New Vehicle Assembly Agreement
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NEW VEHICLE ASSEMBLY AGREEMENT (this "Agreement"), dated as of December 21,
1999, between General Motors Corporation, a corporation organized and existing
under the laws of the State of Delaware ("GM"), and AM General Corporation, a
corporation organized and existing under the laws of the State of Delaware
("AMG").
RECITALS:
WHEREAS, GM desires to design and develop, in consultation with AMG, a new motor
vehicle based upon a platform to be mutually agreed by the parties;
WHEREAS, GM desires to engage AMG to assemble the aforementioned new motor
vehicle and AMG desires to perform such assembly on a contract basis;
WHEREAS, the parties find it mutually desirable for AMG to construct and GM to
primarily fund a new facility to be utilized by AMG for the assembly of the
aforementioned new motor vehicle.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
DEFINITIONS
"AMG Warranty" shall have the meaning set forth in Section 7.1.
"Effective Date" shall mean December 21, 1999.
"New Vehicle" shall have the meaning set forth in Section 1.1.
"New Vehicle Assembly Specifications" shall have the meaning set forth in
Section 2.1.
"New Vehicle Design Specifications" shall have the meaning set forth in Section
1.2.
"New Vehicle Facilities" shall have the meaning set forth in Section 2.4.
"Note" shall have the meaning set forth in Section 3.1.
"Quality Control Standards" shall have the meaning set forth in Section 6.2.
"Report" shall have the meaning set forth in Section 5.8.
"Sub-Contractors" shall have the meaning set forth in Section 2.3.
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SECTION 1
Design and Development of New Vehicle
1.1 Design of New Vehicle. GM shall design and develop, in consultation
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with AMG, a vehicle to be based on a platform to be mutually agreed upon by the
parties (the "New Vehicle").
1.2 Lead Responsibility. GM shall have lead responsibility with regard to
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the design and development process described above and shall have final sign-off
on all New Vehicle specifications, which shall meet all safety and quality
standards required by Federal and State regulations (the "New Vehicle Design
Specifications").
1.3 Product Engineering. GM shall have responsibility for product
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engineering related to the New Vehicle, including but not limited to testing,
certification and compliance with applicable governmental regulations and shall
be considered the Original Equipment Manufacturer of the New Vehicle.
SECTION 2
ASSEMBLY SPECIFICATIONS AND FACILITIES
2.1 New Vehicle Assembly Specifications. AMG shall have responsibility
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for the design, manufacturing engineering and development of specifications
relating to the assembly of the New Vehicle in accordance with all applicable
governmental regulations (the "New Vehicle Assembly Specifications").
2.2 Consultation with GM. AMG will regularly consult with GM regarding
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the design and development of the New Vehicle Assembly Specifications and keep
GM informed of the progress of such design and development; provided, however,
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that the parties acknowledge and agree that the New Vehicle Assembly
Specifications are intended to be based on AMG's existing assembly processes to
the extent reasonably possible.
2.3 Use of Sub-Contractors. AMG may contract with independent design
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and engineering enterprises for services in connection with the design,
manufacturing engineering and development of the New Vehicle Assembly
Specifications ("Sub-Contractors"). AMG shall be responsible for the conduct and
performance of all such Sub-Contractors.
2.4 Construction of New Vehicle Facilities. AMG shall be responsible for
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the engineering, procurement and construction of the facilities required for the
assembly of the New Vehicle in accordance with the New Vehicle Assembly
Specifications (together with the initial complement of machinery and equipment
contemplated in Section 2.5 below, the "New Vehicle Facilities"). Subject to
approval of GM prior to any firm commitment being made by AMG, AMG shall enter
into a contract or series of contracts with a qualified project contractor for
the design, engineering and construction of the New Vehicle Facilities and shall
appoint a project engineer who shall oversee the design, engineering and
construction of the New Vehicle Facilities.
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2.5 New Vehicle Assembly Equipment. AMG shall be responsible for the
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acquisition, maintenance, repair and replacement of the initial complement of
all machinery and equipment required for the assembly and inspection of New
Vehicles. Selection of such machinery and equipment and facility items, funded
by the Note, shall be approved by GM prior to any firm commitment being made by
AMG for the purchase of such items.
SECTION 3
PROJECT FUNDING AND FINANCING
3.1 Promissory Note. Funding for the design, engineering, procurement
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and construction of the New Vehicle Facilities shall be funded primarily through
proceeds of a Promissory Note by and between GM and AMG, in an amount set forth
therein and pursuant to the terms and conditions therein (the "Note"). Exhibit
A to this agreement contains the major assumptions regarding the New Vehicle,
its design and assembly, as well as, the process through which funds will be
released to AMG or its designee. Subject to the terms and conditions of the
Note and this Agreement (including Exhibit A), GM agrees and commits to make the
funding referenced above available to AMG.
