Exhibit
10.31


 





Corporate
Headquarters


7401
West Wilson Avenue


Chicago,
IL 60706-4548


708.867.6777
· Fax: 708.867.6999
· 877.316.7700


 


Via
e-mail


 


August 25,
2008


 


Mr. Mark
A. Shively


Delphi E
& S


2151
East Lincoln Road


Kokomo,
Indiana 46901


 


Re:
Methode/Delphi - Long-Term Agreement


 


Dear
Mark:


 


As
you know, Methode and Delphi do not currently have in place a long-term
agreement but Methode has agreed to ship parts to Delphi at the prices provided
in our May 1, 2008 letter.  As
indicated in our prior letters, these prices will be effective through September 30,
2008.


 


As
we have previously communicated, Methode is interested in continuing as a
supplier to Delphi and is interested in entering into a long-term agreement. Per
your request, Methode is providing the attached pricing which will be in effect
for three years, beginning October 1, 2008.  This revised three-year pricing reflects the
impact of material and component price increases since providing our May 1,
2008 pricing, as well as the impact of further, significantly reduced
volumes.  The May 1, 2008 pricing
was 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 closer
to 4,300,000 units, if not lower. Please note the differential between this
figure and the Finley volumes for the same period of 6,805,000 units.


 


Moving
forward, we will use 4,300,000 units as the baseline for model year 2009 and
3,900,000 for model year 2010 and 2,500,000 for model year 2011.  As previously committed, any shipments above
this baseline quantity will be subject to a 5% rebate on the additional
units.  Further, in order to address your
concerns as to possible pricing consequences for volumes 20% or more below the
Finley volumes, we are withdrawing our right to readjust pricing.  Note that we have also removed our
requirement to review PODS D pricing after one year.  Due to the significant reduction in GMT900
volume, updated pricing for the GMT900 PODS-D program is included in the
attached prices.


 


As
to the three-year pricing provided herein, we require the following conditions.
First, as previously discussed, Methode must be placed on a material/component
cost adder program.  The material/component
costs used to calculate the attached pricing will be the base line.  On a quarterly basis any increases or
surcharges would be passed along to Delphi for reimbursement which must be paid
within 30 days.


 

















 


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


 


Third,
as previously discussed Methode cannot agree to several terms of the purchase
orders 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 and
equipment provided for performance of an operation by consignee remain the
property of Delphi unless otherwise noted”. As Delphi knows, not all tools and
equipment used by Methode in the production of Delphi parts are the property of
Delphi. As such, Methode objects to that term to the extent it was intended to
include tools or equipment not paid for by Delphi.


 


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


 


Given
the fact that the agreement would expire after three years, Methode can not
agree to paragraph 18 of the Delphi T’s and C’s. Specifically, Methode does not
agree to produce any service or replacement parts other than those that will be
produced prior to September 30, 2011. Given the limited amount of service
parts ordered and the resulting set-up costs incurred by Methode, the pricing
for 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 regarding
Delphi audits. In lieu of that paragraph, Methode will agree to the following
term adapted from the OESA (Original Equipment Suppliers Association) Draft
Model Terms and Conditions:


 


Seller
will maintain records as necessary to support amounts charged to Buyer in
accordance with Seller’s document retention policies. Buyer and its
representatives may audit Seller’s records of transactions completed within one
year prior to the audit date, to the extent needed to verify the quantities
shipped and that the prices charged match the agreed prices. Any audit will be
conducted at Buyer’s expense (but will be reimbursed by Seller if the audit uncovers
material errors in the amounts charged), at reasonable times, and at Seller’s
usual place of business.


 


Methode
will accept purchase orders with the attached pricing subject to the above
conditions and exceptions through September 30, 2011. In order for Methode
to accept purchase orders for product shipped after September 30, 2008,
the purchase orders must have these exceptions noted as well as Delphi must
remove any reference to pricing being “under protest”. Delphi must also waive
all rights or claims to having paid Methode “under protest” as to any past
purchase orders.


 


Please
provide 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

  	
   

  



 

















 


                                 Electronics &
Safety


 


Via
E-Mail and UPS or FedX


 


September 4,
2008


 


Mr. Timothy
R. Glandon


Vice
President & General Manager


North
American Automotive Operations


111
W. Buchanan Street


P.O. Box
130


Carthage,
IL 62321-0130


 


Re:    Methode/Delphi


 


Dear
Tim:


 


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


 


Methode
will be placed on a material cost adder program.  The material/component costs used to calculate
the attached pricing will be the baseline. On a quarterly basis any increases
or surcharges will be passed along to Delphi for reimbursement which must be
paid within 30 days.


 


ZCRI
payment terms to apply for the term of the agreement.


 


That
portion of Paragraph 12 on the Purchase Order providing that “tools and
equipment provided for performance of an operation by consignee remain the
property of Delphi unless otherwise noted” shall be deleted as you have
demanded.


 


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


 


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


 


It
is agreed that Paragraph 28 of Delphi’s Terms & Conditions as to “Right
to Audit and Inspect” shall not be applicable and that instead, the OESA Draft
Model Terms and Conditions must apply:


 


Seller
will maintain records as necessary to support amounts charged to Buyer in
accordance with the Seller’s document retention policies. Buyer and its
representatives may audit Seller’s records of transactions completed within one
year prior to the audit date, to the extent needed to verify the quantities
shipped and that the prices charged match the agreed prices. Any audit will be
conducted at Buyer’s expense (but will be reimbursed by Seller if the audit
uncovers material 


 


One
Corporate Center PO Box 9005 Kokomo, IN 46904-9005 USA


 

















 


errors
in the amounts charged) at reasonable times, and at Seller’s usual place of
business.


 


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


 


A
copy of your August 25, 2008 letter is attached hereto. Purchase orders
consistent with the terms of this letter will follow.


 


Sincerely,


 


Mark
A. Shively


Mark
A. Shively


Purchasing
Manager


Delphi
Electronics Group