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EXHIBIT 10.1
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement"), dated as of July 28, 2000, is
by and between American Axle & Manufacturing, Inc. ("AAM") and General Motors
Corporation ("GM").
RECITALS
A. AAM and GM have entered into the following agreements: the Component
Supply Agreement, dated as of February 28, 1994, as amended and as
modified by the letter agreement dated February 20, 1996 (the "CSA");
the Restated and Amended Memorandum of Understanding, dated September
2, 1997 (the "MOU"); the *** Agreement, dated February 24, 2000 ("***
Agreement").
B. AAM has stated that certain amounts are due from GM to AAM and, in
addition, AAM has alleged that GM has breached certain provisions of
the CSA ("AAM Claims"); and GM has stated that certain amounts are due
from AAM ("GM Claim"). A brief description of the AAM Claims and GM
Claims is set forth on Exhibit 1 attached hereto.
C. AAM and GM desire to amicably resolve and completely settle the AAM
Claims and GM Claim, without either of the parties admitting any
liability to the other.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Recitals. The foregoing recitals to this agreement are incorporated
into, and they should constitute an integral part of, this Agreement.
2. Agreement.
A. On or before August 15, 2000, GM shall pay AAM $*** for the
inbound transportation costs of productive material to AAM
under Section 3.6 of the CSA for the period prior to March 31,
2000.
B. As soon as reasonably practicable, but in no event later than
September 30, 2000, GM and AAM shall increase the price of
components sold by AAM under the CSA for material and freight
rebate amounts as the parties have agreed. Such price increase
will be effective for applicable components on or after April
1, 2000.
<PAGE> 2
C. Upon completion of the price increases described in Section
2.B. above to the mutual satisfaction of AAM and GM, Section
3.6 (b) of the CSA will be deleted in its entirety from the
CSA.
D. As soon as reasonably practicable, but in no event later than
August 31, 2000, GM shall pay AAM's invoices against GM
purchase orders as identified in Exhibit 2.
E. On or before August 1, 2000, GM shall pay AAM $*** for the
Saginaw tooling.
F. All payments for products or services provided by AAM (or any
of its subsidiaries or affiliates) to GM or General Motors de
Mexico ("GMM") under the 8.6 inch 5 link rear axle program and
the 11.5 inch rear axle program shall be in U.S. dollars
("USD"). Furthermore, within 10 days from GM's receipt of
invoices, GM shall pay to AAM USD for all past due amounts for
such products and services under the programs identified
above. Current and future payments for such products and
services under the programs identified above shall be made by
GM to AAM in USD in a timely manner as such amounts become due
per GM and AAM payment terms. Payment for components to be
manufactured by AAM (or any of its subsidiaries or affiliates)
in Mexico and sold to GMM for future programs shall be in the
currency the parties shall agree upon.
G. Notwithstanding Paragraph 2 of the *** Agreement, GM and AAM
agree to modify the original schedule of *** from AAM to GM
and agree to the payment schedule set forth on the attached
Exhibit 3. All other provisions of the *** Agreement remain in
effect unchanged.
H. GM and AAM shall establish a mutually agreeable procedure for
the administration of directed buy components by August 15,
2000.
I. With respect to the sourcing of New Components under Section
1.2 of the CSA, actual competitive quotes shall be made
available by GM to a mutually agreeable independent third
party to verify and confirm to AAM that GM's 30 day letter to
AAM, specifying the nature and extent to which AAM's original
proposal is not competitive with respect to quality, service
and price, is full, complete and accurate, including, without
limitation, the items set forth in the attached Exhibit 4 and
reflects a bonafide competitive quote that is not from GM or a
GM affiliate and is based upon U.S. and Canadian production.
Such independent third party shall also verify and confirm to
AAM that any sourcing by GM under Section 1.2 to suppliers
other than AAM is in accordance with Section 1.2 of the CSA.
J. AAM and GM mutually agree that the following information is
sufficient to satisfy GM's needs with respect to Piece Price
Cost Breakdown and Tooling Cost Breakdown (on GM's standard
forms) as set forth on the attached Exhibit 5 and Exhibit 6,
respectively:
Information to be provided if available:
2
<PAGE> 3
All General Header Information
Raw Material & Purchased Components
(1) Item descriptions
(2) Purchase or manufacture
(3) Quantity
(4) Cost/unit
Total
Labor & Burden
(6) Operation description by major component
(9) Labor cost
(12) Machine type
(15) Total
(16) Total manufacturing cost
(17) SG&A expense
(18) Profit
(19) Selling price
Tooling Breakdown
(1) Operation Description by Major Component
(2) Tooling type (Perishable/Durable/Gages/Other)
(3) Tools per operation - number of sets
(4) Tool Description (Name)
(5) Tooling Location
(6) Tool Cost
(7) Lead Time (wks)
(11) Annual Tool Capacity
(13) Volume quoted
(14) Plant Operation (Dept/Hrs/Shift/ Hrs/Day/Days/Wk)
(15) Local Currency
The parties acknowledge that all information provided is
deemed to be estimates at the time of quotation and subject to
change prior to or after production.
