Exhibit 10.2
HEAVY DUTY*
COMPONENT SUPPLY AGREEMENT
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THIS COMPONENT SUPPLY AGREEMENT ("Agreement") is entered into July 31, 1994, by
DRA, Inc. ("DRA"), a company organized under the laws of the State of Delaware,
and General Motors Corporation, a company organized under the laws of the State
of Delaware ("GM").
INTRODUCTION
This Agreement is entered with reference to the following facts:
A. DRA, DR International, Inc. ("DRI") and GM have entered into the Asset
Purchase Agreement dated July 13, 1994, (the "Asset Purchase Agreement"),
pursuant to which DRA will purchase from GM certain of the assets, and will
assume certain of the liabilities, of the Delco Remy Heavy Duty Starter
Motors and Generators business ("HDO"), the Delco Remy Light Duty Starter
Motors business ("LDO"), the Delco Remy Powder Metal Forge Business
("PMF"), the Delco Remy Heavy Duty Starter Motors and Generators
Remanufacturing Business ("HDO Reman") and the Delco Remy Light Duty
Starter Motors Remanufacturing business ("LDO Reman" and collectively with
HDO, LDO, PMF, and HDO Reman, the "Businesses") of the Delco Remy Division
of GM (together with any successor unit of GM, the "Delco Remy Division").
B. In connection with the transactions contemplated by the Asset Purchase
Agreement, GM and DRA desire to establish a mutually beneficial and
efficient long-term arrangement for the purchase and sale of certain motor
vehicle components and to cooperate with each other to achieve certain
commercial objectives. Accordingly, DRA desires to sell to GM, and GM
desires to purchase from DRA, certain motor vehicle components upon the
terms and conditions stated herein.
*Portions of this Exhibit 10.2 were omitted and filed separately with the
Secretary of the Securities and Exchange Commission (the "Commission") pursuant
to an application for confidential treatment filed with the Commission pursuant
to Rule 406 under the Securities Act of 1933. Such portions are marked by the
word "Redacted."
C. DRI has formed DRA to own and operate the Businesses. The investors in DRI
and GM intend that DRA will be a supplier of GM for an extended period,
subject to DRA's competitive performance in technology, quality, service
and price as set forth herein. DRA acknowledges GM's normal expectation
that component suppliers will deliver a minimum net cost reduction of three
percent (3%) each year. GM acknowledges that DRA will need several years to
achieve satisfactory financial performance. Both GM and DRA acknowledge
that the best way to achieve their goals is by establishing a cooperative,
ongoing relationship.
D. DRA understands that components sold under this Agreement must be
competitive with regard to components available to GM from other suppliers
to GM, and as set forth herein, that GM intends to continue to seek
information regarding products of other suppliers, including information
regarding quality, technology, service, and price.
NOW, THEREFORE, in consideration of the mutual promises contained herein and
intending to be legally bound, DRA and GM hereby agree as follows:
ARTICLE 1 - PURCHASE AND SUPPLY COMMITMENTS
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1.1 (a) Commitment for GM Requirements: For the term of this Agreement,
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subject to paragraphs 1.2(d)(iii) and 1.2(e) of this Agreement, DRA
agrees to sell and GM agrees to purchase one hundred percent (100%)
of GM's production and current production model service requirements
for Components in the United States and Canada. Additionally, DRA
agrees, and commits through its purchase offer, to capacitize its
operations to the full extent of GM's requirements for such
Components; and shall not rebill GM for the cost of any tooling or
equipment transferred pursuant to the Asset Purchase Agreement.
Separate provisions will be negotiated for service parts currently
distributed by AC Delco and/or GM Service Parts Operations. To the
extent that GM purchases any Components indirectly (e.g.,
incorporated into a sub-assembly
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purchased from a sub-assembler for use as original equipment), GM
shall require such sub-assembler to comply with this Article 1.1 For
purposes of this Agreement, the term "Components" shall mean any one
or more of the motor vehicle components listed in the Supply
Schedule attached hereto as Annex "A", plus any other new or
replacement component which is required by GM for use as original
equipment or service parts between the effective date of this
Agreement and July 31, 1997, provided, however, that "Components"
shall not include (i) remanufactured motor vehicle heavy duty starter
motors and parts and sub-assemblies, and (ii) motor vehicle heavy
duty starter motors and parts and assemblies for past model service.
(b) Issuance of Purchase Orders: GM will place all orders hereunder in
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accordance with GM's customary practices, as the same may be revised
from time to time.
1.2 Price and Adjustments
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(a) Initial Prices: The unit prices for the Components as of the
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effective date of this Agreement are stated in the Supply Schedule
(Annex "A"). GM and DRA understand the current prices listed in
Annex A are market competitive as of Fall 1993. In addition, the
parties agree that GM's standard non-ferrous metals price adjustment
policies will apply throughout the term of this Agreement.
(b) Cost Reduction Programs:
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(i) DRA and GM shall use their best efforts to identify and
implement productivity and other improvements to reduce DRA's
cost of producing the Components. Beginning in the second model
year after DRA's transition out of GM (i.e. beginning August 1,
1995) (the "Second Model Year"), and each
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model year thereafter during the term of this Agreement, DRA shall
retain fifty percent (50%) of the amount of the "Cost Savings" (as
such term is defined below) achieved in the most recent model year
ended and fifty percent (50%) of the Cost Savings shall be passed on
to GM by means of additional price reductions on Components;
provided, however, that DRA shall retain 100% of the Cost Savings
resulting from the "right sizing" (the related reduction of hourly
personnel and elimination of all associated employee benefit cost as
described in Section 7.13 of the Asset Purchase Agreement) of DRA's
business as contemplated in DRA's business plan for the HDO business.
