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EXHIBIT 10.5
RELATIONSHIP AGREEMENT
between
AUTOMOTIVE CONSUMER SERVICES GROUP
and
VISTEON CORPORATION
THIS RELATIONSHIP AGREEMENT is entered into effective as of the 1st day of
January, 2000, by the AUTOMOTIVE CONSUMER SERVICES GROUP ("ACSG", formerly Ford
Customer Service Division) of Ford Motor Company ("Ford"), and VISTEON
CORPORATION ("Visteon").
WHEREAS, Ford has determined it would be appropriate and beneficial to
separate the activities being conducted under the name Visteon Automotive
Systems, an enterprise of Ford, including those activities conducted by the
subsidiaries and affiliates aligned with such enterprise (collectively, with
historic operations, the "Business"); and to that end, Ford has set up a
separate legal structure for Visteon and will be operating Visteon as a separate
legal entity;
WHEREAS, it is anticipated that Visteon will be spun-off from Ford, and
become a separate, independent enterprise;
WHEREAS, ACSG and Visteon, in recognition of the impending separation of
Visteon from Ford, wish to set forth their agreement as to how they will conduct
business between ACSG and Visteon going forward.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties agree as follows:
1. PURCHASE OF CURRENT PRODUCTION PARTS. Purchase by ACSG from Visteon of any
service, accessory, warranty and /or replacement parts (collectively "Service
Parts") already covered by a Ford production purchase order or other Existing
Agreement (as defined below) will be governed by the terms of the Purchase and
Supply Agreement between Ford and Visteon, dated as of January 1, 2000, which
incorporates by reference the Ford standard Purchase Order terms and conditions
(FGT26 rev. 4/97) (the "Supply Agreement"), as it may be modified by Ford and
Visteon from time to time. Accordingly, the terms of the Supply Agreement are
incorporated herein by reference. For such purposes, all such Service Parts (if
covered by an Existing Agreement) shall be deemed Components and Current
Business as those terms are defined and used under the Supply Agreement.
2. SERVICE PARTS AND SERVICES. Subject to Visteon remaining at all times
competitive in terms of quality, service and delivery, ACSG agrees that Visteon
will not be desourced during the term of this agreement with respect to any
non-production
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service parts or services currently supplied by Visteon to ACSG or Ford.
Accordingly, ACSG shall honor the terms and conditions of all non-production
purchase orders, long term supply agreements, sourcing confirmation letters,
ESTA's and other formal and verifiable informal agreements in existence as of
the date of this Agreement relating to the sale by Visteon of non-production
Service Parts or related Services ("Existing Service Parts Agreements"). Service
parts and services purchased by ACSG from Visteon hereunder will be governed by
the applicable Existing Service Parts Agreement, except to the extent they are
modified by the following:
a. FCSD Service Parts Guide. ACSG and Visteon agree that all purchases
under this Section 2 shall be governed by the FCSD Service Parts Guide
(Attachment 1), as such may be updated from time to time.
b. Global FCSD Full Service Supplier Statement of Work Generic
Requirements. ACSG and Visteon agree that all purchases under this Section
2 shall be governed by the requirements set forth in the ACSG document
"Global FCSD Full Service Supplier Statement of Work Generic Requirements"
(Attachment 2) as it may be modified from time to time.
c. Parts Branding Directive. ACSG and Visteon agree that all purchases
under this Section 2 shall be in compliance with the "Parts Branding
Directive" set forth in a letter issued by Ford Motor Company President and
CEO on October 7, 1999 (Attachment 3).
d. Performance Goals. ACSG and Visteon agree that all purchases under
this Section 2 shall be subject to the ACSG Performance Goals as
periodically determined and published by ACSG Purchasing.
e. Pricing. ACSG and Visteon have agreed to the pricing principles in
this subsection (e), to be effective as of January 1, 2000 and through
December 31, 2004. Except as provided in this Section, pricing on all
Current Business shall be fixed at the current pricing set forth in the
Existing Service Parts Agreements. Thereafter, prices for newly-sourced
(non-Current Business) Service Parts shall be determined on a competitive
basis in accordance with ACSG's customary practice with its suppliers.
