use of all efforts by Seller, Seller will (subject to Section 11.2(b) and the other provisions of this Article XI) indemnify the Buyer Indemnified Person for fifty percent (50%) of the amount of such Losses attributable to such misappropriation, infringement or unlawful use; or

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(G) to the extent such misappropriation, infringement or unlawful use would not have occurred if Seller had signed the applicable Contract, as noted as unsigned on Schedule 2.2(a)(i).

(d) All amounts agreed to by the Parties or determined by a court of competent jurisdiction to be owing under this Section 11.2 shall be paid promptly by Seller through wire transfer of immediately available funds to the account designated in writing by each Buyer Indemnified Person or Buyer Indemnified Person entitled to such payment.

Section 11.3 Indemnification by Buyer.

(a) Buyer hereby agrees (subject to the terms of this Article XI) to indemnify, defend and hold harmless Seller and its Affiliates, equityholders, officers, directors, managers, members, employees and Representatives (collectively, the “Seller Indemnified Persons” and together with Buyer Indemnified Persons, the “Indemnified Persons”) for, from and against any and all Losses imposed upon or incurred by Seller Indemnified Persons, or any of them, to the extent arising out of or resulting from any and all of the following (whether or not arising out of any Third Party Claims): (i) any inaccuracy as of the Closing Date in, or any breach of, any representation or warranty contained in Article V of this Agreement; (ii) any breach by Buyer of, or any failure by Buyer to perform or comply with, any covenant or agreement contained in this Agreement; and (iii) (A) any of the Assumed Liabilities (including as a result of a failure for them to be satisfied when due) and (B) any Liabilities under the Site Development and Incentive Agreement as a result of the failure to obtain a consent to transfer. For the avoidance of doubt, the Parties acknowledge and agree that (x) the assumption by Buyer of the Assumed Liabilities and any Liabilities under the Site Development and Incentive Agreement as a result of the failure to obtain a consent to transfer shall not negate or diminish Buyer’s (or, if applicable, a Buyer Indemnified Person’s) indemnification rights set forth in Section 11.2 of this Agreement and (y) Section 11.3(a)(iii)(B) does not modify Section 2.3(b).

(b) Buyer shall pay all amounts agreed to by the Parties or determined by a court of competent jurisdiction to be owing under this Section 11.3 by wire transfer of immediately available funds to the account designated in writing by each Seller Indemnified Person entitled to such payment.

Section 11.4 Third Party Claims. The obligations and Liabilities of Buyer and Seller in connection with their respective indemnities pursuant to this Article XI, resulting from any Claim or other assertion of Liability by a third party (a “Third Party Claim”), shall be subject to the following terms and conditions:

(a) The Indemnified Person seeking indemnification under this Article XI must give the Party from whom indemnification is sought (the “Indemnifying Person”) notice of any Third Party Claim that is asserted against, imposed upon or incurred by the Indemnified Person and that may give rise to Liability of the Indemnifying Person pursuant to this Article XI, stating (to the extent known or reasonably anticipated) the nature and basis of such Third Party

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Claim and the amount thereof; provided that the failure to give such notice shall not affect the rights of the Indemnified Person hereunder except to the extent that the Indemnifying Person shall have been actually and materially prejudiced by reason of such failure.

(b) Subject to Section 11.4(c) below, if the Indemnifying Person’s reasonable estimated monetary exposure (whether in such Third Party Claim or as a result thereof) arising out of such Third Party Claim is reasonably expected to exceed the Indemnified Person’s reasonable estimated monetary exposure (whether in such Third Party Claim or as a result thereof) arising out of such Third Party Claim after taking into account all of the claims and causes of action (and underlying facts and circumstances) upon which such Third Party Claim is premised, and the indemnification obligations of the Indemnifying Person and limits thereon hereunder (as determined in good faith at the outset of such claim by mutual consultation and negotiation between the Indemnifying Person and the Indemnified Person), then the Indemnifying Person shall have the right to undertake, by counsel or other Representatives of its own choosing (which shall be reasonably satisfactory to the Indemnified Person), subject to Section 11.2(b), the defense of such Third Party Claim at the Indemnifying Person’s sole expense and, subject to Section 11.4(d), settle or compromise such Third Party Claim.

