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EXHIBIT 10.7
EMPLOYEE TRANSITION AGREEMENT
This Employee Transition Agreement relating to certain employment
matters and employee benefit plans (this "Agreement") dated as of April 1, 2000
is made and entered into by and among Ford Motor Company, a Delaware corporation
("Ford") and Visteon Corporation, a Delaware corporation and a wholly owned
subsidiary of Ford, ("Visteon"). Ford and Visteon are referred to herein
individually as a "Party" and collectively as the "Parties".
RECITALS
1. Ford has determined that it would be appropriate and beneficial to separate
the activities now being conducted under the name of "Visteon Automotive
Systems, an enterprise of Ford Motor Company," including those activities
conducted by any entity in which Ford, directly or indirectly, owns or
controls 50% or more of its stock or other equity interests (a
"Subsidiary") and by any entity in which Ford, directly or indirectly, owns
or controls less than 50% but more than 20% of its stock or other equity
interests (an "Affiliate") which is aligned with such enterprise, which
presently includes the Chassis Systems, Climate Control Systems, Interior
and Exterior Systems, Energy Transformation Systems, Glass Division, and
the Visteon Technology Office (collectively, with historic operations,
including the former Automotive Products Operations, Automotive Components
Division, Electronics, Plastics and Trim, Climate Control, Chassis,
Electrical and Fuel Handling, and Glass Divisions, the "Business");
2. Ford has concluded that the separation of the Business from its automaking
business would (i) alleviate competitive barriers to expanding the Business
beyond sales to Xxxx, Xxxx Subsidiaries and Ford Affiliates, (ii) allow
Ford to overcome competitive barriers to making purchases from third-party
automotive suppliers, and (iii) enhance the Business' ability to attract
employees and permit the Business to offer employee incentives more
directly tied to the performance of the Business;
3. Ford has caused Visteon to be formed for the purpose of carrying on and
conducting the Business;
4. Ford and Visteon have entered into various agreements, including a Master
Transfer Agreement dated as of even date herewith, to effect the separation
of the Business; and
5. The parties desire that Ford transfer to Visteon certain employees who are
presently engaged in doing work for the Business and to provide for the
orderly transition of employee benefit plans.
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AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 "BENEFIT TRANSITION DATE" shall mean the first day of the month coincident
with or preceding the Distribution Date except with respect to the Ford Flexible
Benefits Plan shall mean June 1, 2000.
1.02 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.03 "DISTRIBUTION DATE" shall mean the date Ford will distribute to Ford
shareholders all of the shares of Visteon common stock then owned by Ford.
1.04 "DOL" shall mean the U.S. Department of Labor.
1.05 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.06 "FORD BUSINESS EMPLOYEES" shall mean
(i) Persons who are enrolled on the Ford salaried payroll (U.S. or
non-U.S) or enrolled on the Ford hourly payroll in non-U.S
jurisdictions and who are actively at work at the Business the day
prior to the Transfer Date including those on paid time off (i.e. Jury
Duty Pay, Bereavement Pay, Short Term Military Pay, Vacation and Paid
Holiday) and those on reduced or alternate work schedules, but
excluding Ford employees who are on temporary assignment to the
Business ("Active Ford Business Employees"); and
(ii) Persons who are absent from such salaried or hourly employment as of
the day prior to the Transfer Date on account of short term or long
term disability leave or other approved leaves of absence, or layoff
("Inactive Ford Business Employees").
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1.07 "FORD RETIREE" shall mean a former Ford Business Employee, or a surviving
spouse or beneficiary of a former Ford Business Employee, who had terminated
service with Ford or Visteon and is receiving retirement benefits under a Ford
sponsored retirement plan as of the Benefit Transition Date or who terminated
employment with Ford or Visteon on or before the Benefit Transition Date and is
eligible on the Benefit Transition Date to receive immediate or future
retirement benefits (including deferred vested benefits) under the Ford
sponsored retirement plan.
1.08 "GENERAL RETIREMENT PLAN" OR "GRP" shall mean the General Retirement Plan
of Ford Motor Company and its participating subsidiaries.
1.09 "GLOBAL FORD BUSINESS EMPLOYEES" shall mean all employees of Ford or its
Subsidiaries or Affiliates who are engaged in the conduct of the Business prior
to the Transfer Date, including but not limited to
(i) Ford Business Employees; and
(ii) Persons who are enrolled on the payroll of a Subsidiary or Affiliate
of Ford engaged in the Business as of the Transfer Date, or persons
who are no longer active but who had been employed by a Subsidiary or
Affiliate engaged in the Business at any time prior to the Transfer
Date ("Subsidiary Employees").
1.10 "GLOBAL VISTEON EMPLOYEES" shall mean all employees of Visteon or its
subsidiaries or affiliates who are engaged in the conduct of the Business after
the Transfer Date, including but not limited to
(i) Visteon Employees; and
(ii) Subsidiary Employees who as a result of the transfer of Ford's
interest in the Subsidiary or Affiliate to Visteon as of the Transfer
Date, became employed by, or became the responsibility of, a
subsidiary or affiliate of Visteon on the Transfer Date.
For purposes of this Agreement, Global Visteon Employees shall not include any
employees hired directly by Visteon or its subsidiaries or affiliates after the
Transfer Date.
1.11 "GROUP I EMPLOYEE" shall mean a U.S. Visteon Employee who as of the Benefit
Transition Date is eligible for immediate normal or regular early retirement
under the provisions of the GRP as in effect on the Benefit Transition Date.
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1.10 "GROUP II EMPLOYEE" shall mean a U.S. Visteon Employee who
(i) is not a Group I Employee;
(ii) has as of the Benefit Transition Date a combination of age and
continuous service that equals or exceeds sixty (60) points (partial
months disregarded); and
(iii) could become eligible for normal or regular early retirement under
the provisions of the GRP as in effect on the Benefit Transition Date
within the period after the Benefit Transition Date equal to the
employee's Ford service as of the Benefit Transition Date.
1.12 "GROUP III EMPLOYEE" shall mean any U.S. Visteon Employee who participates
in the GRP other than a Group I or II Employee.
1.13 "IRS" means the U.S. Internal Revenue Service.
1.14 "OSHA" shall mean the Occupational Safety and Health Act of 1970, as
amended.
1.15 "PBGC" shall mean the Pension Benefit Guaranty Corporation.
1.16 "SFAS NO. 87" shall mean the Statement of Financial Accounting Standards
No. 87.
1.17 "SFAS NO. 106" shall mean the Statement of Financial Accounting Standards
No. 106.
1.18 "TRANSFER DATE" shall mean the date specified in the Master Transfer
Agreement with respect to each entity or interest to be transferred pursuant
thereto.
1.19 "VISTEON BALANCE SHEET" shall mean the balance sheet for Visteon Automotive
Systems as of March 31, 2000, as prepared by Ford.
1.20 "VISTEON EMPLOYEES" shall mean
(i) Active Ford Business Employees who are transferred to Visteon pursuant
to the terms hereof and who are at work on the Transfer Date including
those on paid time off (i.e., Jury Duty Pay, Bereavement Pay, Short
Term Military Pay, Vacation Pay and Paid Holiday) and those on reduced
or alternate work schedules; and
(ii) Inactive Ford Business Employees or Ford Retirees on a disability
retirement who are transferred to Visteon pursuant to the terms hereof
on the Reinstatement Date or Disability Retiree Reinstatement Date.
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For purposes of this Agreement, Visteon Employees shall not include any
employees hired directly by Visteon after the Transfer Date, except for those
specified in (ii) above.
1.21 "VISTEON RETIREE" shall mean a former Ford Business Employee, or a
surviving spouse or beneficiary of a former Ford Business Employee, who became a
Visteon Employee and who terminated service with Visteon after the Benefit
Transition Date and is receiving retirement benefits under a Ford sponsored
retirement plan and a Visteon sponsored retirement plan.
ARTICLE II
EMPLOYMENT RESPONSIBILITY
2.01 EMPLOYEE CENSUS.
On the Transfer Date, Ford shall provide Visteon a preliminary employee
census ("Employee Census") containing the following information:
(i) a list of all Active Ford Business Employees by location;
(ii) a list of all Inactive Ford Business Employees by location;
(iii) the job classification of each Ford Business Employee;
(iv) the Ford Service Date of each Ford Business Employee;
(v) the base monthly salary of each Ford Business Employee;
(vi) the reason for any absence of any Ford Inactive Business Employee and
the date any leave expires.
Ford shall finalize the Employee Census no later than thirty (30) days after the
Transfer Date, subject to Visteon review. Ford shall not be responsible for
providing Visteon an Employee Census of the Global Ford Business Employees.
