LIFETIME PROGRAM CONTRACT*
BETWEEN GENERAL MOTORS CORPORATION
NORTH AMERICAN OPERATIONS ("BUYER") AND
AMERICAN AXLE & MANUFACTURING, INC. ("SELLER")
1. Purchase of Product
-------------------
Seller agrees to sell, and Buyer agrees to purchase, 100% of Buyer's production
and service requirements for the following product (the "Product" or "Goods"):
Part Number Description Per Unit Price Annual Daily Tool Capacity
----------- ----------- -------------- --------------------------
See Attached *** Schedule. Exhibit B
2. Term
----
The term of this Agreement is for the "life of the Product", which is defined
as the duration of the *** style presently projected to run from *** through
***
3. Prices: Price Reduction
------------------------
The per unit price of the Product is F.O.B. Seller's Plant. Pricing from model
year *** is subject to the following annual percentage reduction from the prior
year's price:
See Attached *** Schedule. Exhibit B
Purchases of Productive Material by Buyer for Seller shall continue through
December 31, 2002, or such earlier date established by agreement of AAM and GM.
Thereafter, except for increases or decreases in Seller's cost by reason of
Seller's participation in Buyer's Steel Resale Program; Buyer's pricing
adjustment policy(ies) for non-ferrous metals; or permitted under Buyer's
Purchase Order Terms and Conditions no adjustments will be made hereunder for
increases or decreases in Seller's costs for materials. Except for the increases
or decreases set forth above, no other pricing adjustments (e.g. labor or
overhead) will be made except by agreement between AAM and GM.
In addition, Buyer and Seller will use their best efforts to implement cost
savings and productivity improvements, as set forth in Exhibit A attached
hereto, in order to reduce
-----------
* Portions of this Exhibit 10.22(c) were omitted and filed separately with 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, as amended. Such portions are marked
by the symbol "***".
2
Seller's costs, with the understanding the 50 percent (50%) of jointly achieved
net savings (after deduction of expenditures for development, applications,
engineering tools, prototypes and financing) will be applied to reduce the price
of the Product to Buyer and the balance will be for the benefit of Seller.
4. Supplier Development: Quality Control
--------------------------------------
Seller agrees to participate in Buyer's supplier quality and development
program(s). In addition, Seller shall comply with all quality requirements and
procedures specified by Buyer, as the same may be revised from time to time,
including those applicable to Seller as set forth in Quality System Requirement
SQS-9000.
5. Right to Purchase from Others
-----------------------------
5.1 Seller will assure that the Product remains competitive in terms of
technology, design, and quality with similar goods available to Buyer during
the term of this Agreement. If, in the reasonable opinion of Buyer, the Product
does not remain competitive, Buyer, to the extent it is free to do so, will
advise Seller in writing of the area(s) in which another product is more
competitive with respect to technology, design or quality. If, within 150 days,
Seller does not agree to immediately sell the Product with comparable
technology, design or quality, Buyer may give notice of termination of this
Agreement and after a period of one (1) year after such notice may purchase
from another supplier without liability to Seller.
5.2 It is agreed by the parties that nothing in this Paragraph 5 shall modify
or otherwise limit Buyer's right under Paragraph 12 ("Cancellation") of Buyer's
Purchase Order Terms and Conditions.
6. Technical Information: Waiver of Claims
----------------------------------------
6.1 Buyer and Seller will cooperate to create, maintain, update and share
technical information about the Product and its manufacture, without
restriction, as needed, and in compliance with Buyer's drafting and math data
standards.
6.2 In the event Buyer exercises its right to terminate or cancel this
Agreement, for reasons other than those set forth in Paragraph 5 above, and
then makes the Product or purchases the Product from another supplier. Seller
agrees not to bring any action or claim against Buyer, its suppliers, dealers,
or customers for any reason, excluding any claim for infringement of patents or
other proprietary rights, arising from the manufacture, use and sale of the
Product or use of the information furnished by Seller to Buyer under this
Agreement. Seller will secure the necessary agreements with its employees and
sub-contractors to assure compliance with this Section 6.