(c) In the event that (i) the Indemnifying Person shall elect not to undertake such defense; (ii) the Indemnifying Person shall fail to undertake to defend such Third Party Claim, or diligently pursue or maintain such defense, within thirty (30) days after delivery of notice by the Indemnified Person of such Third Party Claim; (iii) such Third Party Claim seeks non-monetary relief or involves criminal allegations against a Party; or (iv) the Indemnified Person reasonably concludes that the Indemnifying Person and Indemnified Person have conflicting interests with respect to such Third Party Claim (it being understood that a relationship with a supplier shall not constitute a conflicting interest), then the Indemnified Person (upon further notice to the Indemnifying Person) shall have the right to undertake the defense, compromise and/or settlement of such Third Party Claim, by counsel or other Representatives of its own choosing; provided, that with respect to a Third Party Claim seeking non-monetary relief, the Indemnifying Person shall have the right to employ separate legal counsel and to participate in (but not control) the defense thereof, but the fees and expenses of such legal counsel shall be at the expense of the Indemnifying Person; and provided further that the Indemnified Person shall not compromise or settle such Third Party Claim or consent to the entry of any Order with respect to such Third Party Claim without the consent of the Indemnifying Person (which consent shall not be unreasonably withheld, conditioned or delayed).

(d) Anything in this Section 11.4 to the contrary notwithstanding, the Indemnifying Person shall not, without the Indemnified Person’s written consent (which consent shall not be unreasonably withheld, conditioned or delayed), settle or compromise any Third Party Claim or consent to the entry of any Order with respect to such Third Party Claim unless (i) the Indemnifying Person agrees in writing to pay all amounts payable pursuant to such settlement, compromise or Order as provided in this Agreement, (ii) such settlement, compromise or Order includes as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Person of an irrevocable release from all Liability in respect of such Third Party Claim in form and substance satisfactory to the Indemnified Person, (iii) such settlement, compromise or Order would not result in the finding or admission of any violation of

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Law, and (iv) such settlement, comprise or Order does not impose any injunctive relief or operational restrictions on the Indemnified Person or admit to any wrongdoing by or on behalf of the Indemnified Person.

(e) The Parties agree that any settlement described in Schedule 11.4(e) shall be managed as described thereon.

Section 11.5 Limitations on Indemnification Liability.

(a) Losses Net of Insurance Proceeds and Other Third-Party Recoveries. Notwithstanding any provision in this Agreement to the contrary, all Losses for which any Indemnified Person would otherwise be entitled to indemnification under this Article XI shall be reduced by the amount of insurance proceeds, indemnification payments and other third-party recoveries to which any Indemnified Person receives in respect of any Losses incurred by such Indemnified Person, in each case after deducting the out-of-pocket costs and expenses incurred following Closing in connection with such Loss and obtaining such proceeds, payments or recoveries, including any incremental insurance premium costs incurred by such Party; provided that in the case of any such incremental insurance premium costs, the Indemnified Person shall provide the Indemnifying Person with a written statement from its insurance carrier specifically allocating the increase in premium costs directly to the claims for which indemnification is sought. In the event any Indemnified Person is entitled to any insurance proceeds, indemnity payments or any third-party recoveries in respect of any Losses for which such Indemnified Person is entitled to indemnification pursuant to this Article XI, such Indemnified Person shall use commercially reasonable efforts to obtain or receive such proceeds, payments or recoveries; provided that this Section 11.5(a) shall not require any Indemnified Person to initiate, engage in or threaten litigation with any Person, including any of its insurance carriers. In the event that any such insurance proceeds, indemnity payments or other third-party recoveries are received by an Indemnified Person subsequent to receipt by such Indemnified Person of any indemnification payment hereunder in respect of the claims to which such insurance proceeds, indemnity payments or other third-party recoveries relate, appropriate refunds shall be made promptly by the relevant Indemnified Person of the relevant portion of such indemnification payment.