2.02 EMPLOYMENT TRANSFER.
Unless otherwise agreed, Ford shall transfer the employment of the Active
Ford Business Employees to Visteon effective on the Transfer Date and the Active
Ford Business Employees shall become Visteon Employees effective on the Transfer
Date. Ford shall transfer to Visteon the employment of an Inactive Ford Business
Employee who is recalled from layoff or other inactive status or requests
reinstatement on or before the date such employee's leave of absence expires or
as of the date such employee's medical disability ceases and such employee is
released by their personal physician to return to their former position of
employment or a comparable position consistent with any medical restrictions, as
applicable (the "Reinstatement Date"). In addition, Ford shall transfer to
Visteon employment responsibility for a Ford Retiree on
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a disability retirement ("Disability Retiree") on the date the medical
disability ceases, such employee is released by their personal physician to
return to their former position of employment or a comparable position
consistent with any medical restrictions, and the retirement committee approves
the return to work ("Disability Retiree Reinstatement Date"). The Transfer Date,
the Reinstatement Date and the Disability Retiree Reinstatement Date shall be
known as the "Employment Date". Notwithstanding the above, Visteon shall remain
financially responsible for any costs incurred by Ford or its benefit plans and
programs related to the Inactive Ford Business Employees between the Transfer
Date and the Employment Date, and Visteon shall reimburse Ford for any such
costs under a method to be mutually agreed by the Parties. A Ford Business
Employee who is on an international service assignment to a non-Business
activity as of the Distribution Date shall remain in such assignment until
scheduled to return and shall return to the originating activity. A Ford
employee who is on international service assignment to a Business activity as of
the Distribution Date shall remain in such assignment until scheduled to return
and shall return to the originating activity. Visteon or Ford, as applicable,
shall reimburse the other for the costs of such employees after the Distribution
Date under a method to be mutually agreed by the Parties.
2.03 RECOGNITION OF SERVICE.
Visteon shall recognize, or shall cause its subsidiaries or affiliates to
recognize, the Ford Service Date or Subsidiary Service Date, as applicable, of
each Global Visteon Employee in determining years of service under the employee
benefit plans and other compensation and benefit practices and polices of
Visteon or its subsidiaries or affiliates both prior to the Benefit Transition
Date and thereafter, except as otherwise provided in this Agreement.
2.04 COMPENSATION AND BENEFIT PLANS.
Visteon shall pay each Global Visteon Employee at the same base salary rate
or hourly rate as was applicable to them as a Global Ford Business Employee, and
shall implement any merit, promotional or other increases that were scheduled to
go into effect as of the Transfer Date. Effective on the Transfer Date, and
except as otherwise provided in this Agreement, Visteon shall adopt the same
benefit plans and programs for Visteon Employees as are in effect for Ford
Business Employees as of the Transfer Date, and shall participate in the Ford
employee benefit plans and programs as a participating subsidiary or its
equivalent until the Benefit Transition Date. Visteon shall reimburse Ford for
any such cost and expense consistent with the methods presently in effect for
charging such expenses to participating subsidiaries or their equivalents using
methodology consistent with U.S. GAAP and acceptable to both Parties. In
addition, Visteon shall reimburse Ford for any costs and expense incurred prior
to the Benefit Transition Date and that relate to Ford Retirees under an
incentivized separation program. Effective on the Benefit Transition Date, and
except as otherwise provided herein, Visteon shall adopt, or shall cause its
subsidiaries or affiliates to maintain or adopt, benefit plans and programs for
the U.S. Global Visteon Employees
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that are substantially comparable in the aggregate to those that were in effect
on the day immediately preceding the Benefit Transition Date and shall continue
such programs substantially in effect for at least four (4) years after the
Distribution Date, provided, however, if Ford makes changes in the benefit plans
and programs applicable to Ford employees during the four (4) year period,
Visteon or its subsidiaries or affiliates, as applicable, shall be permitted,
but shall not be required, to make a comparable change. The comparability period
shall not be effective with respect to U.S. employees of Visteon who were hired
as new hires by Visteon after the Transfer Date or with respect to non-U.S.
Global Visteon Employees. Except as otherwise provided in this Agreement, Ford
shall take such action as is necessary to eliminate Global Visteon Employees
from Ford sponsored benefit plans and programs as of the Benefit Transition Date
unless otherwise agreed by the Parties, and thereafter Global Visteon Employees
shall have no rights under any such plans or programs.
2.05 PAID TIME OFF.
Effective as of the Employment Date, each Global Visteon Employee shall
retain the same paid time off eligibility they had under Ford's paid time off
policy, or the policy of Ford's Subsidiaries or Affiliates. Any paid time off
used by a Global Ford Business Employee in 2000 prior to the Employment Date
shall be counted against such employee's entitlement as a Global Visteon
Employee after the Distribution Date until December 31, 2000.
2.06 COLLECTIVE BARGAINING AGREEMENTS.
Certain of the Ford Business Employees are covered under the terms of the
collective bargaining agreements listed on Attachment A. Effective as of the
Transfer Date, Visteon shall assume the obligation of Ford under the collective
bargaining agreements applicable to such employees, and Ford shall be relieved
of any further obligations under such agreements with respect to such employees.
The Agreement Governing the Separation of the Ford Visteon Organization dated
January 25, 2000 between Ford and the Ford European Works Council, attached
hereto as Attachment B, shall apply to the Ford Business Employees represented
by the Ford European Works Council, and Visteon agrees to abide by its terms.
2.07 REEMPLOYMENT RESTRICTION.
Except with the consent of Visteon, Ford shall not hire any Global Visteon
Employee during the period commencing as of the Distribution Date and
terminating twelve months thereafter, unless otherwise required by law.
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ARTICLE III
EMPLOYEE BENEFIT PLANS
3.01 U.S. QUALIFIED DEFINED BENEFIT RETIREMENT PLANS.
a. GRP Participating Subsidiary. U.S. Ford Business Employees participate
in the GRP as employees of Ford. Effective as of the Transfer Date,
Visteon shall take such corporate action as is necessary to
participate in the GRP as a "Participating Subsidiary" as defined in
the GRP with respect to the Visteon Employees until the Benefit
Transition Date. Ford hereby consents to such participation by
Visteon. Visteon shall reimburse Ford for the cost of any early
separation incentive programs applicable to U.S. Ford Business
Employees prior to the Benefit Transition Date.
b. Visteon Mirror GRP.
(i) Establishment of Plan. Effective on the Benefit Transition
Date, or such later date as the Parties may mutually agree,
Visteon shall establish its own defined benefit pension plan
that with respect to Group III Employees contains provisions
that duplicate the benefit provisions of the GRP as it
pertains to service prior to the Benefit Transition Date and
with respect to Group I and II Employees, contains
substantially comparable benefit provisions with respect to
service after the Benefit Transition Date ("Visteon Mirror
GRP"). The Visteon Mirror GRP shall be responsible for
providing retirement benefits for Group I and Group II
Employees for service on or after the Benefit Transition Date
and, subject to receipt of the asset transfer described below,
for Group III Employees for service recognized under the GRP
prior to the Benefit Transition Date and for service with
Visteon after the Benefit Transition Date. The Visteon Mirror
GRP shall recognize credited service of Visteon Employees
under the GRP through the Benefit Transition Date for purposes
of eligibility to participate and eligibility for benefits to
the same extent as such credited service (or ERISA service)
was counted under the GRP. Notwithstanding the above, for
purposes of calculating the Part B Contributory Benefit, only
a total of thirty five (35) years of combined Ford and Visteon
service may be used.
(ii) Asset Transfer Valuation. Ford shall cause to be transferred
from the GRP assets in cash or cash equivalents, or marketable
securities reasonably acceptable to Visteon, that shall equal
the projected benefit obligation, as defined in SFAS No. 87,
of the liabilities related to the Group III Employees as of
the Benefit Transition Date ("GRP PBO Value") determined by an
independent actuary appointed by Ford ("Ford Actuary") in
accordance with the principles stated below:
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(A) The present value of liabilities will be determined under
SFAS No. 87 as the projected benefit obligation, using
the actuarial assumptions and methods that are published
in the most recent actuarial valuation for accounting
purposes for the GRP prepared by Buck Consultants.
(B) A discount rate as of the Benefit Transition Date
determined by Ford using its normal methods for
developing a SFAS No. 87 discount rate but based on
market interest rates as of the Benefit Transition Date.