7. Purchase Order Terms and Conditions
-----------------------------------
Buyer's Purchase Order Terms and Conditions (1986), a copy of which is
attached, are hereby incorporated into this Agreement by reference. It is
understood that Paragraph 13
3
TERMINATION will not be applicable with respect to this contract. Any
amendments to or revision of such Terms and Conditions shall also become a part
hereof, provided that: (i) Buyer provides Seller with a copy of the Terms and
Conditions as amended or revised; and (ii) Seller does not object to said
amendment or revised Terms and Conditions within thirty (30) days after
receipt. The Terms and Conditions and any amendment or revision made a part
thereof shall be construed, to the extent possible, as consistent with the
terms and conditions set forth herein and as cumulative; provided, however,
that if such construction is unreasonable, terms and conditions set forth
herein shall control.
This Agreement is effective upon its execution. The parties hereby agree that
this agreement supersedes the Component Supply Agreement between them, dated
February 28, 1994, as amended, as it relates to the subject matter contained
herein and removes any requirement with respect to components covered hereby
for GM to give notice of non-renewal under such agreement.
Seller Buyer
By /s/ Xxxxx XxXxxxx By /s/ Xxxxxx X. Xxxxxxx
----------------- ---------------------
Title Director, MST Programs Title Director, Metallic Purchasing GMTG
---------------------- ----------------------------------
Date May 1, 1998 Date June 19, 1998
-----------
4
Exhibit A
"LIFETIME CONTRACT COST SAVINGS"
--------------------------------
Some examples of Cost Savings which shall be shared equally by the
parties are set forth in (a), (b), and (c) below:
(a) AAM requests from GM Engineering a dimensional change in an
Existing Component that reduces scrap and improves efficiency. If granted, the
savings with respect to that Existing Component would be shared equally by the
two parties.
(b) GM and AAM are both working on deproliferation of Existing
Component Part Numbers by changing parts to commonize them. Savings with
respect to such Existing Components would be shared by the two parties.
(c) AAM or GM requests a material change applicable to a particular
Existing Component or Components that would improve efficiency or reduce tool
costs. These savings with respect to such Existing Components would be shared
equally by the two parties.
Improvements which are not attributable to specific components and
improvements in processing, operating conditions, labor efficiency, scrap
reduction, or any other area made by AAM as a result of its management
expertise and knowledge or contributions by AAM employees, without any input
from GM, are not included in the Cost Savings computation and are the exclusive
property of AAM.
5
EXHIBIT B LIFETIME PROGRAM CONTRACT
***
===================================================================================================================================
Model Year 2005 2006 2007 2008 Succeeding
Years
-----------------------------------------------
Percent Reduction *** *** *** *** ***
-----------------------------------------------
Part Per Annual Daily
Number Description Unit Price Tool Capacity
==================================================================================================================================
-------------------------------------------------------------------------------------------------------------------------------
8.0"Rear Axles
15157619 *** Rear Axle 4.10 Std. *** *** *** *** *** *** ***
15157587 *** Rear Axle 3.42 Std. *** *** *** *** *** *** ***
15157585 *** Rear Axle 4.56 Std. *** *** *** *** *** *** ***
15157615 *** Rear Axle 3.73 Std. *** *** *** *** *** *** ***
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
7.25" Front Axles
15030027 *** Front Axle with P/N 15030023 Disconnect Assembly 3.42 *** *** *** *** *** *** ***
