EXHIBIT 10.32
July 10, 2003
Mr. Mitch Marecki
Senior Manager
Service Parts Procurement
DaimlerChrysler Corporation
26311 Lawrence Avenue
Centerline, Michigan 48015-1201
Subject: DaimlerChrysler/Aarons Automotive
Products Letter of Agreement Dear Mr. Marecki;
Dear Mr. Marecki:
This letter sets forth the agreement between
DaimlerChrysler Corporation (“DCX”) and Aaron’s
Automotive Products, Inc. (“AAP”) regarding certain
changes to the agreement pursuant to which AAP supplies
remanufactured product to the Mopar Division of DCX.
1)
Price Concession:
1.
AAP will agree to [ XXX ]
price concession on all remanufactured product currently supplied
to support Mopar’s Remanufacturing Enterprise.
2.
AAP will provide additional price
concessions of [ XXX ] each for the years 2004 and 2005; the
effective dates for these future concessions will be
January 1st of each year.
2)
Length of Contract:
1.
DCX and AAP agree that this Letter
of Agreement shall cover the time frame 6/30/03 through
12/31/05. During that time period DCX may not
(i) terminate without cause part or all of this agreement or
any order with respect to any Continuing/Replacement business (as
defined in paragraph 3.2. below), other than the 606
transmission business, or (ii) obtain Continuing/Replacement
business, other than the 606 transmission business, from third
parties or from within DCX or its subsidiaries, except to the
extent that AAP is unable to provide Continuing/Replacement
business.
3)
“New” vs.
“Continuing/Replacement” Business
Opportunities:
1.
AAP recognizes DCX/Mopar’s
intent to competitively quote “New” business
opportunities. Both parties agree that “New”
business is defined as any introductory product that represents
distinct differentiation from any current product.
2.
AAP agrees to [ XXX ] Pricing
Policy” regarding “Continuing/Replacement”
business opportunities. “Continuing/Replacement”
business opportunity is defined as (i) any current product or
product line (including subsequent model years) and (ii) any
new product or product line that replaces a current product
(ex: 48RE replacing 47RE).
3.
Should the [ XXX ] Pricing
Policy” prove insufficient in certain instances regarding
resolution of possible differences of opinion between Mopar and
AAP, DCX acknowledges that AAP, during the term of this agreement,
[ XXX ].
4.
Both parties agree that the 45RFE
Program will be considered as “Continuing/Replacement”
business.
4)
Continuing MCM
Participation:
1.
AAP agrees to continue to
participate in MCM Initiatives provided that they reflect
margin-neutral consequences to AAP.
2.
DCX agrees that all MCM Initiatives
identified and acted upon in 2003, in excess of those initiatives
that total to date [ XXX ], shall be credited towards 2004
results.
3.
DCX agrees that, beyond the
immediate price concession and those scheduled for 1/1/04 and
1/1/05, all future cost savings realized by DCX during the term of
this agreement [ XXX ].
5)
AAP Internal Cost Savings
Initiatives:
1.
During the term of this agreement,
AAP may elect to relocate/rearrange all or certain portions of
their current production and remanufacturing systems in order to
realize internal cost reductions and associated benefits. The
result of these initiatives shall remain to the sole benefit of
AAP. AAP agrees that any initiatives in this regard will not
result in increased system cost to DCX.
6)
Collateral Open Economic
Issues:
1.AAP and DCX acknowledge and agree
that certain other open economic issues must be addressed and
resolved within a reasonable time frame. The attachment to
this letter of agreement details the pertinent issues and defines
them within the categories of either “immediate” or
“long term”. Both parties agree that
“immediate” open economic issues shall be settled
within 30 days of the start of this agreement. Both parties
agree that “long term” open economic issues shall be
settled within 90 days of the start of this agreement.
7)
Performance Expectations
Both Parties acknowledge that
certain performance levels, particularly regarding quality and
delivery, are necessary and normal to the ongoing supply
relationship. Both parties agree that non-performance of
these standards, by either party, shall be deemed causal. The
non-performing party shall retain the right to rectify the causal
action within a timeframe reasonable to the particular incident of
non-performance. The aggrieved party shall retain the right
to take appropriate action if the non-performing party does not
rectify the causal action. In order to satisfy this
requirement, both Parties agree that reasonable performance metrics
are necessary in order to establish base line performance and to
measure subsequent improvements. These performance metrics
are to be developed jointly between DCX/Mopar and AAP in a mutually
agreeable fashion.
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Please acknowledge your agreement with the
foregoing by executing this letter below.
