1
EXHIBIT 10.4
MASTER SEPARATION AGREEMENT
THIS MASTER SEPARATION AGREEMENT ("Agreement") is entered into as of
the 1st day of June, 2000, by and among VISTEON CORPORATION, a corporation
organized under the laws of Delaware, U.S.A., with offices at 0000 Xxxx Xxxx
Xxxxx, Xxxxxxxx, Xxxxxxxx 00000 ("Visteon"), and FORD MOTOR COMPANY, a
corporation organized under the laws of Delaware, U.S.A., with offices at The
American Road, Dearborn, Michigan 48121 ("Ford").
R E C I T A L S
WHEREAS, Visteon was formed by Ford to hold the assets (including
Ford's interests in certain subsidiaries and affiliates) relating to those
activities that had been conducted under the name "Visteon Automotive Systems,
an enterprise of Ford Motor Company" (the "Business");
WHEREAS, 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 Ford, and its Subsidiaries and Affiliates (as
defined in Schedule 1), (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;
WHEREAS, to effectuate the Separation, and in pursuance of a plan of
reorganization (within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code")), Ford has agreed to transfer to Visteon those
entities and assets of Ford (or its Subsidiaries and Affiliates) devoted to the
Business, and Visteon has agreed to assume certain liabilities associated with
the Business, as more particularly described in the Master Transfer Agreement,
dated March 30, 2000 ("Master Transfer Agreement"), between Ford and Visteon
(the "Transfer");
WHEREAS, Ford intends to effect a distribution (the "Distribution") (A)
to the holders of Ford's common stock, par value $1.00 per share ("Ford Common
Stock") and the holders of Ford's Class B Stock, par value $1.00 per share
("Class B Stock") (other than the Plans defined below), of all shares of the
common stock of Visteon ("Visteon Common Stock") held by Ford immediately prior
to the Distribution, and (B) to the Ford Motor Company Savings and Stock
Investment Plan for Salaried Employees and the Ford Motor Company Tax-Efficient
Savings Plan for Hourly Employees (collectively, the "Plans"), of cash in lieu
of shares of Visteon Common Stock, which cash shall be a portion of the Dividend
described below;
WHEREAS, Ford acknowledges that it is in the best interest of Ford and
Visteon for the cash position of Visteon at the time of the Distribution to be
equal to a target cash amount and, to that end, either will (i) cause Visteon to
effect a distribution of cash to Ford as a dividend (the "Dividend"), or (ii)
contribute cash to Visteon;
WHEREAS, in the event the Dividend is declared, Ford will segregate
such funds in a
2
separate bank account and, within a year after the Distribution, will use such
funds to pay creditors of Ford and/or to make distributions to shareholders of
Ford;
WHEREAS, the parties intend the Transfer and the Distribution be
treated as tax-free transactions under Sections 351, 368(a) and 355 of the Code
to both Ford and its stockholders;
WHEREAS, in connection with the transactions contemplated by the
parties, and in order to support the purposes contemplated thereby, Ford and
certain of its Subsidiaries and Affiliates have entered into several ancillary
agreements with Visteon and its Subsidiaries and Affiliates, including, without
limitation, a Tax Sharing Agreement between Ford and Visteon ("Tax Sharing
Agreement"), an Hourly Employee Assignment Agreement between Ford and Visteon,
an Employee Transition Agreement between Ford and Visteon, an Information
Technology Services Agreement between Ford and Visteon ("IT Agreement"), a
Purchase and Supply Agreement between Ford and Visteon ("Purchase and Supply
Agreement"), an Aftermarket Relationship Agreement between Visteon and the
Automotive Consumer Services Group of Ford, a Patent Cross-License Agreement
between Visteon Global Technologies, Inc. ("VGTI") and Ford Global Technologies,
Inc. ("FGTI"), a Technology Cross-License Agreement between VGTI and FGTI, and
various real estate leases (The foregoing agreements described above are
collectively referred to as the "Ancillary Agreements");
WHEREAS, in anticipation of the Distribution, the parties desire to set
forth in writing the terms under which certain central services will continue to
be provided to Visteon by Ford and certain of its Subsidiaries and Affiliates
for a specified period of time; and
WHEREAS, in connection with the Distribution, the parties hereto desire
to provide for certain indemnification rights as between the parties and certain
other matters described below.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties agree as follows:
1. DEFINITIONS.
Capitalized terms not otherwise defined in the body of this Agreement
shall have the meanings set forth in Schedule 1 attached hereto.