In no event shall the GRP PBO Value as calculated on the basis
described above result in an asset transfer less than the amount
necessary to reflect the requirements of the provisions of Code
Section 411(d) and 414(l) and the Treasury Regulations issued
thereunder and the actuarial methods and assumptions established by
the PBGC with respect to spin-offs of pension plans where liabilities,
for purposes of Code Section 411(d) and 414(l), are calculated using a
discount rate equal to the applicable rate or rates published by the
PBGC and in effect for plans terminating on the Benefit Transition
Date. The determination of the GRP PBO Value by the Ford Actuary shall
be submitted to an independent actuary appointed by Visteon (the
"Visteon Actuary") for verification but such verification shall relate
only to the calculation of the GRP PBO Value on the basis set forth
above. If the Visteon Actuary and the Ford Actuary are unable to agree
on a verification, they shall jointly designate a third independent
actuary whose verification shall be final and binding. Ford and
Visteon shall each pay one-half of the costs of such third actuary.
(iii) Transfer to Qualified Plan. Within ninety (90) days of the
Transfer Date (but in no event later than the Benefit
Transition Date), Visteon shall provide Ford with the plan
document for the Visteon Mirror GRP, together with either (A)
an opinion letter of counsel reasonably acceptable to Ford
that the Visteon Mirror GRP satisfies the requirements for
qualification under Section 401(a) of the Code as of its
effective date or will be amended to meet the qualification
requirements in the event the IRS requires retroactive
amendments to the Visteon Mirror Plan as part of the
determination letter process and that the transfer of assets
provided in (iv) below shall not affect the qualification of
such plan, or (B) a favorable determination letter issued by
the IRS that the Visteon Mirror GRP satisfies the
requirements for qualification under Section 401(a) of the
Code as of its effective date.
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(iv) Asset Transfer. As soon as practicable after the latest of
(A) the date on which the GRP PBO Value is determined and
verified pursuant to (ii) above, (B) the expiration of
thirty days following the filing of Forms 5310 with the IRS
and PBGC in respect of the GRP and the Visteon Mirror GRP or
(C) the receipt by Ford of the opinion or determination
letters described in (iii) above and determination by Ford
that the Visteon Mirror GRP satisfies the terms of this
Agreement (the "Asset Transfer Date"), Ford shall cause the
trustee of the GRP to transfer assets and respective
liability therefor to the Visteon Mirror Pension Plan in
such amount and in such form as provided in (ii) above,
together with interest from the Benefit Transition Date to
the first of the month immediately preceding the Asset
Transfer Date, at the Ford Master Trust rate of return, and
thereafter until the Asset Transfer Date, interest at the
90-day Treasury Xxxx rate on a bond equivalent yield in
effect on the last business day of the month immediately
preceding or coincident with the Asset Transfer Date as
quoted in the Wall Street Journal.
(v) No Further Liability. Upon receipt of the transferred assets
from the GRP, neither Ford nor the GRP shall have any
further liability to the Group III Employees for benefits
for service under the GRP with respect to which liabilities
and assets have been transferred. Ford and Visteon shall use
their respective best efforts to make amendments to their
respective plans and trusts as may be necessary or
appropriate to effect the transfers contemplated by these
provisions.
(vi) Pension Security. The assets of the Visteon Mirror GRP that
are transferred from the GRP trust as provided in section
(iv) above, and any earnings thereon, shall be held in a
separate trust for a period equal to five years commencing
as of the Benefit Transition Date. Such assets shall be
available only for the purposes of providing pension
benefits for plan participants and their beneficiaries for
service under the Ford GRP through the Benefit Transition
Date ("Visteon Past Service Trust"). In the event the assets
in the Visteon Past Service Trust are insufficient to pay
the liability for accrued benefits measured on a plan
termination basis, determined as of each year end, using
PBGC assumptions, including the PBGC discount rates,
mortality tables and expected retirement ages unless Ford
agrees to such other rates, tables and assumptions certified
to by the Visteon Actuary as appropriate for measuring
liabilities on a plan termination basis, while such
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Visteon Past Service Trust is maintained, Visteon shall
contribute sufficient cash within thirty days of the date
the year-end calculation is complete to restore the assets
in the Visteon Past Service Trust to be at least equal to
such termination liability. Notwithstanding the above,
Visteon need not contribute in any year an amount greater
than the maximum tax deductible contribution allowed for
such year, and provided further, that if the contribution
required would exceed $10 million in any year, Visteon shall
have the option to pay $10 million the first year, and shall
pay the balance in succeeding years in annual installments
of at least $5 million until the obligation is satisfied,
together with interest on the obligation at the 90 day
Treasury Xxxx rate as quoted in the Wall Street Journal for
the relevant period (the "Financial Burden Formula").
Visteon shall not terminate the Visteon Mirror GRP and
revert assets to Visteon for a period of five years after
the Benefit Transition Date. Visteon shall not invest any
assets of the Visteon Past Service Trust in an employer
security as defined in Section 407(d)(1) of ERISA for a
period of five years after the Benefit Transition Date.
x. Xxxx GRP Pension Liability.
(i) Ford Retirees. The GRP shall retain liability for retirement
benefits for all Ford Retirees, and shall retain all GRP
assets with respect thereto. The benefits payable shall be
based on the benefit provisions applicable under the GRP as
of the date of retirement, and as may be subsequently
amended. To the extent that such benefit is based on final
average salary under the GRP, the GRP will take into account
any base salary paid at Visteon while an employee as of the
December 31 prior to the Benefit Transition Date. Ford shall
amend the GRP to provide that Ford Retirees may be employed
at Visteon after the Distribution Date and remain eligible
to receive benefits under the GRP.
(ii) Group I and Group II Employees For Pre-Benefit Transition
Date Service. The GRP shall retain liability for retirement
benefits of Group I and Group II Employees, but only for
service through the Benefit Transition Date. The GRP shall
recognize credited service (or ERISA service) of U.S.
Visteon Employees under the Visteon Mirror GRP for purposes
of eligibility to participate and eligibility for benefits
to the same extent as if such credited service (or ERISA
service) was earned under the GRP, but not for purposes of
benefit calculation. The retirement benefits paid to Group I
and Group II Employees from the GRP shall be based on the
benefits in effect as of the retirement date using the final
average salary of the
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Group I or Group II Employee at retirement from Visteon,
giving effect to Visteon base salary increases after the
Benefit Transition Date. Visteon shall reimburse Ford for
the following additional costs: (A) the cost of benefit
increases under the GRP that occur after the Benefit
Transition Date and relate to service prior to the Benefit
Transition Date; (B) for the effect on the PBO related to
Group I and Group II Employees for any Visteon average merit
salary increase which exceeds the average Ford merit
increase by one-half percent in any given year, provided
Visteon shall receive credit if the Visteon average merit
salary increase is less than the average Ford merit increase
by one-half percent in any given year; and (C) for the
effect on the PBO related to Group I and Group II Employees
as a result of Visteon's implementation of any early
separation incentive programs, provided however that Visteon
shall receive credit if the effect of such programs reduces
the PBO. The method of computing the reimbursements shall be
as described on Schedules X, Y and Z. The amount of
reimbursement shall be determined by Ford's Actuary and
shall be subject to verification by Visteon's Actuary. If
the Visteon Actuary and the Ford Actuary are unable to agree
on a verification, they shall jointly designate a third
independent actuary whose verification shall be final and
binding. Ford and Visteon shall each pay one-half of the
cost of such third actuary. The reimbursements shall be done
annually within thirty days after the annual actuarial
valuation of the GRP is completed by the Ford Actuary and
verified by Visteon's Actuary. If the reimbursements for
either Party exceeds in the aggregate $10 million per year
(relating to costs under (A), (B) and (C ) above and under
(A), (B) and (C) of Section 3.02c(ii) incurred in that year,
but not including costs under (A), (B), and (C ) above or
under (A), (B) and (C) of Section 3.02c(ii) incurred in
prior years) the Party with the obligation shall have the
option to pay the obligation according to the Financial
Burden Formula. Group I and Group II Employees who retire
under the GRP will be eligible for the same Ford
postretirement benefits, such as health care and life
insurance and certain other Ford sponsored programs on the
same basis as other Ford employees retiring at the same
time.
d. Prorated GRP Supplements.
(i) Early Retirement Supplement. To the extent that any Early
Retirement Supplement is payable under the GRP to a Group I
or Group II Employee, the amount of the total monthly
benefit used for determining the Early Retirement Supplement
shall be determined as follows: The amount of the total
monthly benefit that would otherwise be used for determining
the Early Retirement
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Supplement under the GRP at the time the Group I or Group II
Employee retires shall be multiplied by a fraction, the
numerator of which is the number of years of credited
service, including fractions of a year, under the GRP not to
exceed thirty years, and the denominator of which is thirty.
