SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q /A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-23938
SAFETY COMPONENTS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-0596831
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3190 PULLMAN STREET
COSTA MESA, CALIFORNIA
(Address of principal executive offices)
92626
(Zip Code)
(Registrant's telephone number, including area code) (714) 662-7756
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class July 3, 1997
- -------------------------------------- ----------------
Common Stock, par value $.01 per share 5,015,383 shares
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SAFETY COMPONENTS INTERNATIONAL, INC.
Date: July 8, 1997 By /s/ Jeffrey J. Kaplan
------------------------
Jeffrey J. Kaplan
Executive Vice President
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Description Page
- -------- ----------- ----
10.1 TRW/SCI Multi Year Agreement dated as of April 1, 1996 among TRW
Vehicle Safety Systems, Inc., TRW, Inc. and Safety Components
International, Inc. Confidential treatment requested as to
certain portions of this exhibit. Such portions have been
redacted.
10.2 Exhibits and Schedules to Credit Agreement dated as of March 15,
1996 among Safety Components International, Inc., Automotive
Safety Components International, Inc., Galion, Inc., Valentec
Systems, Inc. and Citicorp USA, Inc. (Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1996 is hereby incorporated by reference).
10.3 Amendment No. 1 to Loan Agreement among Safety Components
International, Inc., Automotive Safety Components International,
Inc., ASCI Holdings Germany (DE), Inc. and Bank of America
National Trust & Savings Association dated as of September 30,
1996. (Exhibit 10.3 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended December 31, 1996 is hereby
incorporated by reference).
10.4 Amendment No. 2 to Loan Agreement among Safety Components
International, Inc., Automotive Safety Components International,
Inc., ASCI Holdings Germany (DE), Inc. and Bank of America
National Trust & Savings Association dated as of October 31,
1996. (Exhibit 10.4 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended December 31, 1996 is hereby
incorporated by reference).
10.5 Amendment No. 3 to Loan Agreement among Safety Components
International, Inc., Automotive Safety Components International,
Inc., ASCI Holdings Germany (DE), Inc. and Bank of America
National Trust & Savings Association dated as of December 31,
1996. (Exhibit 10.5 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended December 31, 1996 is hereby
incorporated by reference).
11.1 Statement of Computation of Per Share Earnings (Exhibit 11.1 to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996 is hereby incorporated by reference).
27 Financial Data Schedule (Exhibit 27 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1996 is
hereby incorporated by reference).
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EXHIBIT 10.1
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]", have been
separately filed with the Securities and Exchange Commission.
TRW / SCI
MULTIYEAR AGREEMENT
INCLUDES:
- PURCHASE AGREEMENT
- ASCI REVISION "D" DRAFT
- J. AIELLO PCN LOG
- TERMS AND CONDITIONS
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is entered into as of the
1st day of April, 1996, by and between TRW VEHICLE SAFETY SYSTEMS INC. ("VSSI"),
a Delaware corporation, TRW INC., an Ohio corporation, acting for and on behalf
of its TRW Safety Systems/Mesa operations ("Mesa") (VSSI, TRW Inc. and Mesa
being collectively referred to herein as "Buyer"), and SAFETY COMPONENTS
INTERNATIONAL INCORPORATED ("Seller") a Delaware corporation, for the purpose of
establishing the terms and conditions on which Buyer will purchase from Seller
and Seller will sell automotive airbag cushion assemblies ("Product").
Buyer and Seller agree as follows:
1.0 VOLUME AND PRICE
1.1 Volume and Price
(a) Buyer will purchase from Seller its requirements for
Product as described in Exhibit 1 hereto in accordance with the terms
and conditions set forth in Exhibit 1 for the identified calendar
years, provided that Seller's prices, delivery, technology and quality
remain competitive.
(b) The associated volume estimates set forth in Exhibit 1
(the "Volume Estimates") are provided solely for Seller's planning
purposes and do not constitute a commitment or obligation of any kind
on the part of Buyer to purchase such quantities. However, Seller shall
maintain the capacity to manufacture and ship twenty-five percent (25%)
more than the Volume Estimates in each calendar year.
(c) The Volume Estimates do not, in and of themselves,
authorize Seller to procure raw materials, manufacture Product or build
inventories in advance of Seller's receipt of Buyer's Releases (as
defined below), other than as stated in Section 2.4 below.
(d) Seller will supply all Product ordered by Buyer up to a
maximum of one hundred twenty-five percent (125%) of the Volume
Estimates for each calendar year.
2.0 RELEASES AND SUPPLY OF GOODS
2.1 Releases: Unless in Buyer's judgment supply frequency requirements
dictate otherwise, Buyer will issue to Seller bi-weekly releases, in the form
specified by Buyer ("Releases"), consisting of a Shipping Authorization (as
described in Section 2.2) and the Material Planning & Authorization (as
described in Section 2.3). If there is any conflict in the terms of Releases,
the most recent Release will prevail; provided, however, that Seller will be
fully
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compensated hereunder for its actions in supplying Product identified by a
Shipping Authorization, in fabricating Product pursuant to a Fabrication
Authorization (as described in Section 2.3) and in procuring materials pursuant
to a Raw Material Authorization (as described below) taken or committed to prior
to the receipt of such later Release.
2.2 Shipping Authorization: Each Shipping Authorization will authorize
Seller to ship specified quantities of Product for arrival at the location
designated by Buyer on specified due dates. Those quantities identified by a
Shipping Authorization will be the only quantities Seller is authorized to
deliver to Buyer.
2.3 Material Planning & Authorization: Each Material Planning &
Authorization will state the following information:
(a) the quantities of Product that Seller will be authorized
to fabricate ("Fabrication Authorization").