All calculations pursuant to this Paragraph 1.2(b)(i) shall be done
at a plant level or each Component. For purposes of this Agreement,
the term "Cost Savings" shall mean the net reduction, if any, in the
full manufacturing cost to produce one unit of a Component (taking
into account all labor, material and plant burden (including
depreciation and amortization)) at the end of a model year from the
full manufacturing cost to produce one unit of a Component at the
beginning of a model year, calculated utilizing a consistent
accounting procedure agreed upon by the parties whereby all of DRA's
costs are allocated on a part number basis which reflects the true
full manufacturing cost to produce one unit of the Component. The
parties shall agree upon a mutually acceptable measuring device for
calculating the cost savings no later than six (6) months prior to
the commencement of the second year taking into account DRA's need to
protect the confidentiality of the cost information and GM's need to
verify the information.
(ii) In addition, GM will make available to DRA, and DRA will
participate in good faith in, all productivity improvement programs
generally available to suppliers to GM, including but not limited to
PICOS workshops and creativity teams. Each party will bear its
respective costs arising from participation in such activities.
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(c) Prices and Adjustments for Prior Model Service Parts: Pricing with
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regard to prior model service parts which have not yet become prior model
as of the Closing Date and which are not otherwise listed on Exhibit B to
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the Distribution and Supply Agreement between GM and DRA of even date
herewith (the "Distribution and Supply Agreement") will be determined on an
initial basis by the pricing of such Component pursuant to this Agreement
immediately before that Component becomes prior model. Thereafter,
adjustments to pricing for prior model service parts will be determined by
adjustments to the price at which GM's Service Parts Operations Division
provides such Component to its customers, in the manner provided for in the
Distribution and Supply Agreement.
(d) Global Sourcing:
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(i) GM may periodically undertake global sourcing studies with regard to
the Components at any time during the term of this Agreement. GM agrees to
solicit such information from qualified suppliers only, and in the context
of both substantive volume and an extended time frame, in order to assure
that the information received represents achievable benchmarks. GM agrees
to inform DRA on a timely basis of its issuance of any such requests.
(ii) If GM informs DRA prior to July 31, 1997, that the unit price of a
Component is not competitive with the market-based price determined by such
a global sourcing study, GM and DRA will cooperate in good faith to
determine why DRA's price is not competitive. Promptly thereafter, DRA will
prepare a plan including specific interim goals and target dates for
reducing DRA's price to the market-based competitive price. With the
assistance of GM, DRA will use its best efforts to achieve maximum
productivity and cost reduction improvements, including but not limited to
changing types of suppliers of materials and incurring reasonable
developmental expenses and
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capital investments, and beginning in the Second Model Year, fifty percent (50%)
of any resulting cost reductions, if any, will reduce prices pursuant to
paragraph 1.2(b) of this Agreement. However, prior to July 31, 1997, GM shall
not purchase Components from other suppliers because of price.
(iii) After July 31, 1997, the Components must competitive in terms of price,
technology and design with similar products which may be available to GM. Should
GM receive a quotation which meets the criteria of (i) above, and which, in the
case of quotations received from current GM suppliers, is comparable to current
prices being charged GM by such suppliers, GM, to the maximum extent and detail
possible without breaching any legal or contractual obligations to such third
party, shall advise DRA in writing of the area(s) (i.e., price, technology
and/or design) in which the other product(s) offered in such quotation are more
competitive. DRA shall have sixty (60) days within which to notify GM that it
shall sell the affected Components(s) at the competitive price, with
substantially comparable technology and/or design as the case may be. It is
agreed by the parties that the effective date(s) for such price reductions(s)
and/or improvement(s) in technology and/or design shall be the date(s) at which
the other supplier is able to supply the competing component(s). It is further
agreed by the parties that should DRA elect to meet the competing offer, its
price reduction(s) and/or improvement(s) in technology and/or design shall not
be limited to only the quantities set forth in the competing offer but rather to
all affected Components being supplied by DRA hereunder.
(iv) Should DRA fail to notify GM within the sixty (60) day time period set
forth in (iii) above, or should DRA notify GM that it will not meet the
competing offer, GM may terminate its purchase(s) of the affected Component(s)
hereunder and thereafter purchase the Component(s) from the other source.
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(e) GM and DRA agree that within 120 days of the closing of the
transactions contemplated by the Asset Purchase Agreement, GM will
globally source the 28MT Component to establish the market competitive
price for such component. DRA will have the right of last refusal to
continue supplying GM's production and service requirements for the
28MT Component at the newly established market competitive price. Any
required price adjustment hereunder will be effective immediately.
1.3 Service Manuals and Technical Support: During the term of this Agreement,
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DRA shall provide to GM at no additional cost all necessary service and
technical support information and materials related to the Components
(regardless of format, i.e. text, graphics, audio, video, etc.) including
but not limited to service manuals, service bulletins, training materials,
product bulletins and product information booklets; provided however, that
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such services and support shall be reasonably consistent with that supplied
by the Delco Remy Division prior to the Closing Date.
