CONFIDENTIAL TREATMENT REQUESTED FOR CERTAIN PORTIONS
** Indicates that confidential information has been omitted and filed
separately with the SEC in an application for confidential treatment.
Exhibit 10.18
AGREEMENT
BETWEEN
PRECISION ENGINE PRODUCTS - CO. (PEP-C)
AND XXXXXXX - XXXX CORPORATION
FOR
PURCHASE OF VTAA PEDESTALS
1. PRODUCT: Machined pedestals for the VTAA Assembly on the DCX 3.5L SOHC
program for Kenosha Engine Plant or other engines using the same machined
pedestals. ** Parts will be produced to the blueprint specifications. All
mutually agreed upon subsequent revisions of the listed parts will be
added to this agreement.
2. TERM: The DCX Program term will begin June 30, 2004 or upon successful
PPAP/PSO and run though June 30, 2007. It is solely PEP-C's option to
continue this program to June 30, 2008 for a fourth year. This program is
subject to PEP-C retaining the DCX Program. Should PEP-C lose this program
this agreement is cancelled without any additional charges to PEP-C.
3. PURCHASE AND SALE COMMITMENT: PEP-C will purchase from XXXXXXX - XXXX 100%
of the VTAA Pedestals to support DCX requirements for the above listed
programs for each year the program is in effect or renewed.
PROPRIETARY INFORMATION: All drawings, electronic files, pricing,
sourcing, contracts, tooling and processes related to the subject product
line as well as communications transmitted from PEP-C, or it's parent
firm, to MADISON-KJPP or, to any of it's sub suppliers shall be regarded
proprietary information and considered as confidential. Confidential
information is the property of PEP-C and may not be disclosed to any third
party without the written permission of PEP-C.
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5. ENGINEERING CHANGE: All engineering changes initiated by PEP-C and
agreed on by MADISON-KJPP will be processed pursuant to PEP-C
practices in effect at the time of change. XXXXXXX-XXXX will
cooperate in the implementation of engineering changes. PEP-C is
responsible for the purchase of all scheduled production completed
or in process at the time of change. XXXXXXX-XXXX'x price changes
for PEP-C approved engineering changes are to be based solely on the
cost differential of the design variance from the original design
version as XXXXXXX-XXXX justifies and documents to PEP-C.
6. PRICING AND PRICE ADJUSTMENTS: Pricing for the pedestals is set
forth as follows in Exhibit "A."
EXHIBIT "A" BASE PRICING
From Proposal 20890-R3 dated Oct. 10, 2003
Estimated SOP l-Sept-2004
PEP-C
P/N DESC Volume Price Volume Price Volume Price Volume Price Weight
-------- ------ ----- ------ ----- ------ ----- ------ ----- ------
** ** ** ** ** ** ** ** ** .2551
** ** ** ** ** ** ** ** ** .3331
** ** ** ** ** ** ** ** ** .2883
All values represent USD $. Calendar quarter piece price metal
adjustment calculation: Platts Metals Week MW US Transaction. Average of the
last two weeks from month two month prior to the effective date plus $** (Last
two weeks of Feb for April effective date.)
7. PAYMENT TERMS: Net 45 days.
8. QUALITY: XXXXXXX-XXXX shall provide and maintain a quality system as
follows:
8.1. XXXXXXX-XXXX will follow XXXX-XX-0000, XXXXX, SPC, and PPAP
manuals, including the "DaimlerChrysler specific" portion and
ISO 9002 procedures in the administration and execution of the
PEP-C contract XXXXXXX-XXXX will follow a process signoff
(PSO) similar to DCX for production equipment/processes prior
to deliverables.
8.2. Stanadyne AQP process and/or DCX PAP (Product Assurance
Planning) will be used to plan and execute all aspects of the
implementation and production of the 3.5L VTAA Shaft Program.
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8.3. Xxxxxxx-XXXX will be measured utilizing the PEP-C "Supplier
Performance Program," Stanadyne Procedure P-l.003 Rev. "G"
dated 12/15/03 (copy attached). XXXXXXX-XXXX will abide by
principles outlined in Stanadyne Procedure P-9.009 "Guidelines
for Suppliers" Rev. "F" dated 1/20/03, or any subsequent
mutually agreed upon revisions thereof.
