1
Exhibit 10.2
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[Note: Certain confidential portions of this document have been omitted and
filed separately with the Securities and Exchange Commission. The
omitted confidential information is marked throught the document with
a "*"]
NEENAH FOUNDRY
T-78155
ATTACHMENT A
SPECIAL PROVISIONS
1) CONTRACT TERM
The initial term of this Agreement shall begin effective April 1, 1995
and end March 31, 1998. The parties agree to meet to negotiate new
Agreement not less than 90 days prior to contract expiration and
further agree to complete said negotiations not less than 60 days from
the date said negotiation began, except that the date may be extended
or otherwise changed upon mutual agreement in writing signed by both
parties.
2) VOLUME/CAPACITY COMMITMENT
Buyer agrees to purchase at least of its requirements for the Products
listed on Attachment 1A, 1 B. 1 C* and 1 D; subject to ISIR approval by
Buyer and subject to Products demonstrating acceptable machineability
during pre-production qualification testing at Buyers plant or at a
designated outside machining source.
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Seller agrees to provide Buyer the necessary capacity to meet 100% of
Buyers U. S. and Canadian schedules, unless Buyer's product
requirements exceed Sellers total equipment capacity.
3) SCRAP SURCHARGE
a) The prices set forth on Attachments 1A through 1D at the time
this Agreement is signed shall be known as Base Prices. The
Base Price for each Product shall be adjusted up Of down for
the cost associated with changes in specifications and for the
adjustments made pursuant to Paragraph 4, and each price, as
adjusted, shall be the new Base Price for the Product in
question. Base Prices shall not be affected by any scrap
adjustments made pursuant to this Paragraph 3.
b) The effective price for a Product shall be determined by
application of a steel scrap adjustment to the then current
Base Price according to the formula provided below. Steel
scrap adjustment shall be calculated on a semi-annual basis
and shall be effective beginning April 1, 1995 and upon each
October 1 and April 1 thereafter.
c) The base cost of scrap included in the base pricing is
$150.00/gross ton. The formula set forth below shall be used
to calculate the amount of the steel scrap adjustment when
average price (HAP-) exceeds $150.00 per gross ton, downward
when price drops below S135.00 per gross ton per the formula
shown below.
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d) The AP of scrap for six months immediately prior to the April
1 or October 1 steel scrap adjustment date shall be determined
by averaging the midpoint of the range shown for the prices
for the preceding six months as shown in the Chicago District
Iron Ace for low phosphate steel plate 2' and under.
e) The amount of the scrap adjustment equals ({AP-BP}/2240) x A
where BP equals the scrap base of $150.000/gross ton, A equals
the weight in pounds per part number as shown on the
Attachments.
f) The amount of the scrap adjustment for each period shall be
added to the Base Price to determine the operative price for
the period. If the AP of steel scrap is between $135.00/ton
and $150.00/ton, We Base Price shall be used as the operative
price for the applicable period.
g) The AP effective on April 1, 1995 and reflected in the initial
purchase order prices shall be */'gross ton.
4) PRICING
Seller agrees chat base prices for Products identified on Attachments
1A - 1D shall be in accordance with the attached schedule.
5) MACHINE SCRAP
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Seller agrees that if Buyer returns Products as defective or
non-conforming, Seller shall reimburse Buyer Me When effective price of
the Product as shown on the Attachments. Additionally, in the event
Buyer has begun machining of Products prior to their identification as
unacceptable, Seller agrees to reimburse Buyer on a part number basis
its cost not to exceed the value indicated in Attachment II, of said
machining as outlined below (hereinafter, the Machine Chargeback
Policy).
a) In the event Buyer identifies Products as unacceptable, Buyer
agrees to promptly notify Seller as below:
i. Buyer will promptly contact Seller by telephone or
fax, identifying any defective material problem prior
to any action by Buyer.
ii. Buyer will provide Seller with the opportunity to
promptly replace or repair defective material. Seller
agrees that replacement of defective material must be
done so as not to interrupt Buyer's production
schedule.
iii. Buyer may in certain instances considered critical by
Buyer and after notification to Seller proceed with
the machining of defective material in order to
salvage satisfactory parts. Buyer agrees to pursue
all practical alternatives in an attempt to minimize
cost for such work. Seller agrees to absorb machine
scrap costs resulting from defective Products at the
rate indicated in Attachment 11.