ARTICLE 2 - PURCHASE ORDER TERMS AND CONDITIONS:
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2.1 Purchase Orders: Attached hereto as Annex "B" is the standard form of
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purchase order customarily offered by GM to its suppliers as of the date of
this Agreement. All purchase orders issued by GM and accepted by DRA
pursuant to this Agreement shall utilize such standard form purchase order
and shall be governed by its terms and conditions, provided, however, that
Paragraphs 11, 12, 13, 15, 22, 23, 31 and the last sentence of Paragraph 14
therein shall be deleted and may not be invoked or exercised by either
party with respect to any purchase orders issued and accepted under this
Agreement; and provided further that notwithstanding the provisions
contained in Paragraph 2 of the form of purchase order, the payment terms
to DRA for all Components sold hereunder shall be net 10th, 25th Prox,
F.O.B. DRA - Anderson, Indiana. Additionally, the parties agree with regard
to Paragraph 14 of the form of
purchase order that the word "reconstruct" in sub-paragraph (c) therein
shall not be interpreted to mean remanufacture.
2.2 Order of Precedence: The terms and conditions of such purchase orders
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shall be construed as cumulative and supplemental to those set forth
herein; provided, however, that to the extent of any conflicts between
the provisions of any purchase order and those of this Agreement, the
terms of this Agreement shall govern.
ARTICLE 3 - TERM OF AGREEMENT AND GROUNDS FOR EARLIER TERMINATION
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3.1 Term of Agreement: The term of this Agreement shall be through July 31,
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2000 unless terminated earlier pursuant to Article 3.2 or 3.3.
3.2 General Grounds for Termination: Either party may terminate this
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Agreement in any of the following events: (i) the other party materially
breaches this Agreement; (ii) the other party becomes insolvent or
enters bankruptcy, receivership, liquidation, debtor initiated
composition of creditors, dissolution, or similar proceeding; or (iii) a
significant portion of the assets of the other party necessary for the
performance of this Agreement becomes subject to attachment, embargo, or
expropriation.
3.3 Special Grounds for Termination: In addition to its rights under the
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preceding paragraph, GM may terminate this Agreement in the event that
thirty-five percent (35%) of the voting shares of DRI or DRA become
owned or controlled, directly or indirectly, by a manufacturer of fully
assembled passenger cars and/or light duty trucks. For purposes of this
Section, the percentage ownership in DRI or DRA voting shares which is
deemed to be owned or controlled directly or indirectly by an entity
(the "Parent") owning voting shares in an entity other than DRI or DRA
(as the case may be) (the "Affiliate"), shall be determined by
multiplying the Parent's percentage ownership of voting shares in the
Affiliate by the percentage ownership or control, direct or indirect,
that the Affiliate has in either DRI or DRA. Similarly, the
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foregoing shall also apply to any additional levels of either the
Parent's or the Affiliate's subsidiaries or affiliates. In all cases,
however, ownership or control, directly or indirectly, of more than
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fifty percent (50%) of the voting shares of any entity will be deemed to
be direct or indirect ownership or control of one hundred percent (100%)
of the voting shares of that entity.
3.4 Termination Procedure: A party intending to terminate this Agreement
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shall first notify the other party of the grounds for the intended
termination. In the event the other party fails to remedy such grounds
for termination within thirty (30) days after the date of such notice,
then the terminating party may terminate this Agreement effective
immediately upon notice to the other party without the need for any
judicial action.
3.5 Reservation of Rights: The provisions of this Article are without
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prejudice to any other rights or remedies either party may have be
reason of the default of the other party.
ARTICLE 4 - TECHNOLOGY, DESIGN AND QUALITY
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4.1 Quality Control: DRA will institute and maintain a quality control and
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inspection system which incorporates A.I.A.G. Standards, General Quality
Standards, Targets for Excellence, and other GM policies generally
applicable to suppliers.
4.2 Technology and Design: Through July 31, 1997, DRA will use its best
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efforts to provide Components which are equivalent in terms of
technology and design to similar parts available at a substantially
equivalent price. If GM informs DRA that, in the reasonable opinion of
GM, the technology or design of a Component is not equivalent (giving
additional relevant information as available for disclosure by GM) to
another available product, DRA will submit within one hundred (120) days
of comprehensive
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business plan as to how it will attempt to provide Components with
equivalent or superior technology or design.
4.3 Quality/Warranty Provisions:
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(a) Warranty on Components: Components supplied hereunder shall confirm
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to the warranty set forth in Paragraph 9 ("Warranty") of GM's purchase
order terms and conditions. Should Components fail to conform to such
Warranty, DRA (with assistance from GM as appropriate) shall
immediately develop a comprehensive corrective action plan. However,
should DRA fail to implement the corrective action plan or should DRA
fail to remedy or cure the default/breach within one hundred (180)
days, GM, at its option, may immediately terminate its purchase of the
affected Component(s). This right of termination shall be cumulative
and additional to those set forth in Sections 3.2 and 3.3.