(b) the quantities of Product for which Seller will be
authorized to procure the necessary raw materials ("Raw Material
Authorization"). Buyer will have no obligation for any fabrication with
respect to the materials procured pursuant to such Raw Material
Authorization, other than as has been authorized by a Fabrication
Authorization.
2.4 Finished Goods Inventory: Seller will maintain at its sole expense
finished goods inventory consisting of two (2) weeks' supply of the Product as
estimated on Buyer's latest Material Planning and Authorization (the "Finished
Goods Inventory"). Buyer at its option may draw down such inventory and in such
event Seller will have a reasonable time in which to replenish the Inventory.
The Finished Goods Inventory will be maintained at ASCI's Otay facility in Mesa,
Arizona.
2.5 Deliveries: Seller will deliver all Product in the quantities and
on the dates specified by Shipping Authorization unless any variance thereto is
agreed in writing by Buyer. Seller will bear all expenses, losses or costs
reasonably incurred by Buyer as a result of any failure by Seller to deliver
Product in accordance with any Shipping Authorization. Seller will deliver
Product on either of the following trade terms designated by Buyer and in
accordance with the method of shipment (such as sea, air, rail or truck)
designated by Buyer:
(a) C.I.F. (Incoterms 1980) with All Risks Insurance, named
port of destination; or
(b) Delivered Duty Paid (Incoterms 1980), named place of
destination.
Seller will separately invoice Buyer for the following (collectively,
the "Delivery Charges"): (i) freight to the named port or place of destination,
(ii) export licenses, export taxes and export fees, (iii) premium, if any,
incurred for the Insurance of Product during shipment, (iv)
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loading and unloading costs, if any, and (v) if Buyer has designated Delivered
Duty Paid trade terms, import licenses, import duties, import taxes and import
fees.
2.6 Notification of Inability to Deliver: Seller will immediately
notify Buyer of any inability to supply Product in accordance with the terms of
a Shipping Authorization. Seller may be required by Buyer to submit a plan to
prevent reoccurrence of such inability. Buyer may take such action as it deems
necessary to prevent reoccurrence, including increasing the required size of the
Finished Goods Inventory.
2.7 Invoices: Seller may not submit invoices to Buyer until after
shipment to Buyer of the Product to which such invoices relate. All invoices
must include purchase order number, TRW part number, Release number, quantity
shipped and date of shipment. Payment will be due from Buyer within thirty (30)
days of invoice date but Buyer will be entitled to a one percent (1%) discount
if payment is made within ten (10) days of Buyer's receipt of Seller's Invoice.
3.0 QUALITY/PROCESS CONTROL
3.1 Specifications: Product will conform in all respects with all Buyer
drawings and specifications identified on purchase orders or Releases issued by
Buyer from time to time under this Agreement (the "Specifications").
3.2 Compliance with Quality Control Standards: Seller will comply with
Buyer's Supplier Development Program Manual QPS-0100, Revision F, dated June
1995, and all amendments and supplements thereto and all restatements thereof
(the "Quality Manual"), the provisions of which are hereby incorporated herein
by reference. Seller acknowledges that it has previously received a copy of the
Quality Manual.
3.3 Compliance with Law: All Product supplied under this Agreement are
to be manufactured and shipped in accordance with all applicable local, state
and federal laws and regulations.
4.0 GENERAL TERMS AND CONDITIONS
The provisions of this Agreement include the General Terms and
Conditions of Purchase which appear on the reverse side of Buyer's purchase
order form (the "Terms and Conditions"), a copy of which is attached as
Attachment B to Exhibit 1 hereto, and which are hereby incorporated herein by
this reference. In the event of any conflict between the provisions of this
Agreement and Exhibit 1 hereto or the Terms and Conditions, the provisions of
this Agreement will govern. This Agreement, together with Exhibit 1 hereto and
the Terms and Conditions, is in lieu of and overrides any contrary term or
condition, preprinted or otherwise, that may appear on any form used (a) by
Buyer to purchase, offer to purchase, or to confirm the purchase of any Product
or (b) by Seller to acknowledge such purchase, offer or confirmation.
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5.0 TERMINATION
5.1 Termination Without Cause: Buyer, at its option, may terminate this
Agreement on at least ninety (90) days' prior written notice to Seller.
5.2 Termination For Cause: Buyer may terminate this Agreement upon the
occurrence of any of the following events ("Default"):
(a) Seller's failure to comply with any term of this
Agreement; or
(b) Seller's insolvency, bankruptcy or dissolution; or
(c) Seller's failure to give Buyer, upon request, reasonable
assurances of Seller's future performance; or
(d) Any other event which causes reasonable doubt as to
Seller's ability to render due performance hereunder.
6.0 EFFECT OF TERMINATION
6.1 Seller's Obligation Upon Termination Without Cause: Upon Buyer's
termination of this Agreement pursuant to Section 5.1 above, Seller will, unless
otherwise directed by Buyer, (a) immediately terminate all work under this
Agreement; (b) transfer title and deliver to Buyer all finished Product
conforming to Buyer's Specifications, work in process (provided that Buyer
authorized the fabrication of such work in process by a Fabrication
Authorization) and raw material (provided that Buyer authorized the procurement
of such Raw Material by a Raw Material Authorization); and (c) take all action
necessary to protect property in Seller's possession in which Buyer has or may
acquire an interest and, if requested, return such property.
6.2 Buyer's Obligation Upon Termination Without Cause: Upon Buyer's
termination of this Agreement pursuant to Section 5.1 above, Buyer will pay to
Seller an amount equal to the sum of: (a) the contract price for all finished
Product transferred and delivered to Buyer in accordance with clause (b) of
Section 6.1; plus (b) Seller's actual cost of the work in process and raw
materials transferred and delivered to Buyer in accordance with clause (b) of
Section 6.1, provided that Buyer's obligations under this clause may not exceed
the obligation Buyer would have had to Seller in the absence of termination.