K. In resolution of issues relating to *** and the ***, the
parties have agreed that within *** from the date hereof, GM
shall designate substitute business that is mutually agreeable
to GM and AAM and that is not covered by the CSA or by the
MOU. Such substitute business will have an annual purchase
value equal to or greater than $*** at the time of award. The
parties agree that programs covered by Article 1 of the CSA
and/or the MOU are not eligible as substitute business.
Sourcing of such substitute business to AAM shall be for the
life of the program or programs and be done in accordance with
Section 1.2, Sourcing of New Components, of the CSA and shall
be included in Lifetime Program Contracts as set forth in
Paragraph 1 of the MOU.
3
<PAGE> 4
If for any reason sourcing of such substitute business to AAM
does not result from the procedure set forth above, other
mutually agreeable substitute business will be designated by
GM without delay. This procedure shall be repeated until such
time as substitute business as specified herein is sourced to
AAM.
L. The parties acknowledge the cost reduction provisions of
Section 3.2 of the CSA and recommit themselves to this effort
in this regard.
M. The parties agree that quarterly business planning meetings
will be held with appropriate executives between both parties
to discuss matters such as cooperative cost reduction efforts,
current and future sourcing, commercial and financial issues,
future business opportunities and current performance in terms
of quality, service, technology and price.
N. Upon GM program release of the replacement for the GMT
820/830, GM shall utilize the process set forth in Section 1.2
of the CSA for the sourcing of replacement components
manufactured by AAM for the GMT 820/830.
O. As of the date of this Agreement and based on the provisions
herein, the parties are not aware of any circumstances or
other matters which would result in the failure to meet the
conditions set forth in Paragraph 1.c. of the MOU ((i)
transition of the purchasing function, and (ii) inclusion of
all Existing Components (as defined in the CSA) to Lifetime
Program Contracts) as it relates to the March 1, 2001 date. If
either party becomes aware of any such circumstances or other
matters, they will be brought promptly to the attention of the
other party for prompt resolution.
3. Release.
A. AAM hereby fully and forever releases and discharges GM, and
its officers, directors, employees, agents, successors and
assigns, from all manner of action and causes of action,
suits, damages, demands and rights whatsoever, in law or in
equity, existing or accrued as of the date hereof, whether
known or unknown, by reason of, or arising out of or in any
way connected with the AAM Claims. AAM hereby covenants that
AAM will refrain from commencing any action or suit,
prosecuting any pending action or suit, or participating or
assisting in any manner in the commencement or prosecution of
any action or suit, in law or in equity, against GM on account
of any action or cause of action released hereby of the AAM
Claims.
B. GM hereby fully and forever releases and discharges AAM, and
its officers, directors, employees, agents, successors and
assigns, from all manner of action and causes of action,
suits, damages, demands and rights whatsoever, in law or in
equity, existing or accrued as of the date hereof, whether
known or unknown, by reason of, or arising out of or in any
way connected with the GM Claim. GM hereby covenants that GM
will refrain from commencing any action or suit, prosecuting
any pending action or suit, or participating or assisting in
any manner
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in the commencement or prosecution of any action or suit, in
law or in equity, against AAM on account of any action or
cause of action released hereby of the GM Claim.
C. AAM and GM each hereby acknowledges that all matters contained
or referred to herein have been thoroughly read by it, and are
familiar to and have been fully and satisfactorily explained
to it, that all of the terms and conditions contained herein
are clearly understood by it and have been fully and
unconditionally consented to by it, that AAM and GM each has
had the benefit and advice of counsel of its own selection,
that this Release is being entered into freely, voluntarily,
with knowledge and without duress, that in executing this
Release, it is relying upon no other representations, either
written or oral, express or implied, made to it by any person.
4. Entire Agreement. This Agreement contains the entire understanding and
agreement of the parties hereto with respect to the subject matter
hereof; it supersedes all prior negotiations and agreements, if any,
regarding the subject matter hereof; and it may not be amended or
modified in any respect except by written instrument which specifically
refers to this Agreement and is executed by both of the parties hereto
affected thereby. No representations, warranties, promises or
inducements, oral or written, not specifically set forth in this
Agreement in respect of the subject matter of this Release shall be
binding on any of the parties hereto.
