Document JNZR8B1LXXe4wznvY4mZNzzNX

SEARS, ROEBUCK AND CO. NATIONAL HEADQUARTERS July 22, 1985 Mr. W. C. Burkhead MAREMONT CORPORATION 250 E. Kehoe Blvd. Carol Stream, IL 60187 Dear Chuck: RE: AMENDMENTS TO BASIC BUYING AGREEMENT Attached are three copies of drafts to the Basic Agreement between Maremont and Sears covering Exhaust, Shocks and Brakes. Please review and provide us with your comments so that a final draft may be prepared. Thank you for your assistance. Very truly yours SEARS, ROEBUCK AND CO. FH/dr Att. cc: D. Levans, D/628 F. Andelbrat, D/628 F. Hatcher Assistant Buyer Department 628 (a/ <^(3 Ok SEARS TOWER CHICAGO. IL 60684 MAR 007205 JUL 1 9 ht.j July 18, 1985 D. L. Levans Department 628 F. H. Hatcher Department 628 RE: Maremont Amendments Attached hereto are three revised draft amendments to the Maremont Agreements. Please note that separate amendments have been created for each Maremont Agreement (exhaust, shock systems and brakes). Also, I have incorporated the recommendations that have been made by all of the individuals responding to the original drafts of the amendments which accompanied my letter of May 30, 1985. Once again, please review the attached amendments and submit your comments. If you find the amendments acceptable, please obtain Maremont's comments so that I may prepare a final draft for review by Department 70 2M. ' cc: Esther Loth, D/768A F. Saczawa, D/700-8 M. T. Zajac, D/628M F. Andelbrat, D/628 MAR 007206 AMENDMENT AGREEMENT AMENDMENT AGREEMENT made the ______ day of , 198, between MAREMONT CORPORATION, a Delaware corporation (hereinafter called "Seller"), and SEARS, ROEBUCK AND CO., a New York' corporation (hereinafter called "Sears"): WITNESSETH: WHEREAS, by Agreements dated January 1, 1973, as subsequently amended, Seller agreed to manufacture and sell to Sears, and Sears agreed to purchase from Seller certain of Sears requirements of exhaust system parts purchased through Sears Department 628, all as set forth therein, and; WHEREAS, the parties wish to further amend the Agreement in order to change the method by which the "contract price" of product will be computed; NOW, THEREFORE, the parties agree that effective July 1, 1985, Paragraph 2(a) of the aforementioned Agreement is deleted and the following is substituted therefor: MAR 007207 "2. (a) (i) It is the intent of the parties that product manufac tured by Seller for Sears will be scheduled for production semi annually during the term hereof so as - to meet Sears reasonable delivery requirements, and insofar as possible to achieve manu facturing efficiency and economical production. For such purpose, each contract year shall be divided into two.-semi-annual periods (hereinafter called "periods") beginning, respectively, on the first day of January and July. Sears shall furnish to Seller, at least forty-five (45) days before the beginning of each contract year, a written estimate of Sears requirements of product for such year. Within fifteen (15) days after receipt from Sears of said estimate. Seller shall furnish to Sears a written statement of Sellers estimated capacity for production of product during such contract year, and a written statement of Seller's computa tion of its estimated "manufacturing cost", as defined in Schedule "A" hereof, of product to be manufactured for Sears during such year. Such statements of estimated cost shall show as accurately as Seller can determine each element entering into "manufacturing cost" and any differences between the estimated "manufacturing cost" of product and Seller's standard cost hereinafter referred to. Thereafter, and at least fifteen (15) days before the begin ning of each contract year, the estimated "manufacturing cost" to be used in fixing the contract price to be charged for product -2- MAR 007208 to be manufactured during such year shall be agreed upon by Seller and Sears, or otherwise established as provided in Paragraph 7 hereof. Sears shall then immediately .place with Seller a firm production order for the first period at the contract price determined in accordance with the provisions of Paragraph 3 hereof. In addition, at least forty-five (45) days in advance _of the second period of each contract year. Sears shall furnish Seller a written estimate of Sears requirements of product for said period. Within fifteen (15) days thereafter, Seller shall furnish Sears with a written statement of its estimated capacity for production of product during said period, and a written statement of Seller's computation of an updated estimated "manu facturing cost", as defined above, of product to be manufactured during said period. Thereafter, and at