Notwithstanding the foregoing, during the term of this Agreement, DRA
shall not have any financial responsibility whatsoever to GM for
vehicle warranty, except to the extent, if any, and subject to Section
4.3(b) below, that such financial responsibility derives from any
recall, service fix, or campaign (safety and otherwise)
b. Service Fix, Recall and Safety Campaigns: DRA will promptly notify GM
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of any defects, when such defects come to the attention of DRA, which
might be the basis of a recall, service fix or campaign (safety or
otherwise) for which GM might be responsible. Notwithstanding the last
sentence of paragraph (a) above: (i) GM will pay 100% of the cost of
any service fix, recall or campaign (safety or otherwise) that is
undertaken for all Components actually manufactured by GM through the
date of this Agreement, and (ii) for a period of four (4) years from
the date of this Agreement GM shall also pay 100% of the cost of any
service fix, recall or campaign (safety or otherwise) involving
Components manufactured after the date of this Agreement for
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which the Component design, engineering or manufacturing process in
use as of the date of this Agreement is a contributing cause, or for
which a GM prescribed application, design, engineering or
manufacturing process is a contributing cause.
(c) Inventory: If either party becomes aware of or discovers the existence
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of any defect or nonconformity in any Components that are enroute to
or in the parts inventory of GM (other than parts inventory that was
enroute to or in the parts inventory of GM as of the Closing Date), it
shall notify the other. In such event, DRA shall, as the case may be,
either absorb or reimburse GM for all direct costs and expenses
incurred on the repair, modification or replacement of such items.
4.4 GM Use of Technical Information: Upon the request of GM, and solely for the
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purpose of quality, reliability, and durability testing/evaluation of the
Components, DRA will deliver to GM all information relating to the
development and manufacture of any and all Components in sufficient detail
to permit evaluation of the Components by GM or its designated supplier of
testing service(s), provided that such supplier is not a direct competitor
of DRA. Such information may include drawings; parts lists; process and
material specifications; product software and mask works; purchasing
specifications; tool and labor routings; inspection processes; assurance
and reliability projections; process capability studies; test reports; and
failure mode and analysis studies. Such information will be updated by DRA
to show changes in any Components or their manufacture. GM will use such
information exclusively for evaluation of the Components. It is agreed by
the parties, however, that "Component Interface Materials" (as such items
are described in Section 3.2.10 of the Asset Purchase Agreement) are or
shall be the property of GM and consequently not subject to the
restrictions set forth in this Agreement or in any other between the
parties.
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ARTICLE 5 - GENERAL PROVISIONS
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5.1 No Agency: This Agreement does not constitute either party the agent or
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legal representative of other party. Neither party is authorized to create
any obligation on behalf of the other party.
5.2 Advertising: DRA will not, without first obtaining the written consent of
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GM, if any manner advertise or publish the fact that DRA has contracted to
furnish the Components to GM, or use any trademarks or tradenames of GM in
DRA's or DRI's advertising or promotional materials; provided, however,
that the foregoing restriction shall not apply to advertisements or
publications (i) reasonably necessary under applicable securities laws or
regulations in the event of a public offering of DRI or of DRA securities;
(ii) necessary for obtaining financing by DRA or DRI; or (iii) permitted
under the Asset Purchase Agreement, the Tradename License Agreement or the
Trademark License Agreement.
5.3 Notices: Any notice under this Agreement shall be in writing (letter,
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telex, facsimile, or telegram) and shall be effective when received by the
addressee at its address indicated below.
(a) Notice sent to DRA shall be addressed as follows:
Delco Remy America, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
(b) Notice sent to GM shall be addressed as follows:
AC Delco Systems Division GM Worldwide Purchasing
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Building 1-8
Attn: Finance Director ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Executive Director - Electrical
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(c) The parties by notice hereunder may designate other addresses to
which notices shall be sent.
5.4 Amendments: No amendment to this Agreement shall be binding upon either
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party unless it is in writing and is signed by the other party.
5.5 Assignment: This Agreement shall be binding upon and inure to the benefit
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of GM and DRA and their respective successors and assigns. No party to
this Agreement may assign this Agreement or any of its rights, interests
or obligations hereunder without the prior written consent of the other
party; provided, however, that DRA may (a) without the prior written
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consent of GM assign this Agreement and any or all of its rights,
interests and obligations hereunder to one or more of its Affiliates (as
defined in the Asset Purchase Agreement), provided that, notwithstanding
such assignment DRA shall remain liable for all of its obligations
hereunder and (b) upon receipt of GM's consent (which will not be
unreasonably withheld), assign this Agreement and its rights, interests
and obligations hereunder to (i) a transferee of all or substantially all
of the assets of any or all of the Businesses, or (ii) any successor to
any or all of the Businesses, in each case, insofar as such rights,
interests and obligations relate to or affect the assets or Businesses so
transfered or as to which such assignee has become a successor, provided
that GM shall take into consideration in granting its consent the
following: (A) that such transferee or successor is not less creditworthy
than DRA as of the Closing Date, (B) such transferee or successor executes
a written acknowledgement of its assumption of DRA's obligations to GM
under this Agreement, (C) that such transferee or successor is not an
original equipment manufacturer of fully assembled passenger cars and/or
light duty trucks, (D) if such transferee or successor is a then current
supplier to GM, such transferee or successor shall be in good standing and
have demonstrated manufacturing expertise, (E) if such transferee or
successor is a manufacturer but is not then a current supplier to GM, such
transferee or successor shall have not been terminated as a supplier by
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GM for reasons other than failure to be price competitive and shall have
a reputation of large-scale, quality manufacturing and reliable
performance of contracts.
5.6 Law and Jurisdiction: This Agreement shall be governed by the laws of
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the State of New York without regard to the principles of conflict of
laws thereof. Each party consents, for purposes of enforcing this
Agreement, to personal jurisdiction, service of process, and venue in
any state or federal court within the State of New York having
jurisdiction over the subject matter.
