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Total deliveries to Oct. 31, 1941.

RECONCILIATION OF DELIVERIES TO OCT. 31, 1941, WITH SALES PER EXHIBITA Less: Proceeds from experimental contracts credited to manufacturing expense.

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EXHIBIT NO. 10

WAR DEPARTMENT

AIR CORPS, MATERIAL DIVISION

Supplemental Contract to Contract No. W 535 ac-16443. WHEREAS, under date of October 19, 1940, a contract numbered W 535 ac16443 was entered into between THE UNITED STATES OF AMERICA by G. V. McPIKE, Major, Air Corps, U. S. Army, as contracting officer, acting by authority of the Secretary of War, as party of the first part, and JACK-HEINTZ, LTD., a corporation organized and existing under the laws of the State of California. Providing for the furnishing of Type G-4 and G-2 Starter Assemblies and Data, as party of the second part, and

WHEREAS, it is provided in Section 1, Paragraph (0) of Public Act No. 703, 76th Congress, approved July 2, 1940, as amended by Section 103 of Public, No. 781, 76th Congress, approved September 9, 1940, that the Secretary of War shall have authority to advance payments under contracts for the War Department in an amount not to exceed thirty per centum (30%) of the contract price when he deems it necessary in the interest of National Defense, and

WHEREAS, The Secretary of War deems it necessary in the interest of the National Defense that the Government amend the original contract for the purpose of providing additional working capital to the Contractor essential to the expediting and dispatch of the work originally contracted for,

Now, THEREFORE, this supplemental contract is entered into this 4th day of November, 1940, between the Government and the contractor, said parties agreeing to and with each other as follows:

ARTICLE 1. The Government shall from time to time after the approval of this Supplemental Contract, at the request of the Contractor and subject to the approval of the Chief of the Air Corps, or his authorized representative, as to the necessity therefor, advance to the Contractor, without payment of interest therefor by the Contractor, sums not to exceed Seven Hundred Sixty Thousand, Six Hundred and Ten Dollars and Twenty-Five Cents ($760,610.25), or thirty per centum (30%) of the contract price, as it may be amended, whichever shall be the smaller.

ARTICLE 2. As a condition precedent to the making of any advance payment or payments as hereinbefore provided, the Contractor will furnish the Government with a surety bond or bonds or other security satisfactory to the Chief of the Air Corps in such amount as shall be prescribed by the Secretary of War: Provided: That subject to the provisions of Article 4 hereof, an agreement or agreements as more specifically set forth in Article 3 of this Supplemental Contract, between the Government, the Contractor, and a national bank or banks, approved by the Chief of the Air Corps, together with this Supplemental contract, shall be considered adequate security for such advance payments.

ARTICLE 3 (A). Until all advances hereunder are liquidated, all sums received as advance payments under this agreement shall be deposited in a special account or accounts separate from the Contractor's general or other funds. The Contractor shall, by the deposit of amounts out of partial and other payments as received by the Contractor, maintain the balance in said special bank account or accounts at an amount not less than the difference between the following sums to wit:

(1) The aggregate of all advance, partial, and other payments made to the Contractor under the contract, minus the amount of advance and partial payments liquidated, either directly or by deductions from the unit price of completed articles, and

(2) The total of disbursements properly made out of the special account or accounts up to the amount of the advances plus 75% of other sums expended by the Contractor toward the manufacture of articles upon which the Government has a lien or to which the Government has title under the provisions of the principal contract.

ARTICLE 3. (B) Such special bank account or accounts shall be established subject to an agreement between the Government, the Contractor, and a National Bank providing substantially as follows:*

(1) Payment by the Government of the advance or advances to be made hereunder shall be made in the form of a check or checks payable to the Contractor and endorsed for deposit only in Central National Bank of Cleveland, Ohio, or such *To be used only with the 3d, 4th, and 5th alternates of article 3 (A).

other bank or banks as shall be agreed upon, which bank or banks shall deposit the funds received hereunder in a special account or accounts for the use of the Contractor in the performance of the contract, subject to all the terms and conditions set forth in this Article 3 (B), Subparagraphs (1) to (S), inclusive, and subject to be withdrawn or suspended at the discretion of the Chief of Air Corps of the U. S. Army.