2. TRANSITIONAL SERVICES TO VISTEON.
(a) Historically, Ford, directly or through its Subsidiaries and
Affiliates, has arranged for certain services to be provided to the Business
centrally. The parties have agreed to continue certain of these services
("Transitional Services") after the Distribution through December 31, 2001 (the
"Transition Termination Date"). "Transitional Services" are such services which
Ford provided to the Business in the twelve (12) months prior to the
Distribution and which are identified by Visteon as continuing services in
writing to Ford prior to the Distribution, and includes, without limitation,
those services generally identified on Schedule 2(a). The parties
2
3
agree that all Transitional Services will be more particularly described in
writing, together with the agreed changes, as soon as possible, in one or more
documents signed by the parties which specifically reference that they are to be
considered Transitional Services under this Agreement. Transitional Services do
not include (i) any of the excluded services identified in Section 5 below, or
otherwise covered by the IT Agreement, or (ii) any other services which Ford
would not be legally permitted to provide to Visteon (or its Subsidiaries or
Affiliates) from time to time. In no event xxxx Xxxx be required to obtain a
different or new license or permit in order to legally provide any service
hereunder.
(b) Ford (directly or through its Subsidiaries, Affiliates, or
designated third parties) agrees to provide to Visteon and its Subsidiaries and
Affiliates, as requested by Visteon, the Transitional Services through the
Transition Termination Date in exchange for the charges agreed to by the parties
in writing under service level agreements. Visteon may terminate all or any
portion of the Transitional Services at any time upon six (6) months' prior
written notice to Ford, or such shorter time period as may be agreed to by Ford
with respect to a specific Transitional Service. If the parties have not already
agreed in writing to a charge that is applicable to such terminated Transitional
Service(s), the parties will endeavor in good faith to adjust the charge to
Visteon to reflect the reduced level of service. (For example, this would occur
if the parties agreed on one charge for all accounting services, and, later,
Visteon notified Ford that it no longer needed certain accounting services but
continued to need the remainder of the accounting services agreed to.) In the
event the parties are unable to agree on the revised charge within thirty (60)
days after Visteon notifies Ford of the services to be terminated, such dispute
over the adjusted charges shall be submitted to dispute resolution as provided
in Section 10(f) of the Master Transfer Agreement. It is intended that the
Transitional Services will be provided to Visteon and its Subsidiaries and
Affiliates at the fully accounted cost, including a reasonable allocation for
internal overhead costs, direct costs and costs incurred from outside suppliers.
Any taxes due (including, without limitation, withholding taxes) on the amounts
owing to Ford for Transitional Services will be paid by Visteon (or its
respective Subsidiary or Affiliate) at its own expense. The parties will
endeavor in good faith to agree on an amount to be charged by Ford for providing
the Transitional Services (or the method for determining such charge). In the
event that Ford (or its Subsidiaries or Affiliates) provides any Transitional
Services to other third party suppliers, Ford will charge Visteon no more than
the amounts for such services as it charges to similar third party suppliers.
(c) In the event that Visteon considers that any of the Transitional
Services are incomplete or incorrectly described, within thirty (30) days after
the Distribution, Visteon shall provide to Ford written notice of any proposed
deletions or modifications to any Transitional Services, including the reasons
for revisions and, unless precluded by either: (i) law or regulation, or (ii)
the express terms of existing contracts between Ford and a third party,
suchdeletions, or modifications shall be accepted by Ford (subject to
appropriate adjustments to the charges for such revised Transitional Services)
under the terms of this Agreement, and, with respect to proposed changes in the
charges for such Transitional Services, Ford and Visteon shall reasonably agree
on the appropriate revised charges. In the event that Ford and Visteon are
unable to reach an agreement on revised charges within thirty (30) days after
Visteon notifies Ford as provided in
3
4
the first sentence of this Section 2(c), such dispute shall be submitted to
dispute resolution as provided in Section 10(f) of the Master Transfer
Agreement, and the parties will be governed by the principles for charges in
Section 2 (b) above.
