Exhibit 10.19
"Chromtec" cladded wheel Purchase Supply and Assembly Agreement
PURCHASE, SUPPLY AND ASSEMBLY AGREEMENT, dated as of January 15, 1998. (the
"Agreement"), between ACCURIDE CORPORATION, a Delaware corporation with offices
at Henderson, Kentucky ("Accuride"), and LACKS INDUSTRIES, INC., a [Michigan]
corporation with offices at Southfield, Michigan ("Lacks" and, together with
Accuride, the "Parties").
RECITALS
A. Lacks manufactures plastic cladding for steel wheels and has developed
a patented process of applying plastic cladding to steel wheels under the name
"CHROMTEC".
B. Accuride manufactures PN-96/UN-93 and UN-173 steel wheels and sells
such wheels to Ford Motor Company ("Ford") for Ford trucks (the "Wheels").
C. Accuride and Lacks desire that Lacks will apply CHROMTEC plastic
cladding and adhesive or bonding agent ("Cladding") to Wheels supplied by
Accuride, for sale by Accuride to Ford (Wheels with the Cladding applied are
referred to herein as "Cladded Wheels").
IN CONSIDERATION OF the mutual covenants contained herein, the Parties
agree as follows:
ARTICLE I--ASSEMBLY OF CLADDED WHEELS
1.1 Application of Cladding: Lacks shall apply Cladding to all Wheels shipped
to Lacks by Accuride that are to be sold by Accuride to Ford as Cladded Wheels
pursuant to an agreement or agreements between Ford and Accuride.
1.2 Statement of Work: In order to comply with all ISO & QS-9000
requirements (the "ISO & QS-9000 Requirements"), Lacks and Accuride have
jointly developed and agreed upon a Statement of Work as set forth on
Schedule 1 attached hereto (the
"Statement of Work"). The Statement of Work includes, but is not limited to,
the following areas:
- General Program Description
- Program Objectives / Assumptions
- Program Timing
- Responsibilities for Design and Development (with designations for Lead,
Support and Verification)
The Parties hereby agree to abide by and carry out all of the terms and
conditions set forth in the Statement of Work. Notwithstanding the preceding
sentence, the terms of this Agreement will control and displace any inconsistent
provision of the Statement of Work.
1.3 Tooling: Accuride and Ford have authorized the acquisition of all the
required tooling to produce, plate and apply the Cladding to the Wheels (the
"Tooling") have been issued. All the funds required for the tooling have been
paid by Ford and are subject to Ford Supply Practice 35 as set forth on Schedule
2 attached hereto ("Ford Supply Practice 35"). Lacks must insure the Tooling to
general industrry practices and maintain the Tooling (i) in excellent repair,
(ii) in good working order, and (iii) in accordance with Ford Supply Practice
35. Lacks hereby represents and warrants that, no lien or encumbrance exists on
the tooling, it has no loan or other obligation that would purport to create any
lien or encumbrance on the Tooling, and it will incur no such obligation. Lacks
must use the Tooling exclusively for applying the Cladding to Wheels and may not
use the Tooling for cladding any other wheels.
1.4 Quality Parameters: The Cladded Wheels as delivered to Ford by Lacks,
including but not limited to the assembly of the Cladded Wheels, shall meet and
be in accordance with (i) the Statement of Work, (ii) ISO & QS-9000
Requirements, and (iii) Ford's design and product specification XL34-1015-CA
(for PN-96/UN-93 Wheels) and XL 74-1015-AA (for UN-173 Wheels) and subsequent
design revisions, previously furnished to Lacks, as the same may be revised from
time to time by Ford ("Ford's Design and Product Specifications"). Lacks may at
no time alter Ford's Design and Product Specifications without prior written
consent from Ford and Accuride. Lacks shall assure that each shipment of
Cladded Wheels to Ford adheres to (i) the Statement of Work, (ii) the ISO &
QS-9000 Requirements, and (iii) Ford's Design and Product Specifications.