6.3 Seller's Claim Period: Seller will submit to Buyer promptly, but
not later than sixty (60) days from the effective date of termination, its claim
for payment pursuant to Section 6.2 ("Termination Claim"). If Seller fails to
submit its Termination Claim within such period, Buyer may determine on the
basis of information available to it the amount, if any, due Seller with respect
to the termination and such determination will be final and binding on Seller.
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6.4 Access to Records: Buyer will have access to Seller's premises and
records, prior and subsequent to payment, to verify the Termination Claim.
6.5 Buyer's Obligation Upon Termination for Cause: Buyer will have no
obligation to Seller if this Agreement is terminated by Buyer because of the
occurrence of a Default.
6.6 Exclusive Remedy: Section 6.0 is a complete statement of Seller's
Recoverable damages related to Buyer's termination of this Agreement with or
without cause. Seller hereby waives all other direct, indirect, consequential,
incidental, or other damages (including lost profits) for Buyer's termination of
this Agreement, even if Buyer has been advised of the possibility of such
damages.
6.7 Surviving Rights and Obligations: Termination of this Agreement
will not terminate vested rights or relieve either party from due performance of
all Obligations which by their nature continue after the termination of this
Agreement, including, but not limited to, the following paragraphs of the Terms
and Conditions:
Paragraph 5 Product Warranties
Paragraph 6 Product Indemnification
Paragraph 7 Infringement Indemnification
Paragraph 13 Proprietary Information--
Confidentiality--Advertising
Paragraph 14 License to Repair; Use of Copyrighted
Materials
Paragraph 15 Indemnity/Insurance
7.0 MERGER/AMENDMENT
This Agreement supersedes all prior agreements and understandings
between the parties respecting the subject matter hereof. The provisions of this
Agreement may not be amended, supplemented or otherwise modified except by a
written agreement signed by an authorized individual for each party.
8.0 HEADINGS
Section headings used in this Agreement are for convenience only and
are not a part of this Agreement for any other purpose.
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9.0 GOVERNING LAW
This Agreement will be governed by and construed in accordance with the
laws of the State of Michigan. The parties hereto stipulate that any litigation
which relates to this Agreement or the transactions contemplated hereby may only
be filed in the United States District Court for the district in which Buyer's
principal place of business is located, except that if such court lacks subject
matter jurisdiction, any such action may be filed in a court of the State of
Michigan having subject matter jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
TRW VEHICLE SAFETY SYSTEMS SAFETY COMPONENTS
INC. INTERNATIONAL INCORPORATED
By: By:
Title: Title:
Date: Date:
TRW INC.
By:
Title:
Date:
7
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The information marked by "[***]" has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
Draft for Airbag Purchase Agreement - Revision "D" - July 12, 1996 Page 1
EXHIBIT 1
This Airbag Purchase Agreement is entered into this 1st day of April, 1996 by
and between TRW VEHICLE SAFETY SYSTEMS INCORPORATED, a Delaware Corporation
("TRW") and SAFETY COMPONENTS INTERNATIONAL INCORPORATED, a Delaware Corporation
("SCI"), acting on behalf of its Automotive Safety Components International
Division ("ASCI"), for the purpose of establishing the terms and conditions on
which TRW will purchase from ASCI and ASCI will supply automotive airbag cushion
assemblies ("Product").
1. GENERAL (BASIS FOR MULTI-YEAR AGREEMENT)
1.1 The long term agreement will consist of a four year contract
for calendar years 1996, 1997, 1998 and 1999.
1.2 [In calendar year 1996, ASCI has established new product
pricing that when multiplied by operations planning volumes
(OPV's) will yield cost savings of [***] In addition to these
savings, ASCI has agreed to provide an addition [***] which
will be paid in the form of [***] Total savings for calendar
year 1996 shall be [***] provided O.P. Volumes are met. TRW
shall realize greater savings if [***] [***] lesser savings if
[***] [***]. A [***] will be made to each individual product
at the end of the calendar year which will account for the
[***] to provide a starting basis for calendar year 1997.
Payments for Calendar Year 1996 savings shall be made on or
before December 15, 1996.
1.3 Contributing factors inclusive in calendar year 1996 Cost
Reductions shall include peso devaluation benefits,
productivity improvements, overhead reduction, off-all scrap
savings, freight savings and ASCI cost reduction projects
which were identified as part of the Calendar Year 1996 Cost
Reduction directive.
1.4 The following programs have been identified as Calendar Year
1996 Cost Reduction directive programs. [***] of the savings
from these [***] programs are [***] in the 1996 cost reduction
to TRW, and are not eligible for Value Analysis (V.A.)
savings:
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The information marked by "[***]" has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
Draft for Airbag Purchase Agreement - Revision "D" - July 12, 1996 Page 2
1.4.1 [***]
---
1.4.2 [***]
---
1.4.3 [***]
---
1.4.4 [***]
---
1.4.5 [***]
---
1.4.6 [***]
---
1.4.7 [***]
---
Please Note: Should current program products change from stated Part Number and
Revision Level stated in Attachment "A", provisions Stated in Section 5 "PRODUCT
DESIGN CHANGES" will apply.
1.5 [The following programs have been identified as Calendar Year
1996 Cost reduction directive programs. [***] of the savings
from these [***] programs are [***] in the 1996 cost reduction
to TRW, the other [***] will be provided to TRW as additional
Value Analysis (V.A.) savings:
1.5.1 [***]
1.5.2 [***]
1.6 In Calendar Years 1997, 1998, and 1999, Value Analysis program
savings will be evenly split between ASCI and TRW after ASCI
has been reimbursed for cost of
implementation.