(d) Visteon agrees that it will, and it will cause its Subsidiaries and
Affiliates to, use commercially reasonable efforts to obtain all Transitional
Services from a source other than Ford and its Subsidiaries and Affiliates
commencing no later than the Transition Termination Date. In the event that
Visteon or any of its Subsidiaries or Affiliates is unable to obtain a
replacement source for any particular Transitional Service (a "Continued
Service") to commence at the Transition Termination Date, then Visteon may
continue to obtain the Continued Service hereunder, on the same terms and
conditions for the particular Transitional Service, for a period designated by
Visteon, which ends no later than June 30, 2002, by giving Ford written notice
before June 30, 2001, identifying the Continued Service(s) Visteon wishes to
continue. In addition, Visteon may continue any Transitional Service that is
comprised of information technology services for a period not to exceed five (5)
years from the date of Distribution.
3. QUALITY OF SERVICES.
(a) The Transitional Services provided under this Agreement will be
substantially the same in scope, quality and responsiveness as are provided to
other areas of Ford for the time period they are being provided. If Ford ceases
to provide any Transitional Service to Ford and the Ford Subsidiaries and Ford
Affiliates, it may, upon reasonable notice to Visteon, cease providing such
Transitional Services hereunder. Ford and its Subsidiaries and Affiliates shall
have no liability for actions or failure to act in connection with Transitional
Services, except (i) for claims arising out of the gross negligence or willful
misconduct of Ford or its Subsidiaries or Affiliates, and (ii) as provided below
in this Section 3. Visteon agrees to indemnify Ford and its Subsidiaries and
Affiliates, and their respective officers, directors, employees, and agents, as
provided in Section 7 of the Master Transfer Agreement, for any claims arising
out of Transitional Services, except for matters which are specifically excluded
above. In addition, Visteon's obligation to defend and indemnify hereunder will
continue to apply after the termination or other conclusion of Transitional
Services to the extent the incident which forms the basis of the claim occurred
as a result of Transitional Services provided hereunder. In the event that
Visteon or its Subsidiaries or Affiliates are dissatisfied with the quality or
responsiveness of any Transitional Service provided hereunder, Visteon shall
provide written notice thereof to Ford, and, if the local entities involved in
providing or receiving the Transitional Service in dispute cannot resolve the
dispute in a mutually satisfactory manner within thirty (30) days after receipt
of such notice, the dispute shall be submitted to an officer designated by each
such party for resolution. Upon determination by such officers that the quality
or responsiveness of such Transitional Service does not meet the standard set
forth herein, Ford shall immediately take action to cause such Transitional
Service to be performed at the levels provided for herein. Pending any such
final determination, Visteon or its designated Subsidiary or Affiliate will pay
for the undisputed Transitional Service(s), and Ford or its Subsidiary or
Affiliate shall continue to provide all Transitional Services hereunder without
interruption.
4
5
(b) If Ford is in material breach of any provision of this Agreement,
Visteon shall have the right to terminate any Transitional Service involved in
such breach, upon not less than thirty (30) days' written notice to Ford. In the
event that such notice period would result in irreparable harm to the recipient
of the Transitional Service, an appropriate shorter notice period shall apply.
If Ford cures the breach during the notice period, said notice shall be void.
