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					                 Yazaki North America Inc.

                        Supplier Quality Manual


YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)   1
                              TABLE OF CONTENTS

                      1. Overview

                      2. Quality

                      3. Entertainment Policy-Gifts, Favoritism, and Other Issues

                      4. SAVE Program

                      5. Supplier Rating System (Scorecards)

                      6. YNA-Canton Enterprise Resource Planning System

                      7. Shipping and Packaging

                      8. Accounts Payable Practices

                      9. Diversity Purchasing

                      10. Indirect Purchasing

                      11. Environmental Policy

                      12. Supplier Initiated Changes

                      13. General Terms and Conditions

                      14. Contacts

                      15. Supplier Manual Revision History

                      16. Supplier Quality Documents

YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)        2

Welcome to Yazaki! Our North American headquarters are located in Canton, Michigan, not far
from Detroit. At Yazaki, we say “All Systems Go” and we aim for continuous improvement in all
areas. To our customers, “All Systems Go” means that Yazaki is customer centric and brings
benchmark technical expertise, systems integration capability and a passion for innovation to the
development and production of highly advanced, ultra-reliable vehicle power and data networks and
components. This background is what continually gives us the edge over our competitors. Our
product line is extensive and under constant expansion. Yazaki produces electrical distribution
systems, fiber optics, advanced networking, instrumentation, junction blocks, connector systems,
and advanced electronics. For more information on our products, please visit Products located on
our home page at
                                              Last year, our global automotive annual sales totaled
                                              7.4 billion U.S. dollars making Yazaki one of the
                                              largest privately owned Tier 1 suppliers in the
                                              automotive industry. Eighty-five percent of Yazaki’s
                                              annual sales were in the automotive sector. We are
                                              already the world’s largest manufacturer of wire
                                              harnesses and our next goal is to become the world’s
                                              largest automotive parts supplier.
                                                  • One in three vehicles worldwide has a Yazaki
                                                       wire harness.
                                                  • Half of the vehicles worldwide have a Yazaki
                                                                                          Automotive Products

 At Yazaki, we are committed to building and maintaining                                   · wire harness
                                                                                           · components
                                                                                           · instruments
strong, positive relationships with our suppliers. The Yazaki
supplier manual is available on our website for easier                                     Electric Wire & Cable

access in order to increase communication and                                                               7%
collaboration between Yazaki and our suppliers. Our                                        Gas Products
manual is designed to guide our suppliers through Yazaki                                                    6%
procedures, systems, and expectations in order to achieve                                  Air Conditioning
the highest standards of efficiency, effectiveness, and
results. Included in our supplier manual you will find                                                      2%
guidelines regarding our business ethics and entertainment policies, SAVE program, payment
options, and expectations of our suppliers along with many other pertinent subjects that must be
addressed to build healthy relationships with our suppliers. Please refer to our Table of Contents for
a complete listing.

As our company grows, the opportunities for current and potential suppliers are also growing.
Yazaki invites all suppliers to read our Supplier Manual and learn more about our purchasing
procedures. If you are interested in becoming a Yazaki supplier, please contact the appropriate
Yazaki Buyer (please see Contact section); we would like to know how you can contribute to our
business. Yazaki seeks to continuously improve all of its processes including the Supplier Manual.
We, therefore, reserve the right to update the manual without advance notice.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              3

The purpose of the Supplier Manual is to define the quality requirements necessary to ensure a
successful partnership between Yazaki North America (YNA) and our suppliers. This manual
documents the required quality standards for products and services purchased from suppliers; and
outlines Yazaki’s overall satisfaction expectations.

Our Expectations

        • Suppliers must be capable of providing defect-free product that meets design intent.

        • All significant change proposals (including but not limited to material changes, process
        changes, manufacturing location, etc.) shall be communicated to Purchasing Commodity
        Manager in writing.

        • All proposed manufacturing location changes must be communicated in writing to the
        appropriate Commodity Manager prior to the move and the move plan must be approved in
        advance by Yazaki and our OEM customer, as applicable.

        • All design changes must be communicated to the appropriate Purchasing and SQD
        personnel well in advance of PPAP submissions.

Supplier Requirements
 YNA Suppliers must be certified to ISO/TS16949:2002 or at a minimum to ISO 9001:2000 by

Environmental Review
YNA is required to comply with customer environmental material reporting directives and
engineering standards, as well as, the EU End-of-Life Directive. In order to comply with these
directives and standards, YNA requires suppliers to report product structure, material, and substance
information based on the Global Automotive Declarable Substance List (GADSL) for existing and
new products. This information is being requested early in the design phase and is to be submitted
prior to PPAP submission.

Please use the latest version of the GADSL (available at as a guide to determine
which substances require reporting. If any products contain any of the substances on this list, then
the substance(s) must be reported to YNA regardless of the substance concentration.

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YNA has two primary acceptance criteria; no more than 10% maximum “Joker” substance content
and there must be more than one substance reported when a material is rubber or plastic based.

In order to collect the necessary environmental information in a format acceptable to our customers,
YNA requires that suppliers report all product information either in an “AIAG Compliance Connect
Spreadsheet” or through IMDS directly. YNA’s IMDS ID# is 2961. You can download an “AIAG
Compliance Connect Spreadsheet” from AIAG through a link on our website at Complete the spreadsheet according to
the instructions available in the downloaded spreadsheet. Questions regarding the spreadsheet or
IMDS reporting can be directed to YNA’s IMDS Group at 734-983-1212.
Completed spreadsheets must be returned to

Previous versions of the AIAG Compliance Connect Spreadsheet will not be acceptable after June
23, 2005 due to changes in IMDS - only spreadsheets that are Version 10.6 or later will be
acceptable for submission.

As of June 6, 2005, proof of acceptance of any material data submissions to Yazaki North America
Inc. must be included in the PPAP package. For IMDS submissions, this includes a screen shot of
the part number(s) submitted to YNA as well as the status field showing “acpt”. If an AIAG
spreadsheet is submitted, YNA will reply to the email with a .pdf file which has a signature of an
IMDS Group member. If an AIAG spreadsheet is not acceptable, an email will be sent to the
submitter explaining which parts of the submission are not acceptable.

YNA holds suppliers accountable for non-compliance with this reporting mandate. Failure to
report affects your supplier rating and may lead to a loss of current and future business with

Quality Objective
For all production and non-production product (prototype) received, YNA’s quality standard is zero
(0) PPM and zero (0) documented defective claims per month.


New Purchases with New Supplier
Supplier Quality and Development (SQ&D) provides supplier performance data that influence and
support sourcing decisions. SQ&D utilizes a standardized supplier assessment. Suppliers are
required to complete the assessment for YNA’s review that may be followed by an on-site
assessment. The assessment results in classifying a supplier as:
1) acceptable for purchase; 2) conditional for purchase; or, 3) non-acceptable.

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        Assessment Results

        Acceptable: The supplier received a score of 85% or greater with no major non-compliance.
        A non-compliance is any question assigned one (1) or zero (0) points.

        Conditional: The supplier received a score of 75% or greater with fewer than seven (7)

        Non-Acceptable: The supplier failed to receive a score greater than 75%; or, has more than
        seven non-compliances. The supplier will not be recommended for inclusion on YNA’s
        Approved Supplier List.

New Purchases with Existing Supplier
YNA Purchasing utilizes a fact-based approach when considering current suppliers for new
business sourcing decisions. Once a supplier is accepted for purchase, the supplier’s on-going
performance will influence future sourcing considerations. Supplier performance data is reported
monthly to Purchasing by SQ&D. YNA’s Scorecard is provided to suppliers quarterly reporting the
summarized performance data.

Advanced Product Quality Planning (APQP)
Suppliers are expected to implement Advanced Product Quality Planning (APQP) activities to
communicate and ensure timely, high-quality product development. APQP must be consistent with
the AIAG “Advanced Product Quality Planning and Control Plan – APQP” requirements. The
manual provides guidelines designed to produce a product quality plan, which will support the
development of a product, or service that will satisfy the customer. APQP status reports or output
documents for this process may be requested by YNA. PPAP documentation must be on hand and
readily retrievable upon request. Proprietary considerations will be made regarding documents, as

Design Review and Annual Product Verification Testing
Suppliers are responsible for reviewing designs at the Quote Stage in order to identify potential
design, manufacturing, and quality issues. The supplier must consider all "Safety and Regulatory
Items" relative to the product and make notation of all identified critical characteristics.
Verification testing must be performed annually to ensure design intent requirements are maintained.
All applicable documents must be updated to reflect product performance throughout production,
including updates to the original PPAP submission and dimensional annual layout. The annual
layout record and schedule are expected to be available upon request within 48 hours. All
appropriate design verification documentation must be made available upon request. Please contact
the appropriate YNA Buyer to request a design review.

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Component Deviation Request
“Component Deviation Requests” indicating the specific non-conformances and defining the
deviations of design requirements must be approved by Engineering in advance; submitted to
Purchasing; and included in PPAP submission to YNA SQ&D.

Post Sourcing Assessment (Process Sign Off)
Process Sign-Off (PSO) is a formal and systematic review of the supplier’s planned and actual
manufacturing process. PSO transpires prior to PPAP submission. YNA and some OEM customers
require PSO in the process development and qualification of product. PSO includes document and
data review of: drawings, specifications, FMEAs, Control Plans, etc. On-site activity at
manufacturing is run-at-rate verification and product test validation.

Production Part Approval Process (PPAP)
Suppliers are required to follow the Production Part Approval Process (PPAP) Requirements
Manual published by AIAG and all applicable customer requirements. YNA requires a level three
(3) PPAP submission, unless a supplier is certified with YNA. When OEM customer program
requirements permit, the certified suppliers are allowed to submit to a level one (1) PPAP. PPAP
submissions must be performed and approved for all YNA production level components and
assemblies prior to the first shipment of production parts. Suppliers must ensure that all special
characteristics are identified appropriately within the PPAP documentation. Failure to provide
timely and accurate PPAP documentation will be reflected in the supplier’s performance data and
Scorecard rating. Supplier certification for level one (1) PPAP submission does not eliminate the
requirement of performing an annual layout. YNA reserves the right to request and audit annual
layout data. Contact your SQ&D representative for specific PPAP requirements.

All costs related to PPAP submissions are the responsibility of the supplier. YNA will not authorize
additional payment to a supplier for submission of a PPAP. Contact your Purchasing representative
for specific contract terms.

If external laboratories are used for inspection, testing or calibration services, they must be
accredited to either ISO/IEC 17025, or to the National equivalent (A2LA, NVLP), or be a customer
approved laboratory. For the Internal Laboratories, there needs to be a defined and documented
Laboratory Scope that shows capability to provide such services. Such Scope must be presented as a
separated item from the ISO, QS or TS accreditation, and must be specific to the type of test that the
manufacturing facility will be performing by location.

Disclaimer: PPAP submissions containing instances where legal disclaimers and other references
to legal terms and conditions are viewed as follows:
Yazaki North America’s purchases are governed exclusively by the terms and conditions of
purchase set forth at We hereby reject any contrary terms, including but not
limited to, any terms that purport to limit the scope or nature of seller’s warranty obligations or that
purport to limit seller’s obligation to notify us of any proposed change in part specifications.
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)               7
PPAP’s are mandatory for the following conditions:

    •   New part
    •   Tool moves or additional production facilities
    •   Design change
    •   New or modified tool
    •   New or optional material / color
    •   Optional constructions
    •   New sub-contractors
    •   Significant process changes
    •   For further information, contact AIAG

    NOTE: When there has been a revision change to a drawing that does not affect the
    component and level 3 PPAP that has already been approved: Submit level 1 PSW to reflect
    the new drawing revision level. In the “REASON FOR SUBMISSION” section on the PSW,
    add the statement “PSW updated to match drawing revision which did not affect component”.

PPAP layout quantities are to be presented as follows:

    •   Single Cavity or Muliple Cavity Tool: A 100% dimensional layout on all tolerance and
        non-reference dimensions for a minimum of one part per cavity from the production tool.
        Parts must be clearly identified as the measurement samples.

    •   Bulk Material: Please refer to the AIAG PPAP manual for applicable requirements.

Self-Certification Program

Suppliers that receive Self-Certification status from Yazaki North America, Inc. (YNA) will submit
YNA Level 1 PPAP. (YNA reserves the right to request Level 3 paperwork at anytime regardless
of certification status).

Supplier submits request for Self-Certification by completing YNA Self-Certification Form located
on the Supplier Quality Manual website – Supplier Quality Documents http://www.yazaki-

Self-Certification is granted to individual manufacturing location only.

SQD management team verifies that supplier meets criteria for nomination/removal by utilizing the
YNA PPAP Self-Certification Program Nomination/Removal Criteria check-list located on the
Supplier Quality Manual website.

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Criteria for Nomination to the Self-Certification Program

Suppliers must meet all of the following conditions.

1) Supplier must have at least 12 months of business history with YNA to qualify for PPAP Self-

2) Third party registration to ISO/TS-16949:2002 (or at a minimum ISO-9001:2000) is required.
QS-9000 will not be accepted after December 2006.

3) Supplier scorecard rating for quality performance is satisfactory or above.

4) Evidence of compliance to requirements as stated in the AIAG Production Part Approval Process
(PPAP) Manual and Yazaki specific requirements is mandatory.

5) There shouldn’t be any significant supplier responsible disruptions or warranty problems at
Yazaki affiliates.

6) Evidence of conformance to all program requirements (e.g.. QIP) as designated by Supplier
Quality & Development is required.


Manufacturing Review
YNA may perform a Manufacturing Review at the supplier’s manufacturing location. A
Manufacturing Review is an assessment of the supplier’s actual manufacturing process. It is used to
verify corrective action implementation and to promote continuous improvement activities.

Temporary Deviation Request
The Supplier must formally notify SQ&D as soon as it becomes aware of any facts suggesting that
when non-conforming product may be shipped to Yazaki. The supplier may submit a temporary
deviation request for PPAP’ed product not conforming to design requirements and deemed by
customer design engineering as not affecting the fit or function. SQ&D will review the request and
provide feedback regarding approval, limitations, and timing requirements. If the deviation is
approved, the supplier will be authorized to ship deviated product for a specific quantity or period
of time. This is intended as a temporary allowance.

All deviated product must be clearly identified on the cartons and must have appropriate traceability.
If the deviation is not approved, the supplier may not release deviated product to Yazaki.
Unapproved product will be rejected and counted as a defective claim towards the supplier’s PPM
and supplier Scorecard rating.

Non-Conforming Material
Suppliers are responsible for the quality of their product at all times throughout the Yazaki
manufacturing process; installation at the final customer; and, through to the end consumers use.
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Suppliers must have procedures in place to prevent non-conforming product from escaping their
process resulting in shipment to Yazaki facilities.

Defective Conditions
When a product does not meet the documented specification and design requirements, the product
will be rejected. The following is a partial list of general quality reject conditions:

    •   Appearance / surface defects
    •   Assembly defects
    •   Broken / damaged
    •   Burrs
    •   Contamination / corrosion
    •   Cracks / holes / tears
    •   Flash
    •   General deformities
    •   Missing part
    •   Over / under specified dimension
    •   Packaging
    •   Plating
    •   Sharp edges
    •   Short shot
    •   Wrong material

Quality Rejection Notification
In the event that non-conforming material is identified at Yazaki manufacturing locations and/or at
the final customer location, immediate actions must be taken to ensure that acceptable product is
utilized and production is maintained. Suppliers will be contacted and required to provide
containment measures and sort authorization within 24 hours of notification of the defect claim.

Quality Reporting Requirements
Suppliers are required to respond to all defective claims using a disciplined problem solving method.
All efforts to identify root cause should be taken with updates provided to YNA regularly. A
specific corrective action update schedule will be established with suppliers based on the severity
and impact of the issue. Problem solving methods should utilize a team approach including
statistical and mistake proofing techniques. Corrective actions that involve process change require
the supplier to provide updated Process Failure Modes and Effects Analysis (PFMEA) and Control
Plans. Operator training and procedure violations are unacceptable root causes. Annual layout data
and product layout data may be requested.

All defective claims identified and communicated to a supplier require containment actions within
24 hours by using 3 discipline (3D) response. All certified material shall be identified with the
associated GQRS (Global Quality Reporting System) number written or printed on a green sticker.
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This label will be near all barcodes on the container and clearly visible. RMA numbers for defective
product shall be submitted in writing within 5 business days from the GQRS origination date. The
supplier is responsible to provide updates to all interim activity through to final verification.
Validated corrective action measures that ensure prevention of the defective condition must be
communicated in writing to YNA within two weeks of the original defect notification date. All
interim action and corrective action plans must be entered into the Yazaki GQRS system.
Verification information shall be uploaded into the GQRS after 30 days of approval of the
corrective action. Verification information can be items such as Process control charts, P charts,
GO-NO GO charts, etc. The verification information must include 30 days of production data and
shall be free of any non-conformances. If non-conformances are found within the 30-day
verification period, a new corrective action plan shall be submitted.

Corrective Action Failures
Continual quality concerns will significantly affect a supplier’s opportunity for additional business
with YNA. Suppliers are expected to use “Lessons Learned” and “Things Gone Right/Things Gone
Wrong” methodologies to eliminate potential risk factors and prospective defects. Suppliers shall
apply all analysis findings and action items to similar processes within their manufacturing facility.
When corrective actions do not eliminate the defective condition, the supplier must re-evaluate the
root cause and establish a new and effective corrective action. Continued failures may result in
formalized quality improvement activities.