1.5 Delivery Performance: Lacks shall deliver Cladded Wheels to Ford in
accordance with (i) the delivery times specified in Accuride's QS-9000 procedure
4.6 as set forth on Schedule 3 attached hereto, and (ii) any delivery notices or
release orders Accuride may provide to Lacks in agreement with Lacks' process
timing requirements which shall at no time exceed four (4) weeks. Lacks requests
copies of Ford' 830 and 862 releases.
2
1.6 Freight: Lacks will dispatch and ship the Cladded Wheels to the
plant designated by Ford, F.O.B. Grand Rapids, Michigan, unless the
delivery location is otherwise specified in writing (i) by Accuride's
Project Coordinator (as defined in Section 1.10 of this Agreement), (ii)
by an Accuride delivery notice or release order or (iii) by Ford.
1.6.1 Premium Freight: In the event Lacks fails to meet the delivery times
specified in sections 1.5 (I) and (ii) of this agreement ("Delivery Delays"),
Lacks will absorb the premium freight expenditures associated with such delivery
delays, and will indemnify Accuride for any premium freight expenditures paid by
Accuride assocated with Delivery Delays.
1. 7 Advance Shipping Notices: In accordance with Accuride QS-9000 procedures
as set forth on Schedule 4 attached hereto, Lacks will submit if feasible,
advance shipping notices ("ASNs") via Electronic Data Exchange ("EDI") to [Ford]
within thirty (30) minutes after shipping the Cladded Wheels to the Ford
location specified in Section 1.6 of this Agreement.
1.8 Pricing: The purchase price to be paid by Accuride to Lacks for each
Cladded Wheel to be delivered hereunder (the "Purchase Price") shall be set
forth on Schedule 5 attached hereto.
1.9 Packaging: Accuride will provide all Wheels to Lacks on plastic
pallets. Lacks will use the same plastic pallets to deliver the Cladded
Wheels to Ford at the location specified in Section 1.6 of this Agreement.
Lacks will at its expense load and band the pallets with Cladded Wheels to
be delivered to Ford and will do so in (i) a safe and protective manner,
and (ii) the same manner as Lacks received the Wheels from Accuride.
1.10 Project Coordinator: Accuride will assign a project coordinator who will
manage the flow of Wheels and information (the "Project Coordinator"). At
the Project Coordinator's request, Lacks will provide on the 30th.of each
month to the Project Coordinator in writing a monthly inventory
reconciliation of Wheels at Lacks site. In the event that Lacks cannot
account for all of the Wheels, Accuride will invoice Lacks, and Lacks
agrees to pay within sixty (60) days of the date of the invoice, $24.90 for
each unaccounted for Wheel (allowing for 3% scrap allowance), as the
Parties will assume that Lacks has lost the unaccounted for Wheels due
to assembly difficulties.
1.11 Annual Inventory Audit: Once a year, at Accuride's request, Lacks shall
afford Accuride and its representatives (including Accuride's accountants)
reasonable access, during reasonable business hours, for a reasonable number of
days, to Lacks' premises, for the purpose of auditing Lacks' inventory of Wheels
and Cladded Wheels
3
for the period since the date of this Agreement or since Accuride's last
audit, whichever is later.
1.12 Periodic Quality Audit: At Accuride's request, and at times chosen by
Accuride, Lacks shall afford Accuride and Ford and their representatives
reasonable access, during reasonable business hours, for a reasonable number of
days, to Lacks's premises, books, records, data, personnel, Tooling, Cladded
Wheels and inventory relating to Lacks' obligations under this Agreement, for
the purpose of determining whether the Cladded Wheels and the Tooling conform to
the requirements specified in this Agreement. Within the audit Accuride
personnel must adhere to Lacks' proprietary guidelines.