(c) With respect to any such breach by Xxxx, Xxxx and any Subsidiary or
Affiliate of Ford providing the disputed Transitional Services will be liable to
the recipient of the Transitional Service as follows:
(i) Ford will promptly pay the reasonable amount charged by a third
party upon whom the recipient of the Transitional Service had to rely in order
to have the specific Transitional Service properly rendered for a period not to
exceed ninety (90) days, and
(ii) If such breach is occasioned by the willful or negligent
interruption or negligent or otherwise improper discontinuance of a Transitional
Service, the provider will reimburse the recipient to the extent of any direct
damages incurred as a result of any claims by third parties whose claims arise
out of the performance or nonperformance by the provider of such Transitional
Service.
(d) The above remedies are available cumulatively in respect of each
breach hereunder, and in lieu of any other remedies, including equitable
remedies, in contract or in tort.
(e) The above remedies shall not be applicable in respect of any
Transitional Service provided in the most part by a supplier to Ford or its
Subsidiaries or Affiliates (by way of example, telephone services), nor to the
extent that such Transitional Services are provided using licensed software,
where a failure in such software was the primary cause of such breach; provided,
however, that Ford shall make available to Visteon and the recipient of the
Transitional Service all warranties and remedies available to Ford or its
Subsidiaries or Affiliates in respect of such Transitional Service.
(f) In the event of a breach by Ford or its Subsidiaries or Affiliates
arising out of this Agreement, Visteon and its Subsidiaries and Affiliates shall
use all reasonable efforts to mitigate its or their damages, including, but not
limited to, immediate notification to Ford of such breach.
4. PAYMENT TERMS.
(a) For payments covered by this Agreement and the IT Agreement, Ford
and Visteon will implement payment terms in the U.S. that generally are
consistent with the terms that are provided to Ford's U.S. supply base and that
also will allow for netting of intercompany balances and the payroll dates that
Visteon reimburses Ford for labor. A description of the payment calculations and
dates are included in Schedule 4.
(b) Except as otherwise provided herein, the parties will continue the
present monthly
5
6
billing practices and processes, as provided in 4(a) above, for Transitional
Services and for charges under the IT Agreement from Ford's Process Leadership
(information technologies) until such time as the accounting functions for
Visteon have been sufficiently transitioned so that there is no longer the
ability to continue the present billing practices. The present process in the
U.S. provides for monthly billing by various departments, the net amount of
which is divided into weekly amounts, which are due beginning in the month
following the month the services were billed. Except as otherwise agreed to in
writing by the parties, after Visteon has transitioned from the Ford accounting
services necessary for the present billing process, Ford will submit two monthly
xxxxxxxx to Visteon; one for charges from Ford's Process Leadership (information
technologies) and the other for Transitional Services, with the total charges to
continue to be due consistent with the present practice and Schedule 4. Ford and
Visteon will work together to reach a mutually acceptable billing format that
provides Visteon sufficient detail to identify the charges and does not require
Ford to make significant revisions to its systems.
(c) In the event the parties agree to terminate the intercompany
netting process, Ford may charge interest on any amounts due under this
Agreement at the same rate of interest (if any) as Visteon is entitled to charge
Ford on Ford's purchases from Visteon from time to time.
(d) Ford has the right to offset any amounts owed by Visteon or its
Subsidiaries or Affiliates for Transitional Services provided to Visteon or its
Subsidiaries or Affiliates against amounts otherwise owed by Ford or Ford's
Subsidiaries or Affiliates to Visteon.
5. EXCLUDED OR LIMITED SERVICES.
(a) To the extent that any Ancillary Agreement specifically addresses
any matter set forth in this Agreement, the terms of such Ancillary Agreement
will govern and control with respect to such matter; provided, however, (i) with
respect to cost of services provided by Ford and its Subsidiaries and Affiliates
to Visteon and its Subsidiaries and Affiliates, the charge can be no less than
Ford's fully accounted cost, including a reasonable allocation for internal
overhead costs, as well as any direct costs incurred from outside suppliers, and
(ii) with respect to the duration of services that are provided by Ford and its
Subsidiaries and Affiliates to Visteon and its Subsidiaries and Affiliates
(other than information technology services which may have a different duration
or services which are provided at a fair market rate for such services), the
term during which any services are provided cannot be longer than the time
period provided for in Section 2 above.