3.2 Promissory Note Changes. Recognizing that the New Vehicle Design
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Specifications and the New Vehicle Assembly Specifications will be developed and
finalized almost concurrently, GM and AMG shall work together in good faith (as
further described in Section 4 below) to manage expenditures within the
parameters established by the amount of the Note. In the event, however, that
the amount of the Note needs to be increased or decreased, the parties agree to
work together in good faith to (i) review the cause or basis for any proposed
increase or decrease in the amount of the Note; (ii) jointly determine the
necessity and appropriateness of any proposed increase or decrease in the amount
of the Note; and (iii) jointly determine whether specific proposed increases
should be funded through the Note.
3.3 Payment of the Note. Unless otherwise agreed, the Note shall be
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paid by AMG by means of an offsetting credit to the assembly fee set forth in
Section 5.4 below, in the amount to be determined pursuant to the terms of the
Note.
3.4 Financial Obligations. Except as otherwise provided in Sections 3.1
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and 3.2 above (including in Exhibit A referenced therein), each party will fund
its own costs and expenses related to the performance and completion of their
respective responsibilities and obligations under this Agreement.
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SECTION 4
Facilities Development, Management and Operation
4.1 Mutual Cooperation. Each party will provide to the other the full
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measure of cooperation reasonably required to fulfill the objectives of this
Agreement. Each party shall be responsible to the other to participate in
regular reviews of engineering and assembly, and reviews of any other business
issues, including distribution, marketing, field performance, customer
satisfaction, volume forecasts, and production to schedule performance, as they
may arise during the term of this Agreement. Subject to Section 5.2 of the
Master Agreement, each party shall freely exchange with the other certain
technical and business information pertinent to the New Vehicle, so that the
parties can adequately monitor and coordinate such activities as design,
development, conformance to applicable laws and regulations, manufacturing
status, service readiness, timing, and costs.
4.2 New Vehicle Program Managers. AMG and GM will each assign a
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program manager, who will coordinate their respective efforts and assume the
following responsibilities:
(a) Conduct progress meetings and establish ongoing agenda, outlines
and procedures;
(b) Track the overall content and status of each phase of development
of the New Vehicle Facilities and report the progress to their respective
management;
(c) Track and report the following:
(i) Tool progress;
(ii) Sample approval progress;
(iii) Individual part and program timing;
(iv) Prototype building, testing and validation;
(v) Performance to budgets;
(vi) Service readiness program progress; and
(d) Carry out such other responsibilities as the parties may mutually
establish.
4.3 Systems, Personnel and Timing. In connection with the performance of
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their respective obligations under this Agreement, each party shall provide the
necessary systems and personnel for the performance of specified tasks in
accordance with the timing requirements to be mutually agreed to by the parties.
Each party shall be responsible to the other to report any and all events that
might affect such tasks or timing. The parties will mutually determine the
systems configuration required to implement the terms contemplated in this
Agreement, including the amount of funds required for the initial systems
hardware and software, and the expenses required to operate the final system
configuration. To the maximum extent possible, the systems should be funded from
the proceeds of the Note and the operation of
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the systems should be paid by the party incurring the expense. In the event that
the funding of the systems cannot be accomplished within the parameters set
forth above, final resolution of such issues relative to the Note and the
Assembly Fee shall be governed by Exhibit C.
4.4 New Vehicle Design and Product Engineering. GM will fund the design
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and product engineering for the New Vehicle and shall own all intellectual
property rights related to the New Vehicle and the related product engineering
other than as provided in Section 4.5 below.
4.5 Manufacturing Engineering. GM and AMG shall mutually agree
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pursuant to Exhibit A herein, what costs and expenses shall be funded through
the proceeds of the Note. To the extent not funded by the Note, AMG will fund
manufacturing engineering, and AMG shall own all intellectual property rights
associated with engineering of the assembly process for the New Vehicles;
provided, however, that, in the event of the termination or expiration of this
Agreement or the need to increase production beyond AMG's capacity (40,000 units
annually plus available overtime capability as mutually determined by the
parties), GM is hereby granted the non-exclusive right to use or have used such
intellectual property for GM purposes.
4.6 Component Tooling. GM shall be responsible, at its sole expense,
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for the acquisition of all supplier component tooling necessary for the
procurement of parts required for the assembly of the New Vehicle.