Prior to implementing price changes, Visteon will consult with ACSG to
ensure that individual component price changes effected under this
subsection (e) do not cause ACSG to become uncompetitive in price on such
individual components. The agreed upon pricing principles are not
superceded by terms of any Existing Service Parts Agreement nor the Supply
Agreement and are as follows:
1) Price Increase. Visteon may increase pricing on certain Service
Parts such that the total amount of such increase multiplied by
the volume of affected Service Parts purchased by ACSG does not
exceed $4 million in calendar year 2000.
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2) Price Decrease - 2000. Effective January 1, 2000, Visteon shall
provide to ACSG a 1.5% price reduction on certain Service Parts
such that the net average price reduction across all production
Service Parts, non-production Service Parts and Remanufactured
Parts (as hereinafter defined) sold to ACSG for such period shall
equal 1.5%. The 1.5% price reduction will be calculated on the
immediately prior year Visteon sales to ACSG.
3) Price Decrease - 2001-2004. Effective January 1, 2001 and each
anniversary thereafter through 2004, Visteon shall provide to
ACSG a 2% price reduction on certain Service Parts such that the
net average price reduction across all production Service Parts,
non-production Service Parts and Remanufactured Parts (as
hereafter defined) sold to ACSG for such period shall equal 2%.
The 2% price reduction will be calculated on the immediately
prior year Visteon sales to ACSG.
4) Exclusion of Newly Sourced Service Parts. The foregoing price
reductions during the years 2001 through 2004 do not include
newly sourced Service Parts first sold to ACSG after July 1 of
the prior year in calculation.
5) Credit for Cost Savings. Visteon shall receive credit from ACSG
for 100% of the materials cost savings resulting from changes
initiated by Visteon and approved by ACSG. Such cost savings will
be credited against the above-required cost reductions. With each
design change that Visteon initiates, Visteon must furnish
information and data that demonstrate, in conformance with
standard industry engineering practices, the feasibility of the
change. ACSG may conduct its own engineering analysis of the
change and shall not be obligated to approve any change that ACSG
believes causes a deviation from original product specifications.
6) Credit for Remanufactured Service Parts. For purposes of
calculating the amount of price reduction achieved in connection
with any volume of Service Parts sales for any relevant sales
period hereunder, Visteon shall be entitled to include the entire
volume of Remanufactured Parts (as defined below) sold to ACSG in
that period.
f. Tooling - Visteon may continue to use ACSG tooling as follows:
(i) Aftermarket Suppliers - Visteon may continue to use
ACSG-owned tooling ("ACSG Tooling") for production of Service Parts
for automotive aftermarket suppliers through 2004. Any new/additional
customers, Service Parts or tooling use requires prior ACSG approval.
Use of ACSG Tooling in 2000 will be free of any additional charge. In
2001, Visteon shall pay a 2% tooling use and maintenance fee on net
sales of components manufactured from ACSG Tooling and sold to
automotive aftermarket suppliers. In 2002 through 2004, Visteon shall
pay a 2.5% tooling use and maintenance fee on net sales of components
manufactured from ACSG Tooling and sold to automotive
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aftermarket suppliers. Use is subject to the Ford standard Purchaser
Order terms and conditions (FGT26 Rev. 4/97) except as otherwise set
forth herein. ACSG will notify Visteon as to ACSG's determination
regarding disposition of ACSG Tooling after 12/31/04.
(ii) Warehouse Distributors - Visteon may continue to use
ACSG Tooling for production of Service Parts for warehouse
distributors through 2004. Any new/additional customers, Service Parts
or ACSG Tooling use requires prior ACSG approval. Use of ACSG Tooling
in 2000 will be free of any additional charge. In 2001, Visteon shall
pay a 3.5% tooling use and maintenance fee on net sales of Service
Parts manufactured from ACSG tooling and sold to distributors other
than through ACSG. In 2002 through 2004, Visteon shall pay a 4%
tooling use and maintenance fee on net sales of components
manufactured from ACSG Tooling and sold to distributors other than
through ACSG. Use is subject to the Ford standard Purchaser Order
terms and conditions (FGT26 Rev. 4/97) except as otherwise set forth
herein. ACSG will notify Visteon as to ACSG's determination regarding
disposition of ACSG Tooling after 12/31/04.