1.7 ASCI shall maintain all current business (platforms/volumes)
presently held by ASCI, Ensenada and will receive replacement
business for current programs through calendar year 1999
provided that TRW is awarded the replacement business by their
customers, and as long as ASCI remains competitive. Please see
Attachment "A" for current platform program designations and
associated volumes.
1.8 [In calendar year 1997, ASCI will reduce the price of each
individual product to yield the annual cost savings. The
starting basis will be from [***] [***] product prices which
will include the [***]. Each product price will be reduced by
[***]of ASCI valued added services, where value added will be
defined as [***] [***]. The new adjusted product pricing will
go into effect by no later than 1/15/97 following agreement
from both parties on [***].]
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The information marked by "[***]" has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
Draft for Airbag Purchase Agreement - Revision "D" - July 12, 1996 Page 3
1.9 [In calendar year 1998, ASCI will reduce the price of each
individual product to yield the annual cost savings. The
starting basis will be from [***] [***] product prices. Each
product price will be reduced by [***]of ASCI valued added
services, where value added will be defined as [***] [***].
The new adjusted product pricing will go into effect by no
later than [***] following agreement from both parties on
[***].]
1.10 [In calendar year 1999, ASCI will reduce the price of each
individual product to yield the annual cost savings. The
starting basis will be from [***]. [***] product prices. Each
product price will be reduced by [***]of ASCI valued added
services, where value added will be defined as [***] [***].
The new adjusted product pricing will go into effect by no
later than [***] following agreement from both parties on
[***].]
1.11 In calendar years 1997, 1998 and 1999, should the aggregate
total of passenger and driver cushions exceed the volumes
listed in Attachment "A" [***] [***], TRW will continue to
enjoy the per unit savings from each product purchased above
the listed volumes.
1.12 [In calendar years 1997, 1998 and 1999, should the aggregate
total of passenger and driver cushions fall below the volumes
listed in Attachment "A" [***] TRW will realize the per unit
savings from each unit purchased, however will fall short of
total savings anticipated for the calendar year based upon
original O.P.
Volume.]
1.13 Cost savings realized from product manufacturing in China are
not included in savings calculations. Amendment(s) for "China
Bag" manufacturing may be forthcoming.
1.14 "Terms and Conditions of Purchase" for this agreement have
been provided, see Attachment "B". Because the savings
commitments provided by ASCI are tied to production orders
from TRW over a four year period, the following altered
language for Section 10 -- Termination for Convenience, shall
apply:
1.14.1 Termination for Convenience: Buyer, at its option may
terminate this Agreement on at least ninety (90)
days' prior written notice to Seller.
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The information marked by "[***]" has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
Draft for Airbag Purchase Agreement - Revision "D" - July 12, 1996 Page 4
1.14.2 Effect of Termination
1.14.2.1 Seller's Obligation Upon Termination for Convenience:
Upon Buyer's termination of this Agreement
pursuant to Section 1.14.1 above, Seller
will, unless otherwise directed by Buyer,
(a) immediately terminate all work under
this Agreement; (b) transfer title and
deliver to Buyer all finished Product
conforming to Buyer's Specifications work in
process (provided that Buyer authorized the
fabrication of such work in process by a
Fabrication Authorization) and raw material
(provided that Buyer authorized the
procurement of such Raw Material by a Raw
Material Authorization); and (c) take all
action necessary to protect property in
Seller's possession in which Buyer has or
may acquire an interest and, if requested,
return such property.
1.14.2.2 Buyer's Obligation Upon Termination for Convenience:
Upon Buyer's termination of this Agreement
pursuant to Section 1.14.2.1 above, Buyer
will pay to Seller an amount equal to the
sum of: (a) the contract price for all
finished Product transferred and delivered
to Buyer in accordance with clause (b) of
Section 1.14.2.1; plus (b) Seller's actual
cost of the work in process and raw
materials transferred and delivered to Buyer
in accordance with clause (b) of Section
1.14.2.1, provided that Buyer's obligations
under this clause may not exceed the
obligation Buyer would have had to Seller in
the absence of termination. In addition,
Buyer shall reimburse Seller for all cost
savings provided to Buyer within a twelve
month period from the time of termination.
(previously read "...outlined in this
agreement up to and including that offered
for Calendar Year 1996.)
1.14.2.3 Seller's Claim Period
Seller will submit to Buyer promptly, but
not later than sixty (60) days from the
effective date of termination, its claim for
payment pursuant to Section 1.14.2.2
("Termination Claim"). If Seller fails
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The information marked by "[***]" has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
Draft for Airbag Purchase Agreement - Revision "D" - July 12, 1996 Page 5
to submit its Termination Claim within such
period, Buyer may determine on the basis of
information available to it the amount, if
any, due Seller with respect to the
termination and such determination will be
final and binding on Seller.
2. CALENDAR YEAR 1996 COST REDUCTION PAYOUT (PAID BY ASCI.)
2.1 [TRW will receive cost reduction benefits from reduced product
prices totaling [***] provided O.P. Volumes are met. In
addition, a one time management challenge benefit of [***]
will be provided.]
2.2 New product prices will be put into effect on April 1, 1996.
These prices will be those listed in Attachment "A". TRW
should adjust current purchase orders to reflect these prices.
2.3 ASCI will provide the balance of the cost reductions (from the
one time management challenge) via additional product price
reductions or lump sum distribution on or before December 15,
1996.