5. Binding Effect. This Agreement shall be binding upon and enforceable
against the parties hereto and their respective successors and assigns.
6. Section Headings. Headings of sections in this Agreement are only for
the convenience of the parties hereto and, accordingly, they shall not
be deemed to constitute a part of this Agreement when construing or
enforcing this Agreement.
7. Governing Law. This Agreement is being entered into in the State of
Michigan and shall be governed and construed under and in accordance
with the laws of the State of Michigan.
IN WITNESS WHEREOF, the parties hereto duly have executed and have
caused this Agreement to be executed and delivered as of the day and year first
above written.
AMERICAN AXLE & MANUFACTURING, INC. GENERAL MOTORS
CORPORATION
By:/s/ B.G. Mathis 7/28/00 By:/s/ Barbara Whittaker 7/28/00
-------------------------------- ------------------------------------
5
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EXHIBIT 1
CLAIMS SUBJECT TO RELEASE
AAM CLAIMS
***
*** of the following programs:
- ***
- ***
PAYMENT CLAIMS
- In-bound transportation costs of productive material with respect to
Section 3.6 in CSA.
- Saginaw Tooling
GM CLAIM
PAYMENT CLAIM
- ***
<PAGE> 7
EXHIBIT 2
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
AMERICAN AXLE & MANUFACTURING
SUMMARY OF OPEN AAM / GM ISSUES
----------------------------------------------------------- -------------- ------------------------- --------------- ---------------
UNPAID
DESCRIPTION OF ITEM PO # DATE SUBMITTED DUE DATE PRINCIPAL
----------------------------------------------------------- -------------- ------------------------- --------------- ---------------
<S> <C> <C> <C> <C>
AGREED TO BUT NO PAYMENT DATE SET
5a Simpson Damper Issue 2/17/00 (letter) ***
17 Q1-2000 Material Rebate L6T000WW 5/10/00 (invoice) 6/9/00 ***
26 Unpaid MCR Premiums -- Axles -- Through 4/00 5/10/00 (letter) 6/10/00 ***
30 STC Obsolete Material 5/23/00 6/23/00 ***
Tooling Various Various ***
May Operating Premiums ***
----------------------------------------------------------- -------------- ------------------------- --------------- --------------
TOTAL AGREED TO BUT NO PAYMENT DATE SET ***
----------------------------------------------------------- -------------- ------------------------- --------------- --------------
</TABLE>
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EXHIBIT 3
*** AGREEMENT
SCHEDULE OF AAM PAYMENTS
<TABLE>
<CAPTION>
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
--- --- --- --- --- --- --- --- --- --- --- --- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 *** *** *** ***
2001 *** *** *** *** *** ***
2002 *** *** *** *** *** *** *** *** *** *** *** *** ***
2003 *** *** *** *** *** *** *** *** *** *** *** *** ***
2004 *** *** *** *** *** *** *** *** *** *** *** *** ***
2005 *** *** *** *** *** *** *** ***
-------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Totals ***
=================================================================================================
</TABLE>
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EXHIBIT 4
COMPETITIVE QUOTATION ANALYSIS BY THIRD PARTY
PROCESS: Copies of original supplier quotations and supporting
documentation should be reviewed by third party
representatives to assure that as a minimum, the following
quote content is understood and verified.
Competitive production piece price
FOB Point (Assure site is not a warehousing location) (U.S. or Canada)
Manufacturing location (U.S. or Canada)
Quality and IPTV Commitments
SPO pricing methodology
Production lead time
Special processing requirements
Minority supplier commitments
Exceptions to design requirements
Prototype Tooling Costs
Prototype lead times
Brake administration fees (Where applicable)
Competitive Production Tooling costs
Prototype piece cost
Productivity commitments, including to what specific product content it applies
Metal Market Adjustment Calculation
Differential requirements (Type, Manufacturer, Penetration, etc.)
Verify specific product to which quotation applies
Quoted volumes by component
Economics (Material, Labor, Overhead)
Verification of Directed-Buy Components
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EXHIBIT 5
[GM LOGO]
GENERAL MOTORS CORPORATION
SUPPLIER COST ENGINEERING
PIECE COST BREAKDOWN WORKSHEET
Date: 06/19/2000 Drawing Level:
Part #: Volume Quoted:
Part Name: ABS Unit Tooling Capacity:
Original Quotation Supplier Name: @ hrs/day:
Plant Location: @ days/week:
Duns #: Local Currency:
Award Prepared By:
<TABLE>
<CAPTION>
<S><C>
------------------------------------------------------------------------------------------------------------------------------------
Raw Material & Purchased Components: Note: You may submit this data in your own format
As long as the same level of detail is provided.