(2) All payments from said special account or accounts, except payment of any amount to be refunded to the Government hereunder, shall be made by check of the Contractor on the bank or banks concerned. Each such check shall be transmitted to the drawee bank, accompanied by certification and proof as herein required that the amount of such check is necessary, and is to be used, for payment for material or services used, or to be used, in the performance of the contract. (3) Each eheck of the Contractor on any such special account in payment for material and equipment shall be transmitted by the Contractor directly to the drawee bank, shall be made payable to the order of the person, firm, or corporation supplying said material and shall, when so transmitted to the bank, be accompanied by the original invoices (or photostatic copies thereof) for such material or equipment together with an affidavit executed by an officer of the Contractor that all such material, or such part thereof as is covered by the check, was used, or is necessary for use, by the Contractor in the performance of the Contract, and that the amounts of such invoices, or of such portion thereof as relates to material covered by the check concerned, are correct and remain unpaid. The bank shall cause its Trust Officer or some other principal officer to countersign and transmit the check to the payee directly and take a receipt from the payee for the material or services paid for by said check, if the certification and proof herein have been supplied and found sufficient by the said bank. If such certification and proof have not been supplied or have not been found sufficient, the drawee bank shall refuse either to countersign or transmit or pay the same pending receipt of such certification and sufficient proof. No check shall be honored by said bank unless countersigned by it as herein provided.

(4) Withdrawals for the purpose of paying wages and salaries chargeable to the performance of the contract shall be made by checks of the Contractor on the bank or banks concerned, payable to the order of the Contractor. Each such check shall be accompanied by the affidavit of an officer of the Contractor that the amount thereof is necessary for effecting such payment, with extracts from the pertinent original records of the Contractor. No such check shall be honored by the drawee bank pending receipt of such affidavit and extracts. Then, if said proof is found sufficient, the said check shall be countersigned as provided herein in Article 3, paragraph (4), and honored by said bank.

(5) The bank or banks in which the special deposit or deposits are made as herein provided, shall keep a true and correct record of withdrawals, together with the invoices and other supporting data furnished hereunder; and shall afford any authorized agent of the Government Proper Facilities for inspection and audit of the pertinent special account or accounts.

(6) The bank or banks in which special deposit or deposits are made, as herein provided, shall allow withdrawals as hereinbefore provided, pending receipt by such bank or banks of notice from the Chief of the Air Corps of the termination or suspension of the right of the Contractor to make further withdrawals. Upon receipt of any such notice the bank or banks concerned shall suspend further withdrawals and either return any unused balance or balances to the Government, or otherwise dispose of same as directed by the Secretary of War or his duly authorized representative.

(7) The bank or banks in which the special deposit or deposits are made as herein provided, shall segregate and hold in trust for the use of the United States Government securities owned by said bank or banks equal in value to the total amount of said advance payment fund on special deposit in said bank or banks at any one time to secure the Government against loss caused by failure of said bank or banks, said securities to be only legal obligations of the United States Government.

(8) Balances in such special account or accounts shall at all times secure the repayment of advances in connection with which the special account or accounts are opened, and the Government shall have a lien upon such balances to secure the repayment of such advances, which lien shall be superior to any lien of the bank upon such account or accounts by virtue of assignment to it of such contract or otherwise.

ARTICLE 4. If at any time the Secretary of War deems the security furnished by the Contractor inadequate, the Contractor shall furnish such additional security as shall be satisfactory to the Secretary of War.

ARTICLE 5. If, upon the completion of the contract, the advance payments and partial payments made to the Contractor have not been fully liquidated in the manner herein provided, the balance or balances thereof shall be deducted from any payments otherwise due to the Contractor, and if the sum or sums due the Contractor be insufficient to cover any such balance, the deficiency shall be paid by the Contractor in cash: Provided, That, if and when the Contractor may, by means of deductions or otherwise, have reimbursed the Government in full for payments made, any balance of any such special account or accounts shall become the property of the Contractor, and the bank or banks concerned shall have authority to pay same to the Contractor and shall be relieved of any further obligation to the Government on account thereof.

ARTICLE 6. In the event of cancellation or termination of the Contract for any cause whatsoever, or in case of breach of this supplemental agreement by the Contractor, the Contractor agrees to return to the Government, upon demand, the outstanding balance of any advance payment or payments. If such demand is not met within fifteen (15) days after receipt of notice by the Contractor, the balance remaining due the Government shall bear interest at the rate of six per centum (6%) per annum from date of demand until payment is made.

