EXHIBIT 10.1
AMENDMENT NO. 2 TO AGREEMENT
THIS AMENDMENT NO. 2 TO AGREEMENT (the "Amendment No. 2") is entered
into effective as of the 30th day of September 2002, by and among Allied
Automotive Group, Inc. ("Carrier") and UPS Autogistics, Inc. ("Customer").
WHEREAS, Carrier and Ford Motor Company entered into that certain
agreement later assigned to Customer, dated April 3, 1992, as amended from time
to time, including the amendment dated August 1, 1999 (the "Prior Agreement");
and
WHEREAS, Carrier and Customer entered into that certain Letter
Agreement dated September 6, 2001 (the "Letter Agreement"); and
WHEREAS, the parties entered into that certain Amendment to Agreement,
effective September 6, 2001, which revoked the terms and conditions of the
Letter Agreement and provided that the Prior Agreement has remained in full
force and effect notwithstanding the terms and conditions of Letter Agreement
(the "Amendment"); and
WHEREAS, the parties desire to enter into this Amendment No. 2 to amend
certain terms of the Amendment as set forth herein; and
WHEREAS, the Prior Agreement, as amended by the Amendment and this
Amendment No. 2, shall be hereinafter referred to as the "Agreement;"
NOW, THEREFORE, in consideration of the foregoing, and the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
1. The Prior Agreement, as amended by the Amendment and as
amended hereby, shall terminate on (i) September 30, 2005, as to ramp locations,
and (ii) December 31, 2005, as to plant locations.
2. The administrative processing fee per eligible units in the
amount set forth in the Amendment shall continue and shall only be charged by
Carrier once per vehicle. Notwithstanding the foregoing or anything contained in
the Amendment to the contrary, the parties agree that the administrative
processing fee shall not apply to (i) any vehicle damaged by Carrier and
identified as "J" or "R" damage claims, such assessment to be mutually agreed to
by Carrier and Customer, (ii) all shuttle traffic, (iii) new business awarded
subsequent to the effective date of this Amendment No. 2 or business which was
awarded from September 7, 2001 through the effective date of this Amendment No.
2, (iv) rail diversions occurring after September 7, 2001, or (v) new business
(which is not handled by Carrier as of the date of this Amendment No. 2)
rerouted to existing locations. Customer shall have the right, at its expense,
to conduct periodic on-site audits of Carrier's financial data solely for the
purpose of determining the accuracy of such
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administrative processing fees charged pursuant to the Amendment and this
Amendment No. 2; provided, however, that Customer shall provide to Carrier prior
written notice before conducting any such audit and such audit shall be
conducted during Carrier's normal business hours and under reasonable terms and
conditions.
3. The underlying rates charged to Customer shall be as those
rates exist as of the effective date of this Amendment No. 2. The parties hereby
agree that the underlying rates charged to Customer shall not be subject to
upward or downward adjustment prior to [XXXXXXX], except that Customer agrees to
adjust rates based on fuel price fluctuations using the current fuel surcharge
process. The parties agree that Carrier shall increase the underlying rates
(excluding the administrative processing fee) charged to Customer on all
vehicles, including vehicles transported by shuttles, by [XXXX] beginning
[XXXXXX] for ramp and plant locations.
4. Carrier agrees to that it will use its commercially reasonable
efforts to pursue Q1 certification with a target date of December 31, 2003.
5. Customer will terminate the business transported by Carrier at
each of Orillia, Washington; Portland, Oregon; and Laurel, Montana effective
January 1, 2003.
6. Customer hereby agrees to utilize Carrier for the Norfolk
Plant shuttle operations (Norfolk Plant to Crescent Yard) at [XXXXX] per
vehicle, effective as of October 1, 2002, and Customer will continue to utilize
Carrier as the shuttle operator from the Norfolk Plant to the Chesapeake Yard
until that operation is terminated ([XXXXXXXX]).
7. Each of Carrier and Customer hereby agrees to jointly
establish collaborative "Process Improvement Teams" that will work to identify
and implement improvements that will elevate Carrier's quality results, reduce
Carrier's overall cost base, improve transit times and potentially identify new
business that might be integrated into Carrier's system at competitive rates and
to evaluate the feasibility of adjusting the service standards set forth in this
Amendment No. 2 in order to improve time in transit, efficiency and reliability.
