**Exhibit10.31**

 

CorporateHeadquarters

7401West Wilson Avenue

Chicago,IL 60706-4548

708.867.6777· Fax: 708.867.6999· 877.316.7700

 

**Viae-mail**

 

August 25,2008

 

Mr. MarkA. Shively

Delphi E& S

2151East Lincoln Road

Kokomo,Indiana 46901

 

**Re:Methode/Delphi - Long-Term Agreement**

 

DearMark:

 

Asyou know, Methode and Delphi do not currently have in place a long-termagreement but Methode has agreed to ship parts to Delphi at the prices providedin our May 1, 2008 letter.  Asindicated in our prior letters, these prices will be effective through September 30,2008.

 

Aswe have previously communicated, Methode is interested in continuing as asupplier to Delphi and is interested in entering into a long-term agreement. Peryour request, Methode is providing the attached pricing which will be in effectfor three years, beginning October 1, 2008.  This revised three-year pricing reflects theimpact of material and component price increases since providing our May 1,2008 pricing, as well as the impact of further, significantly reducedvolumes.  The May 1, 2008 pricingwas based on anticipated 2009 model year volumes of 5,293,924 units.  Based on the latest information available,including Delphi releases, however, the 2009 model year volumes will be closerto 4,300,000 units, if not lower. Please note the differential between thisfigure and the Finley volumes for the same period of 6,805,000 units.

 

Movingforward, we will use 4,300,000 units as the baseline for model year 2009 and3,900,000 for model year 2010 and 2,500,000 for model year 2011.  As previously committed, any shipments abovethis baseline quantity will be subject to a 5% rebate on the additionalunits.  Further, in order to address yourconcerns as to possible pricing consequences for volumes 20% or more below theFinley volumes, we are withdrawing our right to readjust pricing.  Note that we have also removed ourrequirement to review PODS D pricing after one year.  Due to the significant reduction in GMT900volume, updated pricing for the GMT900 PODS-D program is included in theattached prices.

 

Asto the three-year pricing provided herein, we require the following conditions.First, as previously discussed, Methode must be placed on a material/componentcost adder program.  The material/componentcosts used to calculate the attached pricing will be the base line.  On a quarterly basis any increases orsurcharges would be passed along to Delphi for reimbursement which must be paidwithin 30 days.

 

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Second,ZCRI payment terms must apply for the term of the agreement.

 

Third,as previously discussed Methode cannot agree to several terms of the purchaseorders and the Delphi General Terms and Conditions (“Delphi T’s & C’s).One such term is paragraph 12 of PO# 550063028, which provides that “tools andequipment provided for performance of an operation by consignee remain theproperty of Delphi unless otherwise noted”. As Delphi knows, not all tools andequipment used by Methode in the production of Delphi parts are the property ofDelphi. As such, Methode objects to that term to the extent it was intended toinclude tools or equipment not paid for by Delphi.

 

Similarly,Methode cannot agree to paragraph 16 of the Delphi T’s & C’s to theextent that it grants Seller the right to take possession of and title to anypart of any equipment owned by Methode if it was used in the production ofDelphi parts.

 

Giventhe fact that the agreement would expire after three years, Methode can notagree to paragraph 18 of the Delphi T’s and C’s. Specifically, Methode does notagree to produce any service or replacement parts other than those that will beproduced prior to September 30, 2011. Given the limited amount of serviceparts ordered and the resulting set-up costs incurred by Methode, the pricingfor service parts will be determined by the order quantity.

 

Finally,Methode does not agree to paragraph 28 of the Delphi T’s and C’s regardingDelphi audits. In lieu of that paragraph, Methode will agree to the followingterm adapted from the OESA (Original Equipment Suppliers Association) DraftModel Terms and Conditions:

 

Sellerwill maintain records as necessary to support amounts charged to Buyer inaccordance with Seller’s document retention policies. Buyer and itsrepresentatives may audit Seller’s records of transactions completed within oneyear prior to the audit date, to the extent needed to verify the quantitiesshipped and that the prices charged match the agreed prices. Any audit will beconducted at Buyer’s expense (but will be reimbursed by Seller if the audit uncoversmaterial errors in the amounts charged), at reasonable times, and at Seller’susual place of business.

 

Methodewill accept purchase orders with the attached pricing subject to the aboveconditions and exceptions through September 30, 2011. In order for Methodeto accept purchase orders for product shipped after September 30, 2008,the purchase orders must have these exceptions noted as well as Delphi mustremove any reference to pricing being “under protest”. Delphi must also waiveall rights or claims to having paid Methode “under protest” as to any pastpurchase orders.

 

Pleaseprovide written acceptance to this letter no later than close of business September 5,2008.

 

 
| Sincerely,                                 |   |
|--------------------------------------------|--------|
|                                       |   |
| /s/  Timothy R. Glandon                    |   |
| Timothy  R. Glandon                        |   |
| Vice  President & General Manager |   |
| North  American Automotive Operations      |   |

 

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**                                **Electronics &Safety

 

ViaE-Mail and UPS or FedX

 

September 4,2008

 

Mr. TimothyR. Glandon

VicePresident & General Manager

NorthAmerican Automotive Operations

111W. Buchanan Street

P.O. Box130

Carthage,IL 62321-0130

 

**Re:    Methode/Delphi**

 

DearTim:

 

Delphiaccepts the three-year pricing proposal set out in your August 25, 2008letter.

 

Methodewill be placed on a material cost adder program.  The material/component costs used to calculatethe attached pricing will be the baseline. On a quarterly basis any increasesor surcharges will be passed along to Delphi for reimbursement which must bepaid within 30 days.

 

ZCRIpayment terms to apply for the term of the agreement.

 

Thatportion of Paragraph 12 on the Purchase Order providing that “tools andequipment provided for performance of an operation by consignee remain theproperty of Delphi unless otherwise noted” shall be deleted as you havedemanded.

 

Additionally,Paragraph 16 of Delphi’s Terms and Conditions shall not be applicable to theextent that it allows Delphi to take possession of and title to any part of anyequipment owned by Methode (not paid for by Delphi) if it was used in theproduction of Delphi parts.

 

Inregard to service parts obligation in Paragraph 18 of Delphi’s Terms &Conditions, Delphi is in agreement with your proposal as to service parts withthe price to be determined by order quantity.

 

Itis agreed that Paragraph 28 of Delphi’s Terms & Conditions as to “Rightto Audit and Inspect” shall not be applicable and that instead, the OESA DraftModel Terms and Conditions must apply:

 

Sellerwill maintain records as necessary to support amounts charged to Buyer inaccordance with the Seller’s document retention policies. Buyer and itsrepresentatives may audit Seller’s records of transactions completed within oneyear prior to the audit date, to the extent needed to verify the quantitiesshipped and that the prices charged match the agreed prices. Any audit will beconducted at Buyer’s expense (but will be reimbursed by Seller if the audituncovers material 

 

OneCorporate Center PO Box 9005 Kokomo, IN 46904-9005 USA

 

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errorsin the amounts charged) at reasonable times, and at Seller’s usual place ofbusiness.

 

Delphiwill delete the reference to pricing being “under protest” and waive its rightin regard to having paid Methode “under protest” as to past purchase orders.Delphi will issue new Purchase Orders with the above exceptions with anexpiration date of September 30, 2011.

 

Acopy of your August 25, 2008 letter is attached hereto. Purchase ordersconsistent with the terms of this letter will follow.

 

Sincerely,

 

MarkA. Shively

MarkA. Shively

PurchasingManager

DelphiElectronics Group

 

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