MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement ("Agreement") is entered into this 21st day
of December, 1999, by and between AM General Corporation and AM General Sales
Corporation (collectively "AMG"); and General Motors Corporation ("GM") and
shall be effective as of January 1, 2000.
RECITALS
A. GM and AM General have entered into a series of contractual commitments
through which the parties shall, among other things; design, assemble, market
and distribute products bearing the "HUMMER" brand.
B. AMG currently manufactures and distributes one vehicle and derivatives
thereof (as listed on Exhibit A) for non-military application (the "Current
Vehicle"), which is distributed through a network of independently owned and
operated dealerships pursuant to Hummer Dealer Agreements between AMG and each
of the dealers listed on Exhibit B (Existing Dealers).
C. The parties intend to assess the capabilities of the Existing Dealers to
adequately support both a) the future distribution, sale and servicing of the
number of additional Current Vehicles expected to be distributed by AMG and b)
the additional vehicles which the parties expect to be distributed by GM and
sold as "HUMMER" branded vehicles, beginning in or about the 2002 calendar year
("Future Product").
D. AMG wishes to retain the services of GM to manage and administer AMG's
Existing Dealers pursuant to the terms of the Hummer Dealer Agreement, and to
otherwise provide the sales and marketing support services described in this
Agreement, until the time when Future Products are ready for distribution.
E. GM is willing to provide such services in accordance with the terms set
forth in this Agreement.
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:
SECTION 1
MANAGEMENT SERVICES TO BE PROVIDED BY GM
1.1 Engagement. In reliance upon GM's skill and experience in establishing,
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maintaining and administering dealer distribution networks for motor vehicles
and related field operations, AMG hereby engages GM as the exclusive provider of
the services described in this Agreement related to the sales and distribution
of the Current Vehicle.
1.2 Services. Services which GM will provide, except as otherwise noted, shall
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include:
(a) The following functions currently performed by AMG's Marketing and
Communications Department:
(i) Movie placement: AMG will make available additional vehicles to
GM for movie placement at a mutually agreed upon price. GM will
pay movie placement fees.
(ii) Public Relations, including media relations, press fleet
management, and media kits
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(iii) Advertising, including ad planners, ad production, videos,
brochure, website management, media placements, market/customer
research, agency fees
(iv) Dealer co-op advertising program administration.
(v) Shows and Exhibits
(vi) Miscellaneous photos, printing and merchandise
(vii) Licensing, subject to the terms of the Royalty Sharing
Agreement by and between the parties dated December 21, 1999.
(viii) AMG will continue to provide vehicles as listed on Exhibit C,
at its own expense.
(b) The following functions currently performed by AMG's Fleet Department:
(i) Professional services, such as personnel and travel
(ii) Set up costs and fees for special shows
(c) AMG will continue to handle the day-to-day business handled by AMG's
Sales and Dealer Operations Department. GM will provide support and
guidance with respect to the sales service, and network planning functions.
AMG will also continue to be directly responsible for the expenses
associated with these functions.
(i) Department administration, including salaries and travel
expenses for department personnel
(ii) Training for the Current Vehicle
(iii) International sales administration
(d) The foregoing provisions notwithstanding, AMG's Warranty Department
shall remain in tact and AMG will be solely responsible for the payment of
all warranty claims. Additionally, AMG will continue to be directly
responsible for the expenses associated with these functions.
1.3 Dealer Network. Insofar as the payments GM receives under this
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Agreement are contingent upon Current Vehicle sales, it is in GM's and AMG's
mutual interest to strengthen AMG's dealer network. In order to achieve this
desired result, GM and AMG mutually agree to follow the processes set forth in
Exhibit D.
1.4 Dealer Communication System. GM will assume responsibility for the
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AMG Dealer Communication System ("System") with respect to the ordering of the
Current Vehicle on or before the introduction of Future Product. GM may change
this System, or implement a new system, subject to AMG's agreement concerning
the allocation of costs, if any are to be borne by AMG.
1.5 Standard of Performance. GM agrees to perform hereunder in accordance
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with its customary business practices when performing similar functions with
respect to its own distribution network. Subject to the terms of this
Agreement, GM shall have reasonable discretion in carrying out its
responsibilities hereunder.
1.6 Consultation with AMG. GM will regularly consult with AMG regarding
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the services which GM will provide under this Section 1, and will keep AMG
informed of the status of those services. If AMG believes that GM is not acting
in accordance with the objectives specified herein in executing its
responsibilities hereunder, then AMG shall so advise GM, and the parties shall
utilize their reasonable best efforts consistent with the principles of good
faith and fair dealing to reach a mutually acceptable resolution, consistent
with those objectives.