4.7 Assembly Materials. (a) GM shall procure at its expense all
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components and direct materials necessary to assemble New Vehicles ordered by GM
consistent with GM's standard bill of materials, an example of which is attached
as Exhibit B. ("Assembly Materials"). Such components will be consigned by GM
to AMG pursuant to the terms and conditions of the GM Purchase Order, as defined
below.
(b) GM shall replace all Assembly Materials which fail to meet the agreed
upon specifications; and GM shall reimburse AMG for all actual costs associated
with such defective Assembly Materials that are incurred by AMG, consistent with
GM's actual recovery of such costs from the original supplier of such materials.
(c) AMG shall procure at its expense all necessary consumable indirect
materials necessary for the assembly of New Vehicles ordered by GM hereunder
(e.g., masking, gloves, sandpaper, etc.) in accordance with GM's applicable
quality standards and requirements as mutually agreed by the parties.
(d) GM shall at its option replace or direct AMG to repair all Assembly
Materials produced by GM which fail to meet the agreed upon specifications. GM
shall reimburse AMG for all actual costs associated with such Assembly Materials
that are reasonably incurred by AMG, including the costs associated with making
repairs when so directed by GM.
(e) GM shall utilize its reasonable best efforts to ensure that all
Assembly Materials required for the assembly of the New Vehicle will be
available in quantities consistent with orders placed for the New Vehicle and
AMG's assembly capacity, including components and direct materials that are
shared with other GM platforms.
(f) Costs associated with the completion of assembly of New Vehicles which
arise from a shortage of components shall be borne by AMG; provided, however,
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that in the event of an extraordinary shortage of components, the parties shall
promptly meet to discuss the situation and in good faith jointly develop and
implement an equitable methodology for addressing such shortage.
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4.8 GM Trademarks. AMG shall include on the New Vehicles such trademarks
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owned by GM or its affiliates as may be specified by GM. Such arrangement shall
not be deemed to be a trademark license or an authorization for AMG to use such
trademarks for any other purpose.
4.9 Assembly Operations. All assembly operations will be conducted at
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AMG's facility located at Mishawka, Indiana, if the cost of production, after
all State of Indiana and local incentives, is acceptable to the parties; or such
other AMG location as may be approved by GM.
4.10 New Vehicle Specifications. AMG shall assemble all New Vehicles
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in conformance with the New Vehicle Assembly Specifications and Quality Control
Standards (as defined below) to be jointly developed and agreed by the parties.
4.11 Assembly Standards. All assembly processes at the New Vehicle
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Facilities shall meet all applicable safety and quality standards required by
applicable law.
4.12 Change Orders. Changes to the New Vehicle Design Specifications
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that require changes to the New Vehicle Assembly Specifications may be adopted
in accordance with the standardized process and procedure for the initiation and
approval of changes/modifications as set forth in Exhibit C.
SECTION 5
Purchase and Sale of New Vehicles
5.1 GM Requirements Commitment. For the term of this Agreement, AMG
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shall have production rights for the New Vehicle (including derivatives
thereof) up to 40,000 New Vehicles (plus available overtime capability as
mutually determined by the parties) per year. GM, however, reserves the right
to source production of additional New Vehicles, subject to AMG's capacity as
described above, at its sole discretion. The above provisions notwithstanding,
in the event GM sources production of additional New Vehicles other than to AMG
in any calendar year, GM must order a minimum of 40,000 New Vehicles (including
derivatives thereof) from AMG in that calendar year.
5.2 GM Exclusivity at New Vehicle Facilities. During the term of this
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Agreement, the New Vehicle Facilities shall be exclusively used for the assembly
of New Vehicles for GM (with the sole exception of the painting of the Current
Vehicle) and AMG shall not supply, sell, assign or otherwise transfer any New
Vehicles or any materials, data, information or component parts related to the
New Vehicle (including any derivatives thereof) to any third party without GM's
prior written consent; provided, however, the above limitation on component
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parts shall not apply to the continued production by AMG of the Current Vehicle
or related service parts.
5.3 Assembly Capacity. For each full calendar year during the term
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of this Agreement (excluding the initial start-up and launch period to be
mutually agreed upon by the parties), AMG shall develop, maintain and reserve
for GM hereunder a minimum assembly capacity (exclusive of overtime ) of 40,000
New Vehicles; provided, however, the 40,000 New Vehicle capacity shall be
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distributed evenly throughout the calendar year in accordance with a weekly
production schedule capable of attaining this annual production capacity.
5.4 Assembly Fees. GM shall pay to AMG for each New Vehicle delivered
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hereunder the assembly fee specified in Exhibit D.