(b) Tax Benefits. Notwithstanding any provision in this Agreement to the contrary, all indemnification payments for Losses under this Article XI shall be paid by the Indemnifying Person without reduction for any Tax Benefits (as defined below) available to the Indemnified Person. However, to the extent that an Indemnified Person recognizes Tax Benefits in respect of any Losses for which such Indemnified Person is entitled to indemnification under this Article XI, the Indemnified Person shall pay promptly to the Indemnifying Person an amount in cash equal to the amount of such Tax Benefits (but not in excess of the indemnification payment or payments actually received from the Indemnifying Person with respect to such Losses) as such Tax Benefits are actually recognized by the Indemnified Person. The Indemnified Person shall provide a statement, signed by an officer of the Indemnified Person, setting forth in reasonable detail the calculation of Tax Benefits recognized (even if no such Tax Benefits are recognized) at the following times: (i) no later than one hundred and twenty (120) days after the close of each calendar year after an indemnification payment has been made to such Indemnified Person under this Article XI and (ii) accompanying each payment of Tax Benefits realized by such Indemnified Person under this Section 11.5(b). In the event the

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Indemnifying Person objects to the calculation of Tax Benefits recognized, it shall deliver written notice of objection (the “Tax Benefit Objection Notice”) to the Indemnified Person not more than forty-five (45) days after the Indemnifying Person’s receipt of the calculation. The Indemnified Person and the Indemnifying Person shall promptly endeavor in good faith to resolve the issues related to calculation of Tax Benefits recognized, including through the provision of information reasonably requested by the other party in order to review the calculation of Tax Benefits recognized. In the event such parties are unable to resolve the issues within forty-five (45) days after the issuance of the Tax Benefit Objection Notice, the resolution of the calculation of Tax Benefits recognized shall be submitted to a nationally recognized public accounting firm mutually agreed upon by the Indemnifying Person and the Indemnified Person (the “Arbitrator”). The Indemnifying Person and the Indemnified Person shall each use commercially reasonable efforts to cause the Arbitrator to review the calculation of Tax Benefits recognized and related documents and records necessary to support such calculation and determine the Tax Benefits recognized by the Indemnified Person within forty-five (45) days after the submission of the calculation to the Arbitrator. The decision of the Arbitrator shall be final and binding upon the parties and shall be non-appealable. Upon determination of the Tax Benefits recognized by the Arbitrator, the Indemnified Person shall pay promptly to the Indemnifying Person the amount of any increase, if any, in the amount of Tax Benefits recognized as calculated by the Arbitrator over the amount calculated by the Indemnified Person. The fees of the Arbitrator shall be borne 50% by the Indemnifying Person and 50% by the Indemnified Person. For this purpose, the Indemnified Person shall be deemed to recognize a tax benefit (“Tax Benefit”) with respect to a taxable year if, and to the extent that, the Indemnified Person’s cumulative liability for Income Taxes through the end of such taxable year, calculated by excluding any Income Tax items attributable to the Losses from all taxable years, exceeds the Indemnified Person’s actual cumulative Income Tax liability through the end of such taxable year, calculated by taking into account any Income Tax items attributable to the Losses for all taxable years as provided for by the relevant Income Tax law.

(c) Consequential; Punitive and Other Special Damages. Notwithstanding any provision in this Agreement to the contrary, no Indemnified Person shall be entitled to indemnification for consequential, punitive, indirect or special damages (other than for any such damages that the Indemnified Person is, or has been, required to pay in respect of any Third Party Claim that is subject to such claim of indemnification).

Section 11.6 Treatment of Indemnification Payments. All amounts paid pursuant to this Article XI shall be treated as adjustments to the Aggregate Consideration.

Section 11.7 Exclusive Remedy. Notwithstanding anything contained in this Agreement to the contrary, except (a) in the case of fraud, (b) for injunctive or provisional relief and (c) as contemplated by Section 3.4, after the Closing, indemnification pursuant to the provisions of this Article XI shall be the sole and exclusive remedy for the Parties for monetary damages for any inaccuracy or breach of any representation, warranty, covenant or other provision contained in this Agreement or in any certificate delivered pursuant hereto.