3. PRICING FORMULA
3.1 TRW shall maintain control of material pricing for the product
including [***].
3.2 The G&A and Profit (which will not exceed [***]) will be
established at the time of platform bid acceptance by TRW. The
profit will [***] throughout the existence of that particular
product part number, regardless of changes in material or
labor pricing. The base G&A value will be reduced by [***] in
line with provisions stated in Sections 1.8, 1.9 and 1.10 (for
second, third and fourth year of a multi-year program),
however, the G&A value will [***] due to changes in material
or labor pricing.
3.3 Any price adjustments for material (either upward or downward)
will be calculated by using the [***] cost multiplied by the
[***].
3.4 [***] will be applied to the total manufacturing cost. The
scrap value will vary with changes in material and labor
costs.
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The information marked by "[***]" has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
Draft for Airbag Purchase Agreement - Revision "D" - July 12, 1996 Page 6
3.5 Freight costs (inbound raw materials and outbound product to
the ASCI San Diego, CA finished goods Distribution Center) are
currently a [***] [***] and will continue to be so.
3.6 The variable overhead (burden on labor - Peso based overhead
component) will be calculated at [***] of direct labor cost
and will be displayed as a separate line item.]
[3.7 The fixed overhead (US Dollar based overhead component) will
be displayed as a separate line item.
3.8 Individual purchased materials will be listed with their
associated costs.
3.9 Fabric cost and utilization values will be provided.
3.10 Given reasonable notice, TRW shall have the right to audit
material pricing information, freight cost information, scrap
percentage information and material utilization information.
ASCI will cooperate and support TRW in these audit
proceedings.
3.11 Sample product pricing breakdown sheets will be provided for
each program covered under this agreement, by no later than
December 15, 1996.]
4. ANNUAL SAVINGS FOR CALENDAR YEARS 1997, 1998 AND 1999
-----------------------------------------------------
4.1 Savings will be calculated as a fixed percentage of direct
labor cost, variable overhead cost (burden on labor), fixed
overhead cost (ASCI Value Added) and G & A cost only.
4.2 The fixed percentage used for savings will be determined by
that outlined in Sections 1.4 through and including Section
1.8 of this document.
4.3 Contributing factors inclusive in these savings totals shall
include peso devaluation benefits, productivity improvements,
overhead reductions, freight savings, off-all scrap savings
and 50% of value analysis (V.A.) benefits not listed in
Sections 1.4 and 1.5 (the other 50% from V.A. benefits will be
provided to TRW as additional savings for each specific
program).
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The information marked by "[***]" has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
Draft for Airbag Purchase Agreement - Revision "D" - July 12, 1996 Page 7
5. NEW BUSINESS
5.1 All new business will be presented using the newly described
pricing formula described in Section 3.
5.2 Price of labor, overheads (both variable and fixed), G & A and
profit will remain constant for the first year of production
(from Production Ramp date), providing no design alterations
have been made.
5.3 Price reductions for additional years will follow that
described in Section 4.
6. PRODUCT DESIGN CHANGES
6.1 Should a design alteration occur on an existing product, and
the level of the design change requires that a new part number
be assigned, for purposes of this agreement the new design
will be treated as "New Business" and will follow that
outlined in Section 5.
6.2 Should a design alteration occur on an existing product, and
the level of the design change not require that a new part
number be assigned, the cost differential for this product
will be determined through the use of the new Pricing Formula
described in Section 3. Savings from this design change,
provided it is not included in Sections 1.4 and 1.5, will be
provided to TRW. Design change items inclusive in Section 1.4
and 1.5 have been included in the Calendar Year 1996 Cost
Reduction total by ASCI.
6.3 Savings resulting from Product design changes recommended by
ASCI personnel will be split evenly between TRW and ASCI.
7. PESO ADJUSTMENT/MEXICAN GOVERNMENT MANDATED LABOR
INCREASES
7.1 For Calendar Years 1996, 1997, 1998 and 1999, TRW will not
receive benefit or loss for Mexican Peso fluctuations, nor
will existing product prices listed in Attachment "A" be
effected by Mexican Government Mandated Wage increases.
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The information marked by "[***]" has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
Draft for Airbag Purchase Agreement - Revision "D" - July 12, 1996 Page 8
8. AMENDMENTS TO PREVIOUSLY EXECUTED AIRBAG PURCHASE
AGREEMENT(S)
8.1 Once executed, this Agreement will supersede all previous
agreement, either written or oral.
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The information marked by "[***]" has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
Draft for Airbag Purchase Agreement - Revision "D" - July 12, 1996 Page 9
ATTACHMENT A
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ATTACHMENT B
Draft of 5/29/90
TERMS AND CONDITIONS OF PURCHASE
"Buyer" means the TRW Safety Systems/Mesa operation of TRW Inc. and TRW
Vehicle Safety Systems Inc.; "Buyer's Terms" means the terms and conditions on
the face and back of this order and any other terms and conditions specifically
incorporated herein by reference; "Seller" means the vendor shown on the face of
this order; and "Goods" means the products of Seller shown on the face of this
order and all raw materials, components, tooling, equipment and supplies to be
delivered by and all services to be provided by Seller hereunder.
1. Acceptance: (a) Seller will be deemed to have accepted this order
when Seller returns the acknowledgment copy of this order or begins
performance under this order. Seller's acceptance is limited to
acceptance of Buyer's Terms. Buyer hereby objects to and rejects any
proposal by Seller for additional or different terms. If Seller
proposes additional or different terms which relate to the description,
quantity, price or delivery schedule of the Goods, Seller's proposal
will operate as a rejection of Buyer's offer; in all other cases,
Seller's proposal will be deemed a material alteration of Buyer's
Terms, and Buyer's Terms will be deemed accepted by Seller without
Seller's additional or different terms.