5.5 Payment Terms and Freight. GM shall pay for New Vehicles delivered and
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accepted by GM (a) between the 1/st/ and 15/th/ day of each month, by the 25/th/
day of such month, (b) after the
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15/th/ day of each month, by the 10/th/ day of the following month and (c), in
the event the 10/th/ or the 25/th/ day of any month falls on a weekend or a
holiday, on the next Business Day thereafter. All payments of assembly fees and
costs to AMG for assembly of the New Vehicles shall be made based on delivery
and acceptance F.O.B. New Vehicle Facilities. The parties mutually agree to
install or use existing equipment to allow for electronic billing and electronic
transfer of funds.
5.6 GM Purchase Orders. GM's Standard Purchase Order General Terms and
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Conditions, a copy of which is attached hereto as Exhibit E (the "GM Purchase
Order"), are hereby incorporated into this Agreement by reference, with the
exception of Paragraphs 2, 9, 12, 13, 31, the phrase ",or have Seller provide
the goods from other sources in quantities and at times requested by Buyer, and
at the price set forth in the contract" at the end of the second sentence of
Paragraph 8, the phrase "Seller expressly waives any claim against Buyer that
such infringement arose out of compliance with Buyer's specification;" at the
end of sub-paragraph (a) of Paragraph 14, and the last sentence of Paragraph 18;
thereof which are expressly excluded. Additionally, the parties mutually agree
that (i) the reference to 30 day periods in the last sentence of Paragraph 8 are
increased to 180 day periods; (ii) the provisions of Paragraph 8 (as modified
herein) shall also apply to the construction of the New Vehicle Facilities and
the procurement of the initial complement of machinery and equipment as
contemplated in Sections 2.4 and 2.5 above; and (iii) the provisions of
Paragraph 23 are only applicable to amounts that are then due. Any amendment to
or revision of such Terms and Conditions shall also become a part hereof,
provided that GM and AMG mutually agree to such amendment or revision in writing
separate from the GM Purchase Order itself. In the event of a conflict between
the terms and conditions contained in this Agreement, any Exhibit, or the GM
Purchase Order, the order of precedence shall be as follows: this Agreement, the
Exhibit, and the GM Purchase Order.
5.7 Volume Estimates and Commitments. GM shall provide to AMG estimates of
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projected GM requirements of New Vehicles for assembly by AMG under the terms of
this Agreement and GM Purchase Orders for New Vehicles to be assembled and
delivered by AMG in a form and manner consistent with the processes utilized by
GM at its own manufacturing facilities.
5.8 Performance Bonus. In order to provide AMG a further incentive to
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perform its assembly obligations under this Agreement consistent with the
highest standards of quality and workmanship, AMG shall be paid a performance
bonus for obtaining the goals set forth in Exhibit D to this Agreement.
SECTION 6
Quality Control and Delivery
6.1 AMG Certification. AMG will be promptly certified to QS-9002 by
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an independent third party.
6.2 Quality Control Standards. AMG will maintain quality process,
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control and testing standards in the assembly of New Vehicles in accordance with
standards to be jointly developed and agreed upon by the parties (the "Quality
Control Standards").
6.3 AMG Inspection and Testing. AMG will inspect and test each New
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Vehicle in accordance with the inspection and testing standards set forth in the
Quality Control Standards.
6.4 GM Inspection and Testing. GM may enter AMG's premises upon
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reasonable notice and during reasonable business hours in order to audit,
inspect and test AMG's quality control to determine compliance with the Quality
Control Standards. GM may at its option and expense station
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inspectors at the New Vehicle Facilities for such purposes, provided, however,
that all such activities shall be coordinated through the GM program manager
appointed pursuant to this Agreement or his/her designee. AMG will cooperate
fully with GM in any such audit, inspection or testing.
6.5 Delivery Inspection. GM shall be entitled to inspect each shipment of
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New Vehicles at the New Vehicles Facilities within two (2) business days after
notice from AMG that such shipment is ready for delivery. The parties will
mutually develop and agree upon appropriate procedures for the time, place and
manner of such inspections.
6.6 Acceptance and Rejection. GM shall accept delivery of each shipment
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of New Vehicles within the inspection period provided in Subsection 6.5,
provided, however, that GM may reject any New Vehicles that fail to conform with
the New Vehicle Assembly Specifications and Quality Control Standards. Any such
rejected New Vehicles by reason of defects in the assembly of such New Vehicles
shall be promptly repaired by AMG at AMG's sole cost and expense to the extent
necessary to bring the New Vehicles in conformance with the New Vehicle Assembly
Specifications and Quality Control Standards. Defects not related to the
assembly of the New Vehicles, shall be handled pursuant to Sections 4.7(b) and
4.7(d) above, as applicable. Once repaired or corrected, previously rejected New
Vehicles shall then be resubmitted for inspection in accordance with the
procedures set forth hereinabove.