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ARTICLE XII

GENERAL PROVISIONS

Section 12.1 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered if delivered personally, mailed by registered or certified mail (postage prepaid, return receipt requested) or sent by overnight courier (providing proof of delivery) to the Parties at the following addresses or as of the date transmitted if sent by electronic transmission to the following facsimile numbers or electronic mail addresses (or at such other address, electronic mail address or facsimile number for a Party as shall be specified by like notice):

If to Seller:
	Vought Aircraft Industries, Inc. 9314 W. Jefferson Street Dallas, TX 75211 Attention: General Counsel, Kevin McGlinchey Facsimile: (972) 946-5642
With a copy (which shall not constitute notice) to:
	Latham & Watkins LLP 555 Eleventh Street, NW Suite 1000 Washington, DC 20004 Attention: Daniel T. Lennon                  Paul F. Sheridan, Jr. Facsimile: (202) 637-2201
If to Buyer:
	BCACSC, Inc. c/o The Boeing Company 100 N. Riverside Drive Chicago, IL 60606 Attention: Vice President, Corporate and Strategic Development Facsimile: (312) 777-2885

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	BCACSC, Inc. c/o The Boeing Company 100 N. Riverside Drive Chicago, IL 60606 Attention: Executive Vice President and General Counsel Facsimile: (312) 544-2121 BCACSC, Inc. c/o The Boeing Company P.O. Box 3707 MC 09-20 Seattle, WA 98124-2207 Attention: Vice President, Supply Chain Strategy, Commercial Airplanes Facsimile: (425) 717-7800
With a copy (which shall not constitute notice) to:
	Kirkland & Ellis LLP 300 North LaSalle Street Chicago, IL 60654 Facsimile: (312) 862-2200 Attention: Stephen Fraidin                  R. Scott Falk, P.C.

Section 12.2 Severability; Specific Enforcement. If any provision of this Agreement or the application of any provision hereof to any circumstances is held invalid, unenforceable, or otherwise illegal, the remainder of the Agreement and the application of such provision to other circumstances shall not be affected, and the provisions so held to be invalid, unenforceable, or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal. Upon any such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. Each Party acknowledges and agrees that the other Party may be damaged irreparably in the event that any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each Party agrees that (A) the other Party may be entitled, in addition to other rights or remedies existing in its favor, to injunctive or other relief to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof, in each case without the requirement of posting a bond or proving actual damages (which requirements the other Party shall waive) and (B) each Party hereby agrees that such Party shall not, in connection with any action brought to specifically enforce a Party’s rights or obligations under this Agreement, assert, plead or argue that such remedy is unavailable, or otherwise oppose the imposition of such a remedy, on the grounds that money damages are an adequate remedy for the alleged breach of this Agreement.

Section 12.3 Amendments. No amendment, supplement or modification of this Agreement shall be effective unless in writing signed by all of the Parties.

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Section 12.4 Assignment; Beneficiaries. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by any of the Parties (whether by merger, operation of Law or otherwise) without the prior written consent of the other Parties and any purported assignment in violation of this Section 12.4 shall be void; provided that (i) Seller may collaterally assign its rights under this Agreement as security for Indebtedness and related obligations of Seller under the Seller Senior Credit Agreement or otherwise and (ii) either Party may, without the prior written consent of the other Parties, assign and delegate any of their rights (including Buyer’s right to acquire the Purchased Intellectual Property) hereunder to any Affiliate; provided that no such assignment shall relieve Seller or Buyer of any of their respective obligations or Liabilities hereunder. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and assigns, and nothing in this Agreement, express or implied, other than the rights of Buyer Indemnified Persons and Seller Indemnified Persons pursuant to Article XI, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Notwithstanding the foregoing, nothing in this Agreement, express or implied, is intended to confer upon any Transferred Employees any right, benefit or remedy of any nature whatsoever under or by reason of Article VIII hereof.