(b) After the Distribution, Ford will no longer provide services in the
following areas: insurance coverage (except in certain non-U.S. locations and
under existing occurrence based policies covering Ford and its Subsidiaries for
covered occurrences prior to the Distribution), insurance administrative
services, legal services (except in certain non-U.S. locations), medical
services that Ford is not licensed or authorized to provide to third parties,
travel services on company aircraft that Ford is not licensed or authorized to
provide to other third parties, security services that Ford is not licensed to
provide to third parties, and general auditing. It is understood
6
7
that any charges incurred by Visteon for insurance premiums will not be subject
to refund.
(c) Certain bonds and other guaranties have been backed or issued by
Ford on behalf of the Business. Visteon agrees (i) that it will work diligently
to replace such bonds and guaranties with its own credit and obtain a release of
the Ford bonds and guaranties, and (ii) to indemnify Ford for any loss it
suffers as a result of having to pay on any bonds or guaranties on behalf of the
Business, both as provided in the Master Transfer Agreement.
6. PURCHASING AGENCY.
(a) Visteon, for itself and as agent for the Subsidiaries and
Affiliates of Visteon listed on Schedule 6A (each hereinafter individually
referred to as the "Principal") hereby grants to each of Ford and the
Subsidiaries and Affiliates of Ford listed on Schedule 6B power to act as its
agent (the "Agent") in the purchase of (i) steel and other raw materials
designated by Principal, (ii) energy and non-production goods and services, all
as the Principal may advise the Agent that it requires from time to time;
provided however, that this grant shall not empower the Agent to act as the
Principal's undisclosed agent or agent for any purposes other than those
specified in this Agreement.
The grant authorizes the Agent to:
(i) Send to suppliers and potential suppliers of the Principal, both
locally and abroad, requests for quotations; evaluate the
supplier responses; issue to the suppliers purchase orders and
amendments thereto and shipment release authorizations for, on
behalf of, and in the name of the Principal; and
(ii) Use standard Purchase Order Terms and Conditions as have been
agreed to by Visteon, including any supplementary terms or such
modifications thereto which the Agent, exercising prudent
business judgment, may agree.
(b) Any Principal or Agent may terminate its participation in this
Agreement at any time upon written notice to Visteon and Ford. Such termination
shall not affect the validity of this grant of power with respect to the
remaining parties or the validity of any agreement authorized by the Principal
and executed prior to the Agent receiving notice of such termination.
(c) Visteon shall pay for these procurement services authorized hereby
as part of the Transitional Services.
7. INFORMATION AND RECORDS.
(a) For purposes hereof, "Confidential Information" means, with respect
to any entity, information belonging to such entity or its business that was
obtained by another entity prior to
7
8
the Distribution or any information that an entity obtains from another entity
through (i) any Transitional Service provided hereunder, (ii) services provided
under any of the Ancillary Agreements, or (iii) any sharing of records
post-Distribution as provided for in this Agreement, but does not include
information that is normally obtained by Ford and its Affiliates through their
third party supplier relationships. In addition, "Confidential Information" does
not include any information that (I) is or becomes publicly known other than
through a breach of this Agreement by the receiving party; or (II) is lawfully
received by the receiving party from a third party without breach of this
Agreement or breach of any other agreement between the disclosing party and such
third party; or (III) is independently developed by employees of the receiving
party who have not had access to or received any Confidential Information under
this Agreement; or (IV) is furnished to a third party by the disclosing party
without restriction on the third party's rights to disclose; or (V) is
authorized in writing by the disclosing party to be released from the
confidentiality obligations herein.