15030028 *** Front Axle with P/N 15030023 Disconnect Assembly 3.73 *** *** *** *** *** *** ***
15030025 *** Front Axle with P/N 15030023 Disconnect Assembly 4.10 *** *** *** *** *** *** ***
15007523 *** Front Axle with P/N 15030023 Disconnect Assembly 4.56 *** *** *** *** *** *** ***
===============================================================================================================================
===============================================================================
Per Annual Daily
Part Number Description Unit Price Tool Capacity
===============================================================================
-------------------------------------------------------------------------------
Front Auxiliary and Rear Propshafts
15152340 *** Front Auxiliary Propshaft $ *** ***
15152342 *** Front Auxiliary Propshaft $ *** ***
15152338 *** Rear Propshaft $ *** ***
15152332 *** Rear Propshaft $ *** ***
15152335 *** Rear Propshaft $ *** ***
15152336 *** Rear Propshaft $ *** ***
===============================================================================
6
AMERICAN
AXLE & MANUFACTURING
--------------------
Technical Center
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
June 25, 1997
Xx. Xxx Xxxx
Senior Buyer
GMTG
0000 Xxxxxxxxxxx Xxxxxxx
Mail Code 483-512-1B5
Xxxxxxx, Xxxxxxxx 00000-0000
Dear Xxx:
The revised proposal for the *** Front and Rear Axles is hereby submitted for
your review. As you are aware, AAM and GM have been working together on the
engineering designs for both the front and the rear axles. This close working
relationship has allowed the *** program to proceed within the program timing
while helping to identify and address engineering issues early in the
development process.
The prices provided herein are based on engineering changes required to
Existing Components and the terms and conditions of the Component Supply
Agreement under which AAM is committed to be competitive on future product
programs such as this.
The attached Xxxx of Material for each axle identifies the budget baseline
prices for included parts and productive material purchased by GM.
The tooling for the front axle is ***, including *** of supplier tooling and
tooling for the rear axle is *** including *** of supplier tooling. Supplier
tooling will be adjusted based on the results of the final negotiations with
the suppliers.
Based on this proposal, issuance of an appropriate letter of intent is
requested. As your production source, AAM looks forward to working with you and
to contributing to the success of the *** program.
Best regards,
X. X. Xxxxxxx
Program Manager, GM MST Programs
cc: X. Xxxxxxx, D. Demos, X. Xxxx, X. XxXxxxx
7
*** FRONT AXLE
--------------
0 SORP Date: ***
0 Volume: *** annually; *** per day
0 Volumes quoted are LCR volumes based on ***. The MCR
volume is calculated at *** annually and *** per
day. AAM will provide axles at the purchase order
piece price in effect at that time up to the MCR
levels.
0 FOB: ***
0 Piece Price: ***
0 Tooling: ***
0 AAM - ***
0 Supplier - ***
0 Prototypes: *** and *** tooling
0 Design: AAM will meet the design requirements as provided in
RFQ 2900012268 dated November 15, 1996, and CEA
T104C-011-01 dated November 14, 1996.
0 Labor: *** Economics
8
*** Rear Axle
-------------
0 SORP Date: ***
0 Volume: *** annually; *** per day
0 Volumes quoted are LCR volumes based on ***. The MCR volume
is calculated at *** annually and *** per day. AAM will
provide axles at the purchase order piece price in effect at
that time up to the MCR levels.
0 FOB: ***
0 Piece Price: ***
0 Tooling: ***
0 - AAM ***
0 - Supplier - ***
0 Prototypes: *** and *** tooling
0 Post Assembly Piercing of Brackets: ***, based on decision by March
31, 1998
0 Design: AAM will meet the design requirements as provided in RFQ
2900002656 dated February 7, 1997 and CEA T104C-038 dated
January 24, 1997.