Accountability and Cost of Quality
Suppliers are selected based on their ability to provide cost effective, superior defect-free products;
expert knowledge of their product and manufacturing processes; and provide responsive and
proactive support. With these expectations, suppliers will be held accountable and responsible for
all costs incurred due to defective product identified during Yazaki manufacturing/installation, or
end-customer use of the product.

Suppliers are responsible for all costs incurred while the defect situation is contained and remedied.
Items such as, but not limited to the following, may be charged to the supplier:

    •    Recovery costs due to a vehicle ‘recall’
    •    3rd party sorting or reworking costs
    •    Labor for sorting or reworking of raw stock
    •    Labor for sorting or reworking finished goods
    •    Labor for sorting or reworking of finished goods installed in the end customer product
    •    Scraping or reworking of ‘finished goods’ due to defective supplier product
    •    Reimbursement or replacement of defective raw material
    •    Shipping fees related to return of defective product
    •    Fees and taxes related to scrapping of material outside the U.S.
    •    Warehousing/storage fees accumulated through to disposition of suspect product
    •    All necessary travel, lodging, and meals
    •    Rework or repair materials, tooling, gauges, testing equipment, or third party testing
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)               11
    •   Excess and additional freight charges and air shipments
    •   Production downtime at Yazaki manufacturing facilities
    •   Production overtime at Yazaki manufacturing facilities
    •   Production downtime at customer locations
    •   Administrative, corporate, and management support fees
    •   Follow up actions and assessments, as appropriate
    •   Any other fees associated with a defective condition

All costs are calculated based on US currency using standard man-hour labor rates established by
YNA. Appropriate debits are issued to the supplier through the Finance Department in cooperation
with Purchasing.

Delivery Objectives
Suppliers are expected to deliver 100% on time. Delivery performance data is reported to
Purchasing and included in the Supplier’s Scorecard rating. Quality problems are not justification
for fluctuations in on-time delivery.

Supplier Sub-Contractors
Suppliers are responsible for sub-contracted products and services used in product sold to YNA. It
is expected that suppliers work closely with their sub-contractors and monitor their quality level.
Sub-supplier development activity is encouraged. Yazaki reserves the right to request and perform
necessary assessments at sub-contractor facilities.

Suppliers are responsible for their product through to the end of vehicle life.
Post-production defective claims reported by the end consumer are qualified, tracked, and reported
by YNA. Costs related to such claims are the responsibility of the supplier.

Tool Move Requirements
Suppliers moving production tooling to existing YNA approved manufacturing locations must
notify, in writing, the Buyer and copy SQ&D prior to physically moving the equipment. Suppliers
must propose a detailed comprehensive tooling move plan that includes: location addresses, dates,
bank stock requirements, risk assessment, capability study, PPAP timing, etc. Contact SQ&D for
specific requirements.

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Supplier Scorecard
SQ&D contributes the following supplier performance data to the Supplier Scorecard: part per
million (PPM) calculations, PPAP timing results, on-time delivery, number of defect occurrences,
and defect-claim response timing. If you have any questions or concerns relating to these categories
of the Supplier Scorecard, contact YNA Supplier Quality Development.

        Parts Per Million
        YNA tracks PPM performance and expects suppliers to calculate their own data to track
        PPM internally to identify quality performance trends within their own processes. YNA
        utilizes the following components PPM calculation:

                •   (quantity rejected / quantity received) X 1,000,000 = PPM

        PPAP Timeliness
        YNA requires a level three (3) PPAP submission, unless a supplier is certified with YNA.
        When OEM customer program requirements permit, the certified suppliers are allowed to
        submit to a level one (1) PPAP. Suppliers are to submit PPAP to YNA within two weeks
        from issuance of a New Component Notification form (NCN) from Purchasing. PPAP
        packages arriving after the due date will be considered late. PPAP packages may also be
        requested by SQ&D. For existing production components, these PPAP packages are
        expected within two business days of the request. PPAP packages arriving after two
        business days will be considered late. PPAP packages identified as incomplete will be
        rejected and considered late if not fully re-submitted within the initial two week due date.
        Incomplete PPAP is missing documentation, missing YEMR submission, or missing
        samples, etc.

        On Time Delivery
        Suppliers are expected to maintain deliveries in accordance to YNA purchasing blanket
        releases. Delivery timing requirements are indicated on the blanket releases. On-time
        delivery is measured by the number of pieces received in a timely manner per the YNA
        blanket release requirements for parts on order and then, calculated as a percentage.
        Continued delinquent deliveries require immediate improvement activity. All costs
        incurred due to delivery problems are the responsibility of the supplier.

        Number of Quality Issues Reported
        Supplier quality performance will also be assessed by tracking the total number of quality
        defect occurrences that occur throughout the year. Defect recurrence will be noted in
        supplier performance measures reviews.

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        Response Timing
        Response timing initiates upon notification of the concern to the supplier from YNA SQ&D.
        Suppliers are required to provide containment actions (3-discipline response) within 24
        hours and interim actions (5-discipline response) must follow within five (5) business days.
        A completed corrective action report having supporting documentation must be
        communicated to YNA SQ&D within two weeks of the original notification date.


YNA Supplier Quality Development (SQD) is responsible for monitoring supplier performance.
Supplier Scorecard metrics are used to initiate Quality Improvement Plan (QIP) activities. An SQD
associate will notify suppliers directed to participate in a QIP.

Quality Improvement Plan (QIP)
QIP activity will be concluded by SQ&D when sufficient supplier performance improvement is
evident. Full supplier cooperation is expected throughout the QIP process. Suppliers identified as
high impact with downward quality trends or those who do not compare favorably to others in their
commodity may be required to present a comprehensive Quality Improvement Plan. Suppliers
successfully fulfilling QIP requirements (defined by SQ&D) will be released from the QIP activity.
Poor QIP activity/results may lead to a “Quality Hold”, “New Business Source Hold”, or “De-
Source” designation with YNA Purchasing.

Quality Hold
A “Quality Hold” classification is assigned to a supplier when a high-risk product quality situation
arises. This status directs YNA Purchasing to evaluate suppliers more closely prior to awarding
new business. Suppliers formally notified of a “Quality Hold” status must perform Quality
Improvement Plan (QIP) activities, as directed by SQ&D. The supplier may be subject to extended
sorting and/or third party certifications. This status is not intended to be permanent. If QIP
activities are ineffective, “New Business Source Hold” status may be assigned to a supplier.

New Business Source Hold
“New Business Source Hold” status directs YNA Purchasing to suspend all sourcing with the
supplier. Suppliers are formally notified of “New Business Source Hold” status with a letter from
SQ&D and Purchasing. The supplier must immediately begin quality improvement activities (QIP)
working directly with SQ&D to rectify the quality concerns identified.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             14


Many associates influence Yazaki’s relationship with our suppliers. Our interaction with suppliers
is a reflection of our individual professionalism and a reflection of Yazaki. Therefore, suppliers
should comply with the following rules of conduct that are binding for YNA’s Purchasing staff.

Yazaki values should guide the conduct of all relationships – requiring integrity and serving the best
interests of the company at all times. Though the values guide our behavior – to best serve the
interests of our staff, suppliers and Yazaki – the following Yazaki Supplier Entertainment Policy
has been developed.
Decisions concerning supplier selection are based on the supplier’s total performance and
capabilities. Relationships with suppliers are to be cooperative and business-related, always
focused on the best interests of Yazaki. They are not to be influenced by gifts, favoritism, or other
gratuities. Each supplier must comply with this policy in order to maintain a business relationship
with Yazaki. All members of the Yazaki staff who interact with suppliers must comply with this

Gifts from suppliers should be of nominal value. Examples of acceptable gifts are low value
advertising items such as mugs, calendars, pens and folders. Gifts of cash, illegal items or gifts
given in exchange for something are never acceptable. Gifts should be infrequent and must not be
solicited, directly or indirectly, from suppliers. Associates requesting a gift from a supplier should
be reported to that associate’s Manager or the Compliance Officer.

Entertainment offers are acceptable from a supplier only if a business intention exists.
Entertainment should be infrequent (as a guideline once per quarter overall) and not extravagant.
The supplier should be present with the purchasing associate at the time of the entertainment.
Offers for any form of weekend entertainment, paid vacations or seminars are unacceptable.
Suppliers may not pay for Yazaki staff travel or accommodations.

Meals are considered entertainment. However, it is recognized that at times it is necessary and/or
convenient to conduct business over lunch or dinner. Therefore, occasional lunch and dinner
meetings are acceptable but are not to exceed once per month, overall. Multiple meals may be
taken with a supplier during a daylong or multi-day supplier site visit, for example. In such cases,
Yazaki staff and the supplier company should share expense for meals
(i.e. Yazaki associates pay for meeting participants’ lunch, supplier pays for dinner).

The type of entertainment attended reflects on both the supplier and Yazaki. Therefore, any
entertainment that would negatively reflect on the participants or would be in conflict with company
policy is unacceptable. This includes any entertainment, which is illegal or sexually explicit.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              15
Other Favoritism:
Requesting, considering or accepting any financial benefit or favoritism from a supplier is
unacceptable. Such offers by a supplier are also not acceptable and must be reported

Supplier Responsibilities:
All suppliers are expected to maintain professional relationships with Yazaki staff. Suppliers must
be conscious of their actions when interacting with Yazaki staff. If there is any doubt about the
appropriateness of a gift, entertainment or other concern, then it should be avoided. Any Yazaki
associate directly or indirectly requesting a gift from a supplier should be reported to the associate’s
Manager. Actions or behavior in conflict with the Supplier Entertainment Policy by a supplier may
have consequences up to and including loss of business with Yazaki.

Purchasing Staff Responsibilities:
Each Yazaki associate in contact with suppliers must maintain an Entertainment Log recording all
entertainment, meals, etc. received from a supplier.

Requests for gifts or favors are not acceptable. The acceptance of a gift or entertainment in
compliance with this policy is not an indication to a supplier that business will be awarded based on
any criteria other than quality, cost and delivery performance or other factors included in a specific
commodity strategy (i.e. willingness to sign an LTA, supplier technology, geographic location).

Supplier actions in conflict with this policy should be reported to Purchasing management or
YNA’s Compliance Officer. Concerns regarding questionable relationships or supplier behavior
should also be discussed with Purchasing Management.

Any questions related to this policy should be directed to the Compliance Officer or Purchasing

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)               16

As a valued member of the automotive supply chain, you share with us the responsibility of
delivering ever-increasing value to the final customer. We accomplish this by constantly striving to
make our product development and manufacturing processes more efficient. To be successful, we
must have the participation and cooperation of our suppliers.

This effort is mandated by customer requirement. However, it ultimately serves to enhance the
value of our combined products (yours and ours). Hence, the name of the program is Supplier
Achievement of Value Enhancement (SAVE). SAVE provides the guidelines and structure for
YNA, in collaboration with all of our suppliers, to review current supply chain practices and
identify cost reduction opportunities. The underlying imperative: a supplier’s most important
responsibility, along with meeting quality and delivery targets, is achieving cost reduction targets.

I. Determining the Cost Reduction Target:

Yazaki determines the cost reduction target annually, based primarily on the Purchase Order price
to Yazaki. Since the overall target figure is an average, some suppliers may be asked to meet a
higher or lower target depending on their commodity.

II. Achieving Your Cost Reduction Target through SAVE:

The SAVE objective is to reduce the final cost to the customer. This cost is the accumulation of our
combined supply-chain costs.

Total Cost: Yazaki Costs + Tier II Supplier Costs + Tier III Supplier Costs + . . .

While the SAVE target is based on your P.O. price to Yazaki, all your cost saving proposals that
result in a reduction of Yazaki’s total cost to the customer will count toward the achievement of
your target.

NOTE: Savings per SAVE proposal must be at least $5,000 per year.

Let us assume a supplier’s sales to Yazaki are $500,000 a year and Yazaki has set a 3% savings
target for the supplier. The supplier proposes the two following ideas to offer $15,000 (500,000 x
3%) to Yazaki:

        1. Improvement for YNA-paid packaging which will save $14,104
        2. Extending payment terms from 30 days net to 45 days net, which will save $896

As a result, the supplier achieves its annual savings target of $15,000 without changing its P.O.
prices and eroding its profit margins. Creativity counts!

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              17
III. Cost Reduction Parameters:

The intent of the SAVE program is to aim not only at productivity-related cost savings, but also at
cost savings related to design and process. The following eight parameters have been created to
address both productivity and non-productivity issues. These parameters serve as the basis from
which the Yazaki/Supplier team will identify savings opportunities and generate improvement ideas.

        1. Product design or process changes: A design or process change that results in cost
           savings. The savings will be based on a comparison of prior P.O. price to new P.O.
        2. Introduction of new materials and technology: The cost of a product is reduced
           through the introduction of new material or new technology.
        3. Weight reductions: An existing product is redesigned to reduce weight. Weight
           reduction must be applicable to finished parts. Savings will be case specific – we grant
           credit only when our customer allows credit for reduced part weight.
        4. Cost reduction because of lower freight charges: If you move your production closer
           to a Yazaki plant resulting in lower shipping costs whether or not the cost is included in
           the unit price. When it is included, savings will be based on an amended P.O. When it
           is separately itemized, savings will be case specific.
        5. Increased use of reusable containers: Tangible savings compared to non-returnable
           packaging must be achieved.
        6. Packaging improvements: When packaging is redesigned to put more products in the
           same space, or when a change in type of packaging results in cost savings. Savings will
           be case specific.
        7. Cost reduction as a result of lower inventories:
                • When you lower the inventory level at a Yazaki plant, the savings will be
                    calculated based on the time value of money and operational costs.
        8. Favorable payment terms: When you offer more favorable payment terms than current
           Yazaki terms. The savings will be calculated based on the time value of money.

        The SAVE program is designed to facilitate an open, trusting environment within which to
        build a partnership and develop tangible cost reduction plans. If you have a quantifiable
        cost savings idea that is not listed above, Yazaki Purchasing strongly encourages that it be
        brought forward.

IV. Documentation:

Each cost reduction idea must be documented by you on a SAVE Cost Reduction Worksheet (see
Section 17). The completed form will show the action plan, quantifiable benefits, and costs to
successfully implement the savings.

    •   Your proposals will be approved or rejected within 30 days.
    •   You will be given full year credit only once for each proposal.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             18

In an effort to source the best suppliers and communicate status to our supply base, Yazaki
North America Inc. publishes a quarterly supplier scorecard to the top 80% buy of our
supply base and our critical suppliers. Information collected by our Supplier Scorecard
System is taken into consideration by Yazaki’s purchasing personnel prior to making
further allocations of business.

The scorecard is based on an overall scale of 100 points. The tracked metrics include the
following critical areas of supplier performance: Quality, Commercial, Delivery, and
Environment. Sub-categories within each area are reported and scored for suppliers in the
Scorecard. (Point allocation is defined on the actual scorecard)

Suppliers are rated as a single organization, not by individual locations, and are issued a
rating based on their overall score as follows:
        Superior – 80 points and greater
        Satisfactory – 40 to 79 points
        Unsatisfactory – 39 points and fewer

The ratings trigger the following actions:

Suppliers rated as “Superior” are eligible for recommendation on all new business.
Suppliers rated as “Satisfactory” will typically not change in terms of priority in the
recommendation of new business.
Suppliers rated as “Unsatisfactory” are not recommended for new business and risk being
placed on new-business hold or de-sourced if improvements are not made in a timely

Supplier ratings are reviewed monthly by the Director of Supplier Development, the
Commodity Managers, and Vice President of YNA Purchasing.

Quality Metrics:
       Suppliers shall maintain their own data to calculate PPM and identify quality
       performance trends within their own processes; however, Yazaki utilizes the
       following raw components PPM calculation for report into the supplier scorecard:
       Supplier PPM is calculated by the number of parts rejected divided by the total
       number of parts received multiplied by 1,000,000. PPM = ((# of defects / # of
       receipts) x 1,000,000)
       This measurement is based on the most recent 12-months of data.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)          19
      PPAP Timing
      The PPAP Timeliness category is based on a negative point scale rather than a
      positive one because it is expected that all PPAP submissions be on time, every time.
      As the percentage of PPAP’s received late increases, the points deducted from the
      quality score also increases. Supplier PPAP percentage is calculated as follows:
      Late PPAP % = (# of Late PPAP’s / # of required PPAP’s) x 100
      Incomplete PPAP packages are considered late if not fully re-submitted within the
      initial due date.
      This measurement is based on the most recent 12-months of data.

      3D Response Timeliness
      3D Response timing initiates upon notification of the concern to the supplier from
      the YNA GQRS system. Suppliers are required to provide containment actions (3-
      discipline response) within 24 hours. Supplier 3D Response Timeliness is
      calculated as follows: 3D Timeliness % = ((# of on time 3D’s / # of concerns) x
      This measurement is based on the most recent 12-months of data.

      8D Response Timing
      8D Response timing initiates upon notification of the concern to the supplier from
      the YNA GQRS system. Suppliers are required to provide a completed corrective
      action report including supporting documentation within the YNA GQRS system
      within 10 days of the original notification date.
      Supplier 8D Response Timeliness is calculated as follows: 8D Timeliness % = ((#
      of on time 8D’s / # of concerns) x 100)
      This measurement is based on the most recent 12-months of data.