5.7 Entire Agreement: This Agreement constitutes the entire agreement of the
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parties hereto regarding the subject matter hereof, and supersedes any
and all prior or contemporaneous oral and written agreements between the
parties relating to the subject matter of this Agreement.
IN WITNESS WHEREOF, GM and DRA have caused this Agreement to be executed by
their duly authorized representatives on the day and year first written above.
DRA, INC. GENERAL MOTORS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Executive V.P. Title: Attorney in fact
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ANNEX A
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UNIT PRICES AS OF EFFECTIVE DATE
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[Redacted]
ANNEX B
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[ ]
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D Purchase Order No.
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T DRD
[LOGO OF DELCO REMY APPEARS HERE] E
Division of General Motors Corporation --------------------------------
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ [ ]
[ ]
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S Delco Remy
H
I
P
T
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V --------------------------------
E [ AUTOMOTIVE COMPONENTS GROUP
N DELCO REMY DIVISION
D DISBURSEMENT ANALYSIS DEPT.
O P.O. BOX [ ]
R ] PONTIAC, MI [ - ]
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BUYER PHONE PURCHASING MANAGER
PLEASE ADDRESS ALL CORRESPONDENCE TO
THE ATTENTION OF THE BUYER [ ]
Light Duty Starter Motors Component Supply Agreement
Annex B
Page 1 of 5 Pages
[COPY IN BRACKETS ILLEGIBLE ON ORIGINAL]
PURCHASE ORDER TERMS AND CONDITIONS
1. ACCEPTANCE: Seller has read and understands this order and agrees that
Sellers written acceptance or commencement of any work or service under this
order shall constitute Seller,s acceptance of these terms and conditions only.
All terms and conditions proposed by Seller which are different from or in
addition to this order are unacceptable to Buyer, are expressly rejected by
Buyer and shall not become a part of this order. Any modifications to this order
shall be made in accordance with Paragraph 31.
2. SHIPPING. BILLING AND FLSA CERTIFICATION: Seller agrees: (a) to properly
▇▇▇▇, ▇▇▇▇ and ship goods in accordance with the requirements of Buyer and
in [ ] carriers in a manner to secure lowest transportation cost; (b) to
route shipments in accordance with instructions from Buyer's Traffic Department;
(c) to make no charge for handling, packaging, storage, transportation or [ ]
of goods unless otherwise stated, in this order; (d) to provide with each
shipment packing slips with Buyers order number marked thereon; (e) to properly
▇▇▇▇ each package with this order number, the factory, [ ], and [ ] number,
and where multiple packages comprise a single shipment to consecutively number
each package; and (f) to promptly forward the original ▇▇▇▇ of lading or other
shipping receipt for each shipment in accordance with Buyer's instructions.
Seller will include bills of lading or other shipping receipts correct
classification identification of the goods shipped in accordance with Buyer's
instructions and carrier's requirements. The marks on each package and
identification of the goods on packing slips, bills of lading and invoices shall
be sufficient to enable Buyer to easily identify the goods purchased. Seller
further agrees: (a) to promptly render, after delivery of goods or performance
of services, correct and complete invoices to Buyer; and (b) to accept payment
by check or at Buyer's discretion, other cash equivalent (including electronic
transfer of funds). Seller's invoice must include a certification that all goods
were produced in compliance with the applicable requirements of section 6, 7 and
12 of the Fair Labor Standards Act, as amended and of regulations and orders of
the United States Department of Labor issued in connection therewith. The
payment date is set forth on the face side of this order, or if not stated,
shall be on the 25th day of the month following Buyer's receipt of a proper
invoice (except as may otherwise be agreed upon by Buyer and Seller in
connection with a program providing for electronic funds transfer). Time for
payment shall not begin until correct and complete invoices are received, and
Seller's cash discount privileges to Buyer shall be extended until such time as
payment is due. Buyer may withhold payment pending receipt of evidence, if such
form and detail as Buyer may direct, of the absence of any liens, encumbrances
and claims on the goods or services under this order.
3. DELIVERY SCHEDULES: Deliveries shall be made both in quantities and at times
specified in Buyer's schedules. Buyer shall not be required to make payment for
goods delivered to Buyer which are in excess of quantities specified in Buyer's
delivery schedules. Buyer may change the rate of scheduled shipments or direct
temporary suspension of scheduled shipments, neither of which shall entitle
Seller to a modification of the price for goods or services covered by this
order. For orders of goods where quantities and/or delivery schedules are not
specified, Seller shall deliver goods in such quantities and times as Buyer may
direct in subsequent releases.
4. PREMIUM SHIPMENTS: If Seller's acts or omissions result in Seller's failure
to meet Buyer's delivery requirements and Buyer requires a more expeditious
method of transportation for the goods than the transportation method originally
specified by Buyer, Seller shall, at Buyer's action: (i) promptly reimburse
Buyer the difference in cost between the more expeditious method and the
original method; (ii) allow Buyer to reduce its payment of Seller's invoices by
such difference, or (iii) ship the goods as expeditiously as possible at
Seller's expense and invoice Buyer for the amount which Buyer would have paid
for normal shipment.