To the extent that any Early Retirement Supplement is
payable under the Visteon Mirror GRP to a Group I or Group
II Employee, the amount of the total monthly benefit that
would otherwise be used for determining the Early Retirement
Supplement under the Visteon Mirror GRP at the time the
Group I or Group II Employee retires shall be multiplied by
a fraction, the numerator of which is thirty less the number
of years (not to exceed thirty) of credited service,
including fractions of a year, under the GRP to the Benefit
Transition Date and the denominator of which is thirty. In
the event the Group I or Group II Employee has credited
service under the GRP of thirty or more years as of the
Benefit Transition Date, no Visteon Mirror Supplement shall
be payable.
(ii) Interim Supplement or Temporary Benefit. To the extent that
any Interim Supplement or Temporary Benefit is payable under
the GRP to a Group I or Group II Employee, the amount of the
Interim Supplement or Temporary Benefit as applicable, shall
be determined by multiplying the number of years of credited
service (not to exceed 30), including fractions of a year,
under the GRP as of the Benefit Transition Date by the
monthly Interim Supplement Rate, or Temporary Benefit Rate,
as applicable, in effect at the time of retirement. To the
extent that any Interim or Temporary Benefit is payable
under the Visteon Mirror GRP to a Group I or Group II
Employee, the amount of the benefit shall be shall be
determined by multiplying the number of years of credited
service (except if the combined Ford and Visteon service
exceeds thirty, then the Visteon benefit shall be determined
by subtracting from thirty years the years of Ford credited
service), including fractions of a year, under the Visteon
Mirror GRP by the monthly Interim Supplement Rate, or
Temporary Benefit Rate, as applicable, in effect at the time
of retirement. In the event a Group I or Group II Employee
has credited service under the GRP of thirty or more years
as of the Benefit Transition Date, no Visteon Mirror Interim
Supplement or Temporary Benefit shall be payable.
e. Group II Employees Who Fail Grow-in. Except as otherwise provided
by law, for those Group II Employees who do not continue to
be employed by Visteon or a successor to Visteon until such time
as their age and combined service with Ford through the Benefit
Transition Date and with Visteon or its successor after the
Benefit Transition Date would be
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sufficient to result in eligibility for retirement under the GRP,
any benefit payable for years of service prior to the Benefit
Transition Date shall be based on the benefit rate and final
average salary, if applicable, in effect under the GRP on the
date such employee breaks service under the Visteon Mirror GRP.
In such event, such employee shall be treated as a "deferred
vestee" under the GRP, if otherwise eligible based on combined
service. Benefits for service at Visteon after the Benefit
Transition Date shall be payable by Visteon.
f. U.S. Master Trust. After the Transfer Date, the defined benefit
plans of Ford Electronics and Refrigeration, LLC. ("FE&R") may
continue to participate in the U.S. Ford Master Trust until the
Benefit Transition Date. Visteon shall establish a U.S. Visteon
Master Trust no later than the Benefit Transition Date and Ford
shall cause the Trustee of the U.S. Ford Master Trust to transfer
the assets in such U.S. Ford Master Trust allocable to FE&R's
defined benefit plans to the trustee of the U.S. Visteon Master
Trust. Assets shall be valued at the end of the month coincident
with or following the Distribution Date ("Valuation Date") and
cash or cash equivalents, or marketable securities acceptable to
Visteon, shall be transferred within thirty (30) days thereafter,
together with interest from the Valuation Date to the asset
transfer date at the 90-day Treasury Xxxx rate on a bond
equivalent yield in effect on the last business day of the month
immediately preceding the asset transfer date as quoted in the
Wall Street Journal. Assets attributable to such plans that are
held outside the Ford Master Trust also shall be transferred to
Visteon on or before the asset transfer date, in such form as
such assets are presently held. Nothing herein contained shall be
construed as to prohibit Ford from causing Visteon to transfer
assets and liabilities from FE&R sponsored salaried defined
benefit plans to Ford sponsored defined benefit plans prior to
the Benefit Transition Date for the purpose of aligning
appropriate liabilities with respect to the Business, provided
such transfers comply with applicable law and result in each such
FE&R salaried defined benefit plan having assets with a fair
market value as of January 1, 2000 equal to the projected benefit
obligation, as defined in SFAS No. 87, of the liabilities related
to non-transferred participants in each such plan as of January
1, 2000. Visteon shall cooperate with Ford in effectuating such
transfers in the period between the Transfer Date and the Benefit
Transition Date.
3.02 U.S. NON-QUALIFIED RETIREMENT PLANS.
a. Participating Subsidiary. Ford maintains the following U.S.
non-qualified retirement plans in which certain U.S. Ford
Business Employees who are eligible under the terms of the plans
participate: The Benefit Equalization Plan ("BEP"), the
Supplemental Executive Retirement Plan ("SERP") and
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the Executive Separation Allowance Plan ("ESAP") and the Select
Retirement Plan ("SRP"). As of the Transfer Date, Visteon shall
take such corporate action as is necessary to become a
Participating Subsidiary under the SERP, ESAP and SRP and Ford
hereby consents to such participation.
b. Visteon Mirror NQPs. Effective on the Benefit Transition Date,
Visteon shall establish for the benefit of the U.S. Visteon
Employees who are otherwise eligible as of the Benefit Transition
Date for a BEP, SERP or ESAP benefit, its own non-qualified
retirement plans that with respect to eligible Group III
Employees contain provisions that duplicate the benefit
provisions of the BEP, SERP and ESAP as it pertains to service
prior to the Benefit Transition Date and with respect to eligible
Group I and Group II Employees, contains substantially comparable
benefit provisions with respect to service after the Benefit
Transition Date ("Visteon Mirror NQPs"). For eligible Group I and
Group II Employees, Visteon shall be responsible for paying a
benefit for service after the Benefit Transition Date under the
Visteon Mirror NQPs. For eligible Group III Employees, the
liability for any service prior to the Benefit Transition Date
under the BEP, SERP and ESAP shall be transferred to the
respective Visteon Mirror NQPs, and Visteon shall be responsible
for paying a benefit based on combined service at Ford and
Visteon. Visteon's Mirror NQPs shall recognize service at Ford
for purposes of determining any minimum years of service to
achieve eligibility for benefits under such plans.
x. Xxxx Liability.
(i) Ford Retirees. Ford shall retain the liability for eligible
Ford Retirees. The benefit payable under the BEP, SERP, ESAP
and SRP shall be based on the benefit provisions applicable
under such plans as of the date of retirement, and as may be
subsequently amended. To the extent such benefit is based on
final average salary or final salary, the applicable plan
will take into account any base salary paid at Visteon prior
to the Benefit Transition Date. Ford Retirees may be
employed at Visteon after the Distribution Date and remain
eligible to receive benefits under the BEP, SERP, ESAP and
SRP.
(ii) Group I and Group II Employees for Pre-Benefit Transition
Date Service. Ford shall retain the liability for benefits
for Group I or Group II Employees who have attained the
minimum Leadership Level required for such benefits as of
the Benefit Transition Date, but only for service through
the Benefit Transition Date. For example, a Group I or Group
II Employee who attains Leadership Level 1 or 2 on or after
the Benefit Transition Date shall have no
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benefit payable under the Ford ESAP. As soon as practical
after the Benefit Transition Date, Visteon shall pay cash to
Ford in an amount equal to the BEP, SERP and ESAP projected
benefit obligation with respect to the eligible Group I or
Group II Employees determined by the Ford Actuary and
verified by the Visteon Actuary as of the Benefit Transition
Date. If the Visteon Actuary and the Ford Actuary are unable
to agree on a verification, they shall jointly designate a
third independent actuary whose verification shall be final
and binding. Ford and Visteon shall each pay one-half of the
costs of such third actuary. The benefits paid to an
eligible Group I and Group II Employee from the BEP, SERP
and ESAP shall be based on the accrued benefits and
eligibility, at rates in effect as of the retirement date
using the final average salary, or final salary as
applicable, of the eligible Group I or Group II Employee at
retirement, giving effect to Visteon salary increases after
the Benefit Transition Date. Visteon shall reimburse Ford
for the following additional costs: (A) the cost of benefit
increases under the BEP, SERP and ESAP that occur after the
Benefit Transition Date (including changes in the accrual
rate) and which relate to service prior to the Benefit
Transition Date, when such increases occur; (B) for the
effect on the PBO for any Visteon average merit salary
increase which exceeds the average Ford merit increase by
one-half percent in any given year provided that Visteon
shall receive credit if the Visteon average merit salary
increase is less than the average Ford merit increase by
one-half percent in any given year; and (C ) for the effect
of the PBO as a result of Visteon's implementation of any
early separation incentive programs, provided however that
Visteon shall receive credit if the effect of such programs
reduces the PBO. The method of computing the reimbursements
shall be as described on Schedules X, Y and Z. The amount of
reimbursement shall be determined by Ford's Actuary and
shall be subject to verification by Visteon's Actuary. If
the Visteon Actuary and the Ford Actuary are unable to agree
on a verification, they shall jointly designate a third
independent actuary whose verification shall be final and
binding. Ford and Visteon shall each pay one-half of the
costs of such third actuary. Such reimbursements shall be
done annually within thirty days after the annual actuarial
valuation of the BEP, SERP and ESAP is completed by the Ford
Actuary and verified by the Visteon Actuary. If the
reimbursements for either Party exceeds in the aggregate $10
million per year (relating to costs under (A), (B) and (C )
above or under (A), (B) or (C) under Section 3.01c(ii)
incurred in that year, but not including costs under (A),
(B) and (C ) above or under (A), (B) or (C) under Section
3.01c(ii) incurred in prior years), the Party with the
obligation shall have the option to pay the obligation
according to the Financial Burden Formula.