Agreed and accepted as of July 10, 2003
Aaron’s Automotive Products
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/s/ Paul Komaromy
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Paul Komaromy, President
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Agreed and accepted as of July 10, 2003
DaimlerChrysler Corporation
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/s/ Mitch A. Marecki
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Mitch A. Marecki, Service Parts &
Procurement
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White Paper Attachment
DCX/AAP Open Economic Issues
June 20, 2003
The following Open Economic issues require
resolution as part of the Letter of Agreement dated June
, 2003 between Daimler Chrysler Corporation
(DCX) and Aaron’s Automotive Products (AAP). This
document is intended to define each open issue in terms of
background, liability, and corrective action as well as
establishing target resolution as either “immediate” or
“long term”
[XXX]
:
1)
[ XXX ]: $[ XXX
] (as of [ XXX ])
On a regular basis, AAP [ XXX
].
“IMMEDIATE”
2)
2002 [ XXX ]: $TBD
“LONG TERM”
3)
2003 [ XXX ]: $TBD
“LONG TERM”
[ XXX ].
[XXX]
:
1)
[ XXX ]: $[ XXX
] “IMMEDIATE”
In the spring of [ XXX ], AAP
[ XXX ] to support the remanufacturing process. This
purchase was [ XXX ].
2)
[ XXX ]%
Mitigation/Inter-plants: $[ XXX ]
“IMMEDIATE”
Effective [ XXX ] [
XXX ], [ XXX ], all DCX Interplants were mandated by
DCX to r [ XXX ] in line with the [ XXX ]. [
XXX ] complied with this mandate. [ XXX ] ($[
XXX ]) and [ XXX ]. Based upon the previous
agreement between Mopar and DCX, [ XXX ].
3)
Components returned to [ XXX
] “IMMEDIATE”
AAP was asked by [ XXX
].
4)
[ XXX ]: $ TBD
“LONG TERM”
Much confusion has developed
regarding [ XXX ]. Due to the confusion, [ XXX
].
5)
Other Open [ XXX ] $([
XXX ] up to $[ XXX ] if Cases included)
“Immediate/Long Term”
AAP was authorized [ XXX ],
such as purchasing [ XXX ] / [ XXX ] / [ XXX
], [ XXX ], and [ XXX ]. In addition, [
XXX ]
Addendum Agreement dated
10/16/03
Reference, DC/AAP Letter of
Agreement dated 7/10/03
“Open Economic Issues dated 6/20/03”
Background/Scope: Within the DCX/AAP LOA dated 7/10/03, certain
“Open Economic Issues” were enumerated within an
addendum to the agreement (“6/20/03”). Within the
agreement, it was acknowledged by both parties that resolution of
these. “Open Economic Issues” was to be
accomplished in a series of phases with each phase being addressed
in an expedient manner. The purpose of this document is to
record agreement between DCX/Mopar and AAP regarding resolution and
agreement as to “Phase One” of this process.
Phase One Issues Addressed and
Resolved.
1)
[ XXX ] - $[ XXX ] -
It is acknowledged and agreed by both parties that this obligation
is quantified as indicated and that AAP will receive consideration
for this issue within Phase One Resolution.
2)
[ XXX ]% [ XXX ] - $[
XXX ] - It is acknowledged and agreed by both parties that
this obligation is quantified as indicated and that AAP will
receive consideration for this issue within Phase One
Resolution.
3)
[ XXX ] - $[ XXX ] -It
is acknowledged and agreed by both parties that this obligation is
quantified as indicated and that AAP will receive consideration for
this issue within Phase One Resolution.
Total AAP Consideration = $[
XXX ]
4)
[ XXX ] - $[ XXX ] it
is agreed by both parties that the amount of this obligation has
since changed from the 6/20/03 agreement addendum and that Mopar
will receive consideration for this issue within Phase One
Resolution for the amount equal to the total AAP
consideration.
Total Mopar Consideration = $[
XXX ]
5)
It is acknowledged and agreed by
both parties that there is [ XXX ] net Phase One [
XXX ] and that to amount owing to each party is net to $[
XXX ].
6)
“Phase One Settlement” -
It is acknowledged and agreed that all issues relative to Phase One
Settlement are considered closed with the issuance of this
addendum, and releases each party from any and all liabilities
associated with these issues with no additional recourse or
liability. It is further agreed that this addendum, once
issued, becomes part and parcel of the Letter of Agreement dated
7/10/03.
7)
“Phase Two Settlement” -
It is acknowledged by both parties that certain other Open Economic
Issues as enumerated within the addendum dated 6/20/03 will be
pursued and resolved within Phase Two Settlement. Both
parties agree that Phase Two Settlements will be addressed in the
most expedient matter possible and that that process will commence
immediately upon issuance of this addendum.