ARTICLE 7. It is agreed that the aggregate of the advance payments authorized by this Supplemental Contract and partial payments, if any, to be made to the Contractor under the principal contract, exclusive of such portions of the partial or advance payments made as have been covered by deductions from the unit price of completed articles delivered and accepted by the Government, shall at no time exceed eighty per centum (80%) of the total contract price of the articles, still to be delivered to the Government, under the contract, as amended. It is agreed that each payment made by the Government under the contract shall be reduced by the percentage which the total advance payment or payments bears to the total contract price, as amended.

ARTICLE 8. Except as otherwise provided herein, liquidation of any advance or advances made to the Contractor hereunder shall be made by means of deductions from the contract price of completed primary units delivered to and accepted by the Government, as long as there shall be any unliquidated balance of any advance, there shall be deducted by the Government from the unit price of such completed primary units the percentage which represents the proportion which the total of the advance payments made bears to the total contract price of all articles to be delivered under the contract as it may have been amended pursuant to its terms. ARTICLE 9. The Contractor shall, at all times, afford to the Contracting Officer or his duly authorized representative, proper facilities for inspection and audit of the Contractor's accounts, including to the extent of the Contractor's control thereof proper facilities for the inspection and audit of any special bank account or accounts covering funds advanced hereunder.

ARTICLE 10. Upon receipt of items paid for from such special account or accounts, such items shall be segregated and the Government shall have a lien on such items until the advance payment or payments have been fully liquidated, or until the item or items concerned have become the property of the Government as the result of partial payments or otherwise; Provided: That if segregation in any instance be impracticable and the items concerned are consequently intermingled with other property of the contractor, then and in that event the lien above provided for in favor of the Government, shall extend to that portion of the intermingled mass represented by the items involved, and without limiting the generality of the foregoing, such lien shall continue as follows: (a) in the case the contract covers construction, until such items or materials are incorporated into the building, and thereafter on the building in the construction of which the items or materials are incorporated; (b) in the case of items or materials comprising facilities and such facilities both before and after their installation in the plant; and (c) in the case of articles contracted for until the items or materials so paid for are fabricated into such articles, and thereafter on the articles until accepted by the Government.

(1) If at any time during the progress of the work under this contract it becomes necessary to deliver any item or items upon which the Government has a lien as aforesaid to a third person for fabrication, the Contractor shall notify such third person of the lien herein provided and shall obtain from such third person a receipt in duplicate, acknowledging inter alia the existence of such lien. A copy of each such receipt shall be delivered by the Contractor to the Contracting Officer.

(2) The Contractor shall make no payments in advance for labor or services out of the special account, nor pay for materials out of said special account in advance of delivery at the place of the work, or at an approved storage site, without the prior consent in writing, of the contracting officer.

ARTICLE 11. This Supplemental contract shall be subject to the written approval of the Secretary of War or such officer as said Secretary may designate and shall not be binding until so approved.

Except as hereby amended, all the terms and conditions of the contract affected shall remain unmodified and in full force and effect and shall also apply in carrying out the provisions of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Supplementary Contract on the day and year first above written.

Two Witnesses:

GEORGE W. JACK.
A. BOWMAN.

THE UNITED STATES OF AMERICA, By G. V. McPIKE.

JACK HEINTZ, LTD.,
Contractor.

WM. S. JACK,
Win. S. Jack, President,

809 Hanna Bldg., Cleveland, Ohio.

I, Ralph M. Heintz, certify that I am the secretary of the corporation named as contractor herein; that Wm. S. Jack who signed this Suppplementary Contract on behalf of the contractor, was then President of said Corporation; that said contract was duly signed for and in behalf of said Corporation by authority of its governing body, and is within the scope of its corporate powers.

[CORPORATE SEAL]

Contract for the

RALPH M. HEINTZ.

I hereby certify that, to the best of my knowledge and belief, based upon observation and inquiry, who signed this Suppplementary had authority to execute the same, and is the individual who signs similar contracts on behalf of this corporation with the public generally.

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Approval Recommended November 7, 1940.

Contracting Officer.

November 8th, 1940, Approved Subject to conditions set forth in 1st Ind. hereon.

By direction of the Secretary of War under the provisions of Section 1 (c) Act of July 2, 1940.

ROBERT P. PATTERSON, The Assistant Secretary of War.

(Signed)

For the Chief of the Air Corps:

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