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1.7 Transition of Responsibility. In order to provide the smooth and
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seamless transition of the responsibility for performance of the services set
forth above from AMG (and/or the current provider of such services) to GM, the
parties will work together in good faith to establish a mutually acceptable
transition schedule consistent with Exhibit E to this Agreement that comprehends
the ramp up of GM's performance of the services contemplated above as various
contracts that AMG may already have in place with third parties for the
performance of such services either expire or are terminated.
1.8 Payments to GM. Payments to GM under this Agreement shall be made in
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accordance with Exhibit E.
1.9 Additional Services. The parties periodically may agree to have GM
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perform additional services under this Agreement on mutually acceptable terms
and conditions.
SECTION 2
AMG's RESPONSIBILITIES
2.1 Products. (a) All responsibility for the development, design and
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manufacture of the Current Vehicle shall remain with AMG, as will terms and
conditions of sale of the Current Vehicle to dealers operating under the
existing Hummer Dealer Agreement. AMG and GM will evaluate and adopt or
reject proposed future product changes to the Current Vehicle through a
mutually agreeable process. Before making any equipment or design changes
with respect to the Current Vehicle, or any changes to the terms of sale,
AMG will notify GM and GM shall consult with AMG regarding such changes
including, as appropriate, the proposed implementation date for such
changes, and specific provisions for price protecting vehicle orders
already accepted by AMG.
(b) AMG shall retain all responsibility, financial or otherwise, with respect
to warranty claims, recall campaigns, product liability claims and
lawsuits, and all similar items related to the design, manufacture,
assembly, distribution and sale of the Current Vehicle.
2.2 Assistance to GM. AMG will not take any actions with respect to
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Existing Dealers that are inconsistent with GM's responsibilities. Upon
request by GM, AMG will take such action as may reasonably be requested by
GM to facilitate GM's fulfillment of those responsibilities as set forth in
Section 1.
2.3 Advertising and Promotional Materials. In fulfilling the
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responsibilities set forth in Section 1.2, GM will provide AMG with copies
of all marketing, advertising and promotional materials to be used for the
Current Vehicle. AMG shall have final approval of all such materials and be
responsible for substantiating the truth and accuracy of all advertising
claims contained in such materials. Those materials will be forwarded to
Xxxx Xxxxxxxx, AM General Corporation, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx Xxxx,
Xxxxxxx 00000, or to such other individual as AMG may designate in writing.
AMG will provide GM with information that GM may reasonably request to
fulfill its responsibilities, including data necessary to substantiate any
claims to be made in such marketing, advertising and promotional materials.
Unless it has direct knowledge of evidence to the contrary, which it shall
promptly communicate to AMG, GM shall to the maximum extent permitted by
law be entitled to rely, without independent verification, on the accuracy
of all statements, specifications, descriptions and advertising materials
made or furnished by AMG to GM.
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2.4 In General. Except as expressly provided herein, during the term of this
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Agreement, GM shall have no other obligations with respect to the Current
Vehicle, or with respect to the Hummer dealer network. It is the intention of
the parties that AMG shall continue to be responsible for all of its obligations
under the Dealer Agreements with Hummer Dealers.
SECTION 3
TERM OF AGREEMENT
This Agreement shall become effective on January 3, 2000, and shall remain in
effect until the Distribution Agreement, referenced below, becomes effective, or
until such other time as the parties may mutually agree to terminate this
Agreement.
SECTION 4
DISTRIBUTION AGREEMENT
4.1 It is the intent of the parties, to the degree feasible consistent with
their mutual objectives, to use the same dealers for distributing the Current
Vehicle and Future Product when such Future Product is available for
distribution. The parties anticipate that the requirements for dealers with
respect to facilities, systems, sales processes and capital investment for
Current Vehicle and for Future Product will require new Dealer Agreements and/or
distribution arrangements.
4.2 Since the specific requirements, systems and processes for the future
distribution network will not be finalized until closer to the time of Future
Product availability, the parties are not yet in a position to define the terms
under which the Current Vehicle will be distributed through that network.
However, it is anticipated that GM will assume all responsibility for marketing
and distribution of the Current Vehicle for a fee to be determined, and AMG will
remain responsible for its design and manufacture, as well as the expenses
associated with warranty, product claims and lawsuits, recalls, and similar
product related items. The parties will attempt to develop a Distribution
Agreement for the Current Vehicle consistent with this framework at the earliest
practical time.
SECTION 5
MISCELLANEOUS
5.1 No Franchise Relationship or Intended Beneficiaries. Nothing herein is
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intended to constitute an assignment of any obligations that AMG has to its
dealers under the Hummer Dealer Agreement, and nothing herein is intended to
create any franchise relationship between GM and those dealers who become a
party to a Hummer Dealer Agreement with AMG. Nothing herein is intended to grant
to any third parties, including present or future dealers, any rights.