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iv. In the event sorting or salvage of Products must be
done by the Buyer to accommodate customer needs, a
rate of */hour will be charged to Seller for actual
hours required for this task. Seller has the right to
sort in Buyers plant if time permits.
v. If Products are not salvageable and replacement is
the only resource, all costs as listed in paragraph 5
are applicable.
vi. Seller field quality personnel will make pant visits
in a timely manner to review rejected Products and
make dispositions. Buyer will provide assistance to
Sellers representative without cost to Seller.
6) DELIVERY
Seller will be financially responsible for all costs which result from
the Sellers failure to deliver Products within the following
parameters:
All Products ordered on Buyers Vendor Release & Shipping
Schedule supplied from Seller's plants two (2) and three (3)
will be guaranteed shipped within twenty (20) working days
from receipt of the schedule. Working days are defined as
Mondays through Fridays exclusive of national holidays. Seller
agrees to attempt to make schedule changes upon shorter notice
from Buyer; however, Buyer recognizes that Sellers production
scheduling system limits aggregate volume changes to +/ 10%
for change requests for shipment within twenty (20) working
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days from the change request. Buyer also agrees h use its
release to schedule material according to the normal
parameters of that schedule and afford Seller of as much
advance notice of schedule changes as possible within the
above.
Sellers responsibility for costs attributable to late delivery are
limited to the sum of the elements listed below
a. Premium freight cost both to Buyer and to the end customer.
b. Overtime premium costs at Buyer or its subcontractors.
c. Incremental setup costs at Buyer or its subcontractors.
d. Other delivery related costs which are mutually agreeable to Buyer
and Seller.
Buyer recognizes that circumstances arise where failure to perform
within specified time frames is not entirely under Sellers control
(i.e., timely feedback from Buyer on quality problems, blue print
interpretation differences, machine tool setup changes, or events
of force majeure). Under such circumstances, Buyer and Seller will
mutually agree to responsibilities and incidental delivery costs.
7) THIRD PARTY AUTHORIZATION
Products on the Purchase Order and Products which may be added to the
Purchase Order during the term of this Agreement, may be purchased by a
Buyer location other than that shown on Buyer's purchase order during
the term of this Agreement. Furthermore, Buyer may direct shipments of
their product to a third park location. These Products will be
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supplied to the designated location at the same price as at the
original location. Shipping terms shall be FOB Sellers plant. In the
event Buyers non-North American locations desire to purchase Products
from Seller, the price of said Products will be the same as the price
for Products hereunder. Any such purchase will be made under a
separately negotiated Agreement but under terms and conditions in
commensurate with those of this Order.
8) TECHNOLOGY CHANGE
If, at any time during the term of this Agreement, a major
technological change should occur which would, in Buyers sole judgment,
make like Products purchased from another supplier more attractive or
necessary to Buyer, then Buyer may terminate separate Products of the
Agreement by giving written notice to Seller, which will become
effective twelve (12) months (or such shorter time as may be mutually
agreed upon by the parties) after receipt of said notice by Seller.
During said notice period Seller shall have the opportunity to acquire
such technology and produce and substitute Products derived therefrom
at competitive prices, or, subject to Buyers consent, supply the
Products shown on the Purchase Order at prices competitive to those
derived by the new technology and at a quality similar to those derived
from such new technology. Seller shall have the right to renegotiate
pricing with Buyer if major technology changes results in purchase by
Buyer being less than 50% of the previous annual tonnage.
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9) PLANT CLOSING
In the event Seller contemplates the closing of a plant or plants that
affects Seller's performance hereunder, Seller shall immediately notify
Buyer of such __________________. Seller further agrees to provide
manufacturing, engineering, and technical assistance to Buyer to
provide a smooth transition and to aid the new supply source selected
by Buyer.
10) TOOLING
Seller will provide day to day maintenance of tooling due to normal use
Once tooling has been determined to be worn out from normal production
use, Buyer agrees to pay replacement costs to a level not to exceed a
total of * per agreement year. Seller is responsible to initiate a
request to replace tooling with appropriate justification. Tool
modification resulting from Buyer's engineering changes will be at the
cost and expense of Buyer.
11) RETURNABLE CONTAINER PROGRAM
Seller agrees to assist Buyer in the event a "returnable container"
program is established. In the event a returnable container program is
initiated Seller agrees to reduce it's prices for the Products on the
Purchase Order by an amount equal to the costs charged to Buyer
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for packaging which includes but may not be limited to costs for
pallets, dividers, separators, binding, wrapping, preservatives and
labor.
12) VALUE ENGINEERING
Seller agrees to provide technical assistance and implement value
engineering programs which include weigh/cost reductions. Seller agrees
that Buyer will share equally all cost savings associated with any
value engineering effort upon implementation of same.