5. CHANGES: Buyer reserves the right at any time to direct changes, or cause
Seller to make changes, to drawings and specifications of the goods or to
otherwise change the scope of the work covered by this order, including work
with respect to such matters as inspection, testing or quality control, and
Seller agrees to promptly make such changes: any difference in price or time for
performance resulting from such changes shall be equitably adjusted by Buyer
after receipt of [ ] in such form and detail as Buyer may
direct. Any changes to this order shall be made in accordance with Paragraph 31.
6. INSPECTION: Seller agrees that Buyer shall have the right to enter Seller's
facility at reasonable times to inspect the facility, goods, materials and any
property of Buyer covered by this order. Buyer's inspection of the goods,
whether during manufacture prior to delivery or within a reasonable time after
delivery, shall not constitute acceptance of any work-in-process or finished
goods.
7. NONCONFORMING GOODS: To the extent Buyer rejects goods as nonconforming, the
quantities under this order will automatically be reduced unless Buyer otherwise
notifies Seller. Seller will not replace quantities so reduced without a new
order or schedule from Buyer. Nonconforming goods will be held by Buyer for
disposition in accordance with Seller's instructions at Seller's risk. Seller's
failure to provide written instructions within ten (10) days, or such shorter
period as may be commercially reasonable under the circumstances, after notice
or nonconformity shall entitle Buyer, at Buyer's option, to charge Seller for
storage and handling, or to dispose of the goods without liability to Seller.
Payment for nonconforming goods shall not constitute an acceptance thereof,
limit or impair Buyer's right to assert any legal or equitable remedy, or
relieve Seller's responsibility for Patent defects.
8. FORCE MAJEURE: Any delay or failure of either party to perform its
obligations hereunder shall be excused if, and to the extent that it is caused
by an event or occurrence beyond the reasonable control of the party and without
its fault or negligence, such as, by way of example and not by way of
limitation, acts of God, actions by any governmental authority (whether valid or
invalid), fires, floods, windstorms, explosions, riots, natural disasters, wars,
sabotage, labor problems (including lockouts, strikes and slowdowns), inability
to obtain power, material, labor, equipment or transportation, or court
injunction or order; provided that written notice of such delay (including the
anticipated duration of the delay) shall be given by the affected party to the
other party within ten (10) days. During the period of such delay or failure to
perform by Seller, Buyer, at its option, may purchase goods from other sources
and reduce its schedules to Seller by such quantities, without liability to
Seller, or have Seller provide the goods from other sources in quantities and at
times requested by Buyer and at the price set forth in this order. If requested
by the Buyer, Seller shall, within ten (10) days of such request, provide
adequate assurances that the delay shall not exceed thirty (30) days, if the
delay lasts more than thirty (30) days or Seller does not provide adequate
assurance that the delay will cease within thirty (30) days. Buyer may
immediately cancel the order without liability.
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9. WARRANTY: Seller expressly warrants that all goods or services covered by
this order will conform to the specifications, drawings, samples, or
descriptions furnished to or by Buyer and will be merchantable of good material
and workmanship and free from defect. In addition, Seller acknowledges that
Seller knows of Buyers intended use and expressly warrants that all goods
covered by this order which have been selected, designed, manufactured, or
assembled by Seller, based upon Buyers stated use will be fit and sufficient for
the particular purpose intended by Buyer.
10. INGREDIENTS DISCLOSURE AND SPECIAL WARNINGS AND INSTRUCTIONS: Requested by
Buyer, Seller shall promptly furnish to Buyer in such form and detail as Buyer
may direct: (a) a list of all ingredients in the goods purchased hereunder: (b)
the amount of one or more ingredients, and (c) information concerning any
changes in or additions to such ingredients. Prior to and with the shipment of
the goods purchased hereunder, Seller agrees to furnish to Buyer sufficient
warning and notice in writing (including appropriate labels on goods, containers
and packing) of any hazardous material which is an ingredient or a part of any
of the goods, together with such special handling instructions as may be
necessary to advise carriers. Buyer, and their respective employees [ ] to
exercise [ ] [ ] of care and precaution which will best prevent bodily
injury or property damage in the handling, transportation, processing, use, or
disposal of the goods, containers and packing shipped to Buyer.
11. INSOLVENCY: Buyer may immediately cancel this order without liability to
Seller in the event of the happening of any of the following or any comparable
event: (a) insolvency of the Seller: (b) filing of a voluntary petition in
bankruptcy by the Seller: (c) filing of any involuntary petition in bankruptcy
against Seller: (d) appointment of a receiver or trustee for Seller: (e) or
execution of an assignment for the benefit of creditors by Seller, provided that
such petition appointment or assignment is not vacated or nullified within
fifteen (15) days of such event.
12. CANCELLATION FOR BREACH: Buyer reserves the right to cancel all or any part
of this order, without liability to Seller, if Seller: (a) repudiates or
breaches any of the terms of this order, including Seller's warranties: (b)
fails to perform services or deliver goods as specified by Buyer; or (c) fails
to make progress so as to endanger timely and proper completion of services or
delivery of goods; and does not correct such failure or breach within ten (10)
days (or such shorter period of time if commercially reasonable under the
circumstances) after receipt of written notice from Buyer specifying such
failure or breach.
13. TERMINATION: In addition to any other rights of Buyer to cancel or terminate
this order. Buyer may at its option immediately terminate all or any part of
this order, at any time and for any reason, by giving written notice to Seller.