1.13 Ownership of Wheels: Lacks will have no title or interest in any Cladded
Wheels (other than to receive payment of the Purchase Price as provided
hereunder) or in any Wheels sent to Lacks for assembly, and Accuride will at all
times be the exclusive owner thereof. Lacks hereby represents and warrants that
it has no loan or other obligation that would purport to create any lien or
encumbrance on any Cladded Wheels or Wheels sent to Lacks for assembly, and it
will incur no such obligation.
ARTICLE II--WARRANTIES; INDEMNIFICATION
2.1 Warranties:
Lacks hereby represents and warrants to Accuride that at the time of delivery of
Cladded Wheels to Ford, the Cladding on the Cladded Wheels will be free from all
defects of whatever nature and shall meet (i) the Statement of Work, (ii) the
ISO & QS-9000 Requirements, and (iii) Ford's Design and Product Specifications
("Lacks's Warranty").
2.2 Repair & Replacement:
Accuride and Lacks have agreed to agree upon a Repair & Replacement procedure
within 12 weeks after this agreement takes effect.
2.3 Product Recall Programs: In the event of a product re-call, Accuride, as
the Tier 1 supplier, will be responsible for the coordination of all the
activities. Any such recall must be in accordance with the National Traffic
Motor Safety Act of 1966, and regulations pursuant thereto, as the same may be
amended from time to time. During such an occurrence, Accuride shall advise
Lacks of the actions it plans to take in administering such program and shall,
at Accuride's sole option, incorporate suggestions from Lacks if practicable.
Accuride shall bear the cost of any such programs except that Lacks shall bear
any such costs covered by its indemnities and obligations contained in this
Agreement or otherwise arising out of or resulting from any inaccuracy in or
failure of (or alleged inaccuracy in or failure of) a Cladded Wheel to
4
conform to Lacks' Warranty. In the event that Accuride reasonably believes
that the cost of such program is Lacks' responsibility, it shall so notify
Lacks and invoice Lacks for the related costs; provided that the failure to
provide such notice shall not release Lacks from its obligation unless Lacks
shall be materially prejudiced thereby. Lacks shall be entitled, at its own
expense, to participate in any such program for which it is to pay the cost.
2.4 Third Party Products Liability Claims: Lacks will indemnify, defend and
hold harmless Accuride from and against any and all demands, claims, actions,
suits and proceedings, together with all costs and expenses (including
reasonable attorney's fees and disbursements) of every kind, nature or
description relating thereto, asserted or brought by a third party for injury to
person or property (collectively, "Claims"), to the extent that such Claims
arise out of, relate to, or result from (i) any actual or alleged inaccuracy in,
or any actual or alleged failure of, a Cladded Wheel to conform to Lacks'
Warranty, or (ii) any actual or alleged failure of Lacks to perform its
obligations under Section 2.2 of this Agreement. Accuride will administer any
warranties with Ford. Accuride will review the warranty claims at the
appropriate Ford location and make disposal on said claim upon consultation with
Lacks, provided, however, that after consultation with Lacks, Accuride has the
sole disctretion as to the disposal of warranty claims. (The word "alleged" as
set forth in the within paragraph shall be interpreted so as to require
substantive proof from the manufacturer or third party".)
2.5 Accuride's Indemnity: Accuride will indemnify, defend and hold harmless
Lacks from and against any and all claims not covered by Lacks' indemnity under
Section 2.4 to the extent that such Claims arise out of or result from any
alleged defect in the Wheel itself, exclusive of the Cladding or any adhesive
used to apply the Cladding.
2.6 Patent Infringement Indemnification: Lacks will indemnify, defend and hold
harmless Accuride from and against any and all Claims incurred in any suit
brought against Accuride for infringement of any patent or other right relating
to the Cladding on a Cladded Wheel or the application of such Cladding.