      Quality Complaints per million
      Supplier’s quality performance will be assessed by tracking the total number of
      quality defect occurrences that occur throughout the year in relation to the number
      of parts shipped.
      Quality Complaints per million is calculated as follows: Quality Complaints per
      Million = (# of complaints written / # of receipts)
      This measurement is based on the most recent 12-months of data.

      Repeat Issues
      It is expected that a suppliers root cause determination and subsequent corrective
      action will prevent a failure mode from reoccurring. Repeat issues are determined
      by the following: Repeat Issue = Failure modes occurring on a single part number
      more than once.
      This measurement is based on the most recent 12-months of data.

YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)        20
       Customer disruptions/spills
       The number of supplier responsible production disruptions realized at OEM
       manufacturing plants.
       This measurement is based on the current month’s data of each reported incident.

       Affiliate Line Shutdowns
       The number of supplier responsible line shutdowns realized at Yazaki
       manufacturing affiliates.
       This measurement is based on the current month’s data of each reported incident.

Commercial Metrics:
    Cost Reduction
    Total Cost Reduction percentage is calculated by prorated commercial savings
    divided by the prorated annual buy from the supplier in the past calendar year
    multiplied by 100. Total Cost Reduction figure is cumulative.
    This measurement is based on the current month’s data.

       SAVE Participation-percentage is calculated by the prorated savings credited
       through our SAVE program divided by the prorated annual buy from the previous
       calendar year. A proposal must be in one of the following six stages to receive
       credit; Initiate, Verification, Customer Approval, Drawing Release, Implemented or
       Testing. If the proposal is rejected, it will not be credited towards SAVE
       This measurement is based on the current month’s data.

       Suppliers are rated each month on how well they respond to commercial issues such
       as RFQ response, Debit Memo’s, etc.
       This measurement is based on the current month’s data.

       IMDS Compliance
       IMDS Compliance is calculated by the number of components pending submission
       and the length of time elapsed for acceptance within the YEMR system.
       This measurement is based on the current month’s data.

       ROP Compliance
       ROP Compliance is calculated by the number of Engineering Sample Procurement
       requests that are completed within 4 weeks of the request date.
       This measurement is based on the current month’s data.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)       21
Delivery Metric:
       On-Time Delivery
       Supplier on-time delivery is measured by the number of pieces received in a timely
       manner per the YNA blanket release requirements for parts on order and then
       calculated as a percentage.

       On-time delivery is calculated each month and the delivery rating for the score card
       is based on the year to date (YTD) ratio.
       Deliveries are calculated by piece ratio. A supplier may not ship more than 100% in
       any given month. The following formula is used each month:
       On-Time Delivery % = ((Received Quantity / Ordered Quantity) x100)

       The following formula is used for YTD percentages: YTD % = (Total YTD
       received quantity / Total YTD ordered quantity) x 100).
       This measurement is based on the current month’s YTD data.

Environmental Metrics:
      ISO14001 Certification
      Bonus points are awarded to each supplier with ISO14001 certifications. The
      greater the percentage of locations certified, the greater the bonus. The percentage
      is calculated as follows: ISO14001 % = Number of Certified supplier locations /
      Number of supplier locations
      Only facilities that supply Yazaki are included in the calculation.
      This measurement is based on the current month’s data.

       Green Purchasing
       Bonus points are awarded to each supplier that submits green proposals for
       implementation approval via the SICR process. Bonus points are awarded as
              1 point is received for each valid proposal submitted (Step 1)
              1 point is received for each proposal that receives purchasing approval (Step
              1 point is received for each proposal that receives Advanced Manufacturing
              Feasibility approval (Step 3)
              1 point is received for each proposal that received Advanced Manufacturing
              test approval (Step 4)
              1 point is received for each proposal that receives full implementation
       approval (Step 5)

       Contact your YNA Buyer for a full description of the Green Purchasing initiative.
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)        22
       This measurement is based on the current month’s data.

If you have any questions or concerns of or relating to the Quality or Delivery categories of
the Supplier Scorecard, contact YNA Supplier Quality Development. For all others,
contact your Buyer.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)         23

This section lays out the key elements of YNA’s new ERP System (JD Edwards) for Canton only.

Request for Quotes
Quote responses are a key factor in YNA’s new ERP system. In the past we asked for information,
but did not always require it. In the new system, three pieces of information will be mandatory
before a quote can be accepted.

    •   Piece Weight: It will be used for storage and container leveling purposes.

    •   Copper Weight: It must be included where applicable. This will be used to verify metal
        price fluctuation transactions.

    •   Standard Pack: Our ordering, receiving, storage, picking, and shipping functions all
        depend on accurate and consistent standard pack cases. Without this information, we
        cannot initiate transactions. Variations from the quoted standard pack quantities could
        cause serious inefficiencies for everyone involved. If the number initially supplied must
        change, this must be communicated to Purchasing.

Blanket Orders and elimination of individual P.O.’s
In the past, every vendor had a vendor code and one or more blanket purchase orders. With our new
system, your vendor code number will also serve as the reference number for your blanket order.
Your company’s vendor code and purchase order number will change. There will be a unique
vendor code for each shipment from location, so some businesses may have multiple vendor codes.

New specifications were sent out 3/15/02 to suppliers previously certified by YNA to conduct EDI
transactions. Testing has been underway for the past few months. Adherence to these new
specifications will be mandatory in order for your company to continue to receive EDI transactions.

Releases are for production components only. All other requests will be issued via Quantity
Purchase Orders (Spot Buy). One major change to the release is the due date. The new release will
indicate the departure date from the supplier, not the expected delivery date at YNA, which is on the
current release.

Quantity Purchase Orders
Quantity Purchase Orders will be generated for some prototype components, special pricing,
nonstandard pack orders, and other charges. Quantity Purchase orders will be sent to the supplier
via email or fax from an authorized agent.

Advance Shipment Notification (ASN)
ASN’s will be Mandatory for all shipments. The method used for communicating the ASN depends
on the type of order along with the EDI capabilities of the supplier.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             24
    •   EDI compliant suppliers are required to send the ASN via EDI for shipments related to
        parts on the release.

    •   Non-EDI compliant suppliers must enter the ASN information using the Supply Web link
        off the eYazaki website. This can be found at

    •   The ASN for Spot Buy orders must be sent by either fax or email the associate authorizing
        the order.

Packaging and Labeling Requirements
Changes to standard pack quantities must be coordinated with Yazaki prior to shipment. Multiple
or inconsistent standard packs are unacceptable. Standard pack size should be determined during
APQP. If estimations are made it is the vendor’s responsibility to notify Yazaki of the actual
standard pack size prior to shipment. Labels must comply with AIAG standards.

Evaluated Receipts Settlement
Evaluated Receipts Settlement will process all payments for stock received.

    •   Payments will be based on our P.O. price multiplied by the Quantity of parts received. This
        will be an electronic transaction that updates our Accounts Payable system. Upon the initial
        launch of the system, we will still use your invoices to spot check transactions to audit the
        system for accuracy. Once that trial period is over, we will be issuing a notice to you that
        invoice copies will no longer be required.

    •   The reference to the payment on your remittance will be taken from the invoice number
        supplied on the ASN.

    •   If you receive a payment that does not agree with your records, you have 60 days from the
        payment date to dispute the payment.

Non-Product Charges
As previously explained, payment for stock will be based on the ERS system. This is only for
product transactions. Charges for Copper Fluctuations, Freight, Set-up charges, Scrap, etc. MUST
be billed separately and reflect the original invoice number(s), part number(s), where applicable.
These bills will be routed to the appropriate associate for approval and then processed for payment
individually by our Accounts Payable Department.

Return Material Authorization
Return Material Authorizations will be conducted in a similar manner as they are currently; except
for the form used to communicate the transaction will change. Instead of the current debit/credit
memo form, we will use a Negative Quantity PO. This document will be used to ship the parts back,
and the deduction from your payment will reflect this number.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             25


When shipping expedited freight directly to Yazaki’s customers or freight forwarders please adhere
to the following:

    •   Do not provide invoices to Yazaki customers, forwarders or trucking companies.
    •   A packing list can be provided referencing invoice number, part number, quantity, number
        of cartons and packing specifications to the trucking companies. PIECE PRICING cannot
        be included on the packing list.
    •   The export documentation needs to be provided to the freight forwarder by Yazaki North
        America’s export department only.
    •   All of the direct ship supplier documentation should be sent as an advanced shipping notice
        (ASN) via normal means (EDI, fax or email) to Yazaki North America.

It is extremely important that Yazaki North America files the correct customs documentation at the
time of shipping. If this is not done properly, any or all parties involved can be in violation of U.S.
export laws as well as many import laws into said country of consignee.


Packaging and labeling requirements vary from one location to another. This section lists packaging
and labeling requirements by location.



This packaging specification is provided to the supplier, so that packaging and the handling of the
provided parts can be done expediently while still minimizing the overall packaging costs. It also
provides for the delivery of parts to ensure that no damage occurs and the parts can be handled,
stacked and stored safely. This specification applies to all parts supplied to NACOM Corporation.
With the cooperation of all parties, we can continually make productivity improvements, increase
our competitiveness and minimize packaging and handling costs.

General Requirements

This portion of the specification covers basic requirements to be used in developing packaging to
eliminate double handling and to develop an environment that is most cost effective for all
concerned. These functions are considered the normal view of industrial packaging in the world

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)               26
    •   The supplier is responsible for the package design and materials used.
    •   The shipping container must remain functional so that safe handling, storing and stacking
        can be accomplished at NACOM once it is has been received by the plant.
    •   Materials must be free from damage, dust, dirt and other debris.
    •   All loads must be clearly marked following the labeling requirements in this specification.
    •   Modification of the packaging design or the packaging materials must be approved by the
        NACOM Packaging Engineer prior to any changes.
    •   A packaging contact in the supplier organization must be designated.
    •   NACOM will not be responsible for the cost to supplier of remedying defective packaging.
    •   Package counts must remain constant unless NACOM has approved the piece count change.


All incoming bar codes are scanned by the Receiving Department, so it is important for all of the
information that is provided on the label to be correct. This will also ensure that proper payment
and receipt of the parts is done in a timely manner. This portion is designed to explain the correct
format and information needed to ensure a smooth flow through the NACOM system. It will cover
the standardization of labels for identification of materials and parts supplied to NACOM

Label - A standard size strip of paper marked and attached to each container or package supplied to
NACOM conveying manufacturing, purchasing, inventory, quality and tractability information.
When several containers/packages are shipped in a larger container/package, the larger
container/package and each individual container/package also needs to be labeled.

Data Identifier - One or more NACOM defined alphanumeric characters used to identify the bar
code being scanned. The data identifier follows immediately the start character of the bar code
symbol. The data identifier will not be included in the Human Readable interpretation of the bar
code symbols. The data identifiers follow the ANSI MH10.8.2-995 Standard.

Part No. - A NACOM or YAZAKI designation to the material or parts contained in the container or
               Data Identifier: P
               Format: 13 or less alphanumeric characters
               Example: 1W2345678-900

Quantity - The number of parts, weight or other standard unit of measure indicating the amount of
material/parts available in the container or package. The Human Readable text will have the
numeric and unit of measure information (if applicable). The bar code will have only the numeric
        Data Identifier: Q
        Format: 6 or less numeric characters
        Format (Human Readable): 6 or less numeric characters + unit of measure (If applicable)
        Example: Barcode data Q8
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             27
                   Human Readable 8 kg

Supplier - The NACOM identification of each production supplier.
        Data Identifier: V
        Format: 8 or less numeric characters
        Example: 00123456

P.O. No. - The NACOM purchase order.
       Data Identifier: K
       Format: PO Number-Line Number (10 or less numeric characters)
       Example: 0001234

Date - The date the supplier manufactured the products contained in the container or package.
        Data Identifier: 2D
        Format: mmddyy (month, day, year)
        Example: 021202 (February 12, 2002)

Serial - A code assigned by the supplier to track a unique group (e.g., lot or batch) of material or
parts. This information will allow tracing back to the supplier of specific processes or material used
to manufacture the specific lot or batch of material or parts. Only one serial number (or lot) will be
contained in each container or packaging.
         Data Identifier: S
         Format: 12 or less alphanumeric characters
         Example: A1234B45C-WY

Part Description - The supplier name of the material or parts shipped.
       Format: 35 or less alphanumeric characters
       Example: RES METAL FILM 560R 5% 1 W

Supplier Part No. - The supplier designation to the material or parts shipped.
        Format: 35 or less alphanumeric characters
        Example: CHR100XT-18J561

Rev Level - The current supplier revision level of the material or parts being supplied.
       Format: Three or less alphanumeric characters
       Example: 13

Supplier Name and Address - Name and address of the supplier.
        Format: Name, Address, City, State, Country
        Example: ABC Corp, 123 Apple St., Atlanta GA USA

Label Description:
Each container or package received from NACOM’s Suppliers will have a label containing the
following information:

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              28
    •   Part Number
    •   Quantity
    •   Supplier
    •   Serial
    •   P.O. Number
    •   Date
    •   Part Description
    •   Rev. Level
    •   Supplier Name and Address

This information will be printed in Human Readable and bar code formats, except the Part
Description, Supplier part number and Supplier Name and Address, which only require Human
Readable information. The label will comply with the specifications described in this document, be
approved by NACOM and conform to the standards AIAG B-1, AIAG B-3 and ANSI MH10.8.2-
1995. The following figure and description show the layout and format recommended for the
NACOM shipments.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)            29
NACOM suggests not adding any other label containing a bar code on the container/package. If a
supplier needs to add other bar code labels, these labels cannot have the same identifiers used on the
NACOM label.

When several small containers/packages are shipped in a larger container/package and the NACOM
label is too large to be attached to the smaller containers/packages, a more concise label (here called
NACOM Small Label) is recommended for these items. The NACOM Small Label will contain the
following information:

    •   Part number
    •   Quantity
    •   P.O. Number
    •   Serial Number
    •   Date
    •   Part Description
    •   Rev. Level

This information will be printed in Human Readable and bar code formats, except the Part
Description and Supplier Part Number which need only the Human Readable information. The
label will comply with the specifications described in this document and be approved by NACOM.
Figure 2 shows the label layout and format recommended for the NACOM Small Label.

NACOM AIAG Label (all values are minimum requirements)
Label Size:                                   152.4 mm x 101.6 mm (6 “ x 4 “)
Bar Code Height:                              12.7 mm (0.5 “)
Bar Code Narrow Element Width
(“X” dimension):                              0.25 mm (0.00985 “ or 9.85 mil)
Bar Code Wide/Narrow Bar Ratio:               2.5:1
Bar Code Intercharacter Gap:           0.25 mm (0.00985 “ or 9.85 mil), maximum 3 times
narrow element width.
Bar Code Symbology: 43 characters Code 39, no check digit (the characters $,/,+,% cannot be
used in label when using this symbology)
Bar Code Quiet Zone Width:                    6.4 mm (0.25 “)
Bar Code Interpretative Text Height:          4 mm (0.16 “)
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              30
Bar Code Non-Interpretative Text Height:       3mm (0.12 “)
Bar Code Printer Resolution:                   203 dpi

NACOM Small Label (all values are minimum requirements)
Label Size:                                        76.2 mm x 50.8 mm (4 “ x 2 “)
Bar Code Height:                                   5 mm (0.2 “)
Bar Code Narrow Element Width
(“X” dimension):                                   0.25 mm (0.00985 “ or 9.85 mil)
Bar Code Wide/Narrow Bar Ratio:                    2:1
Bar Code Intercharacter Gap:              0.25 mm (0.00985 “ or 9.85 mil), maximum 3 times
narrow element width.
Bar Code Symbology: Full ASCII Code 39, no check digit or 43 characters Code 39 no check
digit (the characters $,/,+,% cannot be used in label when using this symbology.
Bar Code Quiet Zone:                               3.2 mm (0.125 “)
Bar Code Interpretative Text Height:               3 mm (0.12 “)
Bar Code Non-Interpretative Height:                2 mm (0.08 “)
Bar Code Printer Resolution:                       203 dpi

ANSI MH10.8.2-1995- Data Application Identifier Standard, published by the American National
Standards Institute
AIAG B-1 –Bar Code Symbology Standard and AIAG B-2 – Shipping/Parts Identification Label
Standard, published by the Automotive Industry Action Group


Maximum pallet size should not exceed 48” long by 45” wide. The preferred and desired pallet size
is a 48” long by 45” wide standard automotive pallet. Pallet loads should not exceed 50” tall.
Suppliers must contact NACOM in advance, if parts cannot conform to this height restriction.

Pallet Type:
Pallets must provide four-way entry and must be double-faced wood construction with minimum
fork openings of 3.5”. It is recommended that single winged, double winged or notched stringer
design be used. The single winged or double winged is recommended for stretch wrapped loads.

The pallets must be constructed to withstand the normal material handling of a warehousing and
factory environment. Deck boards on the pallet should be spaced on the pallet to prevent the
containers from falling through the pallet. Corrugated pallets are NOT acceptable unless pre-
approved to be used.