Upon such termination, Buyer shall pay to Seller the following amounts without
duplication; (a) the order price for all goods ar services which have been
completed in accordance with this order and not previously paid for; and (b) the
actual costs of work-in-process and raw materials incurred by Seller in
furnishing the goods or services under this order to the extent such costs are
reasonable in amount and are properly allocable or apportionable under generally
accepted accounting principals to the terminated portion of this order; less,
however, the reasonable value or cost (whichever is higher) of any goods or
materials used or sold by Seller with Buyer's written consent, and the cost of
damage or destroyed goods or material. Buyer will make no payments for finished
goods, work-in-process or raw materials fabricated or procured by Seller in
amounts in excess of those authorized in delivery releases nor for any
undelivered goods which are in Seller's standard stock or which are readily
marketable. Payments made under this Paragraph shall not exceed the aggregate
price payable by Buyer for furnished goods which would be produced by
Seller under delivery or release schedules outstanding at the date of
termination. Except as provided in this Paragraph, 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 or anticipated profit, unabsorbed
overhead, interest on claims, product development and engineering costs,
facilities and equipment rearrangement costs or rental, unamortized depreciation
costs, and general and administrative burden charges from termination of this
order. Within sixty (60) days from the effective date of termination, 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 agents, 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.
14. INTELLECTUAL PROPERTY: Seller agrees; (a) to defend, xxx harmless and
indemnify Buyer, its successors and customers against all claims, demands,
losses, suits, damages, liability and expenses (including reasonable attorney
fees) arising out of any suit, xxxx or action for actual or alleged direct or
contributory infringement of, or inducement to infringe, any United States or
foreign patent, trademark, copyright or mask work right by reason of the
manufacture, use or sale of the goods or services ordered, including
infringement arising out of compliance with specifications furnished by Buyer,
or for actual or alleged misuse or misappropriation of a trade secret resulting
directly or indirectly from Seller's actions; (b) to waive any claim against
Buyer under the Uniform Commerical Code or otherwise, including any hold
harmless or similar claim, in any way related to a claim asserted against Seller
or Buyer for patent, trademark, copyright or mask work right infringement or the
like, including claims arising out of compliance with specifications furnished
by Buyer; and (c) to grant Buyer a worldwide, nonexclusive, [ ] [ ],
irrevocable license to repair and have repaired, to reconstruct and have
reconstructed the goods ordered hereunder. Seller assigns to Buyer all right,
title and interest in and to all trademarks, copyrights and mask work rights in
any material created for Buyer under this order.
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15. TECHNICAL INFORMATION DISCLOSED TO BUYER: Seller agrees not to assert any
claim (other than a claim for patent infringement) with respect to any technical
information which Seller shall have disclosed or may hereafter disclose to Buyer
in connection with the goods or services covered by this order.
16. INDEMNIFICATION: Seller performs any work on Buyer's premises or utilizes
the property of Buyer, whether on or off Buyer's premises. Seller shall
indemnify and hold Buyer harmless from and against any liability claims, demands
or expenses (including reasonable attorney fees) for damages to the property of
or injuries (including death) to Buyer, its employees or any other person
arising from or in connection with Seller's performance of work or use of
Buyer's property except for such liability claim or demand arising out of the
sole negligence of Buyer.
17. INSURANCE: Seller shall maintain insurance coverage in amounts not less
than the following: (a) Workers Compensation Statutory Limits for the state or
states [ ] is to be performed for evidence [ ] authority to
self-insure); (b) Employer's Liability -- $250,000: (c) Comprehensive General
Liability (including Products Completed Operations and Blanket Contractual
Liability) -- $1,000,000 per person. $1,000,000 per occurrence Personal Injury
and $1,000,000 per occurrence Property Damage or $1,000,000 per occurrence
Personal Injury and Property Damage combined single limit and (d) Automobile
Liability (including owned, non-owned and hired vehicles) -- $1,000,000 per
person. $1,000,000 per occurrence Personal Injury and $1,000,000 per occurrence
Property Damage, or $1,000,000 per occurrence Personal Injury and Property
Damage combined single limit. At Buyer's request, Seller shall furnish to Buyer
certificates of insurance setting forth the amount(s) of coverage, policy
number(s) and date(s) of expiration for insurance maintained by Seller and if
further requested by Buyer, such certificates will provide that Buyer shall
receive thirty (30) days prior written notification from the insurer of any
termination or reduction in the amount or scope of coverages. Seller's purchase
of appropriate insurance coverage or the furnishing of certificates of insurance
shall not release Seller of its obligations or liabilities under this order. In
the event of Seller's breach of this provision, Buyer shall have the right to
cancel the undelivered portion of any goods or services covered by this order
and shall not be required to make further payments except for conforming goods
delivered or services rendered prior to cancellation.
18. TOOLS: Unless otherwise agreed to by Buyer, Seller at its own expense shall
furnish, keep in good condition, and replace when necessary all tools, jigs,
dies, gauges, fixtures, molds and patterns ("Tools") necessary for the
production of the goods. The cost or changes to the Tools necessary to make
design and specification changes authorized by Buyer shall be paid for by Buyer.
Seller shall insure the Tools with full fire and extended coverage insurance for
the replacement value thereof. Seller grants Buyer an irrevocable option to take
possession c; and title to the Tools that are special for the production of the
goods upon payment to Seller of the book value thereof less any amounts which
Buyer has previously paid to Seller for the cost of such Tools; provided,
however, that this option shall not apply if such Tools are used to produce
goods that are the standard stock of Seller or if a substantial quantity of like
goods are being sold by Seller to others.