6.7 Shipment. New Vehicles accepted by GM shall be promptly delivered by
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AMG at the New Vehicle Facilities to a carrier specified by GM. Risk of loss or
damage of the New Vehicles shall pass from AMG to GM immediately upon such
delivery. GM shall arrange and pay for all transportation and insurance relating
to the New Vehicles from the point of delivery to the carrier specified by GM.
SECTION 7
Warranty, Repair, and Recall
7.1 AMG Warranty. AMG warrants to GM that each New Vehicle assembled by
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AMG shall conform to the New Vehicle Assembly Specifications and Quality Control
Standards and will be free from defects in indirect materials and workmanship
provided by AMG (the "AMG Warranty"). Unless otherwise agreed by the parties in
writing, Sections 7.2, 7.4,7.7 and Section 8 below provide GM's exclusive
financial remedies for breach of the AMG Warranty.
THE EXPRESS WARRANTY PROVIDED HEREIN IS IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7.2 Responsibility for Repair of Defects (Pre-Sale). Any New Vehicle
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accepted by GM during the initial inspection that proves to be defective prior
to shipment may be repaired by AMG as specified in Section 6.6. In the event a
New Vehicle is shipped before such defects are discovered, the defect(s) may be
corrected as part of the normal warranty process specified in Section 7.4 prior
to delivery to the final customer.
7.3 Term of AMG Warranty. The AMG Warranty shall extend for a period of
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thirty-six (36) months or 36,000 miles, whichever comes first, from the date of
retail sale or the date the New Vehicle is placed in service, whichever comes
first, provided however, that if GM extends its New Vehicle Limited Warranty
applicable to New Vehicles for a longer time or mileage, AMG's warranty
hereunder will be extended to match that of GM consistent with the warranty
sharing arrangement contemplated in Section 7.4 below.
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7.4 Warranty to GM Authorized Dealers. GM will warrant the New Vehicles to
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GM Authorized Dealers as provided under its GM Authorized Dealer Agreement, New
Vehicle Limited Warranty and Emissions Control Systems Warranties. AMG agrees
that, GM Authorized Dealers and GM Authorized Service Centers are authorized to
perform warranty repairs and services and AMG shall reimburse GM for 20% of the
cost of such repairs and services; provided, however, that AMG's liability for a
particular Model Year vehicle for such warranty repairs and services shall be
limited to an amount equal to $200.00 times the number of New Vehicles assembled
by AMG and delivered to GM for that Model Year. The 20% allocation and the
$200.00 per New Vehicle limitation, however, shall not apply to quality spills
or extraordinary spikes in warranty repairs and services, for which the
financial responsibility of each party shall be determined in accordance with
the root cause analysis of such incidents. AMG shall reimburse GM for AMG's
portion of the cost of warranty repairs and services, as specified above, within
30 days of their approval for payment by GM and their submission to AMG. The
above provisions notwithstanding, AMG shall not be responsible for costs
associated with policy expense.
7.5 Review of Warranty Costs. GM shall provide AMG with all existing
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warranty information on the New Vehicles as it becomes available.
7.6 Warranty to Consumers. GM will administer its warranty to consumers
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through the established GM warranty administration process as modified from time
to time in the normal course.
7.7 Recall and Reimbursement. The provisions of Section 7.4 above
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notwithstanding, in the event of a recall campaign by GM necessitated by a
defect or nonconformity for which AMG is responsible (as established by the New
Vehicle Assembly Specifications and quality control standards), in whole or in
part, AMG will reimburse GM for the direct costs, expenses, and any penalties
for which AMG is responsible which may be incurred, with the understanding that
such direct costs, expenses and penalties to be borne by AMG will be
proportional to the degree of AMG's responsibility for the defect or
nonconformity which caused the recall. Prior to GM performing any recall
campaign for which GM expects reimbursement, GM and AMG will exchange
information and will consult with each other with respect to the need and
advisability thereof; provided, however, that the final decision as to whether
or not to have a recall will in every instance rest with GM.
7.8 Representation before Governmental Agencies. GM will represent
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the interests of both GM and AMG in connection with any request for any data or
information and any allegations or inquiries from the NHTSA, the EPA or any
other federal, state or local government concerning suspected or alleged safety
defects or noncompliance with any governmental safety standard or regulation or
governmental emissions control or fuel economy standard or regulation or other
applicable law relating to any New Vehicle. To the extent any such request
could reasonably result in significant financial exposure to AMG, GM shall
consult with AMG regarding such requests and in good faith fully consider AMG's
positions, suggestions and strategies.