(iii) Special Use of Tooling. In addition to the foregoing, ACSG
and Visteon agree that Visteon may continue to use ACSG tooling on a
royalty free basis, consistent with current business practice for the
following programs:
a. Climate Control Service Part (unbranded) sales to Midas.
b. Freightliner Service Parts sales (only as required to
support Sterling (HN-80).
c. Current programs to supply OE (no aftermarket) Service
Parts to Mazda, Nissan, and Volkswagen.
d. Export component sales to Ford dealers in the Middle East
(no new Service Parts - only existing Service Parts being sold
will continue to be offered).
ACSG and Visteon agree that the approved uses of tooling in
subsections (a) through (d) above may continue (i) for the term of any
binding contract (in effect as of the effective date of this Agreement
and entered into by Visteon) that requires Visteon to supply Service
Parts for the transactions described in (a) through (d) above, or if
no such contract term is in place, (ii) for the term of this
Agreement, after which time ACSG and Visteon will mutually agree if
such tooling use will continue,
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under new or prior terms. If ACSG and Visteon agree to discontinue
such tooling use, they will create a reasonable transition and/or
discontinuation plan.
3. REMANUFACTURING PROGRAMS. Subject to Visteon remaining at all times
competitive in terms of quality, service and delivery, ACSG and Visteon agree
that, for a period of two (2) years from the date hereof, Visteon shall be the
exclusive supplier to ACSG and ACSG shall be the exclusive customer of Visteon,
for the remanufactured Service Parts ("Remanufactured Parts") currently
manufactured by Visteon for ACSG. In the event that Visteon elects to supply
Remanufactured Parts to ACSG under the Right of Last Refusal described in
Section 4 (ii) below, such supply will be subject to the same two-year mutual
exclusivity provisions described above.
4. RIGHT OF LAST REFUSAL FOR REPLACEMENT AND NEW BUSINESS. For a period equal
to three (3) years from the effective date of this Agreement, provided that
Visteon is competitive in terms of quality, service and delivery, Visteon will
be granted a right of last refusal ("Right of Last Refusal") under Ford's then
standard Purchase Order terms, for (i) the replacement cycle of all Current
Business; (ii) all Remanufactured Parts under the Program as of the effective
date of this Agreement (as described above) and for any other remanufactured
parts which ACSG wishes to purchase during the period to the extent Visteon
manufactures such parts; and (iii) any new Service Parts requirements of ACSG
which arise during the period, to the extent that Visteon manufactures such
Parts. The Right of Last Refusal shall be governed in accordance with the terms
the Right of Last Refusal as described in Section 6 and Exhibit I of the Supply
Agreement.
5. CARLITE GLASS BUSINESS. ACSG and Visteon acknowledge and agree that all
assets and liabilities related to the Carlite-branded glass manufacturing,
distribution and service/installation business the ("Carlite Brand Glass
Business") have been transferred to Visteon pursuant to the Master Transfer
Agreement between Ford and Visteon dated as of March 30, 2000. Accordingly, ACSG
has no continuing right or interest to or in the Carlite Brand Glass Business.
It is the intention of the parties that Visteon shall be permitted to continue
to operate the Carlite Brand Glass Business substantially as it has in the past,
including without limitation, Visteon's ability to continue to represent such
business as an authorized Ford-OEM replacement glass supplier in the North
American market (for so long as it continues to be so sourced), and the right in
connection therewith to continue to label the Carlite brand with Ford range of
brands on replacement glass in accordance with the licensing guidelines set
forth in Exhibit 5 hereto.
6. VISTEON SERVICE DISTRIBUTOR NETWORK. ACSG and Visteon agree that the
Visteon Service Distributor Network covering audio systems and equipment,
instrument clusters and speedometers (the "Network") will continue as currently
operated and/or managed by Visteon under previously agreed upon guidelines and
principles, whereby Visteon acts as an authorized service center and distributor
for ACSG and Ford Service Parts and service. For the term of this Agreement,
ACSG will continue to recognize Visteon as its sole authorized service center
and distributor, but only for those Ford Service Parts that Visteon manufactures
for ACSG during the term of this Agreement and only if Visteon adheres to
customary standards of quality and timing for service for a
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particular Ford Service Part. After the term of this Agreement, neither ACSG nor
Visteon will be obligated to support the Network unless both mutually agree such
should continue, under mutually agreed upon terms. If ACSG and Visteon agree to
terminate Visteon's status as an authorized service center and distributor, ACSG
and Visteon will create a reasonable transition plan to ensure there is no gap
in service coverage to Ford dealers. Additionally, ACSG has no obligation to
expand the Network relationship to include components other than those currently
covered by the Network.