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(iii) Group III Employees. After the Benefit Transition Date,
Ford shall have no liability for benefits payable to
eligible Group III Employees with respect to service prior
to the Benefit Transition Date.
3.03 RETIREE HEALTH CARE AND RETIREE LIFE INSURANCE.
Visteon shall pay the cost of providing post-retirement health and life
benefits for Group I and Group II Employees under the Ford Health and Group Life
and Disability Insurance Plan (the "Plans") ("OPEB") beginning as of the Benefit
Transition Date as provided below.
a. Determination of Annual Cash OPEB Reimbursement. For the portion of
2000 that follows the Benefit Transition Date and for each calendar
year thereafter until the OPEB liability for the Group I and Group II
Employees is extinguished, the annual cash OPEB reimbursement to the
Plans for any given year shall be an amount equal to the sum of (i)
and (ii) where
(i) is the estimated amount of OPEB claims paid during the period to
the Group I and Group II Employees who retire after the Benefit
Transition Date, together with their spouses or dependents,
determined on the basis of average per contract claims costs for
Ford salaried retirees; and
(ii) is an allocable share of administration expenses based on ratio
of OPEB Liability for Group I and II Employees to the total Ford
salaried OPEB liability unless Ford and Visteon agree to another
method.
The Annual Cash OPEB Reimbursement shall be determined by the Ford
Actuary; the Visteon Actuary will have the opportunity to verify the
calculation.
b. Pre-Funding of SFAS 106 Liability. Visteon will establish and maintain
a Voluntary Employees' Beneficiary Association, other tax-advantaged
funded vehicle, such as a 401(h) medical account under a qualified
pension plan, or a similar bankruptcy remote trust (collectively
"VEBA") whose purpose is to reimburse the Plans in respect of the
claims and administration costs described in Section 3.03a(ii) above.
Visteon agrees that it will make a series of cash payments to the VEBA
with the intent that by December 31, 2020 the assets in the VEBA will
equal Visteon's balance sheet liability at the same date for OPEB
benefits in respect of Group I and Group II Employees The cash payment
to the VEBA shall commence no later than January 1, 2011 and shall be
payable in advance
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in twelve equal monthly installments. The amount of cash paid to the
VEBA in each year commencing no later than January 1, 2011 shall be an
amount equal to the sum of (i), (ii) and (iii) where
(i) is the Visteon SFAS 106 expense for that year as computed by the
Ford Actuary (and verified by the Visteon Actuary) and based on
assumptions used by Ford for its salaried employees;
(ii) is an allocable share of expenses as described in Section a (ii)
above; and
(iii)is the amount of Visteon's OPEB balance sheet liability in
respect of Group I and Group II Employees at the beginning of
each calendar year divided by the number of years remaining to
December 31, 2020.
Notwithstanding the above, Visteon may accelerate payments to the VEBA
in its discretion. In the event tax law would not permit Visteon a
current deduction for the level of funding described above, Visteon
may make only such contributions to the VEBA that would be tax
deductible, provided, however that the balance of the funding
obligation which exceeds the permitted deduction is otherwise
deposited into a separate trust. Visteon and Ford shall cooperate with
each other to design, and Visteon agrees it will take necessary action
to implement, an appropriate method approved by the Parties'
respective auditors that would have the effect of eliminating Ford's
FAS 106 OPEB balance sheet liability for Group I and Group II
Employees beginning on the Benefit Transition Date. In the event that
the tax benefits contemplated by the Parties as being available to
Visteon with respect to prefunding of OPEB liabilities are not or
cease to be available, Visteon and Ford agree to renegotiate the
structure provided the new structure does not increase Ford's costs or
jeopardize Ford's security. If Ford and Visteon cannot agree on a
replacement structure, then Visteon will pay to Ford directly the
payments it otherwise would have paid to the VEBA. Ford shall credit
interest on such amount at the pretax rate of return on Ford's cash
portfolio.
c. Recordkeeping. In connection with administering Section 3.03 (a)
above, Ford may decide to retain a third party service to determine
the correct amount of Visteon reimbursements according to the
methodology set forth in this Section 3.03. If Ford decides to retain
a third party service, Ford shall consult with Visteon prior to
appointing a third party service, but Ford shall retain the right to
appoint a third party service in its sole discretion. Ford shall pay
the expense of such third party service and Visteon shall reimburse
Ford for such expense.
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d. Continuation of Arrangements. The terms set forth in this Section
3.03 shall be in force until the last survivors and dependents of
Group I and Group II Employees in service as of the Benefit
Transition Date who are eligible for GRP retirement or OPEB
benefits are deceased, or upon earlier termination agreed jointly
by Ford and Visteon, including any VEBA or other arrangements or
methods agreed in Section 3.03(b) (unless the Parties' respective
auditors advise that joint agreement to terminate would
jeopardize the expected accounting treatment of such arrangements
or methods).
e. Ability to Substitute. The Parties may agree to substitute an
alternative method of computing reimbursement under this Section
3.03. The method substituted shall have as its objective to
produce a fair estimate of the OPEB expense and other
reimbursement charges set forth in this Section, and should
preserve for each Party, to the extent possible, the economic
benefits bargained under this Section.
f. Actuarial Verification. If the Ford Actuary and the Visteon
Actuary are unable to agree on a verification, they shall jointly
designate a third independent actuary whose verification shall be
final and binding. Ford and Visteon shall each pay one-half of
the cost of such third actuary.
3.04 U.S DEFINED CONTRIBUTION RETIREMENT PLANS.
a. Participating Subsidiary. Ford sponsors the Ford Motor Company
Savings and Stock Investment Plan ("Ford SSIP") for the benefit
of the employees of Ford and its participating subsidiaries and
certain U.S. Ford Business Employees elect to participate in the
SSIP. Effective on the Transfer Date, Visteon shall take such
corporate action as is necessary to participate in the SSIP as a
"Participating Subsidiary" as defined in the SSIP with respect to
the U.S. Visteon Employees who participate in the SSIP until the
Benefit Transition Date. Ford hereby consents to such
participation by Visteon. Ford shall amend the SSIP to vest all
U.S. Ford Business Employees who participate in the SSIP in the
Ford matching contributions contained in their SSIP accounts as
of the Benefit Transition Date.
b. Visteon SSIP. Effective on the Benefit Transition Date, Visteon
shall establish its own defined contribution pension plan for the
benefit of U.S. Visteon Employees that had participated in the
SSIP that contains provisions substantially comparable to the
SSIP, except that the number of investment elections may be
reduced and the Ford Stock Fund election will be replaced with a
Visteon Stock Fund election. The Visteon SSIP shall provide
benefits related to contributions on or after the Benefit
Transition Date. Within ninety days after the Benefit Transition
Date, U.S.
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Visteon Employees who have accounts in the SSIP will be given a one
time opportunity to transfer no less than the entire balance in such
accounts to the Visteon SSIP. U.S. Visteon Employees who choose to
continue to participate in the SSIP with respect to contributions made
prior to the Benefit Transition Date shall be treated as terminated
employees under the provisions of the SSIP. However, no distributions
will be permitted until the U.S. Visteon Employee separates from
Visteon employment or a successor employer. Plan loans will be
permitted subject to the SSIP rules and U.S. Visteon Employees who
have SSIP loans currently or who take new SSIP Loans after the Benefit
Transition Date shall be issued coupon books for their loan
repayments. Hardship withdrawals will not be permitted.
3.05 FLEXIBLE BENEFITS PLAN.
Visteon shall establish a Flexible Benefits Plan for the benefit of U.S.
Visteon Employees who participated in the Ford Flexible Benefits Plan ("Ford
Flex Plan"), commencing on the Benefit Transition Date ("Visteon Flex Plan").