7.9 Governmental Authority Finding. In the event of a finding by any
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governmental agency of any safety defect or noncompliance with any governmental
safety standard or regulation or governmental emissions control or fuel economy
standard or regulation or other applicable law relating to the New Vehicles, (a)
negotiations with that governmental agency about the amount of civil penalties,
fines or other monetary assessment, or a recall or notification campaign, and
(b) a decision on whether to challenge the findings of such, will be conducted
or made solely by GM.
7.10 GM Consultation with AMG. GM shall keep AMG fully informed of any
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representation before any governmental agency and any proceedings in that
connection as well as any findings by any governmental agency and any
negotiations and decisions by GM. If GM determines it is necessary to conduct a
recall campaign involving the New Vehicle, GM and AMG will consult in good
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faith to determine the nature of any corrective action to be taken concerning
the New Vehicle, and GM will issue whatever notification letters are required
and conduct the recall campaign.
7.11 Voluntary Recall Campaigns. If, as the result of field experience,
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test data or otherwise, either GM or AMG finds that there may be a safety or
emissions related defect or noncompliance involving the New Vehicle, even though
not involving an inquiry from or determination of any governmental agency, it
will immediately notify the other party, whereupon GM, after consultation with
AMG, will have the right to issue notification letters or conduct a voluntary
recall campaign in connection therewith.
7.12 Reports to Governmental Authorities. GM will submit to the
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applicable governmental agency all reports and data applicable to the New
Vehicles and required to be submitted under any applicable law. Any information
reasonably necessary for such reports will be furnished to GM by AMG, and AMG
will give reasonable assistance to GM in the preparation of such reports. GM
will prepare all notices, bulletins and other communications to GM Authorized
Dealers regarding any defects in the New Vehicles. GM will endeavor to keep AMG
informed of, all information and reports and data filed with any governmental
agency with respect to the New Vehicles and provide AMG with copies of all such
materials upon AMG's request.
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SECTION 8
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Product Liability Claims
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8.1 Indemnities. GM and AMG shall each indemnify, defend and hold
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harmless the other from and against any liabilities, claims, and demands arising
out of the death of or injury to any person or damage to any property alleged to
have resulted from a defect in or malfunction of any of the New Vehicles,
consistent with the provisions of this Section 8.
8.2 Communication and Cooperation. With respect to any actual,
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potential or threatened product liability claim, action or proceeding relating
to any New Vehicle, GM and AMG shall (i) communicate and cooperate with each
other and, if required, with the appropriate insurance carrier, to the fullest
extent reasonably possible in investigating the facts and circumstances
surrounding the claim and in litigating the matter; (ii) refrain to the fullest
extent reasonably possible from taking positions adverse to the interests of
each other, and (iii) not, except in enforcement of any rights under this
Agreement, institute any claim, action or proceeding, whether by cross-claim,
third-party claim, interpleader or otherwise, against each other.
8.3 Product Liability Insurance. Recognizing that it would be
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undesirable to rely upon third party practice or other legal actions to enforce
each party's rights against the other under this Section 8, AMG has become and
will continue to be, for as long as this Agreement is in effect, an additional
insured under a GM Product Liability Program. GM shall be reimbursed for the
costs associated with such insurance through a payment by AMG in the amount of
$150.00 per New Vehicle assembled by AMG; provided, however, that GM shall be
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fully responsible for any deductibles and/or self insured portion of such
insurance. Upon AMG's written request, GM will furnish AMG with certificates of
insurance verifying the relevant insurance coverages and identifying AMG as an
additional insured.
8.4 Non-Disclosure. GM and AMG agree not to disclose to any third
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parties any information with respect to the arrangements set forth under this
Section, unless required as a matter of law, in any judicial proceedings, or SEC
or similar mandatory filings, without the prior written consent of the other
party which shall not be unreasonably withheld.
8.5 Management of Product Liability Lawsuits and Claims. Because AMG will
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be an additional insured under the GM Product Liability Program, GM as between
the parties shall have the right and responsibility to manage all lawsuits and
all product liability claims relating to New Vehicles covered under this
Agreement. GM shall have the right to select counsel to defend GM and AMG in
product liability lawsuits and claims; provided, however, that GM shall consider
in good faith any objections that AMG may have with regard to such counsel,
including potential conflicts of interest between such counsel and AMG. GM shall
have the right and responsibility to make all case decisions, including whether
and when to settle and how much money to pay. The parties agree to work together
to establish and develop appropriate procedures and practices to make sure that
AMG is kept adequately informed on a current and timely basis regarding the
status of any claims and lawsuits. In the event a product liability claim or
lawsuit is brought against AMG relating to any New Vehicle, AMG shall as
promptly as practicable in the circumstances forward to GM Legal Staff every
summons and complaint and every other court document received by AMG and in no
event shall AMG take any action for defense or settlement without the consent of
the GM Legal Staff.