(b) If this order is deemed an acceptance of Seller's prior offer,
Buyer's acceptance is limited to Buyer's Terms. Any proposal by Seller
for additional or different terms or any attempt to modify Buyer's
Terms will be deemed a material alteration of Buyer's Terms, and Buyer
objects to and rejects such other terms, but this order will not
operate as a rejection of Seller's offer unless it contains variances
in the terms of the description, quantity, price or delivery schedule
of the Goods.
(c) Seller and Buyer agree that, notwithstanding the prior or
subsequent use by Seller of any order form, invoice or other document
containing printed terms or conditions, they are contracting solely on
the basis of this order, which contains the entire understanding of the
parties and is intended as a final expression of their agreement and a
complete statement of the terms thereof, and may not be amended,
modified or otherwise supplemented unless such amendments,
modifications or supplements are in writing and signed by Buyer's
authorized representative. A provision contained in any order form,
invoice or other document used by Seller (whether prior or subsequent
to the date hereof) which is inconsistent with this subparagraph will
have no force or effect and will not be binding on the Buyer unless
such provision is contained in an order form, invoice or other document
dated subsequent to the date hereof and is specifically initialled by
Buyer's authorized representative.
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2. Delivery: (a) Time is of the essence in this order. Seller will make
deliveries in the quantities and at the times specified herein or in
releases issued hereunder. If Seller's deliveries fail to meet Buyer's
delivery schedule, Buyer, in addition to its other rights, may direct
expedited routing and charge Seller for any excess costs incurred as a
result.
(b) Buyer will not be liable for Seller's commitments or production
arrangements in excess of the amount or in advance of the time required
under Buyer's delivery schedule. If Seller delivers Goods in advance of
Buyer's delivery schedule, Buyer may either (i) return such Goods at
Seller's expense for proper delivery; or (ii) withhold payment for such
Goods until the scheduled delivery date and place such Goods in storage
for Seller's account until the scheduled delivery date. While the Goods
are being returned in accordance with (i) of the preceding sentence or
being retained in accordance with (ii) of such sentence, the Goods will
be at Seller's risk.
3. Quality: Seller will maintain an inspection and quality system
acceptable to Buyer and in conformity with any drawings, specifications
and data which are part of this order and with any quality program of
Buyer described in materials referenced on the face of this order and
incorporated herein by such reference. Seller will maintain adequate
authenticated inspection and test reports, affidavits, and
certifications relating to the work performed under this order, retain
such records for a period of ten (10) years after completion of this
order or as otherwise specified by Buyer, and make such records
available to Buyer upon request. Seller acknowledges that Buyer may
reduce its incoming inspection procedures in reliance upon Seller's
maintenance of a quality system as required hereunder.
4. Inspection and Acceptance of Goods: (a) Buyer may inspect all Goods
ordered hereunder at all times and places, including during the period
of manufacture. Such inspection may at Buyer's option include
confirmation of Seller's compliance with required quality control
procedures. Seller will permit Buyer and/or its designees access to
Seller's facilities at all reasonable times and will provide all tools,
facilities and assistance reasonably necessary for such inspection
and/or confirmation at no additional cost to Buyer. All Goods are
subject to final inspection and acceptance anytime after delivery to
Buyer.
(b) Notwithstanding any acts of Buyer which may be deemed under
applicable law to constitute acceptance of the Goods, payment for
delivered Goods will not constitute acceptance thereof. Buyer many
reject any Goods which do not meet the specifications set forth in this
order. Buyer may return any such Goods to Seller for reimbursement,
credit, replacement or correction as Buyer may direct, or Buyer may
correct and/or replace such Goods at Seller's cost. Any Goods rejected
by Buyer will be at Seller's risk and expense and Seller will not
thereafter tender such Goods for acceptance unless the former rejection
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or requirement of correction is disclosed. Seller will reimburse Buyer
for any packaging, handling and transportation costs Buyer incurs with
respect to rejected Goods.
(c) Buyer may revoke its acceptance of Goods at any time, whether or
not a substantial modification to the Goods has been made, if a defect
in the Goods which could not have been discovered during Buyer's normal
inspection procedures or which is not normally discoverable until the
Goods are used substantially impairs the value of the Goods to Buyer.
(d) Neither Buyer's exercise of nor its failure to exercise, any rights
provided hereunder will relieve the Seller from responsibility for such
Goods as are not in accordance with the order requirements or impose
liability on Buyer therefor.
5. Product Warranties: (a) Seller warrants that the Goods (i) will be fit
and sufficient for the purpose intended (if Seller knows or has reason
to know the particular purpose for which Buyer intends to use the
Goods); (ii) will be of merchantable quality and free from all defects,
including defects in material and workmanship, and, if not of Buyer's
detailed written design, defects in design; and (iii) will conform with
all representations, descriptions, samples, drawings, plans,
specifications, designs and other data supplied by Seller or listed on
the front side of this order. The foregoing warranties are in addition
to those available to Buyer by law.
(b) All warranties hereunder will survive Buyer's acceptance, use
and/or payment and will run to Buyer and its customers.
(c) Buyer's review or approval of any samples, drawings, specifications
or other data developed by Seller in connection with this order will
not limit Seller's responsibility under the warranties contained herein
or alter the cost, rate of output or delivery requirements of this
order.
(d) Buyer's specifications and requirements take precedence over
industry standards. Seller will advise Buyer in writing if Buyer's
specifications or requirements are not as extensive as industry
standards.