Weight Requirement:
The pallet shall support a minimum of 2,500 pounds.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)           31
Securing the Loads on the Pallets:
   • All containers must be adequately secured to the pallet by either banding, stretch or shrink
       wrapped to prevent shifting in handling and in transportation.
   • Plastic banding is acceptable and is preferred for corrugated material.
   • Shrink and stretch wrap should be clear so that labels are visible.
   • All palletized loads should contain one part number unless the quantity ordered is less than
       a pallet load. A mixed load should be labeled as “MIXED LOAD” in bold letters that are
       1” or greater and located in a noticeable location. All of the individual cartons need to be
       clearly identified with the individual part number.
   • Banding should not cover the labels.
   • The gross weight of any one package shall not exceed 45 pounds. Any package over 45
       pounds must be individually skidded.
   • The unsupported bottom of a carton must be able to support its contents.
   • Cartons MUST NOT hang over the edges of the pallet.
   • Broken or cracked pallets are NOT acceptable.
   • Flanged tube containers must be stapled to the pallet prior to banding.
   • Arranging the load in a “pyramid” shape is not permitted.

Part Packaging:
Although it is the responsibility of the supplier to develop the packaging design for their products,
NACOM is interested in obtaining the most economical packaging while still maintaining part
protection and quality.

Expendable packaging shall be designed so as to limit the amount of dunnage required for cost,
housekeeping and disposal purposes.

Parts shall be packaged in like quantities with the exception of the last container, which must be
clearly marked with the different quantity. The following items must be taken into account when
determining the quantity for each container:

    •   Release quantities
    •   Container size and weight
    •   Handling of the container
    •   Labor to load and unload the container
    •   Dunnage disposal
    •   Transportation costs
    •   Safe handling
    •   Delivery requirements
    •   Removal of parts without special maneuvering
    •   Removal of parts does not cause container to fall apart

Once quantities have been established, they must remain unchanged unless approval has been
obtained from NACOM.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              32
The use of Styrofoam popcorn as a cushioning device is NOT acceptable.

The inner portion of the package closure must maintain cleanliness and ensure the contents remain
intact during transportation.

Cosmetic Parts:
The purpose of this specification is to provide some general guidelines in packaging cosmetic parts.
It is the supplier’s responsibility to develop and test the packaging to ensure that no damage will

    •   The parts are to be packaged to prevent the parts surface from being scratched or nicked
        due to transportation.
    •   It is preferred to have the parts be separated and layered in the container. This can be
        accomplished by using partitions or trays and pads between layers.
    •   Wrapping the production parts in cushioning material and placing them in a container is
        NOT acceptable. Parts must be easy to unpack.
    •   Placing parts in a cushioning material so they can be easily removed from the container is
    •   Printed parts should have the printed surface away from the packaging material to prevent
        continuous rubbing against the material during shipment.
    •   Materials used in packaging should NOT contaminate the parts or cause an adverse reaction,
        such as chloride or sulfite corrosion from corrugated materials.
    •   A test shipment of the parts is to be used to verify the packaging. Test shipments of the
        parts can be sent to the Attention of the Supplier Quality Assurance Department or the
        Packaging Engineer for evaluation unless otherwise noted.
    •   Pre-approval is required for all cosmetic parts packaging.

Electrical Parts:
The purpose of this specification is to provide some general guidelines in packaging electrical parts.
It is the supplier’s responsibility to develop and test the packaging to ensure that no damage will

    •   Electrical components are to be carefully packaged to prevent any damage to the parts or
        result in failures due to hidden damages.
    •   Parts that can be damaged by static electricity should be placed in antistatic material such as
        antistatic bags, conductive corrugated cartons, antistatic foam or conductive containers.
    •   Parts should be easily removed from the package.
    •   Electrical contacts and terminals that are easily damaged should be individually packaged,
        such as in plastic trays.
    •   The form of packaging and part orientation should be stated on the quote. The engineer
        over the project should be contacted for required delivery method since much of the
        equipment is automated and requires certain types of part orientation. Examples would be
        ammo pack, tape and reel, bulk or individually packaged.
    •   Although bulk packaging is generally more economical, it is NOT an option if the parts will
        be damaged in shipment.
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              33
    •   A test shipment of the parts is to be used to verify the packaging. Test shipments of the
        parts can be sent to the Attention of the Supplier Quality Assurance Department or the
        Packaging Engineer for evaluation unless otherwise noted.
    •   Pre-approval is required for all packaging of electrical parts.


Packaging & Labels
Delay in payment and return of invoice and/or material to the vendor can result if the requirements
below are not followed. Suppliers must be EDI compliant, and conform to AIAG labeling
requirements, bar coding, etc. Invoices and packing slips issued against purchase orders must bear
the following:

    •   Supplier name and code
    •   Complete EWD purchase order number
    •   EWD requisition and/or blanket order release number
    •   EWD ‘ship to’ address
    •   EWD plant name and/or location code
    •   EWD ‘invoice to’ address (post office box address)
    •   EWD non-production material code (item #) or production #
    •   Unit price
    •   Quantity and unit of measure
    •   Proper extension of all line items
    •   Invoice grand total
    •   Further information regarding invoice and receipt requirements can be obtained from either
        the EWD accounts payable department or the EWD shipping department.
    •   EWD accounts payable phone no. - (915) 858 - 8111
    •   EWD shipping department phone no. - (915) 858 - 9114
    •   In addition to proper labeling, the following must be observed:
    •   Two (2) packing lists must be included with shipment. One attached to exterior of shipping
        container and one inside shipping container.
    •   The words "non-production material" or "production material" must be clearly marked and
        visible on outside of shipping container.

Packing Slips
All shipments of production parts and material to EWD plants must include packing slips. The
vendor is required to provide two packing slips with each shipment. Each shipment should be
packaged and shipped by the EWD plant location. The vendor is also required to include four
packing slips with each shipment directed to a consolidation point designated by EWD. Whenever
a shipment is made by truck, one of the packing slips (or packing slip sets for multiple item
shipments) is to be enclosed in an envelope and recorded on the bill of lading with written
instructions for the carrier, or vendor’s driver as appropriate. This is done to ensure that a formal
delivery of the same nature was carried out to the EWD traffic representative upon arrival at the
EWD warehouse receiving location.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              34


ELCOM will inform the supplier what Packaging Material they are required to use. Packaging
material specifications are found in the ELCOM Packaging Material Index, which is an internal
ELCOM document.

If a sufficient material specification cannot be found for a product, ELCOM will provide the
supplier with new packaging material specifications.

Suppliers must adhere to the specification ELCOM has chosen. Any changes in specifications must
be approved by the appropriate ELCOM Engineering Department before implementation.


ELCOM will provide suppliers with labels and with the information needed for labels.

Suppliers are required to use one of the following label types dependent on packaging material.

Label #1
   This label is used only for bags.
   Placement is not specified by ELCOM.


All information required is on the ELCOM database.


 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)            35
Label #2

This label is used for boxes or plastic containers. Please see the below diagram showing its proper

                All boxes (any box size) have a specific area for box labels.


 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             36
All information required is on the ELCOM database.


    •     ELCOM decides which pallet size the supplier must use. ELCOM chooses from
          nine different pallet sizes. Suppliers may make suggestions to fit the customer’s
          special requirements.
    •     Cartons MUST NOT hang over the edge of the pallet. A 1” (2.54 cm) minimum
          clearance is required from the carton (box) to the edge of the pallet.
    •     Broken or cracked pallets are NOT acceptable under any circumstances.
    •     Arranging the load in a “pyramid” shape is NOT permitted. Cartons (boxes) must
          be uniformly placed on the top of the pallet for proper balance.
    •     If stretch wrap is used, it must be clear and the labels must be perfectly visible.
    •     The gross weight of any one package shall not exceed a gross weight of 30lbs.
          (ELCOM’s Packing Standards are designed to adhere to this weight limit)

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)           37

Instrument Division Labeling Requirements

Suppliers must use the following label:

    P a rt N u m b e r

    Q ty .                                                   C u s to m e r A d d re s s

    P a rt N a m e

    Lot N um ber                      M fg . L o t D a te    S u p p lie r L o g o

    In v o ic e N u m b e r                                   S u p p lie r A d d re s s

    P a c k a g in g A p p ro v a l   C a rto n s



Labels must be placed in all locations in the following diagrams.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)                        38

                           3                   2

                                      3            2


YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)       39


NOTE: Currently there are no packaging guidelines documented for ARNECOM.



Bar Code Symbology:
YNA-Canton suppliers must follow the bar code standard set by AIAG Shipping/Parts
Identification Label Guideline B-3 at the very minimum. If the supplier is capable of following
AIAG Trading Partner Labels Guidelines B-10, required data/title areas and any questions will need
to be worked out with YNA. Any component supplier questions should be filtered through
YAZAKI’s Buyer. The Buyer will route inquires to the proper associate at YAZAKI.

Code Configuration:
The four symbols ($, /, +, %) of the Code 39 symbology shall NOT be used on the bar code label.

Code Density and Dimensions:
Bar heights shall be 0.5” (13 mm). For each bar code symbol, the average width of the narrow
elements shall be within the range of 0.013” to 0.017” (0.33 - 0.43 mm). The ratio of the average
width of the wide elements of the average width to the narrow elements shall be 3:1, with an
allowable range of 2.8:1 to 3.2:1. The leading and trailing “quiet zone” should be at least 0.25” (6.4
mm). Intercharacter gap width should be the same as the width of the average narrow elements,
plus or minus the element width tolerance.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             40
Reflectivity and Contrast:
Reflectivity and contrast shall be measured at B900 nanometers. Symbols shall comply with all
optical specifications of AIAG B-1, and shall meet at least one of the following contrasts

    •   Print Contrast Signal: Equal to or greater than 75%
    •   Minimum Reflectance Difference: Equal to or greater than 37.5%
    •   ANSI Print Quality Grade shall not fall below a symbol grade of 1.5 at the customer
        location, and a 2.5 (or higher) grade should be maintained at the time of printing.

Data Areas and Titles:
There are three required “data areas” for each bar code label which must be displayed in both
Human Readable and barcode format: Part Number (Yazaki Part Number) data area, Quantity data
area, and Serial Number data area.

Data areas should be separated by thin horizontal lines and should contain their respective titles in
the upper left-hand corner. Thin vertical horizontal lines should be used to separate the data areas.
If vertical lines are not used, data shall be spaced adequately to provide easy scanning/readability.

Maximum Length of bar code string should NOT exceed 5.5” (140 mm).

Titles shall be printed in 0.1” (2.5 mm) high letters.

Human Readable information is recommended to show any zeros (0) with a slash mark (/) through
it to differentiate from alphabetical O’s.

Data Identifiers:
A Data Identifier shall be used as defined in the current ANSI FACT-1 Data Identifier Directory
Standard. A Data Identifier immediately follows the start character of the bar code symbol and is
used to identify the information to follow. More is discussed below.

Part Number Area:
   • Required: Bar code and Human Readable Formats.
   • Part Number shall be a Yazaki Part Number.
   • Human Readable Part Number characters shall be bold and a minimum 0.5” (13 mm) high.
   • The bar code symbol for the Part Number shall be directly below the Human Readable
       characters, a minimum of 0.5” (13 mm) high and shall contain the Data Identifier (P). Long
       Part Numbers shall continue to be in the Special Data Area.

Quantity Area:
   • Required: Bar code and Human Readable Formats.
   • Human Readable quantity characters shall be bold and a minimum of 0.5” (13 mm) high.
   • The bar code symbol for the quantity shall be directly below the Human Readable
       characters, a minimum of 0.5” (13 mm) high and shall contain the Data Identifier (Q).
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)               41
    •   The unit of measure is assumed to be pieces unless otherwise agreed between YAZAKI and
        the supplier. When the unit of measure is pieces, no notation of the unit of measure is
        required. When the unit of measure is NOT pieces, (pounds, feet, etc.) it should be noted in
        Human Readable form and shall be a minimum of 0.2” (5 mm) high. The unit of measure
        shall NOT be bar coded.

Supplier Number Area:
   • Required: Human Readable Format, Bar code Format is Strongly Recommended.
   • The Human Readable supplier number characters shall be a minimum of 0.2” (5 mm) high.
   • The bar code symbol for the supplier number shall be directly below the Human Readable
       characters, shall be a minimum of 0.5” (13 mm) high and shall contain the Data Identifier

Serial Number Area:
    • Required: Bar code and Human Readable Formats.
    • Each shipping container or pack shall contain a unique serial number (not necessarily in
        sequential order) assigned by the supplier, NOT YAZAKI. This number shall NOT be
        repeated to YAZAKI within a twelve month period. The Human Readable serial number
        characters shall be a minimum of 0.2” (5 mm) high.
    • The bar code symbol for the serial number shall be directly below the Human Readable
        characters and shall be a minimum of 0.2” (5 mm) high.
    • The bar code symbol for the serial number shall be directly below the Human Readable
        characters, shall be a minimum of 0.5” (13 mm) high and shall contain the appropriate Data
        Identifier (S) Individual Pack, (4S)Master Load, (5S) and Mixed Load.
    • The maximum length of the serial number shall NOT exceed nine characters plus the Data

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)            42
Supplier Name:
The supplier Name, City, State and Zip Code shall be directly below the serial number bar code
symbol and should be 0.1” (2.5 mm) high.

Special Data Area:
   • This area may be used for any additional information needed by industry users, but not
        specifically detailed in this document.
   • If the OEM number is available, the supplier should place the OEM number in the “special
        data area” of the label. The OEM part number should be displayed in Human Readable
        Format. Bar code and Human Readable Format is acceptable.
   • The Special Data Area may also be used for the Supplier part number in Human Readable
        Format or in Human Readable and bar code format.
   • If a second line for long part numbers is required, the continuation of the part number shall
        be located in the upper one inch of this area. The Human Readable characters shall be bold
        and a minimum of 0.5” (13 mm) high. The continuation of the Part Number Bar code shall
        be 0.5” (13 mm) high and contain the Data Identifier (C).
   • It is strongly recommended that any bar code symbol in the Special Data Area be located in
        such a manner as to minimize horizontal alignment with the other bar code symbols to
        reduce the possibility of a scanner reading more than one symbol on the same horizontal

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)            43
Electronic Data Interchange (EDI) Coordination:
The electronic transmission of data is covered by AIAG conventions. When EDI is issued in
conjunction with the bar code label, the data areas shall be coordinated.

Master and Mixed Load Labels

Multiple, Common Item Packs – Master Label:
If and when YAZAKI requires that the total content of a multiple pack of common items be
identified, a Master Label shall be used. The total common item pack should be identified with a
label in a location specified by YAZAKI. Master Labels should be placed in such a manner that
when the pack is broken, the Master Label is discarded.
(i.e. hang the Master Label from the banding or attach it to stretch wrap) At the top of this label, the
heading “MASTER LABEL” should be printed in 1” (25.4 mm) high letters. The data areas of the
label shall conform to the specifications shown on the 4 by 6.5 barcode label. The quantity on the
Master Label shall be the total in all sub-packs on the unit load/pallet load.

Mixed Item Loads – Mixed Load Label:
When YAZAKI requires that mixed item load be identified, a Mixed Load Label shall be used and
should be in a location specified by YAZAKI. Mixed Load Labels should be placed in such a
manner that when the pack is broken, the Mix Load Label is discarded. At the top of this label, the
heading “MIXED LOAD” should be printed in 1” (25.4 mm) high letters.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)               44
Label Location:
Illustrations of the most common shipping packs and recommended label locations are shown on
pages 20 and 21.

In most cases, two labels are specified. The bottom edge of the label should be parallel to the base
of the package/container. To facilitate automated scanning of the barcode, the top edge of the label,
where possible, should be 20” (508 mm) from the bottom of the container. Strapping and taping
should NOT obstruct the label. If the label cannot be affixed to the package/container, special
arrangements will be made between YAZAKI and the Supplier.

Label Protection:
Label protection against moisture, weathering, abrasion, etc., may be required in harsh
environments and is encouraged where practical. Sprays, window envelopes and pouches are
examples of possible protection methods. Care must be taken to ensure the protected labels meet
reflectivity and contrast requirements and are capable of being scanned with contact and non-
contact devices.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             45
YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)   46
YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)   47
Quality Assurance Requirements:
Suppliers have a responsibility to provide bar code labels that meet YAZAKI and industry standards.
Used pallets and cartons must maintain their integrity from supplier to final destination point.