8. Customer and Carrier agree that Section 7 of the Amendment
shall be deleted in its entirety and be of no further force and effect, and
shall be replaced by the following language:
"7. Subject to the provisions of Section 7.6, Carrier
agrees to comply by location with the following transit times and
compliance percentages:
7.1 (a) Shuttle: completed within twenty-four (24) hours,
[XXXX] compliance; (b) Ramp to Dealer: completed within forty-eight
(48) hours; and (c) Plant to Dealer: completed within seventy-two (72)
hours.
7.2 [Intentionally omitted]
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7.3 [Intentionally omitted]
7.4 Commencing as of the effective date of this Amendment
No. 2, Carrier agrees to a service standard which provides for [XXXXXX]
percent of Carrier's deliveries to be in compliance with the transit
times set forth in Section 7.1(b) and Section 7.1(c). The remaining
[XXXXXX] percent will be made within an additional forty-eight (48)
hours.
7.5 [Intentionally omitted]
7.6 Customer will notify Carrier if a corrective action
plan is required due to Carrier's failure to comply with the standards
specified in Section 7.4. Carrier must submit a corrective action plan
within forty-eight (48) hours of such notification by Customer. Carrier
shall have thirty (30) days from such notification ("Cure Period") in
which to bring its performance into compliance with said standards.
Customer may terminate the obligation of Carrier and Customer as to any
location not in compliance at the end of the Cure Period. If Customer
elects to so terminate, Customer will give Carrier seventy-five (75)
days' prior written notice thereof. Carrier and Customer agree that,
during any such seventy-five (75) day notice period, Customer and
Carrier will continue fully to perform as to transit standards at
levels no worse than those achieved prior to such corrective action
plan during the Cure Period.
7.7 Carrier may not increase the administrative
processing fee or the underlying rates charged to Customer as provided
in Section 3 of Amendment No. 2 in the event Customer terminates the
obligations of Customer and Carrier as to any location as a result of
the breach by Carrier of Sections 7.1 (as to shuttles) and Section 7.4
of this Amendment No. 2.
7.8 Customer agrees to continue to use commercially
reasonable efforts to assist Carrier in achieving the performance
standards set forth in Sections 7.1 and 7.4, and to work in a
collaborative fashion to investigate and pilot the feasibility and
potential benefits of adjusting standards of performance in order to
improve time in transit, efficiency and reliability which are
acceptable to both parties; provided, however, Carrier bears the sole
responsibility for achieving such performance standards, anything to
the contrary in this Amendment No. 2 notwithstanding. Customer agrees
that Carrier shall not be in breach of this Section 7 to the extent
acts or events or circumstances beyond the reasonable control of
Carrier occur which prohibit compliance with this Section 7."
9. Upon Carrier receiving [XXXXXX] per year of volume in business
awarded from Customer after the effective date of this Amendment No. 2, Carrier
shall install its Vehicle Logistics Suite, which tracks the complete supply
chain life cycle for vehicles, including tracking vehicles from in-factory
manufacturing to final delivery, assimilating information from multiple parties
in the delivery chain, and tracking key
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events associated with vehicle movement, for use by Ford Motor Company in
tracking all new Ford Motor Company products in the United States subsequent to
the installation of such Vehicle Logistics Suite.
10. Customer represents to Carrier that it has the right and
authority to enter into this Amendment and to contract for the distribution of
Ford Motor Company vehicles in accordance with the terms of this Amendment.
11. All provisions of the Amendment which have not been amended by
this Amendment No. 2 shall remain in full force and effect. Notwithstanding the
foregoing, to the extent that there is any inconsistency between the provisions
of the Amendment and the provisions of this Amendment No. 2, the provisions of
this Amendment No. 2 shall control.
IN WITNESS WHEREOF, the parties have executed this document this 30th
day of September, 2002, but effective as of the date first written above.
ALLIED AUTOMOTIVE GROUP, INC.
By:
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Title:
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UPS AUTOGISTICS, INC.
By:
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Title:
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[XXX] Represents material deleted per the Company's request for Confidential
Treatment and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of
1934.
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