(b) Except as otherwise provided in writing by the relevant entity,
Ford agrees that it will use reasonable care to maintain the confidentiality of
Confidential Information of Visteon and its Subsidiaries or Affiliates and to
limit its disclosure, and will cause its Subsidiaries and Affiliates to do the
same, for a period of three (3) years from the Distribution; and, likewise,
Visteon agrees that it will use Reasonable Care to maintain the confidentiality
of Confidential Information of Ford and its Subsidiaries or Affiliates and to
limit its disclosure, and will cause its Subsidiaries and Affiliates to do the
same, for a period of three (3) years from the Distribution, except, in all
cases, on a need-to-know basis in connection with the purpose for which it was
disclosed. "Reasonable Care" shall mean the same degree of care exercised by the
receiving party with respect to its own information of the same nature as
Confidential Information.
(c) If the receiving party becomes legally compelled (by oral
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, the receiving party will provide the disclosing party with prompt
written notice so that the disclosing party may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this
Agreement. In the event that such protective order or other remedy is not
obtained, or the disclosing party waives compliance with the provisions of this
Agreement, the receiving party will furnish only that Confidential Information
which is legally required and will exercise reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded the Confidential
Information so disclosed.
(d) Visteon acknowledges that it is familiar with Ford's record
retention policies and that it will, and will cause its Subsidiaries to, and use
reasonable efforts to cause its Affiliates (collectively, the "Visteon
Entities") to, retain all pre-Distribution records of the Visteon Business for a
period no shorter than would be directed by Ford's record retention policy in
effect at the Distribution, or as otherwise provided in the Tax Sharing
Agreement or any other written agreement with Ford. In the event that Ford
subsequently gives Visteon written notification of any pending claims, lawsuits,
audits, changes in the law or other factors which would indicate that any
records need to be kept for a longer period, Visteon will cause such records to
be kept for the
8
9
period reasonably requested in such notification, at the Visteon Entities'
expense.
(e) During the period that the Visteon Entities are required to retain
any record, as provided above, Visteon will give, or cause to be given to, Ford
(or its Subsidiary or Affiliate, as appropriate) reasonable access to a
requested record. Access is only required to be given to the requestor when it
reasonably relates to the parties' relationship prior to the Distribution and is
for the purpose of auditing, accounting, claims or litigation, employee
benefits, regulatory or tax purposes, or reporting or disclosure obligations. In
providing access to records, the party thought to be in possession of a record
is only obligated to conduct a reasonable search designed to collect all the
requested records (at its own expense) and provide the gathered records for
inspection by the requestor during normal business hours at the place such
records are normally located, unless otherwise agreed by the parties at such
time. The requestor will abide by any security/confidentiality procedures
imposed by the entity possessing the records. The requestor may have the
necessary records duplicated at its own expense.
8. INDEMNIFICATION.
(a) Visteon agrees to indemnify, save, and hold harmless Ford, all Ford
Subsidiaries and all Ford Affiliates, and the officers, directors, employees,
agents, consultants, attorneys, accountants and other representatives thereof
and each Person, if any, who controls any such Person within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "Ford Indemnitees"), from and against any and all Losses
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Form 10 or any amendment thereof or the related Information
Statement (as amended or supplemented if Visteon shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as such Losses are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information furnished to Visteon in writing by Ford expressly for use therein.
Visteon agrees to reimburse, or cause a member of the Visteon Group to
reimburse, each of the Ford Indemnitees for any reasonable attorneys' fees or
any other expenses reasonably incurred by any of them in connection with
investigating and/or defending any Loss.
(b) Ford agrees to indemnify, save, and hold harmless Visteon, all
Visteon Subsidiaries and all Visteon Affiliates, and the officers, directors,
employees, agents, consultants, attorneys, accountants and other representatives
thereof and each Person, if any, who controls any such Person within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "Visteon Indemnitees"), from and against any and all Losses
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Form 10 or any amendment thereof or the related Information
Statement (as amended or supplemented if Visteon shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in each case to the extent,
9
10
but only to the extent, that such Losses are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
furnished to Visteon in writing by Ford expressly for use therein. Ford agrees
to reimburse, or cause a member of the Ford Group to reimburse, each of the
Visteon Indemnitees for any reasonable attorneys' fees or any other expenses
reasonably incurred by any of them in connection with investigating and/or
defending any Loss.