Failure to comply with these guidelines will affect your quality and performance rating, which in
turn will affect future sourcing.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             48

Raw Material Packaging Specification Sheet - Pancake Material
Coil Size:
        Outside diameter:                   42”
        Inside diameter:            16”
        Maximum total skid weight
        (NOT to exceed):                    3,500 lbs
        Maximum skid height:        28”
        Maximum welds per coil:             0

   • If spacers are used, coils must have a minimum of three (3) bands spaced evenly around the
   • See picture 1 for band configuration.
   • See picture 2 for spacer configuration.
   • Spacers can be wood wrapped with paper, wood wrapped with plastic, corrugated plastic,
       cardboard sheets, or paper.
   • Coils are to be as large as possible within the stated limits.
   • All material must have a sample strip affixed to the outside of the protective wrap. Sample
       strips must be 12”-15” long
   • In the case of returnable packaging, all previous mill sheets must be removed prior to
       shipment to CCC. Only the hazardous material warnings and the raw material vendor’s
       mill sheet can be placed on the material packaging.
   • Materials are to be packaged so that they will be protected from physical and environmental
   • Materials must be clearly marked on the outside of the package with the manufacturer’s
       name, lot number, finish size, material weight, tare weight, CCC order number, and
       hazardous material warnings.
   • A material certification report is required for each lot and must accompany each shipment.
       A material safety data sheet must be supplied as required by law. Evidence of statistical
       process control must be supplied upon request.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)           49
Raw Material Packaging Specification Sheet

    •   Reels are to be as large as possible within the stated limits.
    •   The number of welds must be clearly marked.
    •   All materials must have a sample strip affixed to the outside of the protective wrap.
        Sample strips must be 12” -15” long.
    •   In the case of returnable packaging, all previous mill sheets must be removed prior to
        shipment to CCC. Only the hazardous material warnings and the raw material vendor’s
        mill sheet can be placed on the material packaging.
    •   Materials are to be packaged so that they will be protected from physical and
        environmental damage.
    •   Material must be clearly marked on the outside of the package with the manufacturer’s
        name, lot number, finish size, material weight, tare weight, CCC order number and
        hazardous material warnings.
    •   A material certification report is required for each lot and must accompany each shipment.
        A material safety data sheet must be supplied as required by law. Evidence of statistical
        process control must be supplied upon request.
    •   Center of winding must remain at least ½” below the flange diameter.

Raw Material Specification Weld and End of Strip Identification – For TWR and Pancake

    •   Photosensitive material shall be an “opaque black dye”
        Type and source is:
               Opaque Black #1212
               ITW Devcon Fluid Products Group
               Danvers, Maryland 01932, 1-800-445-0268
               Irvine, California 92714, 7-800-854-3260
               St Louis, Missouri 63114, 1-314-423-0100
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)           50
   •   The dye is to be dry, prior to winding, so as to avoid transfer to other surfaces.
   •   A diagonal weld is preferred.
   •   A stencil is to be used to prevent overspray when applying the dye.
   •   Dye must cover the weld completely.

YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              51

The following description of Yazaki’s accounts payables practices is provided for informational
purposes only. We reserve the right to change these practices at any time with or without notice.
Nothing herein alters the terms and conditions of purchase which are as set forth in Yazaki’s
standard purchase orders.

Yazaki has two primary accounts payables practices. YNA-Canton uses the ERS system described
in the Canton section below. All other affiliates use the traditional accounts payables system
described in the Others section below.


Yazaki North America, Inc. Evaluated Receipts Settlement (ERS) Payment System:

ERS Payment System:
Yazaki North America, Inc., (YNA-Canton) processes payments for component inventory based on
an Evaluated Receipts Settlement (ERS) system. Payments are based upon YNA’s agreed purchase
order price multiplied by the quantity of parts received. Our Accounts Payable program will
calculate the due date according to YNA’s agreed upon payment terms. This system enables
Accounts Payable to process payments on a timely basis and eliminates the need to receive the
supplier’s invoice.

Applicable Transactions / Payment Reference:
The ERS system is only applicable to parts issued on a release or on a spot buy order. It is
mandatory that an Advanced Shipping Notice (ASN) be sent for every shipment. Contact the
Component Procurement and Supply department for more information on the ASN. There is a
field available in both the EDI file and the Supply Chain Management Web Tool to input an invoice
number. If the ASN is in the form of a fax, (applicable to Spot Buy Orders only) it should also
include an invoice number. This field will populate the invoice number field on the Accounts
Payable voucher and appear on the remittance advice when payment is made. If this field is left
blank or missing from the ASN, the YNA generated ASN number will be used as the invoice
number – which may cause supplier difficulty when applying for our payment. Supplier must
ensure this field is filled with an appropriate reference when applying payments to Yazaki’s account.

Material returns will be processed using a Negative Quantity Purchase Order. This document will
be processed via the ERS system, which will be reflected as a deduction on supplier check. The
invoice number reference will be the Returned Material Authorization (RMA) number assigned to
the transaction.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             52
ASN Discrepancies:
Any discrepancies noted between the Advanced Shipping Notice (ASN) information and the stock
receipt data undergo an extensive investigation before the receipt record is updated in our system.
Once the receipt is updated, the related Accounts Payable voucher is created.

Payment Remittance/Discrepancies:
YNA processes check runs on a weekly basis. The Accounts Payable department will provide a
report with every check, listing all records updated to Accounts Payable. This report titled
“Records Processed for ERS” includes an invoice number, part number, quantity received and a
purchase order price. This report should be reviewed and used as a tool to reconcile payment

If a supplier receives a payment that is disputable, the supplier has up to 60 days from the check
date to dispute the payment. Disputes filed after 60 days will not be processed. Please contact the
ASN Controller if the discrepancy is related to quantity or contact the Purchasing Department if it is
related to pricing. Supplier must complete the “Payment Discrepancy Form” with the appropriate
information to assist in investigations. Supplier must list the invoice number(s) in question and the
part number for the discrepancy along with the following information:

If there is a discrepancy related to the quantity of parts being paid, list the quantity YNA confirmed
for payment, the quantity expected for payment, the variance (in pieces) and the total variance
(dollar value extension). Supplier should send the completed form and proof of delivery to the ASN
Controller for shipments to Canton or to the Branch Office Production Controller for shipments to
the branch offices.
If there is a discrepancy related to pricing, list the price YNA confirmed for payment, the price
expected, the variance in price per piece and the total variance extension against the quantity of
parts shipped. Supplier should send the completed form and a copy of the effective purchase order
to the Purchasing Department.

Non-Product Charges:
All charges for non-production items (freight, tooling, copper fluctuations, etc.) must be invoiced
separately. Invoices should be sent to:

                Yazaki North America, Inc.
                Attn: Accounts Payable 46W
                6801 Haggerty Rd.
                Canton, MI 48187

Please include shipment reference and detailed part information where applicable. These charges
will be routed through a manual authorization process before payment is made.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             53
                Payment Terms:
                Payment terms are as set forth in YNA’s purchase orders – typically net 30th prox. Checks are cut
                every Thursday afternoon, and are mailed out on Friday afternoon or Monday morning.

                                                                    Canton Process Flow

                                            Internet                                                                Internet


                                                             I                                                                         Remittance Advice

                        Receive Advanced
                        Ship Notice (ASN)

                                                                                                                                           Check Cut

                                                                                                    ASN Files
                  $                          $          ASN Files       $                      $   Invoice Number              $           Evaluated
Blanket Order                                          Invoice Number
                          ASN Records                                            ASN Records       Part Numbers                             Receipts
  (Purchase                                            Part Numbers
                            Created                                                Updated         Qty Stocked                             Settlement
    Cost)                                              Qty In Transit
                                                                                                   Cost                                  (Vouchers Created)
                                                                                                   Ready for ERS

                         Stock Received

                                                                                                                                   Flow of Cost Info

                                                                                                                                   Flow of Stock Info


                The traditional accounts payables procedure goes as follows:
                   1. Issue PO
                   2. Receive item(s)
                   3. Receipt forwarded to A/P
                   4. Invoice matched with receipt
                   5. Invoice processed for payment
                 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)                        54
    6. Check issued
    7. Check signed by the authorized individual (1 or 2 individuals depending on amount of
    8. Check mailed

CCC Payment Terms:
Payment terms are as set forth in the CCC purchase order typically Net 30 and checks are cut twice
a month.

EWD Payment Terms:
Payment terms are as set forth in the EWD purchase order typically Net 30. Checks are cut twice a
week and are paid on the 30th due to payment terms.

Elcom Payment Terms:
Payment terms are as set forth in the Elcom purchase order typically Net 30. Checks are cut every
other Friday.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)            55

YNA’s Diversity Sourcing Group is staffed with three YNA Purchasing associates: a Manager,
Assistant, and Buyer. Currently, the most of our minority suppliers provide YNA with wiring
harnesses. Our Purchasing Department is actively seeking minority suppliers that provide high
quality raw materials, indirect materials, electronics, and design components at a competitive
market price.
Raw materials include:
    • Metals and resins.
Indirect materials include:
    • MRO-Maintenance, Repair, and Operations.
    • Transportation, customs, and warehousing.
    • Supplies; software, office supplies, and office furniture.
    • Communications; computers, telephones, and cell phones.
    • Services; temporary services, travel, and education.
    • Leasing services for equipment.
Electronics include:
    • Relays, PC boards, fuses, junction blocks
Design components include:
    • Plastics; injection molded, extruded, fasteners, insert molding.
    • Bulk material; wire, tape, tubing, sleeving, compounds, metal.
    • Connector systems; connectors, terminals.

Yazaki North America will be recognized by its employees, community, and industry peers as a
leader in the development of minority owned businesses.

Yazaki North America will find unique and innovative ways of providing minority owned
companies ways to be competitive in the industry while enhancing a mutually beneficial
relationship. To accomplish this mission, YNA’s Diversity Sourcing Group shall:

    •   Provide equal access to procurement opportunities.
    •   Provide supplier diversity awareness to YNA associates.
    •   Offer proactive business process integrated in all functions.
    •   Facilitate/encourage economic development.
    •   Coordinate all MBE activities.

Who qualifies?
Minority owned companies that are certified by either the National Minority Supplier Development
Council (NMSDC). or any accredited Regional Council of NMSDC. For further details on
qualifications and certification contact:

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             56
National Minority Supplier Development Council
1040 Avenue of the Americas, Second Floor
New York, NY 10018

Minority suppliers will be evaluated on the same criteria as other suppliers. For more information
on how you can become a minority supplier, please contact our Manager of Diversity Sourcing.
Please refer to our Contact section.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)             57

Yazaki North America Inc. established the Indirect Purchasing department in April, 2001. The
main task for this group is to identify and strategically source major “indirect” categories on a
national level for YNA and YNA’s North American affiliates. YNA defines indirect goods and
services as any item that is purchased but not incorporated into the products we sell.
Examples are as follows:
    • MRO-Maintenance, Repair, and Operations
    • Transportation, customs, and warehousing
    • Supplies: software, office supplies, and office furniture
    • Communications: computers, telephones, and cell phones
    • Services: temporary services, travel, and education
    • Leasing services for equipment

Due to the decentralized environment for the purchasing of these goods and services, YNA has
established a centralized strategic sourcing process which is headed up by the Indirect Purchasing
Department in Canton, MI. This process is based on a team structure, where a Buyer leads both the
process and a team of local category experts from each of our North American offices. The
objective is to gather current spend information, leverage the volumes, put that information out for
bid, and select a national supplier that can meet our service requirements as well as improve our
pricing. Once sourcing is complete, the day-to-day purchases (i.e. ordering, issuing of P.O.s, and
expediting) are handled by the local offices. The Indirect Purchasing Department is responsible to
track savings, monitor performance, address any new supplier requests or bid information, and
maintain the Approved Supplier List. Sourcing is generally done once a year and in most cases no
suppliers will be added outside of the yearly sourcing process.

informational interested indirect suppliers should contact the Manager of Indirect Purchasing.
Please refer to the Contact section.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              58

This section documents the required environmental standards for products and services purchased
from suppliers and furthers Yazaki’s overall satisfaction expectations.

The Yazaki Corporation group recognizes the preservation of the global environment and its
resources as a serious concern common to all mankind. We will strive to make the world a better
place and work to enrich our societies through environmentally sound business activities,
environmental awareness and individual contribution which are in line with our fundamental
business policies.


               •   Implement and maintain a Green Purchasing program
                      o Observe and comply with all applicable local, state, and national
                         environmental laws and regulations.
                      o Product and process designs have environmental concerns addressed.
                      o Reduce the environmental burden in all aspects of development,
                         production, sales, logistics, and service.
                      o Educate employees in environmental awareness and foster proactive
                         participation in activities which preserve the environment
                      o Become proactive participants in local and state environmental

               •   Attain, and maintain, certification to the ISO14001 environmental standard.
               •   Initiate a Green Purchasing program with your suppliers.

Supplier Requirements

               •   Report material content of all parts sold to Yazaki utilizing IMDS or YEMR
                      o Identify and discontinue the use of all banned substances from your
                          products and processes as outlined in the EU ELV directive.
                          DETAIL ON IMDS, YEMR, AND EU ELV.

   • Clean corporate citizens benefit from a reputation in the industry as being part of the
        environmental solution rather than a contributor to the problem.
   • Suppliers that embrace these expectations and requirements will create a strong partnership
        with YNA and Yazaki Corporation and may gain preferential consideration for new and
        additional business.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)           59

This is the process to use when a supplier needs to communicate and request that a change occur on a part
which they supply to Yazaki. The types of changes might include product change, material change, new sub-
supplier, new manufacturing process, tool move, or adding a capacity tool.

Submit a completed Supplier Initiated Change Request form to your Commodity Purchasing contact.
Commodity Purchasing will inform you if the request is accepted for processing or if more information is
needed. An SICR tracking number will be assigned by Yazaki.

The SICR form lists the documentation required to process your request. Submitting your request with as
much information as possible will help us to approve your request.

The guideline page on the SICR form indicates the persons or departments which need to approve your
request. As soon as necessary approvals are obtained, we will send you the approved SICR. An approved
SICR will be needed when you submit your PPAP package.

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        1.       Scope and Acceptance.
                 (a)     These General Terms and Conditions of Purchase (the “Terms and
Conditions”), together with all documents specifically referenced herein or otherwise issued by
Buyer (whether in writing or electronically), as those documents may be amended from time to time,
represent the entire agreement between Buyer and Seller (the “Order”) for the materials ordered
and any related services (whether or not ancillary to a sale of goods) (collectively, “Goods”). These
Terms and Conditions will apply to an Order except as expressly modified or waived on the face of
an Order. Captions in these Terms and Conditions are for convenience only. These Terms and
Conditions constitute the parties’ contractual agreement and supersede any previous oral or written
representations, including but not limited to provisions in Seller’s quotations, proposals,
acknowledgments, invoices or other documents. Any references in an Order to Seller’s quotation or
other form of offer for the Goods is for information only and Buyer hereby rejects all terms and
conditions proposed by Seller therein.
                 (b)     Seller’s written acknowledgement of an Order, commencement of work on
the Goods, or delivery of any Goods hereunder will constitute its acceptance of these Terms and
Conditions. Without Buyer’s written consent, no additional or different terms proposed by Seller in
its acknowledgement will be effective to modify an Order and Seller will be deemed to have
accepted an Order without such modifications. The terms of an Order may not be varied or
modified in any manner, unless in a subsequent writing signed by an authorized representative of
Buyer. Any stenographic or clerical errors are subject to correction by Buyer. Additional or different
terms or any attempt by Seller to vary in any degree any of the terms of an Order shall be deemed
material and are expressly objected to and rejected.
         2.      Prices and Payment. The Goods shall be furnished at the prices set forth in an
Order. Unless otherwise specified in an Order, all prices shall be FOB destination (place of
delivery). Seller warrants that the prices in an Order shall be complete, and no additional charges
of any type shall be added without Buyer’s express written consent, including but not limited to,
charges for shipping, packaging, labeling, custom duties, taxes, storage, insurance, boxing and
crating. Seller will promptly submit correct and complete invoices or other agreed billing
communications with appropriate supporting documentation and other information reasonably
required by Buyer after delivery of the Goods, and Buyer may withhold payment until a correct and
complete invoice or other required information is received and verified. Seller will accept payment
by check or other cash equivalent, including electronic funds transfer. Buyer will pay Seller in the
currency specified in an Order or, if none is specified, in the currency of Seller’s shipping or service
location. All cash discounts shall be computed from the date of receipt by Buyer of a final invoice or
receipt of the Goods, whichever occurs later. Cash discounts shall be based on the full amount of
invoice, less freight charges and taxes if itemized separately on the invoice. Invoices bearing the
Order number must be received by Buyer ten (10) days prior to the cash discount payment date.
Delay in receiving invoices or Goods will be considered good cause for withholding payment without
losing cash discount privileges. Buyer shall have the right after consultation with Seller and on no
less than five (5) days prior written notice to Seller, to reduce and set-off against amounts payable
under an Order any indebtedness or other claim which Buyer, its parent, subsidiaries or affiliates,
may have against Seller, its parent, subsidiaries and affiliates, under an order or any other
agreement between the referenced parties.
         3.      Blanket Order. If an Order is identified as a “Blanket” Order or in some other
manner references a specific quantity of Goods to be purchased, Seller hereby acknowledges that
the quantities specified and delivery dates listed in such “Blanket” Order are estimated quantities
and delivery dates. The purchase of the Goods specified is expressly contingent upon the issuance
of a release by Buyer identifying the Goods to be purchased and providing delivery directions.
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When an Order is identified as a “Blanket” Order or deliveries are otherwise specified to be in
accordance with Buyer’s written releases, Seller shall not fabricate or assemble any Goods nor
procure required materials, nor ship any Goods except to the extent authorized by such written
releases or provisions of an Order specifying minimum fabrication and delivery quantities.
Forecasts are not releases and may not be relied upon by Buyer. Releases are included in the term
“Order”. By accepting a Blanket Order, Seller agrees to accept all releases issued by Buyer
         4.        Samples and Specifications.
(a)      Seller, at its expense, shall fabricate from production tooling and processes and furnish to
Buyer the number of samples specified on the face of an Order, or if none is specified, a reasonable
number of samples. Seller shall inspect such samples before delivery and shall certify inspection
results in the manner requested by Buyer.
(b)      Buyer may from time to time, by way of written notice to Seller, make reasonable changes
to the drawings, specifications, materials, packaging, testing or quality control, quantity, time or
method of delivery or shipment, and other terms of an Order. At Seller’s request with appropriate
supporting documentation, the parties will agree upon an equitable adjustment to price and times
for performance as a result of Buyer’s changes; provided, that Seller makes demand for such
adjustment and delivers all supporting documentation to Buyer within fifteen (15) days of Seller’s
receipt of Buyer’s notice of change. Time is of the essence for such demand. If Seller does not
provide timely notice to Buyer that a requested change may result in a difference in price or time for
performance, the parties agree that Buyer’s requested change did not affect the price or time for
performance. The price shall be adjusted solely to compensate Seller for increased direct costs
necessarily incurred as a result of the changes. Seller may not substitute materials or change the
specifications of the Goods in any way without written authorization from Buyer.
(c)      Seller will not make any change in the quantities, drawings, specifications, testing or quality
control, packing, shipment, scope of work, delivery schedules and other terms of an Order unless
done pursuant to Buyer’s instructions or with Buyer’s written approval.
         5.        Seller’s Quality and Development.
                   (a)     Seller shall, at its sole cost and expense, participate in, and abide by the
terms of, any supplier quality and development programs that are established by Buyer and Buyer’s
customers from time to time, including ISO9001, ISO-TS16949 and any amendments, supplements
and/or successor programs thereto.
                   (b)     Seller agrees to abide by the terms of Buyer’s supplier manuals as such
manuals are amended from time to time.
                   (c)     Seller shall provide to Buyer all quality records and documents required by
Buyer and Buyer’s customers, including but not limited to documents required under Buyer’s PPAP
program, Process FMEA, Design FMEA, DVP&R documentation, and documents validating Seller’s
validation of all tooling used in the production of the Goods.
         6.        Inspection.
                   (a)     Buyer may, upon reasonable advance notice to Seller, inspect the facility,
supplies, materials, tooling, equipment, and production processes, and subject to Seller’s prior
written approval, conduct testing at Seller’s premises for the sole purpose of verifying Seller’s
performance under an Order. Seller may restrict Buyer’s access as necessary to protect proprietary
information and may require appropriate indemnification and releases. Buyer is not required to
inspect the Goods and no inspection or failure to inspect will reduce or alter Seller’s obligations
under an Order.
(b)      All Goods (which term includes without limitation raw materials, components, intermediate
assemblies, end products and accessories such as tooling) shall be received subject to the right of
inspection and rejection by Buyer and its customer. Notwithstanding payment or prior inspection,
Buyer, in addition to any other remedies that it may have pursuant to law or equity, at its option,