0 Labor: *** Economics
9
***
6/25/97
1. *** price increase to both Front & Rear Axle
*** Front
*** Rear
2. F ***
R ***
If lower - AAM benefits
3. Steel Budget Base Equals ***
4. Address omissions of Part No.'s in BOM
5. Material pass through begins at ***.
10
GM
--
General Motors Truck Group
April 7, 1998
Xx. Xxxxx X. XxXxxxx
Director, GM MST & PC Programs
AMERICAN AXLE & MANUFACTURING
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Re: *** FRONT & REAR PROPSHAFTS
RFQ 700018615
Dear Xxxxx:
On behalf of the NAO Worldwide Purchasing Organization, I am pleased to inform
you that American Axle & Manufacturing (AAM) has been selected as the
production supplier for 100% of the *** NAO Front Auxiliary and Rear Propshaft
requirements. This award is based on the negotiated piece price, tooling
investment, and terms listed below. This award is issued under the terms and
conditions of the Component Supply Agreement (CSA), its amendments, and the
Memorandum of Understanding for Lifetime Program Contracts dated September 22,
1997 for *** Components.
Piece Price
Part P/N (At Full PPAP) Tooling
---- --- -------------- -------
Front Auxiliary Propshaft 15152340 *** ***
15152342 *** ***
0 Alpha, Beta, and Prototype Piece Price ***
(This price applies until full PPAP)
0 Prototype Tooling: ***
0 Production piece price is the base propshaft per CEA
T104C-017, dated June 25, 1996, including paint. The piloted
flange and cardboard liner are not included in the base
design. Piece price does include 1/4 - 1/4 balancing, per
revision to CEA dated April 7, 1998.
0 Returnable dunnage shipping racks, and additional packaging
is the responsibility of GMTG.
11
0 FOB: ***
Piece Price
Part P/N (At Full PPAP)
---- --- --------------
Rear Propshaft 15152332 ***
15152335 ***
15152336 ***
15152338 ***
0 Rebillable Tooling: ***
0 Alpha, Beta, and Prototype Piece Price: ***
(This price applies until full PPAP)
0 Prototype Tooling: ***
0 Production Piece Price is the base propshaft per CEA
T104C-017 dated June 25, 1996, except 4" straight aluminum
will be used in place of 4" collapsible MMC. The cardboard
liner is included in the price. Piece price also does include
1/4 - 1/4 balancing, per revision to CEA dated April 7, 1998.
0 Returnable dunnage, shipping racks, and additional packaging
is the responsibility of GMTG
0 GM's "Metal Price Adjustment for Non-Allied Primary Aluminum
Part Suppliers", document revision date of January 21, 1997,
applies to aluminum components after AAM assumes
responsibility for Purchase Components. Utilize base point of
the BOM provided by AAM dated March 23, 1998.
0 FOB: ***
The LCR volumes for this program are as follows:
Part Number Annual Volume Daily Volume
----------- ------------- ------------
15152340 *** ***
15152342 *** ***
15152332 *** ***
15152335 *** ***
15152336 *** ***
15152338 *** ***
The Material Pass Through (Paragraph 3.6 of the CSA) remains in effect
beginning with the purchase order prices at ***. GMTG accepts responsibility
for all material costs exceeding the total material cost per saleable part
number on the attached purchase parts Xxxx of Material (BOM).
12
Service parts: Production for life of part plus (3) years past production based
on SPO standard packs equal to (1) standard AAM rack.
Please contact Xx. Xxxx Xxxxxx, Design Release Engineer, to commence work on
this program. The GMTG SQA will be contacting AAM to schedule an APQP meeting
for the *** propshafts.
We appreciate the level of commitment which you have shown to date and look
forward to your participation in the *** Program.
Best Regards,
Xxxxxx X. Xxxx
Purchasing Manager
cc: X. Xxxxxxx, GMTG
X. Xxxx, GMTG
X. Xxxx, GMTG
X. Xxxxxxxx, GMTG
X. Xxxxxx, GMTG
X. Xxxxxxx, GMTG
X. Xxxxxxx, GMTG
X. XxXxxxxx, GMTG
X. Xxxxxx, GMTG
X. Xxxxx, GMTG
X. Xxxxxxxxxx, XX
X. Xxxx, GMTG
X. Xxxxxxxxxx, GMTG
X. Xxxxxxxxxxx, NAO-AP
X. Xxxx, SPO
D. Demos, AAM
X. Xxxxxxx, AAM