Section 12.5 Counterparts; Facsimiles. This Agreement may be executed and delivered in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Exchange and delivery of this Agreement by exchange of facsimile copies or other electronic copies bearing the signature of a Party shall constitute a valid and binding execution and delivery of this Agreement by such Party. Such facsimile or other electronic copies shall constitute legally enforceable original documents.

Section 12.6 Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

Section 12.7 Governing Law; Forum Selection. This Agreement and all disputes arising out of or relating hereto shall be governed by and construed in accordance with the Laws of the State of Delaware applicable to contracts made and performed entirely with the State of Delaware, without giving effect to any Laws or principles of conflicts of laws that would cause the Laws of any other jurisdiction to apply. Each Party hereby (a) submits to the exclusive jurisdiction of any state or federal court sitting in the State of Delaware (the “Chosen Courts”) in any Legal Proceeding arising out of or relating to this Agreement, (b) agrees that all Claims in respect of such Legal Proceeding may be heard and determined only in any such Chosen Court, (c) hereby waives any Claim of inconvenient forum or other challenge to venue in such Chosen Court, and (d) agrees not to bring any Legal Proceeding arising out of or relating to this Agreement before any Governmental Entity other than the Chosen Courts.

Section 12.8 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY PROCEEDING IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, WHETHER PURPORTING TO BE AT LAW OR IN EQUITY, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

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Section 12.9 Entire Agreement. This Agreement and the other Transaction Documents constitute the final, exclusive and entire agreement of the Parties, and all prior and contemporaneous agreements and undertakings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof (including the LOI) are expressly merged into and superseded by this Agreement and the other Transaction Documents. There are no conditions precedent to the effectiveness of this Agreement other than those expressly stated in this Agreement.

Section 12.10 Waivers. Any failure by any Party to comply with any obligation, covenant, agreement or condition herein may be waived by the Party entitled to the benefits thereof only by a written instrument signed by the Party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure to comply.

Section 12.11 NO ADDITIONAL REPRESENTATION OR WARRANTIES. EXCEPT AS PROVIDED IN ARTICLE IV, NEITHER SELLER, NOR ANY OF ITS AFFILIATES, NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, STOCKHOLDERS, PARTNERS, MEMBERS OR REPRESENTATIVES HAS MADE, OR IS MAKING, ANY REPRESENTATION OR WARRANTY WHATSOEVER TO BUYER WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND NO SUCH PARTY SHALL BE LIABLE IN RESPECT OF THE ACCURACY OR COMPLETENESS OF ANY INFORMATION PROVIDED TO BUYER WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. WITHOUT LIMITING THE FOREGOING, BUYER ACKNOWLEDGES THAT BUYER, TOGETHER WITH ITS ADVISORS, HAS MADE ITS OWN INVESTIGATION OF THE BUSINESS, THE PURCHASED ASSETS AND THE ASSUMED LIABILITIES AND IS NOT RELYING ON ANY IMPLIED WARRANTIES OR UPON ANY REPRESENTATION OR WARRANTY WHATSOEVER AS TO THE PROSPECTS (FINANCIAL OR OTHERWISE) OR THE VIABILITY OR LIKELIHOOD OF SUCCESS OF THE BUSINESS AS CONDUCTED AFTER THE CLOSING. FOR THE PURPOSES HEREIN, ANY INFORMATION PROVIDED TO, OR MADE AVAILABLE TO, BUYER BY SELLER SHALL INCLUDE ANY AND ALL INFORMATION THAT MAY BE CONTAINED OR POSTED IN ANY ELECTRONIC DATA ROOM ESTABLISHED BY SELLER OR ITS REPRESENTATIVES IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

Section 12.12 Disclosure Schedules. Unless the context otherwise requires, all capitalized terms used in the Disclosure Schedule shall have the respective meanings assigned in this Agreement. No reference to or disclosure of any item or other matter in the Disclosure Schedule shall be construed as an admission or indication that such item or other matter is material or outside the ordinary course of business or that such item or other matter is required to be referred to or disclosed in the Disclosure Schedule. No disclosure in the Disclosure Schedule relating to any possible breach or violation of any agreement, Law or regulation shall be

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construed as an admission or indication that any such breach or violation exists or has actually occurred. No exceptions to any representations or warranties disclosed in one particular Schedule shall constitute an exception to any other representations or warranties made in this Agreement unless the exception is disclosed as provided herein on each such other applicable Schedule or cross-referenced in such other applicable Schedule or unless the applicability of such exception to another Schedule is apparent on its face.