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may reject and return or retain and correct, Goods that fail to conform to the requirements of an
Order even if the nonconformity does not become apparent until the manufacturing or processing
stage. If Buyer elects to correct the Goods, it will consult with Seller on the method of correction.
Seller will reimburse Buyer for all reasonable expenses resulting from rejection or correction.
Goods rejected shall be removed by Seller at its expense and at its risk.             Goods returned as
defective or nonconforming shall not be returned to Buyer or replaced without Buyer’s written
approval. Furthermore, Buyer may, at its option, reduce the quantity of Goods Buyer may be
obligated to purchase by the quantity of Goods returned to Seller hereunder. Payment for Goods
prior to inspection shall not constitute an acceptance thereof. Acceptance, whether or not it has
been revoked, shall not release Seller’s responsibility for latent defects, non-conformities, warranty,
or other claims. Nothing in these Terms and Conditions shall relieve Seller from the obligation of
testing, inspection and quality control.
(c)      If any inspection or test is made on the premises of Seller or its supplier, Seller, without
additional charge, shall provide all reasonable facilities and assistance for the safety and
convenience of the inspectors in the performance of their duties. All inspections and tests on the
premises of Seller or its supplier shall be performed in such a manner so as to not unduly delay
(d)      Seller shall provide and maintain an inspection and process control system acceptable to
Buyer and its customer covering the Goods. Records of all inspection work performed by Seller as
to a particular Good shall be kept complete, separate and available to Buyer and its customer
during the performance of an Order and for such longer periods as may be specified in an Order,
but not less than ten (10) years after the last delivery of the particular Good to Buyer.
         7.       Safe Use and Maximum Life of the Goods.
                  (a)      Seller shall provide to Buyer in English all appropriate installation, operation
and maintenance manuals to maximize the useful life and performance of the Goods. Seller shall
also provide Buyer with any specific warnings or instructions regarding the safe installation,
operation and maintenance of the Goods, which should be reasonably provided to the ultimate
users of the Goods.
                  (b)      Prior to and with the shipment of the Goods, Seller shall furnish to Buyer
sufficient warning and notice in writing (including appropriate labels on the Goods, containers and
packing) of any hazardous material that is an ingredient or a part of the Goods, together with such
special handling instructions as may be necessary to advise carriers, Buyer, and their respective
employees of how to exercise that measure of care and precaution that will prevent bodily injury or
property damage in the handling, transportation, processing, use or disposal of the Goods,
containers and packing shipped to Buyer. If requested by Buyer, Seller shall promptly furnish to
Buyer in such form and detail as Buyer may direct (i) a list of all ingredients in the Goods; (ii) the
amount of such ingredients; (iii) information concerning any changes in or additions to such
ingredients; and (iv) all product, material and substance information required by Buyer in connection
with Buyer’s efforts to comply with the EU End-of-Life Directive and any other environmental
material reporting directives issued by Buyer’s customers. Seller shall provide Material Safety Data
Sheets for the Goods as required by law or otherwise requested by Buyer. Without limiting the
scope of its indemnification obligations elsewhere in these Terms and Conditions, Seller specifically
agrees to indemnify and hold Buyer harmless from any costs, fines, expenses, or other damages
incurred by Buyer as a result of Seller’s failure to provide complete and accurate information under
this section.
8.      Compliance with Laws; Employment/Business Practices. Seller and the Goods
shall comply with all applicable laws, rules, regulations, orders, conventions, ordinances or
standards of the country(ies) of destination or that relate to the manufacture, labeling,
transportation, importation, exportation, licensing, approval or certification of the goods or

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services, including, but not limited to those relating to environmental matters, data
protection and privacy, wages, hours, and conditions of employment, subcontractor
selection, discrimination, occupational health/safety and motor vehicle safety. Seller
further represents that neither Seller nor any of its subcontractors will utilize child, slave,
prisoner or any other form of forced or involuntary labor, or engage in abusive employment
or corrupt business practices, in the supply of goods or provision of services under this
contract. At Buyer’s request, Seller shall certify in writing its compliance with the
foregoing. Seller shall indemnify and hold Buyer harmless from and against any liability
claims, demands or expenses (including attorney’s or other professional fees) arising from
or relating to Seller’s noncompliance.
9.       Shipping.         Unless otherwise provided in an Order: (i) all shipping, drayage,
demurrage, storage, insurance, packing and related charges shall be paid by Seller; (ii) all Goods
shall be packed, marked and shipped in accordance with the requirements of the common carriers
in a manner to secure the lowest transportation costs consistent with the requirements hereof; (iii)
packing slips identifying the purchase order number, release number and part number must
accompany each shipment in a package marked “Packing slip enclosed”; (iv) Seller shall mark each
package with the Order number, and where multiple packages comprise a single shipment each
package shall be shown on packing slips, bills of lading, and invoices; (v) in the event that Buyer is
obligated to pay for shipping, Seller shall be responsible for all extra charges incurred because of
Seller’s failure to follow Buyer’s shipping instructions, including those related to delivery schedules,
whether or not Seller’s liability for general damages is excused under other provisions of an Order;
(v) Seller shall describe the Goods on the bill of lading or other shipping receipt and route
shipments in accordance with instructions issued by Buyer; (vi) Seller shall mark Goods, packaging,
and packing as instructed by Buyer and in accordance with the standards of the Uniform
Commercial Code (all such markings shall be in English bar code); (vii) Seller shall pay all express
and other charges necessary to expedite delivery to enable Seller to meet the delivery schedule;
(viii) Seller shall ship all late shipments by express or other priority methods of delivery at its
expense; (ix) Seller shall be responsible for the replacement cost of any reusable delivery cartons
or other materials delivered to Seller; (x) all packaging and documentation shall comply with the law
of all countries of shipment, routing, and destination; and (xi) Seller shall issue to Buyer advance
shipping notices as requested by Buyer. If Seller is required to use Buyer’s returnable packaging,
Seller will be responsible for maintaining, cleaning and returning the returnable packaging.
         10.      Delivery. Time and quantity are of the essence in an Order. Delivery must be on
the date indicated, if any, and otherwise as requested by Buyer. If delivery is “A.S.A.P.” with a date
indicated therewith, delivery must be on or before that date. If an Order is identified as a “Blanket”
Order or if no delivery schedule is provided, deliveries are to be made only in quantities and at
times specified in releases or other instructions from Buyer. Buyer shall have no liability for payment
of Goods delivered to Buyer which are in excess of quantities specified in an Order or in releases
and Buyer may return overshipments to Seller at Seller’s expense for all packing, handling, sorting
and transportation charges. Buyer may, from time to time, change delivery schedules or direct
temporary suspension of scheduled shipments. Buyer will be responsible for additional costs of
expedited or other special transportation that Buyer may require as a result of changes to its firm
releases or delivery schedules to the extent that (i) such changes were not caused by Seller, and (ii)
Buyer can recover such costs from its own customers.
         11.      Electronic Data Interchange. Seller shall, at Buyer’s request, connect to Buyer’s
electronic data interchange (“EDI”) system. All transactions initiated under EDI shall be governed
by the terms contained in such transmissions. Notwithstanding the foregoing, the terms and
conditions which may be a part of Buyer’s EDI system shall be supplemented by these Terms and

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Conditions. A transmission shall be deemed signed if it contains the name of the individual
authorizing the transaction and is otherwise in accordance with Buyer’s EDI system.
          12.     Risk of Loss and Title to Goods.
                  (a)      All shipments are at the risk of Seller, regardless of the F.O.B. point. If
Buyer affirmatively assumes risk of loss in writing, Seller for the benefit of Buyer must provide all
risk casualty insurance. Seller must pay the cost of any such insurance unless otherwise agreed to
in writing by Buyer. Under no condition will the risk of loss be that of Buyer unless such insurance
is provided. Transfer of title shall not govern risk of loss except where expressly agreed to in writing
by Buyer.
                  (b)      Title to all Goods shall vest in Buyer on the date of their identification to an
Order. Identification shall occur not later than the date Seller acquires or begins manufacture of the
          13.     Confidentiality.
                  (a)      At all times prior to, during, and after an Order, Seller shall (i) maintain the
confidentiality of any information disclosed by Buyer or any of its parents, subsidiaries, affiliates,
customers, and contractors, whether or not identified as “confidential” upon disclosure (“Confidential
Information”); (ii) not disclose or permit the disclosure of any Confidential Information to any person
other than its employees for whom such knowledge is essential for performance of an Order; and
(iii) not use Confidential Information except for performance of an Order. Seller shall immediately
notify Buyer of any disclosure of any Confidential Information that is not permitted by these Terms
and Conditions or other misuse of any Confidential Information or breach of these Terms and
Conditions. Without limiting the direct liability of Seller’s employees and others who may have
received Confidential Information directly or indirectly from Seller, Seller shall be responsible for the
disclosure or other misuse of Confidential Information by Seller’s employees and others, and Seller
shall immediately take such steps as may be necessary to terminate any continuing disclosure or
misuse by any Seller’s employees and others of which Seller becomes aware. Buyer makes no
representation or warranty of any kind, express or implied, with respect to any Confidential
Information. Buyer may, at its sole discretion, elect at any time, by written notice to Seller, to
terminate Seller’s further use of Confidential Information for any purpose. Upon receipt of such
notice, Seller shall, and shall cause Seller’s employees to, promptly cease all further use of
Confidential Information, return to Buyer all physical materials containing Confidential Information,
whether the materials were originally provided by Buyer or copied or otherwise prepared by Seller
or any Seller’s employee, and erase or otherwise destroy any Confidential Information kept by
Seller or any Seller’s employee in electronic or other non-physical form. Such termination by Buyer
shall not affect Seller’s continuing obligations in this subsection.
(b)       Any information disclosed by Seller or on its behalf to Buyer or any of its parents,
subsidiaries, affiliates, and contractors in any way related to an Order, shall not be deemed to be
confidential or proprietary information, unless otherwise specifically agreed to in writing by Buyer.

        14.      Intellectual Property Rights.
                 (a)      If Buyer furnishes the design for the Goods or requires Seller to prepare a
design for the Goods, then Buyer will own all intellectual property rights relating to such design. If
Seller furnishes a pre-existing design for the Goods, then Seller will continue to own all intellectual
property rights relating to such design. In the latter event, Seller hereby grants Buyer a permanent,
paid-up, nonexclusive, worldwide, royalty-free license, with a right to sublicense to others, to make,
have made, use, have used, such intellectual property.
                 (b)      Buyer does not transfer to Seller any patent, trade secret, trademark,
service mark, copyright, mask work, or other intellectual property right of Buyer in information,
documents, or property that Buyer makes available to Seller under an Order, other than the right to
use such intellectual property rights to produce and supply the Goods to Buyer.

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                    (b)     Seller at its expense will indemnify and hold Buyer harmless with respect to
every claim that may be brought against Buyer or others that use the Goods of an Order, for any
alleged infringement of any present or future patent, copyright, industrial design right or other
proprietary right based on Seller’s activity under an Order, or the manufacture, sale, or use of the
Goods (i) alone; (ii) in combination by reason of their content, design or structure; or (iii) in
combination in accordance with Seller’s recommendations. Seller will investigate and defend or
otherwise handle every such claim, and at Buyer’s request, assist Buyer in Buyer’s investigation,
defense, or handling of any such claim. Seller will pay all expenses and damages or settlement
amounts that Buyer and others selling Buyer’s products or using the Goods of an Order may sustain
by reason of each such indemnified claim. If the use or sale of the Goods is enjoined, Seller shall,
at its own expense and at Buyer’s option, either: (i) procure the right to continue using the Goods;
(ii) replace same with a non-infringing equivalent; or (iii) remove the Goods and refund the purchase
price and the transportation and installation costs thereof. Seller’s obligations will apply even
though Buyer furnishes all or any portion of the design and specifies all or any portion of the
processing used by Seller.
                    (c)     Seller will furnish to Buyer, or another party designated by Buyer, without
restrictions on use or disclosure, all information and data Seller acquires or develops in the course
of Seller’s activities under an Order. At Buyer’s request, Seller also will discuss with Buyer or
another party designated by Buyer, without restrictions on use or disclosure, any potential design,
quality or manufacturing problems with Goods Seller worked on or produced pursuant to an Order.
                    (d)     At Buyer’s request, Seller will furnish to Buyer all other information and
data of Seller which Buyer deems necessary to understand the design, operation and maintenance
of the Goods delivered under an Order, with no restrictions on use other than Seller’s patent rights.
                    (e)     With respect to inventions which Seller conceives or first reduces to
practice in the course of Seller’s activities under an Order, Seller grants to Buyer a permanent,
paid-up, nonexclusive, worldwide, royalty-free license, with a right to sublicense others, to use such
inventions, including any patents on such inventions, without restriction.
                    (f)     Seller grants to Buyer a permanent, paid-up, nonexclusive, worldwide
license, including a license to any operating software incorporated into the Goods sold hereunder
with a right to grant a sublicense to others, to make, have made, use, have used and sell the Goods
sold hereunder or derivatives thereof under any other patents now or hereafter owned or controlled
by Seller.
                    (g)     Seller grants to Buyer, and agrees to grant to any company designated by
Buyer, a nonexclusive license, on reasonable terms and conditions, to make, have made, use, have
used and sell under any other patents now or hereafter owned or controlled by Seller which cover
any application of the technology embodied in the information or data Seller acquires or develops in
the course of Seller’s activities under an Order.
          15.       Service and Replacement Parts.
                    (a)     At Buyer’s request, Seller shall sell to Buyer the Goods necessary for
Buyer to fulfill its current model service and replacement parts requirements at the price(s) set forth
in an Order. Seller may charge Buyer for any additional costs for special packaging, shipping,
handling, and related services required in connection with the supply of current model service and
replacement parts to Buyer if Buyer is able to recover such costs from its own customer(s). If the
Goods are systems or modules, Seller shall sell to Buyer the components or parts that comprise the
system or module at price(s) that shall not, in the aggregate, exceed the price of the system or
module set forth in an Order less assembly costs.
                    (b)      During the longer of (i) the ten (10) year period after Buyer completes
current model purchases or (ii) such time period granted to Buyer’s customers for service and
replacement parts, Seller shall sell Goods to Buyer to fulfill Buyer’s past model service and
replacement parts requirements. Prices for such parts shall be the lower of (i) the prices negotiated