13) QUALITY RATING
Buyer shall have the right to terminate this Agreement for cause in the
event that Seller fails to maintain the below listed Buyer Quality
Ratings:
Location Ratings
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Sellers Plant #2, #3 Rating #2
14) ACCOUNTS PAYABLE
Seller agrees that Buyers scheduled payments are net 5th proxl2nd 5th
prox. (Shipments made during the first month through the tenth of the
current month will be paid by the fifth of the following month.
Shipments made during the 11th through the 31st of the current month
will be paid by the fifth of the second following month).
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15) COMPARATIVE PRICING GUARANTEE
Seller agrees that Buyer may add additional Products to this contract.
Seller agrees that for Products added to the Attachments, Buyer shall
receive prices in accordance with Paragraph 4 based on reasonable
comparative pricing with like part numbers from the same product family
processed from similar molding equipment.
16) CATASTROPHIC MATERIAL COST INCREASES
In the event Seller should experience catastrophic increases in the
cost of materials used in the production of the Products in this order
which drastically affect profit margins, Buyer will assist in seeking
alternatives to the increase. Seller agrees to aggressively pursue
practical alternatives to offset the price increase and to submit
written documentation supporting any price increase request a minimum
of sixty (60) days prior to the requested effective date. Justification
for the increase includes evidence of ail efforts to avoid the material
increase. If no agreement is reached on price within the sixty (60) day
notification period, either party may terminate this Agreement upon
thirty (30) days written notice given on or after the requested
effective date of price increase.
17) VACATION SHUTDOWN
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In the event Seller contemplates the closing of a plant for vacation
shutdown, Seller shall immediately notify Buyer of such contemplated
action. Seller further agrees to provide delivery of Products, as
identified in the Products, so as not to interrupt Buyers schedule.
18) DELEGATION AND ASSIGNMENT
Seller shall not delegate any of its duties of this Agreement without
Buyer s written approval and Seller shall not assign any of its rights
hereunder without prior notice to Buyer.
19) ALTERATIONS
a) Paragraphs 3,'Warranty"; 15, ~Termination; 9, "Information";
and paragraph 17 Recall Campaigns on the reverse of Buyers
Purchase Order are hereby deleted in their entirety and the
following is substituted in lieu thereof.
"3 Warranty: Seller warrants that Products ordered to
specifications will conform thereto and to any
drawings, samples or deviations furnished or adopted
by Buyer. All Products furnished hereunder will be
merchantable, of good material and workmanship, and
free from defects. Such warranties shall survive
inspections test, acceptance of and payment for the
Products and shall run to Buyer its successors,
assigns, and customers. The warranty period shall be
for five (5) years or 500,000 miles of use,
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beginning with the first use of the vehicle by its
first legal and lawful owner. Seller's obligation to
reimburse Buyer for warranty costs is limited to
$300.00 per individual failure and an aggregate of
$250,000 per contract year. To the extent Products
supplied hereunder are of Buyers design and
specifications, the implied warranty of fitness for a
particular purpose is excluded for Products shipped
under this Agreement".
"15 Termination: Buyer shall have the right to
terminate this Agreement or any part thereof at any
time upon ninety (90) days written notice for cause
if Seller chronically fails to make shipments in
accordance with the obligations described in
Paragraph 6 otherwise fails to observe or comply with
any of the other instructions, terms, conditions, or
warranties applicable to this Agreement or fails to
make progress so as to endanger performance of this
Agreement, or fails to maintain adequate capacity to
handle Buyer's requirements, or fails to maintain
machineability in accordance with drawing
specifications, or fails to maintain quality ratings
as specified in Paragraph 14. Buyer may, in addition
to any other right or remedy provided by this
Agreement or by law, terminate all or any part of
this Agreement for cause by telegraphic or other
written notice to Seller without any liability by
Buyer to Seller on account thereof. In the event of
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termination for cause, Buyer may produce or purchase
or otherwise acquire Products elsewhere on such terms
or in such manner as Buyer may deem appropriate and
Seller shall be liable to Buyer for any excess cost
or other expenses incurred by Buyer.