least fifteen (15) days before the beginning of said period, the updated estimated manu facturing co'st to be used in fixing the contract prices to be paid by Sears for product manufactured during said period shall be agreed upon by Seller and Sears, or otherwise established as provided in Paragraph 7 hereof, and the contract prices shall be calculated as provided in Paragraph 3. At Sears option, and as agreed to by Seller, said contract prices shall then be adjusted upward or downward, in amounts determined by Sears, for each item of product, provided that the total contract price for all product -3 - MAR 007209 which the parties estimate will have been manufactured by Seller during the entire contract year shall equal the updated total estimated manufacturing cost for the entire contract year for all items of product, plus the profit margin specified in Paragraph 3. Sears shall then immediately place with Seller a firm production order_ for said period at the aforementioned, contract prices.,. 2.(a)(ii) If there is a significant change in Seller's second period estimated manufacturing costs, either Sears or Seller may request a third "final" adjustment of the contract prices of pro duct after the start of the second period but prior to October 1 of the contract year. If such a request is made by either party. Sears and Seller shall agree to a "revised" updated estimated manufacturing cost to be used in fixing the adjusted contract prices to be paid by Sears to Seller for product manufactured during the "remainder of the second period. Such agreement shall be in writing and at Sears option said contract prices shall then be adjusted upward or downward in amounts determined by Sears following the procedures already set forth in this Paragraph for fixing contract prices for the second period." The aforementioned Agreements, as herein amended, are fully ratified and affirmed. -4 - MAR 007210 IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed by their respective representatives duly authorized thereunto, as of the day and year first above written. ATTEST: MAREMONT CORPORATION Secretary By President SEARS, ROEBUCK AND CO. By Senior Executive Vice President Merchandising -5- MAR 007211 Approved for Signature by Department-700-8: Group Vice President Approved for Signature by Department 628: National Merchandise Manager Senior Buyer Buyer 6- MAR 007212 AMENDMENT AGREEMENT AMENDMENT AGREEMENT made the ______ day of , 198_____, between MAREMONT CORPORATION, a Delaware corporation (hereinafter called "Seller"), and SEARS, ROEBUCK AND CO., a New 1'ork corporation (hereinafter called "Sears"): WITNESSETH: WHEREAS, by Agreements dated January 1, 1971, as subsequently amended. Seller agreed to manufacture and sell to Sears, and Sears agreed to purchase from Seller certain of Sears requirements of shock absorbers purchased through Sears Department 628, all as set forth therein, and; WHEREAS, the parties wish to further amend the Agreement in order to change the method by which the "contract price" of product will be computed; NOW, THEREFORE, the parties agree that effective July 1, 1985, Paragraph 2 (a) of the aforementioned Agreement is deleted and the following is substituted therefor: MAR 007213 "2. (a) (i) It is the intent of the parties that product manufac tured by Seller for Sears will be scheduled for production semi annually during the term hereof so as to meet Sears reasonable delivery requirements, and insofar as possible to achieve manu facturing efficiency and economical production. For such purpose, each contract year shall be divided into two semi-annual periods (hereinafter called "periods") beginning, respectively, on the first day of January and July. Sears shall furnish to Seller, at least forty-five (45) days before the beginning of each contract year, a written estimate of Sears requirements of, product for such year. Within fifteen (15) days after receipt from Sears of said estimate. Seller shall furnish to Sears a written statement of Sellers estimated capacity for production of product during such contract year, and a written statement of Seller's computa tion of its estimated "manufacturing cost", as defined in Schedule "A" hereof, -of product to be manufactured for Sears during such year. Such statements of estimated cost shall show as accurately as Seller can determine each element entering into "manufacturing cost" and any differences between the estimated "manufacturing cost" of product and Seller's standard cost hereinafter referred to. Thereafter, and at least fifteen (15) days before the begin ning of each contract year, the estimated "manufacturing cost" to be used in