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by Buyer and Seller in good faith based on the availability and cost of needed materials, supplies,
and skilled workers, the additional costs for equipment setup, packaging, shipping and handling,
related services, and other relevant factors, and (ii) the prices at which Buyer is contractually
obligated to sell such parts to its customers. When requested by Buyer, Seller shall make service
literature and other materials available at no additional charge to support Buyer’s service part sales
activities. Notwithstanding the foregoing, this is not a requirements contract and Buyer shall be
under no obligation to purchase any service and replacement parts from Seller.
          16.     Warranty.
                  (a)     Seller expressly warrants and represents to Buyer, Buyer’s successors,
assigns and customers that all Goods shall be: (i) merchantable, safe and fit for Buyer’s intended
purposes, which purposes have been communicated to Seller; (ii) free from failure for the period of
Buyer’s express warranty to its customer; (iii) free from all defects including but not limited to
defects in design, workmanship and materials; (iv) in strict compliance with the specifications,
samples, drawings, designs or other requirements (including performance specifications) approved
or adopted by Buyer; (v) composed of all new components; (vi) free and clear of any liens,
encumbrances and any actual or claimed patent, copyright or trademark infringement; and (vii)
manufactured in compliance with all applicable federal, state and local laws, regulations or orders,
and agency or association standards or other standards applicable to the manufacture, labeling,
transporting, licensing, approval or certification, including by way of illustration and not by way of
limitation, the Occupational Health and Safety Act, the Fair Labor Standards Act, and any law or
order pertaining to discrimination including any regulations in force in countries where the Goods or
Buyer’s customer’s vehicles equipped with the Goods are to be sold. All services performed by
Seller shall be performed in a competent, workmanlike manner and in accordance with industry
standards. These warranties shall be in addition to all other warranties, express, implied or
statutory. These warranties shall survive inspection, test, delivery, acceptance, use and payment
by Buyer and shall inure to the benefit of Buyer, its successors, assigns, customers and the users of
Buyer’s products. Buyer’s approval of Seller’s design, material, process, drawing, specifications or
the like shall not be construed to relieve Seller of the warranties set forth herein, nor shall a waiver
by Buyer of any drawing or specification request for one or more articles constitute a waiver of any
such requirements for the remaining articles to be delivered hereunder unless so stated by Buyer in
writing. Any attempt by Seller to limit, disclaim, or restrict any such warranties or any remedies of
Buyer, by acknowledgement or otherwise, in accepting or performing an Order, shall be null, void,
and ineffective without Buyer’s prior written consent. All warranties and remedies provided herein
are in addition to those provided by law.
                (b) “Warranty Period” shall mean the longer of the following time periods
(i) 18 months from the day of first use of the Goods by Buyer or acceptance by Buyer,
whichever occurs later; or (ii) if the Goods are sold by Buyer to a third party (whether or
not such Goods are incorporated into Buyer’s product), the period of time provided by
Buyer to Buyer’s customers in Buyer’s warranties. Notwithstanding anything in the
foregoing, for Goods purchased by Buyer as service and replacement parts, the Warranty
Period will be the greater of twelve (12) months from delivery to Buyer’s customer or the
remainder of the warranty period on the vehicle on which the part is installed as a service or
replacement part. Seller may contact Buyer’s representative for information regarding
those countries in which vehicles incorporating Goods purchased from Seller will be sold.
Notwithstanding the foregoing, Seller agrees to waive the expiration of the Warranty Period
in the event there are failures or defects discovered after the Warranty Period of a
significant nature or in a significant portion of the goods, or a defect is discovered which, in

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Buyer’s opinion, constitutes a threat of damage to property or to the health and safety of
any person.

(c)      Seller will indemnify and hold Buyer harmless in respect of the cost of recall campaigns and
other corrective service actions that, in Buyer’s or Buyer’s customers reasonable judgment, are
required to rectify non-conformities in the Goods that are the result of a breach of the foregoing
warranty, whether such recall campaigns are mandated by any governmental entity, by Buyer’s
customers or by Buyer.
(d)      Seller represents and warrants to Buyer that the prices charged and to be charged Buyer
are the same or lower than all prices charged by Seller or Seller’s affiliates to others for the Goods
or similar goods during the past 12 months. Prices charged in violation of this clause shall be
reduced and any overpayment shall forthwith be refunded by Seller to Buyer.
(e)      Seller warrants that it shall engage in the continuous improvement of the Goods, other than
Goods that by their nature cannot be improved.
(f)       If Seller is certified under ISO-9001, ISO-TS16949, QS-9000, or any original equipment
manufacturer quality program, Seller shall maintain such certification during the performance of an
Order. If Seller is not so certified, Seller shall begin and continue the certification process under
ISO-9001, ISO-TS16949 or QS-9000 in a diligent manner. Seller warrants that its performance of
an Order shall be in compliance with the provisions of those sections of ISO-9000 (e.g. 9001, 9002,
or 9003) and ISO-TS16949 applicable to the obligations of Seller under the Order, whether or not
Seller is certified or registered under such standards.
(g)      Seller warrants that no prison, forced, or other form of involuntary labor shall be used by
Seller or its subcontractors.
         17.       Security Requirements.
         (a)       Seller shall comply with all of Buyer’s supply chain security requirements, as such
requirements are amended from time to time, including those set forth in Buyer’s Supplier Manual.
Seller shall provide Buyer with documentation of such compliance upon request.
         (b)       Seller shall comply with all applicable C-TPAT security criteria as issued and
updated by the U.S. Customs and Border Protection Agency from time to time. Seller shall provide
Buyer with documentation of such compliance upon request.
         18.       Liability, Indemnity, and Insurance.
 (a)     To the fullest extend permitted by law, Seller agrees to indemnify, save harmless and
defend Buyer, Buyer’s parents, and all of Buyer’s affiliated companies, their directors, officers,
employees, agents and customers (“Indemnitees”) from and against any loss, liabilities, costs,
expenses, suits, actions, claims and all other obligations and proceedings, including without
limitation all judgments rendered against, and all fines and penalties imposed upon Indemnitees
and all attorney’s fees and any other cost of litigation (“Liabilities”) arising out of a breach of these
Terms and Conditions, warranty claims, product recall claims, product liability claims, injuries to
persons, including death, or damage to property caused by Seller, its employees, agents,
subcontractors, or in any way attributable to the performance of Seller, including without limitation,
breach of contract, breach of warranty or product liability; provided, however, that Seller’s obligation
to indemnify Buyer shall not apply to any liabilities solely arising from Buyer’s negligence. Seller
waives the application of the doctrine of comparative negligence and other doctrines that may
otherwise allocate the liability covered by Seller’s indemnity.
(b)      Seller warrants that no lien shall be filed by Seller or anyone claiming under or through
Seller against Buyer, the site for delivery of the Goods, or Buyer’s customer for materials, labor,
services, equipment, goods furnished as part of the Goods. Seller expressly waives and releases,
and agrees not to file or otherwise assert of prosecute or suffer to permit any statutory, equitable or
other liens, including but not limited to any molder liens, tool liens, builder liens and the like, that
Seller has or might have on or in connection with any property.               Seller shall insert the prior
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sentence in any lower tier subcontract or purchase order for labor, equipment or materials
furnished. If any such lien shall be filed by subcontractor, or any of its lower tier subcontractors,
Seller shall take all steps necessary and proper for the release and discharge of such lien, in the
manner required by the law upon demand by Buyer. Seller shall defend, indemnify and hold the
Indemnitees harmless from and against all Liabilities, which might be asserted at any time
whatsoever, arising in any way out of the recording of a lien by subcontractor or any lower tier
subcontractor under it, including without limitation all costs, reasonable attorney fees and expenses
incurred by Buyer or its customer in the releasing, satisfying and discharging of such liens and
enforcement of this clause. Further, Seller shall secure and furnish to Buyer, upon request, a
waiver of lien from each lower tier subcontractor under it.
 (c)      Seller shall carry General Liability insurance in the amount of $2,000,000 for general
aggregate per occurrence and aggregate for products-completed operations and $1,000,000 for
bodily injury and property damage. Seller shall carry Automobile Liability insurance, including
coverage for all owned, hired, and non-owned vehicles in an amount not less than $1,000,000
combined single limit coverage for each accident for bodily injury and property damage. Seller shall
also carry Excess Liability insurance through an umbrella policy in the amount of $5,000,000 per
occurrence and aggregate. Seller shall carry Worker’s Compensation insurance in amounts equal
to the statutory limits for all jurisdictions in which work is to be performed. Seller shall carry
Employer’s Liability insurance in the amount of $1,000,000. The certificate must be in the form of
an ACORD Certificate of Insurance and must set forth the amount of each coverage, number of
policy and date of expiration. Seller shall furnish to Buyer a Certificate of Insurance completed by
its insurance carrier(s) certifying that the required insurance coverages are in effect and will not be
canceled or materially changed until thirty (30) days after prior written notice has been delivered to
Buyer. If Seller is a self-insurer, the certificate of the department of labor of the jurisdiction in which
any labor is to be performed must be furnished to Buyer by Seller. The purchase of such insurance
coverage or the furnishing of said certificate shall not be a satisfaction of Seller’s liability hereunder,
or in any way modify Seller’s obligation to indemnify Buyer.
(d)       If Seller’s work under an Order involves operations by Seller on the premises of Buyer or
one of Buyer’s customers, Seller shall take all necessary precautions to prevent the occurrence of
any injury to persons or damage to property during the progress of such work, and except to the
extent that any such injury or damage is due solely and directly to Buyer’s negligence, Seller shall
defend and indemnify Buyer against any claim which may result in any way from any act or
omission of Seller, its agents, employees or subcontractors.
          19.      Imported Goods. The following applies to all transactions involving imported
                   (a)     Seller warrants that all sales made hereunder are or will be made at not
less than fair value under the United States Anti-Dumping Law (19 U.S.C. Sec. 160 et. seq.) and
Seller will indemnify, defend and hold Buyer harmless from and against any costs or expenses
(including but not limited to any anti-dumping duties which may be imposed) arising out of or in
connection with any breach of this warranty.
(b)       Buyer shall not be a party to the importation of the Goods, the transaction(s) represented by
an Order will be consummated subsequent to importation, and Seller will neither cause nor permit
Buyer’s name to be shown as “Importer of Record” on any customs declaration.
(c)       Transferable credits or benefits associated with the Goods, including trade credits, export
credits, or rights to the refund of duties, taxes, or fees, belong to Buyer unless otherwise prohibited
by applicable law. Seller will provide Buyer with all information and records relating to the Goods
necessary for Buyer to (i) receive these benefits, credits, and rights, (ii) fulfill any customs
obligations, origin marking or labeling requirements, and certification or local content reporting
requirements, (iii) claim preferential duty treatment under applicable trade preference regimes, and
(iv) participate in any duty deferral or free trade zone programs of the country of import. Seller will

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obtain all export licenses and authorizations and pay all export taxes, duties, and fees unless
otherwise stated in the Order, in which case Seller will provide all information and records
necessary to enable Buyer to obtain those export licenses or authorizations.
(d)       Without limiting Seller’s obligations under Section 19(c) above, upon request and where
applicable, Seller shall provide Buyer and Buyer’s agents with all documents required for customs
drawback purposes (properly completed and executed in accordance with government regulations
applicable thereto), including the following: (i) Customs Forms 7582, Certificates of Delivery, (ii)
Certificates of Manufacture and Delivery, (iii) Drawback Rights Assignment Letter, (iv) Proof of entry
and duty payments made on behalf of Seller; and (v) Proof of export documentation, if applicable.
(e) Upon request, Seller shall furnish promptly certificates of local value added in accordance with
applicable government regulations. Such certificates shall be furnished in accordance with the
procedures set forth in Buyer’s Supplier Manual.
(f)       The Order includes and Buyer shall maintain all related customs duty and import drawback
rights, if any, including rights developed by substitution and rights that may be acquired from
Seller’s supplier(s) that are capable of being transferred to Buyer. Seller shall take all actions
reasonably required to ensure that Buyer secures such rights.
(g)       Upon request, Seller shall promptly furnish Buyer and Buyer’s agents with country of origin
certifications for the Goods (Manufacturer’s Affidavits). When requested, Seller shall also promptly
provide Buyer and Buyer’s agents with proof of Seller’s compliance with all applicable trade
programs, including NAFTA, CAFTA, AALA, and CAFÉ as well as Seller’s compliance with the
requirements of the International Phytosanitary Measure (ISPM 15).
(h) Buyer shall charge back to Seller and Seller shall accept from Buyer any and all charges and
expenses incurred by Buyer when acting as the importer of record (IOR) on Seller’s behalf.

          20.      Termination for Convenience.
(a)       In addition to any other rights of Buyer to cancel or terminate an Order or any releases
issued pursuant to an Order, Buyer may, at its option, immediately terminate all of any part of an
Order or any releases issued pursuant to an Order for Buyer’s convenience, at any time and for any
or no reason by giving written notice to Seller. In the event of such termination, Seller shall stop all
work, and shall forthwith cause all of its suppliers and subcontractors to cease work.
(b)       Upon a termination by Buyer pursuant to Section 20(a) above, subject to Section 20(d)
below, Buyer shall pay to Seller the following amounts without duplication: (i) the Order price for all
Goods which have been completed in accordance with an Order not previously paid; and (ii) the
actual direct costs of work in process and raw materials incurred by Seller in furnishing the Goods
under an Order or any releases issued pursuant to an Order to the extent such costs are
reasonable in amount and are properly allowable or apportionable, under generally accepted
accounting principles, to the terminated portion of an Order or any releases issued pursuant to an
Order; less, however, the reasonable value or cost (whichever is higher) of any Goods or materials
subsequently used or sold by Seller with Buyer’ written consent and of the cost of any damaged or
destroyed Goods or materials. Notwithstanding the foregoing or any transfer to Buyer, Buyer shall
not be liable to pay for (i) finished Goods, work in process or raw materials fabricated or processed
by Seller in amounts in excess of four (4) weeks of authorized production pursuant to release
schedules, (ii) any undelivered Goods which are Seller’s standard stock or which are readily
marketable, or (iii) any finished Goods which are not promptly delivered to Buyer after request by
Buyer. Payments made under this Section shall not exceed the aggregate price payable by Buyer
for all finished Goods to have been produced by Seller under the most current delivery or release
schedule issued by Buyer for the four-week period immediately following the date of termination.
Except as provided in this Section, Buyer shall not be liable for and shall not be required to make
payments to Seller, directly or on account of claims by Seller’s subcontractors, for loss of
anticipated profit, unabsorbed overhead, interest on claims, product development and engineering

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costs, facilities and equipment, rearrangement cost or rental, unamortized depreciation costs, and
general and administrative burden charges arising from termination of an Order.
(c)       Within sixty (60) days from the effective date of termination for convenience, Seller shall
submit a comprehensive termination claim to Buyer with sufficient supporting data to permit Buyer’s
audit and shall thereafter promptly furnish such supplemental and supporting information as Buyer
shall request. Buyer or its agent shall have the right to audit and examine all books, records,
facilities, work, material, inventories and other items relating to any termination claim of Seller.
Buyer, however, shall have no obligation to Seller if Buyer terminates its purchase obligations under
an Order or any releases issued pursuant to an Order because of default by Seller. Payment under
this Section shall constitute the only liability of Buyer if an Order is terminated by Buyer for its
convenience. Termination of an Order or any release does not affect Seller’s obligations under
these Terms and Conditions as to Goods delivered or obligations not dependent upon the delivery
of Goods.
(d)       Notwithstanding anything in the foregoing, in the event that Buyer terminates or limits an
Order pursuant to Section 20(a) due to the termination or limitation of an order issued to Buyer by
Buyer’s customer, Buyer’s liability to Seller shall be limited to the lesser of the amount that would be
otherwise owed under Section 20(b) above and that amount which Buyer’s customer actually pays
to Buyer for the termination costs specifically attributable to Seller relative to such Order.
          21.      Default and Remedies.
                   (a)      Time is of the essence and, subject to Section 26 below, either party will
be in default, allowing the other party hereunder to terminate an Order if it: (1) fails to perform any
obligation under an Order and fails to cure the non-performance within 10 business days after
notice from the other party specifying the non-performance, (2) admits in writing its inability to pay
its debts as they become due, commences a bankruptcy, insolvency, receivership, or similar
proceeding, or makes a general assignment for the benefit of creditors, (3) becomes a debtor in a
bankruptcy, insolvency, receivership, or similar proceeding commenced by a third party that is not
dismissed within 30 days after commencement, (4) fails to provide adequate assurance of
performance under an Order within three business days after written demand by the other party.
                   (b)     Upon default of Seller, Buyer may by written notice of default to Seller (i)
terminate the whole or any part of an Order; and (ii) procure alternative goods upon such terms as it
shall deem appropriate. Seller shall continue performance of an Order to the extent not terminated
and shall be liable to Buyer for any excess costs for such similar goods and other direct, incidental,
and consequential damages. As an alternative remedy, and in lieu of termination for default, Buyer,
at its sole discretion, may elect (1) to extend the delivery schedule and/or (2) to waive other
deficiencies in Seller’s performance in which case an equitable reduction in the Order price shall be
established by Buyer to compensate Buyer for its damages.
                   (c)     If Seller for any reason anticipates difficulty in complying with the required
delivery date, or in meeting any of the other requirements of an Order, Seller shall promptly notify
Buyer in writing of the potential default, the cause thereof, and the estimated length of the
anticipated default. Buyer is under no obligation to waive any default.
                   (d)     If any of the Goods are found at any time to be defective in design, material
or workmanship, or otherwise not in conformity with the requirements of an Order, Buyer, in
addition to such other rights, remedies and choices as it may have under an Order or by law, at its
option and sole discretion may: (i) reject and return such Goods at Seller’s expense; or (ii) require
Seller to inspect the Goods and remove and replace nonconforming Goods with Goods that
conform to an Order. If Buyer elects option (ii) and Seller fails to promptly make the necessary
inspection, removal and replacement, Buyer may at its option and Seller’s cost, inspect and repair
or replace the Goods.
 (e)      Seller hereby grants to Buyer a security interest in the Goods to secure Seller’s return of
any deposits and the performance of its obligations to Buyer. Furthermore, Seller hereby grants to