8.6 Costs and Expenses for Investigation and Discovery. The above
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provisions notwithstanding, GM and AMG will bear their respective costs and
expenses incurred in connection with
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cooperating during any investigation of claims and lawsuits, including those
costs incurred for (i) searching for and producing any documents that may be
called for during any discovery proceedings; (ii) answering any interrogatories
or other discovery requests, including any interpreter costs, (iii) identifying
any potential deponents or trial witnesses, (iv) producing any of their
respective employees, retirees, consultants, or experts, for any deposition or
trial testimony; and (v) producing any sample or component parts that may be
necessary for analysis of any technical issues for any claim or lawsuit defense
of any Vehicles covered under the terms of this Agreement.
8.7 Uninsured or Uninsurable Excess Payments. With respect to any
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payments that may be necessary to satisfy any judgments that not covered by such
insurance, the parties agree that responsibility for those payments shall be
apportioned 100% to GM.
SECTION 9
Term and Termination
9.1 Term. Unless sooner terminated or extended in accordance with the
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provisions hereof, this Agreement shall commence on the Effective Date and shall
remain in effect through December 31, 2009. GM may, in its sole discretion,
extend this Agreement for one or more years from the scheduled date of
expiration by giving notice thereof to AMG not less than one year prior to the
then-scheduled expiration. Promptly following receipt of such notice, AMG and
GM shall negotiate in timely manner and in good faith any required adjustments
(up or down) to the Assembly Fee to be received by AMG during the extension
period.
9.2 Term Adjustment. The above provision regarding the specific term of
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this Agreement notwithstanding, the parties mutually acknowledge the potential
for the timing of vehicle programs to be accelerated or delayed for a variety of
reasons. The parties further acknowledge that it is their mutual intent for this
Agreement to cover a expected production run of approximately 7 1/2 to 8 years
beginning on a date to be mutually agreed upon by the parties. In this regard,
the parties agree that, in the event the timing of the New Vehicle Launch is
either accelerated or delayed, as the case may be, the term of this Agreement
will be adjusted as necessary to achieve a 7 1/2 to 8 year production run.
Additionally, in the event that GM fails to order a minimum of 5,000 New
Vehicles (including derivatives thereof) during any calendar year, the parties
shall promptly meet to identify and discuss the cause or causes for such low
volume of orders and jointly develop and implement a mutually acceptable plan
for going forward with the project contemplated herein, including the possible
adjustment (up or down) of the term of this Agreement and/or an appropriate
modification of the Assembly Fee specified in Exhibit D.
9.3 Termination of this Agreement. Either party may immediately cancel
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this Agreement in any of the following events: (a) the other party materially
breaches this Agreement and fails to cure such breach within a commercially
reasonable period of time under the circumstances following written notice; (b)
the other party enters bankruptcy, receivership, liquidation, composition of
creditors, dissolution or similar proceeding; or (c) a significant portion of
the assets of the other party necessary for the performance of this Agreement
becomes subject to attachment (unless cured within a commercially reasonable
period of time), embargo or expropriation.
9.4 Special Termination Rights. GM may terminate this Agreement in
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the event twenty percent (20%) or more of AMG becomes owned or controlled,
directly or indirectly, by a competitor of GM in the business of manufacturing
motor vehicles.
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9.5 No Termination for Convenience. Neither GM nor AMG shall have the
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right to terminate this Agreement for convenience.
9.6 Notice of Default. GM shall advise AMG immediately of the occurrence
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of any of the events set forth in the preceding subsection 9.3 and AMG shall
advise GM immediately of the occurrence of any of the events set forth in the
preceding subsections 9.3 and 9.4.
9.7 Pre-Existing Orders. Any bone fide customer order which may have been
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taken by GM prior to any notice of termination hereunder shall not be affected
by such termination, and upon GM's request, AMG shall utilize its reasonable
best efforts to assist GM in the fulfillment of such order, including but not
limited to the assembly of the New Vehicle contemplated therein.
9.8 Sums Owing. Termination of this Agreement shall not release either
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party from payment of any sum which may be due and owing to the other party
under the terms of this Agreement.