The Visteon Flex Plan shall include health care, life and accident insurance,
health care spending account, dependent care spending account, purchased
vacation, the legal plan, vision care and financial planning on terms identical
to those provided under the Ford Flex Plan for plan year 2000, and benefits
substantially comparable thereafter, and shall be designed to comply with the
requirements of Code Section 125 with respect to those benefits that are
eligible to be included in a Section 125 arrangement. For plan year 2000,
Visteon shall make available to U.S. Visteon Employees who participated in the
Ford Flex Plan at least the same amount of FCA dollars and Bonus Flex Dollars as
was made available under the Ford Flex Plan. For plan years commencing 2001
through 2003, Visteon shall make available to U.S. Visteon Employees who
participated in the Ford Flex Plan at least the same amount of FCA dollars as
was available under the Ford Flex Plan and the amount of Bonus Flex Dollars
shall be determined on the basis of the same formula as was applicable under the
Ford Flex Plan, but shall be based on Visteon's before tax return on sales.
3.06 SALARIED INCOME SECURITY PLAN.
As of the Transfer Date, Visteon shall become a participating subsidiary
under the Ford Salaried Income Security Plan ("SISP"), and Ford hereby consents
to such participation. Effective on the Benefit Transition Date, Visteon shall
adopt its own severance plan with terms substantially comparable to those under
the Ford SISP. Ford's limit on liability under the SISP shall be reduced prorata
by the number of U.S. Global Visteon Employees. Effective as of the Transfer
Date, Visteon shall assume the liability for any U.S. Visteon Business Employee
who is receiving benefits under the Ford SISP. Ford shall retain the
responsibility for paying such benefit payments and continuing any applicable
insurance under the Ford SISP, and Visteon shall reimburse Ford annually for any
such cost.
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3.07 ANNUAL INCENTIVE COMPENSATION PLAN.
Global Visteon Employees who are otherwise eligible to participate in the
Ford Annual Incentive Compensation Plan ("FAICP") shall continue to be eligible
to participate under the same terms applicable to Ford employees after the
Distribution Date through December 31, 2000, with awards for 2000 payable in
March, 2001, provided that the pro forma award amounts, adjusted for Ford
performance, under the FAICP for such Global Visteon Employees shall equal 50%
of the adjusted target amounts. Adjustments for individual performance may be
made to the extent of 50% of the amount of the Extraordinary Contribution Fund
that would normally be allocated to the Visteon Employees. Visteon shall
reimburse Ford for any amounts paid to Global Visteon Employees for 2000 under
the FAICP. Visteon shall establish an interim bonus program for the remainder of
2000 following the Distribution Date for these Global Visteon Employees. If the
Distribution Date occurs prior to January 1, 2001, Visteon shall adopt a Visteon
Annual Incentive Compensation Plan ("VAICP"), subject to stockholder approval
effective January 1, 2001. The Global Visteon Employees who were otherwise
eligible to participate under the FAICP shall be eligible to participate under
the VAICP. If the Distribution Date occurs on or after January 1, 2001, the
Parties shall agree to alternate arrangements.
3.08 STOCK OPTION AND PERFORMANCE STOCK RIGHTS PROGRAMS.
x. Xxxx Stock Option and Performance Stock Rights Programs. Ford Business
Employees who are eligible to participate in the Ford 1998 Long-Term
Incentive Plan ("FLTIP") shall be eligible for grants of Ford stock
options in March, 2000. In general, any options granted in March, 2000
or in prior years under the FLTIP and the Ford 1990 Long-Term
Incentive Plan to Ford Business Employees who become Visteon Employees
continue and shall accrue until five years after the Distribution Date
(provided that the Ford Business Employee had remained an employee of
Ford or its Subsidiaries for at least three months after the date the
option was granted) unless the option expires earlier or such
employee's employment with Visteon terminates (other than due to
disability, death or retirement with Visteon approval). Outstanding
Ford Options designated as "incentive stock options" held by Visteon
Employees will retain their tax attributes only if exercised within
three months after the Distribution Date. Subject to approval of the
Ford Compensation and Option Committee, Ford Retirees who received
option grants in March, 2000 while employed by Ford but who retired
from Ford prior to the date six months after the option grant date,
shall be treated in accordance with the immediately preceding sentence
with respect to
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those grants. Ford Business Employees who are eligible to participate
under the FLTIP shall be eligible for grants of Ford Performance Stock
Rights ("FPSRs") in the first quarter of 2000. Any grants of FPSRs to
an eligible Ford Business Employee shall continue to be earned out and
shall be paid out under the FLTIP as if such employee were still
employed at Ford unless such employee's employment at Visteon
terminates.
b. Visteon Stock Option and Performance Stock Rights Programs. Visteon
shall adopt a Visteon Long-Term Incentive Plan ("VLTIP"), subject to
stockholder approval and regulatory restrictions. The Visteon
Employees who were otherwise eligible to participate under the FLTIP
shall be eligible to participate under the VLTIP in those countries
where it is practicable based on the number of employees and
difficulty and cost to comply with regulatory requirements. Visteon
shall make grants of Visteon stock options under the VLTIP to eligible
Visteon Employees in March 2001, and shall make grants of Performance
Stock Rights to eligible Visteon Employees in March, 2001.
3.09 U.S. PERFORMANCE BONUS PLAN.
U.S. Global Visteon Employees who are otherwise eligible to participate
in the U.S. Ford Performance Bonus Plan ("FPBP") shall continue to be eligible
to participate under the same terms as applicable to Ford Employees after the
Distribution Date through December 31, 2000, with awards for 2000 payable in
March, 2001. Visteon shall reimburse Ford for any amounts paid to U.S. Global
Visteon Employees for 2000 under the FPBP. If the Distribution Date occurs prior
to January 1, 2001, Visteon shall adopt a Visteon Performance Bonus Plan
("VPBP") effective January 1, 2001. The U.S. Global Visteon Employees who were
otherwise eligible to participate under the FPBP shall be eligible to
participate under the VPBP. If the Distribution Date occurs on or after January
1, 2001 or later, the Parties shall agree to alternate arrangements.
3.10 U.S. DEFERRED COMPENSATION PLAN.
Ford shall request the Ford Compensation and Option Committee to approve
effective as of the Transfer Date the participation of U.S. Visteon Employees in
the Ford Deferred Compensation Plan ("FDCP") and ability to make new deferral
elections under the FDCP until the pay ending immediately prior to the
Distribution Date. Visteon shall adopt a Visteon Deferred Compensation Plan
("VDCP") effective on the Distribution Date, and shall offer as an investment
option a Visteon Stock Fund. Any deferral of compensation on or after the
Distribution Date shall be made under the VDCP, even if the election to defer
was made prior to the Distribution Date, and unless the participant changes
his/her investment options for any such deferral, the VDCP shall honor any
investment elections that were in effect under the FDCP for such class year and
type of compensation to the extent the VDCP has the same investment choices. If
a U.S. Visteon Employee had made deferrals under the FDCP prior to the
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Distribution Date, the book entry account balance of such employee's deferred
compensation account in the FDCP, valued as of 5:00 P.M. EST on the Distribution
Date, shall be transferred to the VDCP as of the Distribution Date ("Transferred
Accounts"). The Transferred Account balances may not be immediately available
for further transfer to VDCP investment options until account balances have been
properly verified by the plan administrators. Visteon shall cause the VDCP to
offer a Ford Stock Fund investment option for those Transferred Accounts that
had deferrals based on the FDCP Ford Stock Fund as of the Distribution Date, but
the VDCP Ford Stock Fund shall be a "sell" only fund, and would not be available
for any new deferrals or redesignations into such fund from other funds or for
credits based on dividend earnings. Visteon shall assume the liability with
respect to the Transferred Accounts and shall be responsible for making any
subsequent distributions in the form specified by the participant while employed
by Ford from the Transferred Accounts. If Visteon is unable to make
distributions from the Transferred Accounts at the end of any applicable
deferral period due to insolvency or otherwise, Ford shall make the appropriate
distributions. Ford shall have no responsibility with respect to any other VDCP
accounts.
3.11 NON-U.S. BENEFIT PLANS AND PROGRAMS.
Unless provided otherwise in Schedule 3.11 attached hereto, Global Ford
Business Employees who participate in benefit plans and programs sponsored by
non-U.S. Subsidiaries or Affiliates of Ford, shall transition to the benefit
plans and programs of the non-U.S subsidiaries of Visteon as of the Benefit
Transition Date, except with respect to retirement liabilities as provided in
the next sentence. Ford shall retain liabilities for non-U.S. Ford Retirees as
of the Benefit Transition Date and Visteon shall assume liabilities for non-U.S.
Visteon Employees with appropriate asset transfers from funded plans. To the
extent there are any benefit plans or programs which are unfunded or
underfunded, Visteon shall assume the liability for the benefit payments in
respect of the non-U.S. Visteon Employees and Ford shall retain the liability
for non-U.S. Ford Retirees.