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Buyer an irrevocable power of attorney to execute and file appropriate financing statements
evidencing such interest and the interests of Buyer and its customers in property furnished by them.
Seller’s continued holding of the Goods and property delivered to Seller after demand has been
made for delivery will substantially impair the value of the Goods and property, and Buyer shall be
entitled to a court order for possession without bond.
 (f)       Buyer’s rights and remedies shall be cumulative and in addition to any other rights or
remedies provided by law or equity. A waiver by Buyer of any right or remedy shall not affect any
rights or remedies subsequently arising under the same or similar case. Any attempt by Seller to
limit Buyer’s warranties, remedies or the amount and types of damages that Buyer may seek shall
be null and void. Seller agrees that in no event shall Buyer be liable to Seller for any incidental,
consequential, or special damages, including but not limited to Seller’s loss of profits.
           22.     Property Furnished by Buyer and Its Customer.
           (a)     Buyer will own all supplies, materials, tooling, jigs, dies, gauges, fixtures, molds,
patterns, designs, drawings, specifications, spare parts, trial parts, and other equipment and
property used by Seller to manufacture, store, and transport the Goods (“Property”) if (1) the
Property is so designated in an Order or a separate agreement between the Buyer and Seller, or (2)
Buyer or its customer has provided or paid for the Property (“Buyer’s Property”). Seller will assign
to Buyer contract rights or claims in which Seller has interest with respect to Buyer’s Property and
execute bills of sale, financing statements, or other documents reasonably requested by Buyer to
evidence its or its customer’s ownership of Buyer’s Property. Seller will indemnify and defend
Buyer against claims or liens adverse to Buyer’s or its customer’s ownership of Buyer’s Property.
Seller will hold Buyer’s Property on a bailment basis and will be responsible for loss or damage to
Buyer’s Property while in its possession or control. To the extent permitted by law, Seller waives
any lien or similar right it may have with respect to Buyer’s Property. Buyer will be responsible for
personal property taxes assessed against Buyer’s Property. (b) Seller will (i) at its expense
maintain Buyer’s Property in good condition and repair, normal wear and tear excepted, throughout
the useful life of Buyer’s Property, (ii) use Buyer’s Property only for the manufacture, storage, and
transport of the Goods for Buyer unless Buyer otherwise approves in writing, (iii) prominently mark
Buyer’s Property as belonging to Buyer or its customer, (iv) not remove Buyer’s Property (other than
shipping containers and the like) from Seller’s premises without Buyer’s written approval, and (v)
adequately insure Buyer’s Property against loss or damage, including but not limited to maintaining
full fire and extended coverage insurance for replacement value and naming Buyer as an additional
insured. All replacement parts, additions, improvements, and accessories to Buyer’s Property will
become part of Buyer’s Property unless they can be removed without damaging Buyer’s Property.
           (c)     Buyer will have the right to enter Seller’s premises at reasonable times to inspect
Buyer’s Property and Seller’s records pertaining thereto.
            (d)    Seller will immediately release to Buyer upon request, and Buyer may retake
immediate possession of, Buyer’s Property and other property of Buyer or its customers at any time,
with or without cause and without payment of any kind unless otherwise provided in an Order.
Seller will release the requested Property and other property at Buyer’s option F.O.B. Carrier
Seller’s facility (Ex Works Loaded) or F.O.B. Buyer’s premises (CIF Buyer Plant/Delivered Buyer
Plant), properly packed and marked in accordance with the requirements of the carrier and Buyer.
Seller will cooperate with Buyer’s removal of the Buyer’s Property from Seller’s premises.
           (e)     In the event that the Seller does not immediately return Buyer’s Property pursuant
to Section 22(d) above, the Buyer shall, in addition to any other rights and remedies provided by law
or these Terms and Conditions, have the right to enter the Seller’s premises to reclaim possession
of Buyer’s Property, with or without prior demand and with or without process of law.
           (f)     Seller agrees that it will comply with its obligation to release Buyer’s Property
notwithstanding any claim, financial or otherwise, that it may have against Buyer.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              72
         (g)      Seller shall assume all risk of death or injury to persons or damage to property
arising from use of Buyer’s Property.
         (h)       Buyer does not guarantee the accuracy of any Buyer’s Property or the availability
or suitability of any supplies or material furnished by it. Seller assumes sole responsibility for
inspecting, testing and approving all Buyer’s Property or other materials supplied by Buyer prior to
any use by Seller.
         23.      Seller’s Property.         Seller, will own all Property that is not Buyer’s Property
(“Seller’s Property”). Seller will at its expense furnish, maintain in good condition, and replace when
necessary Seller’s Property needed to perform under an Order. Buyer may inspect Seller’s
Property and production facilities during normal working hours upon reasonable notice to Seller.
Seller shall insure Seller’s Property with full fire and extended coverage insurance for the
replacement thereof. Seller grants Buyer an irrevocable option to take possession of and title to
Seller’s Property that is special for the production of the Goods upon payment to Seller of the book
value thereof less any amounts Buyer has previously paid to Seller in any manner (including but not
limited to amortization of such cost through the price of the Goods) for the cost of Seller’s Property;
provided, however, that this option shall not apply if Seller’s Tooling is used to produce products
that are standard stock of Seller. Seller grants Buyer a security interest in Seller’s Tooling to secure
Buyer’s rights in Seller’s Property and waives any rights that may conflict with this Section.
         24.      Transition of Supply. In connection with termination of this Order by either party
or Buyer's other decision to change to an alternate source of Supplies, Seller will cooperate in the
transition of supply, including the following (collectively, "Transition Support"): (a) Seller will
continue production and delivery of all Supplies as ordered by Buyer, at the prices and other terms
stated in this Order, without premium or other condition, during the entire period reasonably needed
by Buyer to complete the transition to the alternate supplier(s), such that Seller's action or inaction
causes no interruption in Buyer's ability to obtain Supplies as needed; (b) at no cost to Buyer, Seller
will promptly provide all requested information and documentation regarding and access to Seller's
manufacturing process, including on-site inspections, bill-of-material data, tooling and process detail
and samples of Supplies and components; and (c) subject to Seller's reasonable capacity
constraints, Seller will provide special overtime production, storage and/or management of extra
inventory of Supplies, extraordinary packaging and transportation and other special services as
expressly requested by Buyer in writing. If the transition occurs for reasons other than Seller's
termination or breach, Buyer will, at the end of the transition period, pay the reasonable, actual cost
of Transition Support as requested and incurred, provided that Seller has advised Buyer prior to
incurring such amounts of its estimate of such costs.
        25.    Buyer’s Access to Records and Facilities. Seller shall provide to Buyer
Seller’s financial statements and projections upon Buyer’s request. Seller shall permit
Buyer and its representatives to review Seller’s books and records concerning compliance
with each Order and Seller’s overall financial condition and shall provide Buyer full and
complete access to all such book and records for such purpose upon Buyer’s request.
Buyer will have the right at any reasonable time to send its authorized representatives to
examine all such information. Seller shall maintain all pertinent information relating to an
Order for a period of four years after completion of services or delivery of Goods pursuant
to an Order. If Seller experiences any delivery or operational problems, Buyer may, but is
not required to, designate a representative to be present in Buyer’s applicable facility to
observe Buyer’s operations. 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 or other
material inaccuracies in information provided to Seller. All audits shall be conducted at
reasonable times and, to the extent practicable, at Seller’s usual place of business.
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)              73
        26.     Assignment. Neither party may assign or subcontract its duties or
responsibilities under an Order without the prior written consent of the other party, which
will not be unreasonably withheld or delayed. Unless otherwise stated in the consent, any
assignment or subcontracting by either party, with or without the required consent, will not
relieve that party of its duties or obligations under an Order or its responsibility for non-
performance or default by its assignee or subcontractor. If Buyer requires Seller to
subcontract all or a portion of its duties obligations under an Order to a designated
subcontractor, Seller’s liability for a breach of an Order by that subcontractor’s failure to
meet is warranty, delivery, or other contractual obligation shall be limited to the liability of
Buyer to its customer(s) in connection with such breach.
        27.     Excusable Delays. A delay or failure by either party to perform its
obligations under an Order will be excused, and will not constitute a default, only if (1)
caused by an extraordinary event beyond the reasonable control of that party and without its
fault or negligence, and (2) the party unable to perform gives notice of the non-performance
(including its anticipated duration) to the other party promptly after becoming aware that it
has occurred or promptly after becoming aware that it has occurred or will occur. If Seller
is unable to perform for any reason, Buyer may purchase the Goods from other sources and
reduce its purchases from Seller accordingly without liability to Seller. Within three
business days after written request by the other party, the non-performing party will provide
adequate assurances that the non-performance will not exceed 30 days. If the non-
performing party does not provide those assurances, or if the non-performance exceeds 30
days, the other party may terminate the Order by notice given to the non-performing party
before performance resumes.
            28. Labor Contracts. Seller will notify Buyer of the contract expiration
date at least six months before the expiration of a current labor contract that has not been
extended or replaced. Buyer may thereafter direct Seller in writing to manufacture up to 30
days of additional inventory of the Goods, specifying the quantities of the Goods required
and any packaging and storage requirements. Seller will use commercially reasonable
efforts to comply with Buyer’s written directions prior to expiration of the current labor
contract and until the current labor contract has been extended or a new contract completed.
By authorizing the additional inventory, Buyer commits to buy the entire quantity of
conforming Goods requested and produced. Seller is responsible for carrying costs and any
additional costs of manufacture.

           29.    Negotiation; Choice of Forum; Applicable Law

               (a)    Buyer and Seller will first endeavor to resolve through good faith
negotiations any dispute arising under an Order.

             (b)     All disputes between the parties that the parties cannot resolve
through good faith negotiations, including those arising, directly or indirectly, under an
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)          74
Order or the performance or breach of an Order, shall be adjudicated exclusively in the
Circuit Court for the County of Oakland, State of Michigan or, if subject matter jurisdiction
exists, the U.S. District Court for the Eastern District of Michigan. The parties stipulate
that the referenced venues are convenient. All disputes between the parties regarding an
Order will be construed, governed and controlled in all respects by the laws of the State of
Michigan. The UN Convention for the International Sale of Goods is expressly excluded.

                (c) In the event that Seller is located outside of the United States, then
Buyer shall have the option of submitting any dispute, controversy or claim arising under
an Order or otherwise to binding arbitration. Such arbitration will take place before one
arbitrator in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and shall take place in the City of Southfield, State of Michigan.
The arbitration award may be entered as a final judgment in any court of competent
jurisdiction. The Federal Arbitration Act, 9 USC §1, et seq. will apply to the application
and interpretation of this arbitration provision.

       30.      Taxes. Unless separately agreed by the parties in writing, the price for the
Goods includes all applicable federal state, provincial, and local taxes other than sales,
value added, or similar turnover taxes or charges. Seller will separately invoice Buyer for
any sales, value added, or similar turnover taxes or charges that Seller is required by law to
pay or collect from Buyer.

         31.      Miscellaneous.
 (a)     Seller shall not at any time advertise or otherwise disclose its relationship with Buyer or
Buyer’s customers without Buyer’s prior written consent, except as may be required to perform
under an Order or as required by law..
(b)      With respect to its role as supplier to Buyer, including any interaction with any employee of
Buyer, Seller shall not: (i) give or offer to give any gift or benefit to Buyer’s employees; (ii) solicit or
accept any information, data, services, equipment, or commitment from Buyer’s employees unless it
is (1) required under a contract between Buyer and Seller, or (2) made pursuant to a written
disclosure agreement between Buyer and Seller, or (3) specifically authorized in writing by Buyer’s
management; (iii) solicit or accept favoritism from Buyer’s employees; or (iv) enter into any outside
business relationship with Buyer’s employees without full disclosure to, and prior approval of
Buyer’s management. “Employee” includes members of the employee’s immediate family and
household, plus any other person who is attempting to benefit from his or her relationship to the
employee; “Seller” includes all employees and agents of Seller; “gift or benefit” includes money,
goods, services, discounts, favors and the like in any form but excluding low value advertising items
such as pens, pencils and calendars; “supplier” includes prospective, current and past suppliers;
and “favoritism” means partiality in promoting the interest of Seller over that of other suppliers.
Such activity by Seller shall constitute default by Seller of every contract and Order with Buyer and
may further result in Seller’s debarment from doing business with Buyer.
(c)      The failure of either party at any time to enforce any right or remedy provided in an Order or
by law on a particular occasion will not be deemed a waiver of that right or remedy on a subsequent
occasion or a waiver of any other right or remedy.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)                75
(d)      Seller and Buyer are independent contractors, and nothing in an Order shall make either
party the agent or legal representative of the other for any purpose. Neither party has authority to
assume or to create any obligation on behalf of the other party.
(e)      A finding that any provision of an Order is invalid or unenforceable in any jurisdiction will not
affect the validity or enforceability of any other provision of the Order or the validity or enforceability
of that provision in any other jurisdiction.
(f)      Any notice or other communication required under these Terms and Conditions must be in
writing and will become effective on the date of actual receipt if the date of actual receipt is a
business day or on the next business day if the date of actual receipt is not a business day.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)                76

Robert McDonald, Vice President
Tel: (734)983-5072, E-mail:

Wire and Bulk
       Ramin Baghaie, Manager
       Tel: (734)983-4226, E-mail:

Diversity Sourcing:
        Santiago Garcia, Manager
        Tel: (734)983-4530, E-mail:

Metal/Resin, Plastics, Rubber, and Fasteners:
       Gary Kilgore, Manager
       Tel: (734)983-3534, E-mail:

        Frank Roberts, Manager
        Tel: (734)983-4516, E-mail:

       Ken Pichla, Manager
       Tel: (734)983-4250, E-mail:

Raw Material:
      Shashi Kamath, Manager
      Tel; (734)983-4522, E-mail:

Indirect Purchasing:
         Marianne Gamsjager, Manager
         Tel: (734)983-4276, E-mail:

Pam Broomall, Supplier Quality Development Director
Tel: (734)983-5038, E-mail:

Commodity Supplier Quality Development:
     Jim Janeczko, Manager
     Tel: (734)983-3996, E-mail:

PPAP and Analysis:
        Rick King, Senior Manager
Tel: (734)983-4482, E-mail: rick.

 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)          77
Note: The latest revision is highlighted in yellow.
Revision   Description                                             Author          Date
1.0        Original release                                        SQD             7/15/2001
1.1        Added 13 new sections                                   James Karakos   7/16/2003
1.2        Added revision levels in the footnotes; added Section   James Karakos   7/25/2003
           15; changed “Supplier Requirements” on Page 4
1.3        Expanded Design Review (p.7); expanded Tool Move        James Karakos   11/17/03
           Requirements (p.11), updated Scorecard Rating
           System ($ limit, rating tables, formula
           descriptions,titles), reorganized Contacts, changed
           titles (p.19-69, merged Indirect and Direct PO terms
           and conditions, updated Table of Contents, changed
           $ limit for Scorecard (p.20), updates FAQ (p.71),
           added Revision History Section
1.4        Revised 2 bullet points (page8) on PPAP; updated        James Karakos   2/16/04
           SQD Director name
1.5        Updated page85; updated threshold (page19)              James Karakos   2/20/04
1.6        Updated e-mails (Contacts Section); added Supplier      James Karakos   7/29/04
           Initiated Changes (Section 14); revised page 5-6
           (Quality Sec.); deleted 5 questions from FAQ section;
           updated Canton payment terms (Sec8)
1.7        Added extraordinary cost topic to FAQ section           James Karakos   9/1/04
1.8        Added “see Section15” to SAVE section (page17)          James Karakos   9/20/04
1.9        Revised Environmental Review in Section 2               James Karakos   2/18/05
           (Quality); expanded Quality Reporting Requirements
           in Section 2; added Shipping to Sec7; added Self-
           Certification form to Sec15; added Self-Certification
           Program to Section2; updated contacts in Section 13
2.0        Added Environmental Policy section and rearranged       James Karakos   3/17/05
2.1        Revised Environmental Review section under Quality;     James Karakos   6/23/05
           updated annual sales figure under Overview; updated
           cost reduction parameter
2.2        Updated Sec15 to reflect new addresses; updated         James Karakos   8/4/05
           Tooling Transfer Req. form in Sec17
2.3        Updated Indirect Purchasing section                     James Karakos   9/6/05
2.4        Updated Section 2 (Quality)                             James Karakos   9/23/05
2.5        Updated Sec12 (Supplier initiated changes)              James Karakos   11/08/05
2.6        Updated Sec6 to include Commercial/Environmental        James Karakos   11/15/05
           performance/OEM spills
2.7        Added a paragraph to PPAP section (page7)               James Karakos   1/31/06
2.8        Updated Section 12                                      James Karakos   3/7/06
2.9        Updated entire Scorecard section starting page 19       James Karakos   4/3/06
3.0        Deleted ISO140001 from Sec11&Sec14;updated              James Karakos   5/14/07
 YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)           78

YAOP-PUR-S3-058, Rev: 3.0 (5/15/07)   79

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