6. Product Indemnification: Seller will indemnify, defend and hold
harmless Buyer, its officers, employees, agents, successors, assigns,
customers, and users of its products from and against any and all
losses, expenses, damages, claims, suits and liabilities (including
recall, repair and replacement expenses and other incidental and
consequential damages; court costs and attorneys' fees) arising as a
result of actual or alleged breach of any warranties or other terms
contained herein or arising under any strict tort or negligence
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claims premised on either an actual or alleged defect in the Goods. At
Buyer's request, Seller will assume promptly full responsibility for
the defense of any action described in this paragraph which may be
brought or threatened by a third party against Seller and/or Buyer.
7. Infringement Indemnification: Seller will indemnify and hold harmless
Buyer, its officers, employees, agents, successors, assigns, customers
and users of its products from and against any and all losses,
expenses, damages, claims, suits and liabilities (including incidental
and consequential damages, court costs and attorneys' fees) arising as
a result of any claim that the manufacture, use, sale or resale of any
Goods infringes any patent, utility model, industrial design,
copyright, or other intellectual property right in any country. Seller
will, when requested by Buyer, defend any action or claim of such
infringement at its own expense. Seller's obligations under the
preceding two sentences will apply even though Buyer furnishes all or
any portion of the design of or specifies all or any portion of the
processing for the Goods. If the sale and/or use of the Goods is
enjoined or, in Buyer's sole judgment, is likely to be enjoined, Seller
will, at Buyer's election and Seller's sole expense, either procure for
Buyer the right to continue using such Goods, or replace same with
equivalent noninfringing goods, or modify such Goods so they become
noninfringing, or remove same and refund the purchase price, including
transportation, installation, removal and other charges incidental
thereto.
8. Changes: Buyer may at any time by a written order but without notice to
sureties change drawings, designs, specifications, materials, packing,
time and place of delivery or method of transportation. If any such
change increases or decreases the cost or time required for Seller's
performance hereunder, an equitable adjustment will be made and this
order will be modified in writing accordingly. Any claim by Seller for
any adjustment hereunder must be made within ten (10) days of the date
Seller is first notified of the change. If Seller's claim includes any
cost for property made obsolete as a result of the change, Buyer may
prescribe the manner in which such property will be disposed. Pending
the resolution of any dispute regarding any such adjustment, Seller
will diligently pursue the order as changed. No change to design,
material, process, procedures or practice is to be made by Seller
without written authorization by Buyer.
9. Force Majeure: If, due to forces beyond its control, Buyer determines
to alter Buyer's delivery schedule to delay delivery, the provisions of
this paragraph (rather than the preceding paragraph) will control.
Seller will hold any such delayed Goods at the direction of Buyer and
will deliver them when the cause affecting the delay has been removed.
Buyer will be responsible only for Seller's direct additional costs
(excluding interest on the purchase price) incurred in holding the
Goods or delaying performance at Buyer's request. Either party will be
excused from performance which has been made impracticable by the
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occurrence of a contingency the nonoccurrence of which was a basic
assumption on which the order was offered and accepted, or by good
faith compliance with any law, even if later found invalid.
10. Termination for Convenience: Buyer may terminate this order or any part
of it for its convenience by written notice to Seller. Upon receipt of
notice of termination, Seller will immediately stop all work hereunder
and cause any of its suppliers or subcontractors to cease such work.
Buyer will pay Seller for all goods which are (i) ready for shipment in
accordance with this order's delivery schedule prior to Seller's
receipt of the termination notice, (ii) conform to all requirements of
this order, and (iii) are free and clear of all encumbrances. Buyer
will not pay for any work done after Seller's receipt of notice of
termination, nor for any costs incurred by Seller's suppliers or
subcontractors which Seller could reasonably have avoided.
11. Termination for Cause: Buyer may terminate this order or any part
hereof for cause in the event of a Default by Seller. "Default" means
(i) Seller's failure to comply with any of the terms and conditions of
this order; (ii) Seller's failure to give Buyer, upon request,
reasonable assurances of Seller's future performance; (iii) insolvency,
bankruptcy, liquidation or dissolution of Seller; or (iv) any other
event which causes reasonable doubt as to Seller's ability to render
due performance hereunder. If, after termination for Default, it is
determined that Seller was not in Default, the rights and obligations
of the parties will be the same as if the termination was for Buyer's
convenience.
12. Default--Cancellation: In the event of Default, Buyer may, upon written
notice to Seller but without further liability to Seller, (i) waive all
or any part of the Default; (ii) agree in writing to any change in or
modification of this order as Buyer may in its judgment deem advisable;
(iii) cancel this order in whole or in part; (iv) purchase goods in
substitution for those to be supplied by Seller hereunder and charge
Seller for any excess cost resulting therefrom; and/or (v) exercise any
other rights or remedies Buyer may have under applicable law. Seller's
liability for Default will include Buyer's incidental and consequential
damages.
13. Proprietary Information--Confidentiality--Advertising: (a) Seller will
consider all information furnished by Buyer hereunder (including
drawings, specifications, or other documents prepared by Seller for
Buyer in connection with this order) to be confidential and will not
disclose any such information to any other person, or use such
information itself for any purpose other than performing this order,
unless Seller obtains Buyer's prior written permission. Seller will not
advertise or publish the fact that Buyer has contracted to purchase
Goods from Seller, or disclose any information relating to the order
without Buyer's written permission.
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(b) Unless otherwise agreed in writing, no information disclosed in any
manner or at any time by Seller to Buyer will be deemed secret or
confidential, and Seller will have no rights against Buyer with respect
thereto except such rights as may exist under patent laws.