3.12 NON-EMBEDDED PLANS.
Notwithstanding anything herein to the contrary, to the extent that Ford
has a Subsidiary or Affiliate that maintains pension, savings and or welfare
benefit plans separate and apart from the Ford plans, and such Subsidiary or
Affiliate becomes a subsidiary or affiliate of Visteon pursuant to the Master
Transfer Agreement, the plans of such Subsidiary or Affiliate shall remain the
responsibility of such Subsidiary or Affiliate, and no division or allocation of
such plans will occur as a result of such transfer on the Transfer Date. After
the Distribution Date, Ford shall have no responsibility attributable to a
parent corporation with respect to such plans, except as otherwise may be
required by law.
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3.13 FUTURE BENEFIT CHANGES.
Nothing contained herein shall be construed to prohibit Ford or its
Subsidiaries or Affiliates from amending, terminating or otherwise modifying the
terms of employee benefit plans or programs applicable to Global Visteon
Employees, Ford Retirees or Visteon Retirees, except as may otherwise be
provided by applicable law. Except as otherwise specifically provided herein or
by applicable law, no Global Visteon Employee, Ford Retiree or Visteon Retiree
shall have any vested right to any employee benefit plan or program sponsored by
Ford or its Subsidiaries or Affiliates. Except as provided in Sec. 3.01(b)(vi),
and as may be provided by applicable law, nothing in this Agreement shall
prohibit Visteon or its subsidiaries or affiliates from amending, modifying or
terminating benefit plans or programs applicable to Global Visteon Employees,
Visteon Retirees or any other Visteon retirees or employees.
ARTICLE IV
VEHICLE PROGRAMS
4.01 U.S. LEASE AND EVALUATION PROGRAMS.
Except as specifically provided herein, participation of the U.S.
Global Visteon Employees in Ford's U.S. Lease and Evaluation Vehicle Program
shall be terminated as of the Distribution Date. U.S. Global Visteon Employees
who participate in such programs shall be given a reasonable period of time
after the Benefit Transition Date not to exceed sixty (60) days or such other
time as the Parties mutually agree, to either purchase the vehicles leased or
assigned to them or to return them to Ford, or Ford's agents as provided below
("Vehicle Transition Period'). During the Vehicle Transition Period, Ford shall
offer for sale to each lessee and assignee of such vehicles as are presently
leased to such lessee or assignee under the terms of Ford's Used Vehicle
Purchase ("B") Plans, or to continue a lease under the terms of the Ford
Credit's Red Carpet Lease Plan, subject to credit evaluation and dealer
acceptance. In the event a lessee or assignee of a lease or evaluation vehicle
declines to purchase or continue to lease such vehicle within the Vehicle
Transition Period, the lessee or assignee shall return such vehicle to its
original servicing garage. Visteon shall collect, or shall cause its
subsidiaries or affiliates to collect, the applicable lease fee from the Global
U.S. Visteon Employees for such lease vehicles during the Vehicle Transition
Period. Visteon shall reimburse Ford in cash on a monthly basis, within ten days
of the last day of the month, an amount equal to (i) the aggregate amount on the
monthly lease fees for lease vehicles owed by U.S. Global Visteon Employees and
(ii) the aggregate amount of the monthly evaluation vehicle fees, determined on
the same basis as if the evaluation vehicles were lease vehicles, and paid by
Visteon. U.S. Ford Retirees shall continue to be eligible to participate in
Ford's U.S. Lease and Evaluation Vehicle Programs according to the terms of such
programs. Group I and Group II Employees
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shall be eligible to participate in Ford's U.S. Lease and Evaluation Vehicle
Programs, if otherwise eligible under the terms of such Programs, on the same
terms as a Ford Retiree upon their retirement from Visteon or its subsidiaries
or affiliates.
4.02 NON-U.S. LEASE AND EVALUATION PROGRAMS.
Participation of the Global Visteon Employees in Ford's Non-U.S. Lease and
Evaluation Programs shall terminate as of the Distribution Date, or such other
date as the Parties may agree. Ford shall cooperate with Visteon in providing
appropriate transition services comparable to those described in Section 4.01
with respect to the U.S. Lease and Evaluation Programs.
4.03 VEHICLE PURCHASE PLANS.
U.S. Global Visteon Employees shall be permitted to participate in Ford's
Vehicle Purchase Plan consisting of the "A Plan" indefinitely. After the
Distribution Date, U.S. Global Visteon Employees shall not be eligible to
participate in Ford's "B Plan" (except as provided above in Section 4.01). After
the Distribution Date, U.S. Global Visteon Employees shall not be eligible to
nominate purchasers under the "X-Plan". Ford Retirees shall continue to be
eligible to participate in such plans after the Distribution Date according to
the terms of such plans.
4.04 U.S. SURVIVING SPOUSE CAR PROGRAMS.
Visteon shall not be required to provide a benefit substantially comparable
to the U.S. Surviving Spouse Car Program after the Benefit Transition Date. Ford
shall have no responsibility to provide a benefit under the U.S. Surviving
Spouse Car Program to a spouse of any U.S. Global Visteon Employee who dies
after the Distribution Date.
ARTICLE V
U.S. WORKERS COMPENSATION
Visteon shall assume all liability for workers' compensation claims,
damages, expenses, liabilities or administrative expenses of any kind
whatsoever, related to U.S. Ford Business Employees regardless of when filed or
reported effective as of the Transfer Date. Visteon shall indemnify and hold
Ford harmless in respect of any such claims paid by Ford on Visteon's behalf
under any insured or self insured program operated by Ford. Effective on the
Distribution Date, and at such time as may be required thereafter, Visteon shall
transfer to Ford any reserves established in connection with claims which
applicable state workers' compensation laws require Ford to continue to pay on
behalf of Visteon. Effective on the Distribution Date, Ford shall transfer to
Visteon any reserves established in connection with claims for which Visteon
assumes payment responsibility to the extent allowed by state law and to the
extent
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such reserves are not reflected on Visteon's balance sheet. Where transfer of
claim liability is prohibited by state law, Ford will continue to pay such
claims on Visteon's behalf and shall be reimbursed by Visteon as described
herein. Effective on 12:01 a.m. on the Distribution Date, Visteon shall cease to
be covered by any of the workers compensation liability insurance policies
sponsored by Ford or any self insurance program of Ford applicable to the U.S.
Ford Business Employees for injuries or occupational disablements occurring
subsequent to the Distribution Date. Visteon shall assume responsibility for its
allocable share of future retrospective premium adjustments for periods
preceding the Distribution Date. Visteon shall take all steps necessary under
applicable law to provide workers compensation coverage on or after the
Distribution Date, either through self-insurance where permissible under state
law or by the purchase of insurance. Visteon shall notify state and federal
regulatory agencies of the above. Visteon shall cooperate with Ford in obtaining
the return or release of all bonds, letters of credit, securities,
indemnifications, cash or other assets given by Ford to any state or federal
agency in connection with workers compensation self-insurance with respect to
U.S. Ford Business Employees, and to the extent required by any state or federal
agency, post its own bonds, letters of credit, indemnifications, securities,
cash or other assets in substitution therefor.
ARTICLE VI
EMPLOYEE LIABILITIES
Effective as of the Transfer Date, and except as otherwise provided under
the terms of this Agreement, Visteon will assume, and agrees to perform, the
debts, liabilities, guarantees, contingencies and obligations of Ford, whether
asserted or unasserted, fixed or contingent, accrued or unaccrued, known or
unknown, and howsoever arising, relating to the Global Visteon Employees. Ford
shall transfer any funded or unfunded reserves it may maintain with respect to
such liabilities, unless such reserves are reflected on the Visteon Balance
Sheet.
ARTICLE VII
INDEMNIFICATION
7.01 VISTEON INDEMNITY.
Visteon shall indemnify Ford against and agrees to hold it harmless from
any and all damage, loss, claim, liability and expense (including without
limitation,
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reasonable attorneys' fees and expense in connection with any action, suit or
proceeding brought against Ford) incurred or suffered by Ford arising out of (i)
breach of any agreement made by Visteon hereunder; (ii) any claim by a Global
Visteon Employee (or such employee's dependents or beneficiaries) arising out of
or in connection with the operation, administration, funding or termination of
any of Visteon's employee benefit plans or programs or the employee benefit
plans or programs of a Visteon subsidiary or affiliate, whenever made,
including, without limitation, claims made to the PBGC, the DOL, or the IRS; or
(iii) employment claims of Global Visteon Employees whenever made based on
conditions or actions arising prior to or after the Transfer Date, except as
provided in Section 7.02 below (iii).