(c) The Ford Indemnitees or the Visteon Indemnitees (in either case, an
"Indemnitee"), as applicable, shall promptly give the party giving the
indemnification (the "Indemnifying Party") written notification of any third
party claim or any other indemnification claim, together with a copy of any
legal pleadings or other written demands from such third party, if applicable;
provided, however, that the failure to give such notice will not relieve an
Indemnifying Party of its obligations hereunder, except to the extent that the
Indemnifying Party is actually and materially prejudiced by such failure to give
notice. In particular, in case of any investigation or audit, the Indemnitees
shall inform the Indemnifying Party at the beginning of such investigation or
audit, to the extent practical, so that the Indemnifying Party may participate
therein.
(d) Except where a Ford Indemnitee has reserved or been given the right
to manage or defend a Loss or claim in a written instrument signed by Visteon
(or another member of the Visteon Group involved in such Loss or claim), Visteon
shall be entitled, at its own expense, to conduct the defense of any third party
claim with counsel of its own choice; provided, however, if representation of
such Ford Indemnitee by the counsel retained by Visteon would be inappropriate
due to actual or potential differing interests between such Ford Indemnitee and
any other party represented by such counsel in such proceeding, then Visteon
shall not be entitled to conduct such defense. However, the respective Ford
Indemnitees shall always be entitled to participate in such defense with counsel
of their own choice and at their own expense, and Visteon will cooperate with
the Ford Indemnitees and will consult with the Ford Indemnitees (and give
reasonable consideration to all proposals and suggestions made by the Ford
Indemnitees in connection with all material matters arising in the conduct of
such defense). The Ford Indemnitees shall comply with Visteon's instructions in
the defense unless the Ford Indemnitees believe the instruction to be
unreasonable. The Ford Indemnitees will use reasonable efforts to mitigate the
amount of any Losses that may give rise to indemnification hereunder. In the
event the Ford Indemnitees have the right to manage or defend the Loss, the
involved member of the Visteon Group shall always be entitled to participate in
such defense with counsel of its own choice and at its own expense, and the Ford
Indemnitees will cooperate with the Visteon Group and will consult with the
Visteon Group (and give reasonable consideration to all proposals and
suggestions made by the Visteon Group) in connection with all material matters
arising in the management of such Loss or conduct of such defense.
(e) The Visteon Group may not settle any other third party claims
covered by this Section without the prior written consent of the Ford
Indemnitees involved therein, and the Ford Group may not settle any other third
party claims covered by this Section without the prior written consent of the
Visteon Indemnitees involved therein; except, in either case, if such
10
11
settlement is solely for money damages, the applicable Indemnitees are
reasonably satisfied that the responsible party will directly pay such amount in
full and the settlement provides for the full release of all claims against the
Indemnittees.
(f) For tax purposes, the parties agree to treat any payment pursuant
to this Section as a capital contribution by Ford to Visteon or a distribution
by Visteon to Ford made in the last taxable period beginning before the
Distribution and, accordingly, as not includible in the taxable income of the
recipient or deductible by the payor.
(g) A party's liability with respect to any Loss for which an
Indemnitee actually recovers amounts from third parties (including, without
limitation, proceeds under any policy of insurance available for the purpose)
shall be reduced to the extent of the amounts actually recovered. A party's Loss
shall not include any consequential damages or lost profits that may be suffered
by such party. The parties will also take into account the time cost of money
(using the then-current 30 day LIBOR, or any replacement index, as the
applicable rate) in determining the amount of the Loss suffered by any
Indemnitee.