14. License to Repair; Use of Copyrighted Materials: Seller hereby grants
to Buyer a nonexclusive, royalty-free, irrevocable, worldwide license
to repair, rebuild, reconstruct and relocate the Goods. Seller also
grants to Buyer a nonexclusive, paid-up, irrevocable, worldwide license
to use all copyrighted materials of Seller which are furnished to Buyer
during the course of Seller's performance hereunder and which relate to
any Goods. Without limiting the generality of the foregoing, Buyer's
use of such copyrighted materials pursuant to such license may include
reproduction, distribution to customers and others and public display.
15. Indemnity/Insurance: To the extent Seller's agents, employees or
subcontractors enter upon premises occupied by or under the control of
Buyer or any of its customers or suppliers in the course of the
performance of this order, Seller will take reasonable steps to prevent
any injury to persons or property arising out of acts or omissions of
such agents, employees, or subcontractors. Except to the extent that
any such injury or damage is due solely and directly to Buyer's
negligence, Seller will indemnify, defend and hold Buyer, its officers,
employees and agents, harmless from and against any and all losses,
expenses, damages, claims, suits, or any liability whatsoever
(including incidental and consequential damages, court costs and
attorneys' fees) arising out of any act or omission of Seller, its
agents, employees or subcontractors. Seller will maintain and require
its subcontractors to maintain (i) public liability and property damage
insurance, including contractual liability (both general and vehicle)
in amounts sufficient to cover obligations set forth above, and (ii)
workers' compensation and employer's liability insurance covering all
employees engaged in the performance of this order for claims arising
under any applicable workers' compensation, occupation disease or
health and safety laws and/or regulations. Seller will furnish
certificates evidencing such insurance which will expressly provide
that no expiration, termination or modification will take place without
thirty (30) days' written notice to Buyer. Any property of Buyer used
by Seller in the performance of this order will be deemed to have been
under the sole custody and control of Seller during the period of such
use by Seller.
16. Buyer's Property: (a) Buyer will retain title to any property Buyer
furnishes to Seller. Seller will not alter or use such property for any
purpose other than that specified by Buyer or for any other person
without the prior written consent of Buyer. Seller will keep adequate
records of such property, which records will be made available to Buyer
upon
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request, and will store, protect, preserve, repair and maintain such
property in accordance with sound industrial practice, all at Seller's
expense.
(b) If Buyer's property becomes lost or damaged while in Seller's
possession, Seller will indemnify Buyer or replace such property at
Seller's expense, in accordance with Buyer's request. At the
completion, cancellation or termination of this order for which Buyer's
property was required, Seller will request disposition instructions for
all such property, or the remainder thereof, whether in its original
form or in semiprocessed form. Seller will make such property available
to Buyer at Buyer's request, in the manner directed by Buyer, including
preparation, packaging and shipping as directed. Expenses for
preparation for shipment will be for Seller's account and shipment will
be made F.O.B.
Seller's plant.
17. Tooling: Unless otherwise specified in this order, all tooling and/or
all other articles required for the performance hereof will be
furnished by Seller, who will maintain such articles in good condition
and replace them when necessary at Seller's expense whether furnished
by Buyer or Seller. Seller will not use any such article furnished by
Buyer except for performance by Seller hereunder.
18. Compliance with Laws: In the performance of this order, Seller will
fully comply with all applicable law and will hold Buyer harmless from
any liability resulting from Seller's failure to so comply.
19. Taxes: Seller's prices will be exclusive of any federal, state or local
sales, use or excise taxes levied upon, or measured by, the sale, the
sales price, or use of the Goods. Seller will list separately on its
invoice any such tax lawfully applicable to the Goods and payable by
Buyer with respect to which Buyer does not furnish to Seller lawful
evidence of exemption.
20. Setoff: All claims for money due or to become due from Buyer will be
subject to deduction or setoff by Buyer for any counterclaim arising
from this or any other transaction with Seller.
21. Notice of Delay: Seller will immediately give Buyer a detailed written
notice of any event (including an actual or potential labor dispute) of
which Seller becomes aware and which may delay Seller's timely
performance of this order.
22. Payments: Buyer will pay the prices stipulated on this order for Goods
delivered and accepted, less deductions, if any, as herein provided,
but only upon submission by Seller of an invoice. The prices for Goods
will not be subject to any variation without the prior
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written consent of Buyer. Unless otherwise specified, Buyer will pay
for partial deliveries accepted by the Buyer.
23. Remedies: The rights and remedies provided Buyer herein will be
cumulative and in addition to any other remedies provided by law or
equity. Buyer's waiver of a breach of any provision hereof will not
constitute a waiver of any other breach.
24. Severability: Any provision of this order which is finally determined
to be unlawful will be deemed severed from this order and every other
lawful provision of this order will remain in full force and effect.
25. Assignments and Subcontracting: No part of this order may be assigned
or subcontracted without the prior written approval of Buyer.
26. Government Contracts: (a) The provisions of the following sections of
the Federal Acquisition Regulations (48 C.F.R. Part 52) are
incorporated herein by this reference: (i) 52.222-26, Equal Opportunity
(APR 1984); (ii) 52.222-35, Affirmative Action for Special Disabled and
Vietnam Era Veterans (APR 1984); and (iii) 52.222-36, Affirmative
Action for Handicapped Workers (APR 1984).
(b) If the face of this order specifies that this order is issued under
government contract, (i) the terms and conditions on form GC-1 (Rev.
10/86) are herein incorporated by this reference and will govern over
any inconsistent terms herein; (ii) all references to Buyer herein will
include reference to the United States Government.
27. Fair Labor Standards: Seller warrants that the Goods will be made in
compliance with the Fair Labor Standards Act of 1938, as amended.
28. Governing Law: This order will be governed by the laws of the state
shown in Buyer's address on the face of this order.
5/29/90
8