8.4. Engineering changes in product or process will not be
implemented without prior approval by PEP-C. Changes will only
be accepted on the PEP-C SRPPC (Supplier Request
Product/Process Change) form.
8.5. Warranty: Seller expressly warrants that all products covered
by this Supply Agreement will conform to the specifications,
drawings, samples or descriptions furnished by Buyer, and will
be merchantable, of good material and workmanship and free
from defects. No other warranty provisions of either Seller or
Buyer apply.
9. POINT OF DELIVERY: Parts will be shipped in returnable dunnage
supplied, cleaned, repaired or replaced as required by PEP-C, and
shipped F.O.B. XXXXXXX-XXXX.
10. SCHEDULING AND INVENTORY PROGRAMS: PEP-C will provide delivery
schedules for quantities and dates. PEP-C will provide a monthly
firm schedule release of 3 months from the present day. A planning
forecast of the next 3 months will be provided along with the
releases. PEP-C's liability for material will be limited to the firm
delivery releases. Planning forecast items will have no financial
commitment to XXXXXXX-XXXX. A total planning window of 3 months firm
and 3 months forecast to equal 6 months will be provided monthly.
11. XXXXXXX-XXXX will cooperate with PEP-C to attain PEP-C production,
inventory, or scheduling objectives for any PEP-C developed "Just In
Time" or other continuous improvement program.
12. TOOLING: All tooling used by XXXXXXX-XXXX or its subsidiaries to
produce parts under the agreement shall be used exclusively for
PEP-C product line, and may not be used to produce product for any
other entity. At termination of this Agreement, all such PEP-C
tooling as defined in Stanadyne Purchase order # 32004880 dated
07/19/04 (copy attached), shall be returned to PEP-C, absent mutual
agreement of the parties to the contrary. Should the tooling be in
the possession of any sub-supplier of XXXXXXX-XXXX, XXXXXXX-XXXX
agrees to take all appropriate steps to retrieve the said tooling
from its sub-supplier and arrange for its return to PEP-C.
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13. CAPACITY: It is understood XXXXXXX-XXXX will maintain sufficient
capacity in place to meet the peak demands of ** engine sets of
Pedestals for the Kenosha Engine Plant program.
14. COMPETITIVENESS: XXXXXXX-XXXX agrees to remain competitive with
regard to a qualified, verifiable price, quality, and delivery
during the term of this agreement. In the event XXXXXXX-XXXX is not
able to remain competitive as determined by PEP-C based on price,
quality and delivery standards, PEP-C will have the right to cancel
this agreement or any pertinent program without cancellation charge.
XXXXXXX-XXXX will be given a last right of refusal as it pertains to
the PRODUCT.
15. NON-COMPETITION: During the life of this agreement XXXXXXX-XXXX
agrees that it will not provide or enter into any agreement to
provide the same products to any current customer or client of
PEP-C. If PEP-C loses the business, MKC will have the right to
protect the business interest and investment with a new supplier.
16. AIVIENDMENTS/ADDITIONS: This Agreement, together with the documents
referenced herein, constitutes the entire agreement of the parties
relating to its sub-price change in good faith. To become effective,
any amendments and/or additions to this Agreement must be made in
writing signed by the parties to this agreement. This Agreement, all
orders placed under this Agreement, shall be governed by the laws of
the State of Connecticut.
The Company agrees to furnish supplementally a copy of any omitted
schedule or exhibit to the Commission upon request.
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Stanadyne Automotive Xxxxxxx-Xxxx Corporation
Precision Engine Products Co.
/s/ Xxxxxx Xxxxxx /s/ Xxxxxx X. Xxxxxxx
------------------------------- --------------------------------
Xxxxxx Xxxxxx Xxxxxx X. Xxxxxxx
Vice President & General Manager Vice President
Sales & Marketing
Date: 7/22/04 Date: 21 July 2004
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