19. BAILED PROPERTY: All supplies, materials, tools, jigs, dies, gauges,
fixtures, molds, patterns, equipment and other items furnished by Buyer either
directly or indirectly, to Seller to perform this order, or for which Seller has
been reimbursed by Buyer shall be and remain the property of Buyer. Seller shall
bear the risk of loss of and damage to Buyer's property, Buyer's property shall
at all times be properly housed and maintained by Seller; shall not be used by
Seller for any purpose other than the performance of this order; shall be deemed
to be personalty; shall be conspicuously marked "Property of General Motors
Corporation" by Seller; shall not be commingled with the property of Seller or
with that of a third person; and shall not be moved form Seller's premises
without Buyer's prior written approval. Upon the request of Buyer, such property
shall be immediately released to Buyer or delivered to Buyer by Seller, either
(i) F.O.B. transport equipment at Seller's plant, properly packed and marked in
accordance with the requirements of the carrier selected by Buyer to transport
such property, or (ii) to any location designated by Buyer, in which event Buyer
shall pay to Seller the reasonable cost of delivering such property to such
location. Buyer shall have the right to enter onto Seller's premises at all
reasonable times to inspect such property and Seller's records with respect
thereto.
20. REMEDIES: The rights and remedies reserved to Buyer in this order shall be
cumulative, and additional to all other or further remedies provided in law or
equity.
21. DUTY DRAWBACK RIGHTS: This order includes all related customs, duty and
import drawback rights, if any, (including rights developed by substitution and
rights which may be acquired from Seller's suppliers) which Seller can transfer
to Buyer. Seller agrees to inform Buyer of the existence of any such rights and
upon request to supply such documents as may be required to obtain such
drawback.
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SETOFF: In addition to any [ ] provided by [ ] amounts due Seller
shall be considered [ ] Indebtedness of Seller to General Motors
Corporation and its subsidiaries; and General Motors Corporation may deduct any
amounts due or to become due from Seller to General Motors Corporation and its
subsidiaries from any sums due to or to become due from General Motors
Corporation to Seller.
ADVERTISING: Seller shall not without first obtaining the written consent of
Buyer, in any manner, advertise or publish the fact that Seller has contracted
to furnish Buyer the goods or service herein ordered. [ ] any trademarks or
tradenames of Buyer in Seller's advertising or promotional materials, in the
event of Buyer's breach of this provision. Buyer shall have the right to cancel
the undelivered portion of any goods or [ ] covered by this order and shall
not be required to make further payments except for conforming goods [ ] or
services rendered prior to cancellation.
GOVERNMENT COMPLIANCE. Seller agrees to comply with a federal, state and local
laws. Executive [ ], rules, regulations and ordinances which may be applicable
to Seller's performance or its obligations under this order.
EQUAL OPPORTUNITY AND AFFIRMATIVE ACTION: This order incorporates by reference:
(a) all provisions of 41 C.F.R. 60-1.4, as amended, pertaining to the equal
opportunity clause in government contracts. [ ] provisions of 41 C.F.R. 60-250,
as amended, pertaining to affirmative action for disabled veterans of [ ]
Vietnam Era: and (c) all provisions of 41 C.F.R. 60-741, as amended, pertaining
to affirmative action for handicapped workers. Seller certifies that it is in
compliance with all applicable provisions of 41 C.F.R. 60-1, including but not
limited to: (a) developing and presently having in full force and effect a
written affirmative action compliance program for each of its establishments as
required by 41 C.F.R. 60-1.40, as amended: (b) [ ] EEO-1 Reports as required by
41 C.F.R. 60-1.7, as amended, and (c) neither maintaining segregated [ ] nor
permitting its employes to perform services at segregated facilities as
prohibited by 41 C.F.R. [ ], as amended. Buyer requests that Seller adopt and
implement a policy to extend employment opportunities to qualified applicants
and employees on a equal basis regardless of an individual's age, race, color,
religion or national origin.
NO IMPLIED WAIVER: The failure of either party at any time to require
performance by the other party by provision of this order shall in no way affect
the right to require such performance at any time [ ] nor shall the waiver of
either party of a breach of any provision of this order constitute a waiver of
any proceeding breach of the same or any other provision.
NON-ASSIGNMENT: Seller may not assign or delegate its obligations under this
order without Buyer's written consent.
RELATIONSHIP OF PARTIES: Seller and Buyer are independent contracting parties
and nothing in this order shall make either party the agent or legal
representatives of the other for any purpose whatsoever, nor [ ] it grant either
party any authority to assume or to create any obligation on behalf of or in the
name of the [ ].
GOVERNING LAW: This order is to be construed according to the laws of the state
from which this order [ ] as shown by the address of Buyer on the face side of
this order.
SEVERABILITY: If any term of this order is invalid or unenforceable under any
statute, regulation, ordinance, executive order or other rule of law, such term
shall be deemed reformed and deleted, but only to the extent necessary to comply
with such statute, regulation, ordinance, order of rule, and the remaining
provisions of this order shall remain in full force and effect.
ENTIRE AGREEMENT: This order together with the attachments, exhibits, or
supplements, specifically referenced in this order, constitutes the entire
agreement between Seller and Buyer with respect to the matter pertained herein
and supersedes all prior oral or written representations and agreements. This
order may only be modified by a purchase order amendment alteration issued by
Buyer.
[COPY IN BRACKETS ILLIGIBLE ON ORIGINAL]