fixing the contract price to be charged for product -2- MAR 007214 to be manufactured during such year shall be agreed upon by Seller and Sears, or otherwise established as provided in Paragraph 7 hereof. Sears shall then immediately place with Seller a firm production order f.or the first period at the contract price determined in accordance with the provisions of Paragraph 3 hereof^ In addition, at least forty-five (45) days in advance of the second period of each contract year. Sears shall furnish Seller a written estimate of Sears requirements of product for said period. Within fifteen (15) days thereafter. Seller shall furnish Sears with a. written statement of its estimated capacity for production of product during said period, and a written statement of Seller's computation of an updated estimated "manu facturing cost", as defined above, of product to be manufactured during said period. Thereafter, and at least fifteen (15) days before the beginning of said period, the updated estimated manu facturing cost to be used in fixing the contract prices to be paid by Sears -for product manufactured during said period shall be agreed upon by Seller and Sears, or otherwise established as provided in Paragraph 7 hereof, and the contract prices shall be calculated as provided in Paragraph 3. At Sears option, and as agreed to by Seller, said contract prices shall then be adjusted upward or downward, in amounts determined by Sears, for each item of product, provided that the total contract price for all product -3- MAR 007215 which the parties estimate will have been manufactured by Seller during the entire contract year shall equal the updated total estimated manufacturing cost for the entire contract year for all items of product, plus the profit margin specified in Paragraph 3. Sears shall then immediately place with Seller a firm production order for said period at-the aforementioned contract prices. 2. (a) (ii) If there is a significant change in Seller's second period estimated manufacturing costs, either Sears or Seller may request a third "final" adjustment of the contract prices of pro duct after the start of the second period but prior to October 1 of the contract year. If such a request is made by either party. Sears and Seller shall agree to a "revised" updated estimated manufacturing cost to be used in fixing the adjusted contract prices to be paid by Sears to Seller for product manufactured during the remainder of the second period. Such agreement shall be in writing and at Sears option said contract prices shall then be adjusted upward or downward in amounts determined by Sears following the procedures already set forth in this Paragraph for fixing contract prices for the second period." The aforementioned Agreements, as herein amended, are fully ratified and affirmed. -4 - MAR 0072T6 IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed by their respective representatives duly authorized thereunto, as of the day and year first above written. ATTEST: MAREMONT CORPORATION Secretary By President SEARS, ROEBUCK AND CO. By Senior Executive Vice President Merchandising -5 - MAR 007217 Approved for Signature by Department 700-8: Group Vice President Approved for Signature -by Department 628:- National Merchandise Manager Senior Buyer Buyer 6- MAR 007218 AMENDMENT AGREEMENT AMENDMENT AGREEMENT made the ______ day of , 198_____, between MAREMONT CORPORATION, a Delaware corporation (hereinafter called "Seller"), and SEARS, ROEBUCK AND CO., a. New York corporation (hereinafter called "Sears") : WITNESSETH; WHEREAS, by Agreements dated July 1, 1971, as subsequently amended. Seller agreed to manufacture and sell to Sears, and Sears agreed to purchase from Seller certain of Sears requirements of lined brake shoe sets purchased through Sears Department 628, all as set forth therein, and; WHEREAS, the parties wish to further amend the Agreement in order to change the method by which the "contract price" of product will be computed; NOW, THEREFORE, the parties agree that effective July 1, 1985, Paragraph 2(a) of the aforementioned Agreement is deleted and the following is substituted therefor; MAR 007219 "2. (a) (i) It is the intent of the parties that product manufac tured by Seller for Sears will be scheduled for production semi annually during the term hereof so as to meet Sears reasonable delivery requirements, and insofar as possible to achieve manu facturing efficiency and economical production. For such purpose, each contract year shall be divided into two semi-annual periods (hereinafter called "periods") beginning, respectively, on the first day of January and July. Sears shall furnish to