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Agreed and Accepted 10/16/03:
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Agreed and Accepted 10/16/03:
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/s/ Paul Komaromy
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/s/ David W. Swietik
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Paul Komaromy, President of AAP
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David W. Swietlik, Manager
Mopar P&S
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2
PRODUCTION PURCHASING
GENERAL TERMS AND CONDITIONS
1. AGREEMENT.
Seller agrees to sell and deliver
the goods or services specified in DaimlerChrysler’s order in
ACCORDANCE WITH THE TERMS AND CONDITIONS CONTAINED IN THE ORDER,
INCLUDING THE CLAUSES REFERENCED IN THE ORDER, THE TERMS OF THIS
FORM AND ANY SIGNED DOCUMENTS REFERENCED IN THE ORDER, all of which
constitute the entire and final agreement of the parties and
cancels and supersedes any prior or contemporaneous negotiation or
agreements. The DaimlerChrysler clauses referenced are as
currently published on DAIMLERCHRYSLER’s Extended Enterprise
website: [ XXX ] or its successor site. By
accepting this order, Seller acknowledges having actual knowledge
of the text of the referenced clauses.
DAIMLERCHRYSLER’S ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE
TERMS OF THE ORDER AND ANY ADDITIONAL OR DIFFERENT TERMS, WHETHER
CONTAINED IN SELLER’S FORMS OR OTHERWISE PRESENTED BY SELLER
ARE REJECTED UNLESS EXPRESSLY AGREED TO AND SELLER SPECIFICALLY
WAIVES ITS SIGNED ACCEPTANCE OF THIS ORDER BY DAIMLERCHRYSLER,
“Order” means a purchase order transmitted to Seller
via DaimlerChrysler’s Electronic Data Interchange system or
delivered to Seller in a paper format.
2. ACCEPTANCE.
This order constitutes
DaimlerChrysler’s offer to Seller and is not binding on
DaimlerChrysler until accepted by Seller and Seller specifically
waives its signed acceptance of this order or by a delivery of the
goods, rendering of services, or the commencement of work on goods
to be specially manufactured for DaimlerChrysler pursuant to this
order.
3. DELIVERY. Time is of the essence. Delivery must be
effected within the time specified in this order, or in accordance
with DaimlerChrysler’s releases or procedures, if so
indicated in this order. If Seller falls to make deliveries
or perform services at the agreed time, all damages suffered by
DaimlerChrysler and any premium transportation or other costs
required to meet the specified delivery schedule will be at the
expense of Seller.
4. PACKING, MARKING AND
SHIPMENT. a) Seller
will pack and mark goods and make shipments (including shipping on
Saturdays and holidays, when requested) in accordance with
DaimlerChrysler’s instructions, meet carrier requirements and
assure delivery free of damage and deterioration. All
shipments of goods to DaimlerChrysler’s plants must include
two packing slips, or four packing slips in the case of shipments
directed to a DaimlerChrysler consolidation point. Whenever
shipment is made by truck, Seller will enclose one of the packing
slips (or packing slip sets in the case of multiple item shipments)
in an envelope and Seller will record written instructions on the
bill of lading directing the delivering driver to deliver the
envelope to DaimlerChrysler’s traffic representative upon
arrival at DaimlerChrysler’s plant. Seller is
responsible for the goods until delivery at the designated FOB
point.
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b) DaimlerChrysler may specify the
carrier and/or method of transportation and Seller will process
shipping documents and route shipments of the goods from the FOB
point accordingly. Seller will comply with all of
DaimlerChrysler’s transportation routing instructions,
including, but not limited to, mode of transportation, utilization
of assigned carrier and identification of the shipping point.
Seller will be responsible for all excess costs incurred because of
its failure to comply with DaimlerChrysler’s transportation
instructions.
c) DaimlerChrysler will not be
responsible for delays in the payment of invoices if the following
requirements are not met: invoices and packing slips must
bear the DaimlerChrysler-assigned supplier code purchase order
number, part number, the requisition number on quantity buys, or
the release number on blanket orders, the “Ship-to”
address, DaimlerChrysler assigned, plant location code, invoice-to
address, and whether containers used are “returnable”
or “non-returnable.”
5. RELEASE AUTHORIZATION.
When deliveries are specified to be
in accordance with DaimlerChrysler’s written releases, Seller
will not fabricate or assemble any goods, nor procure required
materials, nor ship, any supplies, except to the extent authorized
by such written releases or provisions of this order specifying
minimum fabrication or delivery quantities.
6. INSPECTION AND
REJECTIONS. DaimlerChrysler may inspect and evaluate all
goods (including all tooling and material used in their
manufacture), and all services at times and places designated by
DaimlerChrysler. Seller will provide and maintain a Supplier
Quality Assurance System