5.2 Mutual Cooperation. Each party will cooperate with the other to the
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reasonable degree necessary to allow the objectives of this Agreement to be
realized.
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5.3 Indemnification. (a) AMG shall indemnify, defend and hold harmless GM from
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and against any liabilities, claims and demands arising (i) 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 Current Vehicle; and (ii) any costs
(including reasonable attorney's fees and expenses) associated with warranty
claims, recall campaigns, product liability claims and lawsuits, and all similar
items related to the design, manufacture, assembly, distribution and sale of the
Current Vehicle (collectively referred to hereinafter as "Claims").
(b) Because GM will be indemnified by AMG pursuant to this Agreement, AMG as
between the parties shall have the right and responsibility to manage all
lawsuits and all product liability claims relating to the Current Vehicle.
With respect to any actual, potential or threatened Claim relating to any
Current Vehicle, AMG and GM shall (i) communicate and cooperate with each
other to the fullest extent reasonably possible in investigating the facts
and circumstances surrounding the Claim and in litigating the matter to the
extent necessary; (ii) refrain to the fullest extent reasonably possible
from taking positions adverse to the interests of each other, (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, and (iv) in the event a
Claim is brought against GM relating to any Current Vehicle, GM shall as
promptly as practicable under the circumstances forward to AMG every
summons and complaint and every other court document received by GM and in
no event shall GM take any action for defense or settlement without the
consent of the AMG.
5.4 Other Litigation. In the event a third party commences or threatens to
commence litigation or other legal action against one or more of the parties to
this Agreement with respect to activities to be performed under this Agreement,
the parties shall, to the extent such litigation or other legal action is of a
type other than that covered in Section 5.3 above:
(a) promptly meet to analyze each claim being asserted and mutually
determine to the satisfaction of the parties utilizing the principles of
good faith and fair dealing which party should take the lead with regard to
such claim and to the extent reasonably possible at the time, how the
parties shall apportion the costs, if any, of resolving the matter;
(b) communicate and cooperate with each other to the fullest extent
reasonably possible in investigating the facts and circumstances
surrounding the claims being asserted and in litigating the matter to the
extent necessary;
(c) refrain to the fullest extent reasonably possible from taking
positions adverse to the interests of each other; and
(d) 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.
5.5 Independent Contractors. This Agreement does not constitute GM as the
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agent or legal representative of AMG, or AMG as the agent or legal
representative of GM for any purpose. GM's personnel are not employees or
agents of AMG, and AMG's personnel are not employees or agents of GM.
5.6 Assignment. This Agreement shall not be assigned by either party without
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the prior written consent of the other party.
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5.7 Notices. All notices hereunder shall be in writing, and communicated by
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U.S. mail, express mail, personal delivery or facsimile. Such notice shall be
effective when received by the addressee at the address noted below:
Notices to AMG: Xxxx X. Xxxxxxx, Chief Financial Officer
AM General Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
with a copy to: Xxxxxx X. Xxxxxxxxx, Vice President - Law
The Renco Group, Inc.
00 Xxxxxxxxxxx Xxxxx
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Xxx Xxxx, Xxx Xxxx 00000
Notices to GM: Xxxx XxXxxxxxxx
HUMMER Marketing
000 Xxxxxxxxxxx Xxxxxx
XX: 482-A32-B98
Xxxxxxx, Xxxxxxxx 00000
with a copy to: Xxx Xxxxxxxxxxx
GM Truck Group
MC: 000-000-000
0000 Xxxxxxxxxx Xxxxx
Xxxx, Xxxxxxxx 00000-0000
or such other addresses as the parties may designate from time to time in
writing.
5.8 Litigation. The parties agree that in the event of any litigation by any
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third party involving a claim related to the services which GM is to provide
hereunder, they will cooperate with each other in the defense of such claim.
5.9 Choice of Law. All disputes concerning the validity, interpretation, or
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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.
5.10 Entire Agreement. This Agreement contains all of the terms and conditions
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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.
5.11 Titles and Headings for Convenience. Titles and headings used in this
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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.
5.12 Severability. Nothing contained in this Agreement shall be construed as
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requiring the commission of any act contrary to law. If any tribunal or court of
competent jurisdiction deems any provision hereof
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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 copies of this Agreement
to be duly executed and delivered by their proper and duly authorized
representatives as of December 21, 1999.
GENERAL MOTORS CORPORATION AM GENERAL CORPORATION
By: ____________________________ By: __________________________
Title: __________________________ Title: _________________________
AM GENERAL SALES CORPORATION
By: ________________________
Title: _______________________
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