Seller, at least forty-five (45) days before the beginning of each contract year, a written estimate of Sears requirements of product for such year. Within fifteen (15) days after receipt from Se=. said estimate. Seller shall furnish to Sears a written statement of Sellers estimated capacity for production of product during such contract year, and a written statement of Seller's computa tion of its estimated "manufacturing cost", as defined in Schedule "A" hereof, of product to be manufactured for Sears during such year. Such statements of estimated cost shall show as accurately as Seller can determine each element entering into "manufacturing cost" and any differences between the estimated "manufacturing cost" of product and Seller's standard cost hereinafter referred to. Thereafter, and at least fifteen (15) days before the begin ning of each contract year, the estimated "manufacturing cost" to be used in fixing the contract price to be charged for product -2- MAR 007220 to be manufactured during such year shall be agreed upon by Seller and Sears, or otherwise established as provided in Paragraph 7 hereof. Sears shall then immediately place with Seller a firm production order for the first period at the contract price determined in accordance with the provisions of Paragraph 3 hereof. In addition, at least forty-five (45) days in advance of the second period of each contract year, Sears shall furnish Seller a written estimate of Sears requirements of product for said period. Within fifteen (15) days thereafter, Seller shall furnish Sears with a written statement of its estimated capacity for production of product during said period, and a written statement of Seller's computation of an updated estimated "manu facturing cost", as defined above, of product to be manufactured during said period. Thereafter, and at least fifteen (15) days before the beginning of said period, the updated estimated manu facturing cost to be used in fixing the contract prices to be paid by Sears for product manufactured during said period shall be agreed upon by Seller and Sears, or otherwise established as provided in Paragraph 7 hereof, and the contract prices shall be calculated as provided in Paragraph 3. At Sears option and as agreed to by Seller, said contract prices shall then be adjusted upward or downward, in amounts determined by Sears, for each item of product, provided that the total contract price for all product which the parties -3 - MAR 007221 estimate will have been manufactured by Seller during the entire contract year shall equal the updated total estimated manufactur ing cost for the entire contract year for all items of product, plus the profit margin specified in Paragraph 3. Sears shall then immediately place with Seller a firm production order for said period at the aforementioned contract .prices. 2.(a)(ii) If there is a significant change in Seller's second period estimated manufacturing costs, either Sears or Seller may request a third "final" adjustment of the contract prices of pro duct after the start of the second period but prior to October 1 of the contract year. If such a request is made by either party. Sears and Seller shall agree to a "revised" updated estimated manufacturing cost to be used in fixing the adjusted contract prices to be paid by Sears to Seller for product manufactured during the remainder of the'second period. Such agreement shall be in writing and at Sears option said contract prices shall then be adjusted upward or downward in amounts determined by Sears following the procedures already set forth in this Paragraph for fixing contract prices for the second period." The aforementioned Agreements, as herein amended, are fully ratified and affirmed. -4- MAR 007222 IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed by their respective representatives duly authorised thereunto, as of the day and year f-irst above written. ATTEST: MAREMONT CORPORATION Secretary By ___________ President ATTEST: Secretary NUTURN CORPORATION By President SEARS, ROEBUCK AND CO. By Senior Executive Vice President Merchandising -5 MAR 007223 AMENDMENT- AGREEMENT PLAINTIFF'S EXHIBIT MAR-503 ' AMENDMENT AGREEMENT made as of this : fir day cf /U-L.g________, ' u X9l7_fl, between MAREMONT CORPORATION, a Delaware corporation r. (hereinafter called-"Seller"), and SEARS', ROEBUCK AND CO., a New York corporation:''(hereinafter called ."Sears.... : ` WITNESSETH: WHEREAS, byAgreements dated January 1, 1971, July 1, 1971, and January 1, '1973, as'subsequently amended, Seller agreed to manufacture and sell to Sears, and Sears agreed to purchase from Seller certain of Sears requirements of shock absorbers, lined brake shoe sets,-.'arid exhaust-,.system'parts purchased through Sears Department 628>\:`ai'i as set'fforth therein, and; WHEREAS, by said Agreement dated July 1, 1971, as amended by Letter Agreement ..'dated February 20, 197 8, (said Agreement, I;."