ARTICLE III--ARBITRATION
2.7 Indemnification Procedures: (a) In the event of any Claim that is
subject to indemnification under Sections 2.4, 2.5 or 2.6 that is not also
covered by Section 2.3, the Party claiming the right to indemnity (the
"Indemnitee") shall promptly notify the indemnifying Party (the "Indemnitor")
or the Claim for which it is seeking indemnification; provided that the
failure to provide such notice shall not release the Indemnitor from any of
its indemnification obligations unless the Indemnitor shall be materially
prejudiced thereby. Accuride will undertake the defense of any such Claim by
counsel of its own choosing, at the expense of Lacks if Lacks is the
Indemnitor. If Lacks is the Indemnitor, Accuride shall advise Lacks of the
counsel Accuride is using to defend the Claim and shall consider any
suggestion for the use of different counsel
5
made by Lacks and Lacks may, by notice to Accuride, assume the defense of
such Claim by counsel reasonably satisfactory to Accuride.
(b) In the event that Accuride, within a reasonable time after notice of a
Claim against Lacks covered by Section 2.5 , fails to undertake the defense of
such Claim, Lacks (upon further notice to Accuride), shall have the right to
undertake the defense, compromise or settlement of such Claim for the account of
Accuride, subject to the right of Accuride to assume the defense of such Claim
at any time prior to settlement, compromise or final determination thereof.
(c) The Party not handling the defense of a Claim referred to in Section 2.7(a)
shall provide the Party handling such defense (the "Defending Party") with such
information as may reasonably be requested by the Defending Party and shall
cooperate with the Defending Party in defending such Claim. Any expense
reasonably incurred by the Party not handling the defense in connection
therewith shall be paid by the Indemnitor. An Indemnitee may, at its sole
option and expense, participate through separate counsel of its own choosing in
the defense of a Claim brought against it.
3.1 Arbitration: Any dispute, controversy or claim arising out of, relating
to, or in connection with, this Agreement, or the breach, termination or
validity thereof, shall be finally settled by arbitration. The arbitration
shall be conducted in accordance with the rules of the American Arbitration
Association in effect at the time of the arbitration, except as they may be
modified herein or by the mutual agreement of the Parties. The seat of
arbitration will be New York, New York. The arbitration shall be the sole and
exclusive forum for resolution of the dispute, controversy or claim. The
abrital award shall be in writing, state the reasons for the award, and be final
and binding on the Parties. The award may include an aware of costs, including
reasonable attorneys' fees and disbursements. Judgment upon the award may
entered by any court having jurisdiction thereof or having jurisdiction over the
Parties or their assets. Notwithstanding Section 5.5 hereof, the arbitration
and this clause shall be governed by the Federal Arbitration Act, 9 U.S.C. SS 1
et seq.
3.2 Selection of Arbitrator: The arbitration shall be conducted by one
arbitrator. The Parties agree to seek to reach agreement on the identity of the
sole arbitrator within 20 days of receipt of notice of said arbitration by the
Party named as defendant. If the Parties are unable to reach agreement on the
sole arbitrator, then the appointment of the sole arbitrator shall be made by
the American Arbitration Association, which shall promptly notify the Parties of
the appointment of the sole arbitrator.
3.3 (a) Remedies: Punitive damages - The Parties expressly waive and forego
any right to punitive, exemplary or similar damages as a result of any
controversy or claim arising out of, relating to or in connection with this
Agreement, or the breach, termination or validity thereof.
3.3 (b) Claims by Ford: Without limiting in any way any other remedies that
Accuride
6
may be entitled to under this Agreement or under law, Accuride shall be
entitled to recover from Lacks any costs or damages, including any outage
penalties, charged by Ford to Accuride, including, but not limited to,
transportation and hauling fees resulting from or arising out of any breach
by Lacks of its obligations hereunder or of Lacks' Warranty.
ARTICLE IV--TERM, OBLIGATIONS UPON TERMINATION
4.1 Term: The term of this Agreement shall commence as of the date hereof
and shall continue until such time Ford no longer requires wheel
assemblies.