"9 Information: (a) Drawings, data, designs,
inventions, computer software and other technical
information supplied by Buyer, or generated, by
Seller, in the performance of this Agreement, shall
be and remain Buyers and shall be held in confidence
by Seller. Such information shall be not reproduced,
used or disclosed to others by Seller without Buyers
prior written consent, and shall be returned to Buyer
upon completion by Seller of its obligations under
this Agreement or upon demand. (b) In the event that
Seller discloses any trade secret information
originated by, or within the knowledge of Seller on
or before the effective date of the Agreement, to
Buyer, in connection with the performance of this
Agreement which is neither generally available to
others, previously known to Buyer, nor independency
developed by Buyer, Buyer shall hold such information
in confidence; provided, however, that nothing in
this Agreement shall require Buyer to exercise any
greater degree of care for the protection of such
information than Buyer normally exercises for its own
information of
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like character. Buyer's obligation of confidentiality
shall be limited to information disclosed in writing
which is marked or stamped "confidential" or
"proprietary".
"17 Recall Campaigns: Seller shall indemnify and hold
Buyer harmless against all damages and expenses
incurred by Buyer as a result of Buyer being required
by law (a) to recall from Buyer's customers or others
any Products furnished hereunder or an end product
employing any such Products as a part or component
thereof and (b) to repair, replace or refund the
purchase price of such Products or end product,
provided that such recall and such repair,
replacement or refund is based upon a defect of
manufacture in the Products furnished by Seller or
the failure of such Products to conform to any
specification or standard to which it is ordered
which creates the reasonable possibility of injury to
persons or property.
Buyer shall notify Seller promptly of the
possibility that Buyer may be required to take an
action described in this paragraph. Seller
acknowledges that Buyer has the right to make the
final decision about such action independent of
Seller.
In the event that Products supplied by
Seller shall not be the sole cause for such a recall,
repair, replacement, or refund, the costs, damages
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and expenses shall be apportioned according to the
proportion of cause in such manner as is reasonable
and equitable under the circumstances.
Buyer shall not be required to consult with,
or seek Seller's concurrence in, the reporting by
Buyer to any administrative or regulatory body, of
any information which Buyer obtains indicating chat
the Products furnished by Seller either fail to
conform to any standard required by law, or
constitute or create of Themselves or within the end
product of which they are a part or component, a
situation requiring recall or notice as defined by
the applicable law. Buyer shall promptly furnish to
Seller a copy of any information reported to any
administrator or regulatory body under this paragraph
with respect to Products furnished by Seller.
Seller shall prepare, maintain and file with
the appropriate authority such records and reports as
pertain to the manufacture, sale, use and
characteristics of the Products furnished to Buyer
hereunder as may be required by any federal, state,
or local law or regulation concerning Me manufacture,
sale, or use of the Products or the end Products of
which ale Products may be a part or component and
shall provide Buyer with copies of such records as
Buyer may require and permit Buyer access to Sellers
records to permit Buyer to ascertain Seller's
obligation to reimburse Buyer for recall expenses is
limited to $500,000 per contract year".
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b) Buyer agrees to provide its own fire and other hazard
insurance on all Buyers property in storage at Seller's
facility and Seller agrees to provide reasonable and adequate
physical protection for Buyers property as stated".
20) TERMINATION CLAUSE
a) Buyer or Seller shall have the right to terminate this
agreement at any time upon ninety (90) days written notice for
cause if the Buyer or Seller fails to observe or comply with
any other instructions, terms, conditions or warranties
applicable to this Agreement or in the event of any
proceedings by or against Buyer or Seller in bankruptcy or
insolvency or appointment of a receiver or trustee or any
assignment for the benefit of creditors.
b) The breaching party shall have sixty (60) days in which to
cure the default, breach, or such reason identified in the
notice of termination for cause under paragraph 1. Should the
breaching party fail to cure within the sixty (60) day period,
this Agreement automatically expires at the end of the ninety
(90) day period identified in the Notice of Termination.
NEENAH FOUNDRY COMPANY ROCKWELL INTERNATIONAL CORPORATION
By: _________________________ By: ____________________________
Title:_________________________ Title:____________________________
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ATTACHMENT 1A
DIFF CARRIERS
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
* * * * *
MISCELLANEOUS PARTS
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
* * * * *
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ATTACHMENT 1B
DIFF CASES
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
* * * * *
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ATTACHMENT 1C
BEARING CAGES
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
* * * * *
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ATTACHMENT 1D
BEARING CAPS
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
* * * * *
STEERING KNUCKLES
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
* * * * *
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ATTACHMENT II
DIFF CARRIERS
PART NUMBER PRICING
----------- -------
* *
DIFF CASES
PART NUMBER PRICING
----------- -------
* *
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ATTACHMENT II
BEARING CAGES
PART NUMBER PRICING
----------- -------
* *
MISCELLANEOUS PARTS
PART NUMBER PRICING
----------- -------
* *
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