..' together ; with "the'.'-Ameridment thereto, hereinafter called "Agreement"), Seller agreed ..'tojmanufacture'.and sell-'to Sears, and Sears agreed _ , . ; . --`('''`.k* 7^5.' - ' to purchase frgnr.Seller during the, term thereof, seventy-five percent'.-.(75%j "orf;::Sears; requirements-of-. Lined Brake Shoe Sets purchased: through";Se`arsip'epaitment,'628 (hereinafter called '"product") and; . ' /--Tv ' WHEREAS, Seiler will' cause the establishment of a new s - v ' production facility,at Smithville, Tennessee for the manufacture of product for'sale to Sears under the Agreement and the parties mutually desire to amend the-Agreement as hereinafter provided: NOW,'THEREFORE, the parties agree that effective January 1, 1979, the Agreement is amended as follows: 1. (a) It is recognized that Seller will incur certain expenses, directly or indirectly, which result from the closing of the Paulding and Allied Drive plants and the relocation of certain operations to the Smithville Plant. These expenses include costs resulting from asset abandonment, severance pay, personnel relocation, rental payments and other "phasing out" costs at those facilities. MAR 007249 (b) .It is also recognized that the initial training and starting-up costs at the -Siriiohvilie Plant may cause the manufacturing cost of product to be higher during the early .stages of production 'than after the plant is in full operation and the employees have been trained. Accordingly, the period commencing'on' January 1,'1978 and ending on December 31, 1980 will be defined as the "Start-up Period". 2. During the Start-up Period, Seller shall establish and maintain a Billing Surplus Account, and shall furnish Sears with monthly statements of its status. . 3. Promptly after' the.end of said Start-up Period, Seller shall determine by audit the actual closing and relocation costs ,, . k s.' * ' provided for in Paragraph' l'Ca) above and the actual total manu- ..y.-iv.Cfacturing cost,'>s defined''in Schedule01 A" of the Agreement, of .* - "- -- ..wall product oroduced by'Seller'at the Smithville Plant durinq r^vrV; :> t; '-said Start-up' Period;'''- If.-..the sum of such actual 'total manu- r'; .' ..'.f.;: facturing costs'at;the Smithyille Plant:';shall exceed the total wpi-};.-., ' V,.-'" ''.ps-'V'.'t-''''' -.py;. ff;'r;?:^"Standard -Cdsts^'fas'-'h'ere'inaf'ter^defiried)'Tb'f'"direct '"'mmra1 terials, ;*V .vi'-: .`f .. J Mi. 1 n U. MV ."'M M J Mi.M V. 1 vl. - _ J -1 1 * ; -- .3 . _ I_ *J " J ,,y) " * * r*. " w<',' . ` .. ' plus the aforementioned Closing and Relocation costs (but in no r&.. .V , event more'.-than One ^Million',Five Hundred Twenty-Six Thousand Dollars ($l>-526,000) shall be considered as "Starting Costs". .'Sears share of the Starting'Costs shall equal thirty-two and seven hundred,sixty-five thousandths percent (32.765%) of Seller's total Starting Costs, but in .no event shall it exceed Five Hundred Thousand Dollars ($500,000). Seller will charge to the Billing Surplus account and retain for its own account the Sears share of said actual costs, but.in no event more than the afore said $500j000. ___ 4. The standard costs of direct material, direct.labor and factory overhead applicable to product manufactured during the Start-up Period shall be agreed upon by Seller and Sears in writ- ' ing in advance of the Start-up Period and shall constitute the "Standard Costs" used in computing Starting Costs, and in comput ing charges and credits to said Billing Surplus Account. MAR 007250 5" " During the Start-up Period there snail be credited ro the'Billing Surplus Account,] the amount by which the sum of Standard Costs, as determined by Section 4 of this Agreement, of direct material,'direct labor.-and factory overhead for any item of product exceeds the actual" manufacturing costs of direct material,' direct labor; and factory overhead (as defined in Schedule "A" of the Agreement and as determined by audit) of such item of product produced at the Smithfield Plant and sold to Sears during the.Start-up Period. 6. For the purpose of amortizing its liability to Seller, Sears Department 628 shall .add to the net price to be paid to Se.ller for.; product .sold ' to.Sears, twenty .'cents' ($-.20) for each "All In One" "selling Said amounts' 'shall .be',.paid by Sears to Seller beginning on ^January 1,; 1979 and credited''-to, the Billing Surplus Account, and shall continue untii.'