4.2 Obligations Upon Termination: A termination of the obligation of Lacks to
apply Cladding to Wheels and Accuride to ship Wheels to Lacks for the
application of Cladding hereunder shall not terminate the rights and obligations
of the Parties with respect to Wheels delivered by Accuride to Lacks and Cladded
Wheels delivered by Lacks to Ford hereunder prior to such termination or the
other rights and obligations of the Parties hereunder that are specified herein
to survive such termination.
ARTICLE V--MISCELLANEOUS
5.1 Notices: All notices and other communications hereunder or in connection
herewith shall be effective and deemed given to a Party when received by that
Party by personal delivery, by facsimile transmission or by mail, including any
courier service, at the address applicable under this Section 5.1. Unless and
until subsequently changed by notice given in accordance with this Section 5.1,
the addresses and facsimile numbers of the Parties shall be as follows:
Lacks Industries, Inc.
00000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Fax No.: 000-000-0000
Accuride Corporation
0000 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
X.X.X.
Attention: President
Fax No.: 000-000-0000
5.2 Assignment: This Agreement or any part thereof may not be assigned,
sublicensed, pledged, encumbered or otherwise disposed of by either Party,
whether by operation of law, as part of a merger or sale of all or
substantially all of the assets of a Party or otherwise, and any such
attempted disposition shall be void and
7
unenforceable, except that either Party may assign this Agreement with the
prior written consent of the other Party, which consent shall not be
unreasonably withheld. This Agreement shall be binding upon and inure solely
to the benefit of the Parties and their respective permitted assigns, and no
person other than the Parties and their respective permitted assigns shall
have any right, remedy or claim hereunder or in respect hereof.
5.3 Entire Agreement: This Agreement (together with the Schedules attached
hereto and forming an integral part hereof) constitutes the entire agreement
between the Parties with respect to the subject matter thereof. All prior
agreements and understandings with respect to the subject matter hereof between
the Parties are hereby superseded by this Agreement and are of no further force
and effect.
5.4 Amendments and Waivers: This Agreement shall not be amended, changed or
modified, whether by a purchase order, acknowledgment form or otherwise, except
in a writing signed by both Parties through their authorized officers. No
waiver shall be deemed to have been made by either Party of any of its rights
under this Agreement unless the same shall be in a writing signed by such Party
through its authorized officer. Any such waiver shall constitute a waiver only
with respect to the specific matter described therein, and shall in no way
impair the rights of the Party granting such waiver in any other respect or at
any other time. No delay on the part of either Party in exercising any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and, except as herein provided, are
not exclusive of any other rights, remedies, powers and privileges provided by
law.
5.5 Choice of Law: This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the law of the state of New York,
without giving effect to the conflict of law rules thereof.
5.6 Miscellaneous: The headings contained in this Agreement are for reference
only and shall not affect in any way the meaning or interpretation of this
Agreement. This Agreement may be executed in several counterparts, each of
which shall constitute one and the same instrument.
5.7 Confidentiality: Each party will, during the term of this Agreement and
for three years thereafter, maintain in confidence, and use solely for the
purpose of the transactions contemplated in this Agreement, all non-public
confidential or proprietary information (including proprietary intellectual
property rights) of the other Party disclosed, either before or after the date
of this Agreement, in connection with the transactions described herein, and
each Party confirms that it has heretofore so maintained and used solely for
such purpose all such information previously disclosed to it. Either Party may
request at any time the return or destruction of any of its confidential or
proprietary information that may have been disclosed to the other Party.
8
Each Party will cause its employees, agents and consultants to comply with
such obligations.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed by their respective duly authorized representatives as of the date
first above written.
LACKS INDUSTRIES, INC.
By /s/ Xxx Xxxxx
-----------------------
Name: Xxx Xxxxx
Date:
Title: Executive Vice President
ACCURIDE CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Date:
Title: President
9
Schedule 6
Repair & Replacement
This is an unresolved issue which needs to be settled.
10