9.9 Rights Following Termination or Expiration. Termination or
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expiration of this Agreement will not affect any liability which (a) has arisen
prior to such termination or expiration; or (b) may arise after such termination
or expiration based on transactions made prior to such termination or
expiration, or any obligations which, from the context hereof, are intended to
survive termination or expiration of this Agreement.
9.10 Other Rights and Remedies. Upon the breach by either party hereto of
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any covenant or warranty hereunder, the party damaged by any such default or
breach may, in its sole discretion, in addition to exercising any other remedies
provided for hereunder, proceed in to protect and enforce its rights, to recover
any damages to which it may be entitled (including all costs and expenses
reasonably incurred in the exercise of its remedy), or to seek specific
performance by the other party of such other party's obligations under this
Agreement; provided, however, in no case shall either party be liable to
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the other for indirect, special or consequential damages (subject to Section 4.3
of the Master Agreement).
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SECTION 10
MISCELLANEOUS
10.1 GM and AMG as Independent Contractors. This Agreement does not
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constitute GM the agent or legal representative of AMG or AMG the agent or legal
representative of GM for any purposes whatsoever. GM's personnel are not
employees or agents of AMG and AMG's personnel are not employees or agents of
GM. Except as otherwise provided herein, neither party has any authority to
negotiate or enter into any agreement or contract or to make any promise,
affirmation, description or representation or to create any obligation of any
kind, or to incur any liability whatsoever, on behalf of the other party. Each
party hereto will function as an independent contractor only and will have no
interest in common with the other as part of any joint venture or partnership.
10.2 Assignment. This Agreement shall not be assigned by either party
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without the prior written consent of the other party.
10.3 Transactions After Termination. In the event either party has any
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business relation with the other after termination of this Agreement, any such
relation shall not be construed as a renewal of this Agreement or a waiver of
such termination.
10.4 Choice of Law. All disputes concerning the validity, interpretation,
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or performance of this Agreement and any of its terms or provisions, or of any
rights or obligations of the parties hereto, shall be governed by and resolved
in accordance with the laws of the State of Michigan, without regard to the
principle of conflicts of law.
10.5 Notices. All notices under this Agreement shall be in writing
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(letter, telex, facsimile, or telegram) and shall be effective when received by
the addressee at its address indicated below.
Notices to AMG: Paul J. Cafiero, Chief Financial Officer
AM General Corporation
105 North Niles Avenue
South Bend, IN 46617
with a copy to: Dennis A. Sadlowski, Vice President
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The Renco Group, Inc.
30 Rockefeller Plaza
New York, New York 10112
Notices to GM: Ken Lindensmith
GM Truck Group
MC: 483-621-175
1919 Technology Drive
Troy, Michigan 48083-4247
or to such other addresses as the parties may from time to time designate in
writing.
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10.6 Waiver and Delay. No waiver by either party of any breach or series
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of breaches or defaults in performance by the other party, and no failure,
refusal or neglect of either party to exercise any right, power or option given
to it hereunder or to insist upon strict compliance with or performance of
either party's obligations under this Agreement, shall constitute a waiver of
the provisions of this Agreement with respect to any subsequent breach thereof
or a waiver by either party of its right at any time thereafter to require exact
and strict compliance with the provisions thereof.
10.7 Successors and Assigns. This Agreement shall be binding upon and
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inure to the benefit of the successors and assigns of the parties hereto,
subject to the restrictions on assignment contained herein.
10.8 Entire Agreement. This Agreement together with all schedules and
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exhibits attached hereto contains all of the terms and conditions agreed upon by
the parties hereto with reference to the subject matter hereof. No other
agreements, oral or otherwise, shall be deemed to exist or to bind either of the
parties hereto, and all prior agreements and understandings are superseded
hereby. This Agreement cannot be modified or changed except by written
instrument signed by both of the parties hereto.
10.9 Titles and Headings for Convenience. Titles and headings used in
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this Agreement are for convenience only and shall not be deemed to affect the
meaning or construction of any of the terms, provisions, covenants, or
conditions of this Agreement.
10.10 Severability. Nothing contained in this Agreement shall be construed
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as requiring the commission of any act contrary to law. If any tribunal or court
of competent jurisdiction deems any provision hereof unenforceable, such
provision shall be modified only to the extent necessary to render it
enforceable and the remaining provisions shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused two (2) copies this
Agreement to be duly executed and delivered by their proper and duly authorized
representatives effective as of the date first written above.
GENERAL MOTORS CORPORATION AM GENERAL CORPORATION
By: ___________________________ By: __________________________
Title: ________________________ Title: _______________________
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