.such. time), as the total credits made .to the Billing Surplus'. Account, from, a'll. sources as herein provided shall equal $500,000 or.'uritil'.December'3l, 1981 whichever occurs . i._._ ................ Billing Surplus Account, 'within ninety (90); 'daysKof';.'the'';'end of each respective contract year,' its share and/Sears share'-of any "excess profits" (as defined in. Paragraph 5-'of the'Agreement) accrued during the 1978, :'1979, 19 80 and 1981 contract years, or until the total credits to the Billing Surplus Account'from all sources equals $500,000, whichever occurs first. ; 8. As soon as possible after December 31, 1981, Seller shall determine by audit, the -total credits made to the Billing Surplus Account. Immediately.thereafter, Sears shall pay to Seller, in a lump sum, the amount by which Sears share'of the total Starting Costs exceeds the total credits to the Billing Surplus Account, or Seller shall pay to Sears, in a lump sum, the amount by which the total credits to the Billing Surplus Account exceeds Sears share of the total Starting Costs, as the case may be. " 3, - MAR 007251 9. If Seller's total Starting Costs exceed . 51,52 6,000 , any such excess shall not be"allowed as .an element of cost under this Agreement.' : FURTHER-MORE, the parties recognize that the Agreements dated January 1, 1971, July 1' 1971, and January 1, 1973, as subsequently amended,- state that Seller is an Illinois corporation. As Sears and,Seller agree that Seller is in fact a Delaware corporation,,;!-! NOW THEREFORE,the parties agree that effective as of ATTEST (SEAL) SEARS, ROEBUCK AMD CO. MAR 007252 ./ Approved for Signature by % -? ' ` Approved for Signature by Department 628: Na'tional ,Merchandise Manager Y'-* .! , ,5 X'* 'yjs. `S' :-v; ...*Y ;- v>- 1 feiagfc;. 1 . - :'-y' ' '*< v-V-S. vr?"-': '. TXw.- ; "v:':-'-':-:. '-: i,'."V-' ' .s ].; - "r;: -...- . .... .; . .,.-. . ' H /.v-- ' . :;-< - V . ... 05/30/79 -; - 5- MAR 007253 rr C" AMENDMENT AGREEMENT AMENDMENT AGREEMENT made this day of fojjliiiL^cn. 19/ft , between MAREMONT CORPORATION, a Delaware corporation (hereinafter called "Seller"), and SEARS, ROEBUCK AND CO., a New York corporation (hereinafter called "Sears"): WITNESSETH: WHEREAS, by Agreements dated January 1, 1971, July 1, 1971, and January 1, 1973, as subsequently amended (herein after called the "Agreements"), Seller agreed to manufacture and sell to Sears,- and Sears agreed to purchase from Seller certain of Sears requirements of shock absorbers, lined brake shoe sets and exhaust system parts purchased through Sears Department 62S, all as set forth therein, and; . WHEREAS, the parties wish to further amend the Agreements to provide for the establishment, by Seller, of a Sales and Installation Training Department to service the Sears account; NOW, THEREFORE, the parties agree that effective as of January 1, 1979, the Agreements are amended as follows: Notwithstanding anything to the contrary in the section entitled "Selling Expenses" in Schedule "A" of each of the respective Agreements, Seller shall maintain a Sales and Installation Training Department consisting of certain "fieldmen", for the purpose of servicing the Sears account. At least 15 days in advance of each production period, Sears and Seller shall agree in writing or: the services to be provided, and the promotional items to be distributed to " Sears by said fieldmen, as well as the cost of those services and promotional items. Those costs will be included as items of manufacturing cost. However, the services provided MAR 007254 ,by the fieldmen will be subject to a total profit margin of 5%, and the promotional items which are distributed shall be "no-profit" items. The manufacturing costs of both the aforementioned services and promotional items, as well as the prices paid for them by Sears, shall be subject to "redetermination" in accordance with Paragraph 5 of each of the aforementioned Agreements. Said price and redetermination calculations shall be made separately for each of the three Agreements, in accordance with written procedures agreed upon by the parties, from time to time. The aforementioned Agreements, as herein modified, are fully ratified and affirmed. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective Presidents or Vice, Presidents, and attested by their respective Secretaries or Assistant Secretaries, duly authorized thereunto, as of the day and year first above written. ATTEST: (SEAL) MAREMON? CORPORATION ATTEST: (SEAL) SEARS, ROEEUCK AND CO. / Department 700-S i -2- MAR 007255 r Approved for Signature by Department 628: // National Merchandise Manager Buyer 01/15/80 -3- MAR 007256 31 MAR 007569