Section 12.13 No Recourse. Except as set forth in the Boeing Guaranty, this Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement may only be brought against the entities that are expressly named as Parties and then only with respect to the specific obligations set forth herein with respect to such Party. Except as set forth in the Boeing Guaranty, except to the extent a named Party to this Agreement (and then only to the extent of the specific obligations undertaken by such named Party in this Agreement and not otherwise), no past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or their respective Affiliates shall have any Liability (whether in contract or tort) for any one or more of the representations, warranties, covenants, agreements or other obligations or Liabilities of any one or more of Seller or Buyer under this Agreement (whether for indemnification or otherwise) of or for any claim based on, in respect of, or by reason of, the transactions contemplated by this Agreement and the Transaction Documents. Nothing in this Section 12.13 shall in any way limit the obligations of Boeing or the rights of Seller under the Boeing Guaranty.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the undersigned have executed and delivered, or have caused this Agreement to be duly executed and delivered, as of the date first set forth herein.

SELLER
VOUGHT AIRCRAFT INDUSTRIES, INC.
By:	/S/ K.B. HOWE
Name:	K.B. Howe
Title:
BUYER
BCACSC, INC.
By:	/S/ BRYAN GERARD
Name:	Bryan Gerard
Title:

EX-15

EXHIBIT (15)

Letter from Independent Registered Public Accounting Firm Regarding

Unaudited Interim Financial Information

LETTER IN LIEU OF CONSENT FOR REVIEW REPORT

October 21, 2009

To the Board of Directors and Shareholders of

The Boeing Company

Chicago, Illinois

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of The Boeing Company and subsidiaries for the periods ended September 30, 2009 and 2008, as indicated in our report dated October 21, 2009; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, is incorporated by reference in Registration Statement Nos. 33-25332, 33-31434, 33-43854, 33-58798, 33-52773, 333-03191, 333-16363, 333-26867, 333-32461, 333-32491, 333-32499, 333-32567, 333-35324, 333-41920, 333-47450, 333-54234, 333-73252, 333-107677, 333-140837, 333-156403 and 333-160752 on Form S-8, Post-Effective Amendments to Registration Statement Nos. 333-03191, 333-47450, 333-35324 on Form S-8, and Registration Statement No. 333-157790 on Form S-3.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/    Deloitte & Touche LLP

Chicago, Illinois

52

EX-31.I

EXHIBIT (31)(i)

CERTIFICATION PURSUANT TO

RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, W. James McNerney, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Boeing Company;

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(s) 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(s) 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.

Date: October 21, 2009

/S/    W. JAMES MCNERNEY, JR.

W. James McNerney, Jr.

Chairman, President and

Chief Executive Officer

53

EX-31.II

EXHIBIT (31)(ii)

CERTIFICATION PURSUANT TO

RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James A. Bell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Boeing Company;

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(s) 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(s) 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.

Date: October 21, 2009

/S/    JAMES A. BELL

James A. Bell

Executive Vice President, Corporate President and Chief Financial Officer

54

EX-32.I

EXHIBIT (32)(i)

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 The Boeing Company (the “Company”) on Form 10-Q for the period ending September 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, W. James McNerney, Jr., Chairman, 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:

(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/    W. JAMES MCNERNEY, JR.

W. James McNerney, Jr.

Chairman, President and

Chief Executive Officer

October 21, 2009

55

EX-32.II

EXHIBIT (32)(ii)

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 The Boeing Company (the “Company”) on Form 10-Q for the period ending September 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James A. Bell, Executive Vice President, Corporate 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:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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/    JAMES A. BELL

James A. Bell

Executive Vice President, Corporate

President and Chief Financial Officer

October 21, 2009

56