7.02 FORD INDEMNITY.
Ford shall indemnify Visteon against and agrees to hold it harmless from
any and all damage, loss, claim, liability and expense (including without
limitation, reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding brought against Visteon) incurred or suffered by
Visteon (i) arising out of breach of any agreement made by Ford hereunder; (ii)
any claim made by a Global Visteon Employee (or such employee's dependents or
beneficiaries) arising out of or in connection with the operation,
administration, funding or termination of any of the benefit plans or programs
sponsored by Ford (excluding any programs sponsored by Ford subsidiaries that
have been transferred to Visteon), whenever made, including, without limitation,
claims made to the PBGC, DOL or the IRS; or (iii) employment claims of Global
Visteon Employees that arise prior to or after the Transfer Date where the
liability, if any, is primarily the result of and arising from conduct of a Ford
supervisor or manager not employed by the Business (as opposed to the actions or
inaction of Visteon or its subsidiaries or affiliates).
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7.03 PROCEDURE FOR INDEMNITY.
The procedure for indemnification under this Section 7 shall be the
same procedure as set forth in Section 7(C ) through (j) of the Master Transfer
Agreement and shall be incorporated herein by reference.
7.04 ASSUMPTION OF LIABILITY.
As of the Transfer Date, Visteon will assume liability and
responsibility for all pending employment litigation by Global Ford Business
Employees transferred to Visteon pursuant to the terms hereof that relate to the
Business, provided, however that Visteon shall not assume any obligation or
liability and Ford with respect to the following litigation: Xxxxxxx Xxxxx et xx
x. Xxxx Motor Company filed on June 9, 1993 in U.S. District Court, District of
Minnesota, regarding discrimination allegations. With respect to those cases
assumed, Visteon will have sole responsibility for deciding how to defend the
claims (e.g., whether to settle or litigate).
ARTICLE VIII
MISCELLANEOUS
8.01 DISPUTE RESOLUTION.
If a dispute arises between the Parties relating to this Agreement, the
following procedure shall be implemented except that either Party may seek
injunctive relief from a court where appropriate in order to maintain the status
quo while this procedure is being followed:
(a) Initial Meeting. The Parties shall hold a meeting promptly, attended
by persons with decision-making authority regarding the dispute, to
attempt in good faith to negotiate a resolution of the dispute;
provided, however, that no such meeting shall be deemed to vitiate or
reduce the obligations and liabilities of the Parties or be deemed a
waiver by a party hereto of any remedies to which such Party would
otherwise be entitled.
(b) Mediation. If, within thirty (30) days after such meeting, the Parties
have not succeeded in negotiating a resolution of the dispute, they
agree to submit the dispute to mediation in accordance with the
then-current Model Procedure for Mediation of Business Disputes of the
Center for Public Resources and to bear equally the costs of the
mediation. The Parties will jointly appoint a mutually acceptable
mediator, seeking assistance in such regard from the Center for Public
Resources if they have been unable to agree upon such
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appointment within twenty (20) days from the conclusion of the
negotiation period.
(c) Arbitration. The Parties agree to participate in good faith in the
mediation and negotiations related thereto for a period of thirty (30)
days. If the Parties are not successful in resolving the dispute
through the mediation, then the Parties agree to submit the matter to
binding arbitration in accordance with the Center for Public Resources
Rules for Non-Administered Arbitration, by a sole arbitrator.
(d) Procedure. Mediation or arbitration shall take place in the City of
Dearborn, Michigan. Equitable remedies shall be available in any
arbitration. Punitive or exemplary damages shall not be awarded. This
clause is subject to the Federal Arbitration Act, 9 U.S.C.A. Section 1
et seq., or comparable legislation in non-U.S. jurisdictions, and
judgment upon the award rendered by the arbitrator, if any, may be
entered by any court having jurisdiction thereof.
8.02 ASSIGNMENT.
This Agreement has been executed in consideration of the Parties involved
and therefore may not be assigned or transferred to a third party without the
prior written consent of the other Party. This Agreement will be binding on the
agreed successors to or assignees of either Party. In no event will a Party be
released from their indemnity obligations without the prior written consent of
the other Party.
8.03 ENTIRE AGREEMENT, AMENDMENT, WAIVER.
This Agreement embodies the entire agreement of the Parties and supersedes
any other agreements or understandings between them, whether oral or written,
relating to this subject matter. In the event of a conflict between this
Agreement and any other agreement between or among any of the Parties with
respect to the subject matter hereof, this Agreement shall control. No amendment
or modification or waiver of a breach of any term or condition of this Agreement
shall be valid unless in a writing signed by each of the Parties. The failure of
either Party to enforce, or the delay by either of them in enforcing, any of its
respective rights under this Agreement will not be deemed a continuing waiver or
a modification of any rights hereunder and either Party may, within the time
provided by applicable law and consistent with the provisions of this Agreement,
commence appropriate legal proceedings to enforce any or all of its rights.
8.04 NOTICES.
Any notice or other communication hereunder must be given in writing
and either (a) delivered in person, (b) transmitted by facsimile transmission or
other
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telecommunications mechanism, (c) sent by a nationally recognized overnight
courier service (delivery charges prepaid) or (d) sent by registered or
certified mail (postage prepaid, return receipt requested) as follows:
If to Ford:
Ford Motor Company
Xxxxx Xxxx II Xxxxx Xxxxxx
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Secretary
Fax: (000) 000-0000
If to Visteon:
Visteon Corporation
0000 Xxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
All notices personally delivered shall be deemed received on the date of
delivery. Any notice sent via facsimile transmission shall be deemed
received on date shown on the confirmation advice. Any notice by registered
or certified mail shall be deemed to have been given on the date of receipt
or refusal thereof. The date of any notice by overnight courier service
shall be the date the airbill is signed by the recipient. Any Party may
change its address for the receipt of notices by giving Notice thereof to
the other.
8.05 PARTIAL INVALIDITY.
Any provision of this Agreement which is found to be invalid or
unenforceable by any court in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability, and the
invalidity or unenforceability of such provision will not affect the validity or
enforceability of the remaining provisions hereof.
8.06 TITLE AND HEADINGS.
Titles and headings of Sections and Subsections of this Agreement are for
convenience only and will not affect the construction of any provision of this
Agreement.
8.07 NEGOTIATED TERMS.
The Parties agree that the terms and conditions of this Agreement are
the result of negotiations between the Parties and that this Agreement will not
be construed in
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favor of or against any Party by reason of the extent to which any Party or its
professional advisors participated in the preparation of this Agreement.
8.08 COUNTERPARTS.
This Agreement may be executed in counterparts, each of which will be
deemed an original, but all of which taken together will constitute one and the
same instrument.
8.09 GOVERNING LAWS.
This Agreement is governed by the internal laws of the State of
Michigan.
8.10 THIRD PARTY BENEFICIARIES.
This Agreement is for the sole benefit of the Parties hereto and no
third party may claim any right, or enforce any obligation of the Parties,
hereunder.
8.11 RELATIONSHIP.
Nothing contained in this Agreement will be construed to make any of the
Parties partners, principals, agents or employees of the other, except as
explicitly provided. None of the Parties will have any right, power or
authority, express or implied, to bind any of the other Parties. For purposes of
this Agreement, Affiliate means any individual, partnership, corporation,
limited liability company, trust, or other entity directly or indirectly,
through one or more intermediaries, controlling, controlled by or, under common
control with a Party.
8.12 GOOD FAITH AND FAIR DEALING.
In entering into this Agreement, the Parties each acknowledge and agree
that all aspects of the relationship among the Parties contemplated by this
Agreement, including the performance of all obligations under this Agreement,
will be governed by the fundamental principle of good faith and fair dealing.
8.13 CONSENTS, APPROVALS AND REQUESTS.
Except as specifically set forth in this Agreement, all consents and
approvals to be given by any of the Parties or any of its respective Affiliates
under this Agreement will not be unreasonably withheld or delayed.
8.14 FURTHER ASSURANCES.
The Parties will execute such further assurances and other documents and
instruments and do such further and other things as may be necessary to
implement and carry out the intent of this Agreement.
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8.15. SALE OF VISTEON BUSINESS.
If Visteon sells all or part of the assets comprising the Business after
the Distribution Date, and transfers Global Visteon Employees to a successor
employer in connection with the sale of such Business assets, Visteon shall
attempt to negotiate in good faith with the successor employer provisions with
respect to benefit comparability and pension security no less favorable than
those set forth in Section 2.04 and Section 3.01 b.(vi).
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as
of the day and year first above written.
FORD MOTOR COMPANY VISTEON CORPORATION
By:/s/ Xxxxxxx Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------- ---------------------------------
Title: Vice President and Treasurer Title: Executive Vice President and
------------------------------ ----------------------------
Chief Financial Officer
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