(1) (2) (3) (4) (5)
Purchased (P) Mass Duns
Item Description Manufacture (M) Quantity (KG) Material Cost/unit Total Supplier Number
================ ================= ======== ======= ======== ========= ===== ======== ======
---------------- ----------------- -------- ------- -------- --------- ----- -------- ------
---------------- ----------------- -------- ------- -------- --------- ----- -------- ------
---------------- ----------------- -------- ------- -------- --------- ----- -------- ------
---------------- ----------------- -------- ------- -------- --------- ----- -------- ------
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---------------- ----------------- -------- ------- -------- --------- ----- -------- ------
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---------------- ----------------- -------- ------- -------- --------- ----- -------- ------
---------------- ----------------- -------- ------- -------- --------- ----- -------- ------
---------------- ----------------- -------- ------- -------- --------- ----- -------- ------
Totals 0.0000 0.0000
================ ======= =========
Labor & Burden Labor Detail Machine Data
(6) (7) (8) (9) (10) (11) (12) (13)
Operation Hrly. Labor Labor Cost No. of Variable
op.# Description Rate ($) Standard Hours (7) x (8) Oper. Mach. Size Mach. Type Cost
================ ========== ============== ========== ====== ========== ========== ========
---------------- ---------- -------------- ---------- ------ ---------- ---------- --------
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Total Labor Cost:
==========
Burden Detail
(14) (15)
Fixed
Cost Total
================ ===========
---------------- -----------
---------------- -----------
---------------- -----------
---------------- -----------
---------------- -----------
---------------- -----------
---------------- -----------
---------------- -----------
---------------- -----------
---------------- -----------
---------------- -----------
---------------- -----------
---------------- -----------
Total Burden Cost: 0.000
===========
Remarks: (16) Total Manufacturing Cost (Material + Labor + Burden): 0.0000
------------
(17) Selling, General & Administrative Expenses:
------------
(18) Profit:
------------
(19) Selling Price - U.S. Funds: 0.0000
============
</TABLE>
GM 1804
<PAGE> 11
EXHIBIT 6
SUPPLIER COST GENERAL MOTORS CORPORATION
GM SUPPLIER COST
ENGINEERING PRODUCTIVE TOOLING COST BREAKDOWN WORKSHEET
ADVANCE PURCHASING
PART NUMBER: PART DESCRIPTION: SUPPLIER:
--------------- ------------ ---------------
<TABLE>
<CAPTION>
MFG. DUNS#-- DWG. LEVEL-- RFQ#-- PREPARED BY:--
=== ======= ======== ============ ============ ====== =========== =========== =============== ============= =============
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
TYPE(B) PCS.PER
OP &PCS TOOLS TOOL TOOLING TOOL LEAD POTENTIAL CYCLES PCS.PER ANNUAL TOOL
NUM PER PER DESCRIPTION LOCATION COST TIME SOURCE PER PROD. TOOL LIFE
(A) CYCLE OP (NAME) (WKS) HOUR RUN CAPACITY CYCLE
=== ======= ======== ============ ============ ====== =========== =========== ====== ======= ============= =============
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
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--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
--- ------- -------- ------------ ------------ ------ ----------- ----------- ------ ------- ------------- -------------
TOTALS: ------
</TABLE>
(A) OPERATION NUMBERS MUST MATCH THOSE SHOWN ON THE PRODUCTIVE
COST BREAKDOWN WORKSHEET.
(B) USE ONE OF THE FOLLOWING DESIGNATIONS FOR TOOLING TYPE:
F=FIXTURE M=TOOLING FOR MACHINE AND EQUIPMENT
G=GAGES P=SPECIFIC PART HANDLING EQUIPMENT
0=OTHER (EXPLAIN ALL "OTHER" TYPES)
(13) VOLUME QUOTED:
--------------------
(14) PLANT OPERATING PATTERN: DEPARTMENT HRS/SHIFT SHIFT/DAY DAYS/WK
========== ========= ========= =======
---------- --------- --------- -------
---------- --------- --------- -------
---------- --------- --------- -------
---------- --------- --------- -------
(15) LOCAL CURRENCY:
------------
NOTE: INSTRUCTIONS FOR COMPLETION ON REVERSE SIDE
(17) COMMENTS:
<PAGE> 12
* Portions of this Exhibit 10.01 were omitted and filed separately with the
Secretary of 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 "***".