7. TRANSFER OF TIER 2 SUPPLIER PURCHASE ORDERS. Within the North American
market, ACSG agrees to transfer certain ACSG Tier 2 purchase orders to Visteon.
ACSG and Visteon will mutually determine which purchase orders will be
transferred dependent on what is appropriate and beneficial to both entities.
ACSG and Visteon will mutually agree on the timeline for the transfer with a
targeted completion date of June 30, 2000. The volume of components represented
by the purchase orders transferred to Visteon on or before June 30, 2000 will be
included under the terms of the pricing agreement set forth in Section 2(e) from
January 1, 2001. The volume of components represented by the purchase orders
transferred to Visteon after June 30, 2000 will be included under the terms of
the pricing agreement set forth in Section 2(e) from January 1, 2002. As relates
to these transferred purchase orders, Ford will provide reasonable assistance to
Visteon to ensure Visteon has access to all tools related to production of the
Service Parts covered by such purchase orders.
ACSG and Visteon also agree to explore Visteon taking control of the supply of
certain aftermarket projects currently supplied directly to ACSG by Xxxxx Tube
Manufacturing ("Xxxxx") and Findlay Industries ("Findlay"). The intention is to
complete this analysis by June 30, 2000. If the decision is made to transfer to
Visteon the business currently handled by these two suppliers, Visteon and ACSG
will mutually agree to a pricing agreement which will be treated as an addendum
to Section 2(e) of this Agreement. Should Visteon and ACSG agree to not transfer
control of this business, then the Xxxxx and Xxxxxxx business will be exempt
from the Section 2(e) pricing agreement.
8. LOGISTICS. ACSG and Visteon have been in discussions relating to the
provision by ACSG to Visteon of certain logistics and transportation services,
to be provided to Visteon beginning January 2001. ACSG will submit a bid to
Visteon for supplying such services by September 30, 2000. Visteon agrees to
give preferred consideration to the ACSG bid and will provide to ACSG an initial
response to the bid within 30 days after its receipt.
9. TERM OF AGREEMENT. This Agreement shall be in effect from January 1, 2000
through December 31, 2004.
10. MISCELLANEOUS.
a. Entire Agreement. This Agreement, including all Exhibits and Schedules
attached hereto, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior written and
oral and all
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contemporaneous oral agreements and understandings with respect to the
subject matter hereof.
b. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Michigan.
c. Benefit of the Parties. 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.
d. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in
person, by fax with confirmation of receipt, by express or overnight mail
delivered by a nationally recognized air courier (delivery charges
prepaid), or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties as follows:
If to Ford:
Ford Motor Company
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Secretary
Fax: (000) 000-0000
If to Visteon:
Visteon Corporation
Auto Club Drive
Dearborn, MI
Attention: General Counsel
Fax: (000) 000-0000
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above. Any notice or communication delivered in person shall be deemed
effective on delivery. Any notice or communication sent by fax or by air
courier shall be deemed effective on the next business day. Any notice or
communication sent by registered or certified mail shall be deemed
effective on the fifth business day after such notice or communication was
mailed.
e. Successsors and Assignees. This Agreement shall be binding upon and
inure to the benefit of each party hereto and their respective successors
and assignees of the parties. In no event will a party be released from
their indemnity obligations without the written consent of the other party.
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f. 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:
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.
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
appointment within twenty (20) days from the conclusion of the
negotiation period.
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.
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.
g. Invalidity of Individual Terms. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent
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of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the fullest extent
possible.
h. Non-Waiver of Rights. No failure or delay on the part of any party
hereto in the exercise of any right hereunder shall impair such right or be
construed to be a waiver of agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
i. Headings. The descriptive headings herein are for reference only and
are not intended to be part of or to affect the meaning or interpretation
of this Agreement.
j. Amendment. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties
to such agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their fully authorized representatives as of the day and year first
above written.
VISTEON CORPORATION FORD MOTOR COMPANY
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Name: /s/ Xxxxxx X. Xxxxxxx Name: /s/ Xxxxxxx Xxxxxxxxx
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Title: Executive Vice President Title: Vice President and Treasurer
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and Chief Financial Officer
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