(h) The amount of any Loss for which indemnification is provided under
this Agreement shall be first reduced by the tax benefit (determined in the
reasonable judgment of the Indemnitee) to any Indemnitee of the applicable loss
item, and such net loss amount shall then be increased to take account of the
net tax cost, including interest and penalties (the "Tax Cost"), if any,
incurred by an Indemnitee arising from the receipt or accrual of an indemnity
payment hereunder (grossed up for such increase). The computation of such Tax
Cost shall reflect the hypothetical tax consequences of the receipt or accrual
of any indemnity payment, defined using the maximum statutory rate (or rates, in
the case of an item that affects more than one tax) applicable to the Indemnitee
for the relevant taxable periods, and reflecting, for example, the effect of the
deductions available for interest paid or accrued and for taxes such as state
and local income taxes. Any indemnity payment hereunder shall initially be made
without regard to this paragraph (h) and shall be increased or reduced to
reflect any such Tax Cost (including gross-up) only after the Indemnitee has
actually realized or received such cost. The amount of any Tax Cost payment
hereunder shall be adjusted to reflect any final determination (which shall
include the execution of Form 870-AD or successor form) with respect to the
Indemnitee's liability for taxes, and payments between Ford and Visteon to
reflect such adjustment shall be made if necessary.
(i) Ford has the right to offset any amounts owed by Visteon, any
Visteon Subsidiary or any Visteon Affiliate to any member of the Ford Group
against any amounts owed by Ford to Visteon pursuant to this Section 8. Visteon
has the right to offset any amounts owed by Ford, any Ford Subsidiary or any
Ford Affiliate to any member of the Visteon Group against any amounts owed by
Visteon to Ford pursuant to this Section 8.
(j) If, for any reason, the indemnification provided for in Section
8(a) or 8(b) is unavailable to any Indemnified Party, or insufficient to hold it
harmless, then the Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses in such proportion
as is appropriate to reflect all relevant equitable considerations.
11
12
9. CONTINUING PROGRAMS AND CONTRACTS.
(a) Employees of Visteon and Visteon Subsidiaries (including Ford
employees assigned to Vistoen under the Hourly Employee Assignment Agreement)
which have been continuously employed by Visteon or a Visteon Subsidiary since
the Distribution will be permitted to continue participating in Ford's vehicle
purchase plans consisting of the "A Plan" and the "Z Plan" (or other similar
programs offered outside the U.S.) to the extent they participated immediately
prior to the Distribution so long as such plans are offered. Other employees of
Visteon and Visteon Subsidiaries will be permitted to participate in Ford's
vehicle purchase plans consisting of the "A Plan" and the "Z Plan" until such
time as Ford shall terminate their participation by giving Visteon two (2)
years' written notice. After the Distribution, employees of Visteon and Visteon
Subsidiaries and Visteon Affiliates will not be eligible to nominate purchases
under the "X Plan". In addition, the participation in the "A Plan" and the "Z
Plan" (or other similar programs offered outside the U.S.) is conditioned on
Visteon supplying the information required by Ford from time to time to
administer the programs. This agreement in no way obligates Ford to continue
offering the "A Plan" and the "Z Plan" (or other similar programs offered
outside the U.S.) if it ceases offering such plans to employees of Ford.
(b) Ford has announced a program to supply its employees with certain
computer hardware and software, which is referred to as the "Connectivity
Program". Employees of Visteon will be allowed to participate on terms to be
negotiated by the parties in a separate written agreement. The parties
acknowledge that the costs to be paid by Visteon will include, without
limitation, (i) the costs of developing any necessary portals not otherwise
created, and (ii) the taxes or other charges associated with the Connectivity
Program, to the same extent Ford Subsidiaries and Ford Affiliates would be
responsible for similar taxes or charges.
(c) Ford and Visteon agree that all executory Inter-Company Buying
Authority agreements ("ICBAs") shall be deemed to be Existing Agreements as that
term is defined in the Purchase and Supply Agreement. The parties agree to use
appropriate purchase orders in the future subject to a period for orderly
transition from the current system.
(d) Visteon, as a Tier 1 supplier to Ford, is the bailee of all
Ford-owned tooling, wherever located, used to make parts for Visteon
("Ford-owned Visteon Tooling"). In accordance with Sections 4 and 29 of Ford's
current standard terms and conditions (including subsequent revisions, "Global
Terms"), Ford grants Visteon permission to locate Ford-owned Visteon Tooling on
the premises of third party suppliers to Visteon as Bailed Property (as Defined
in the Global Terms), and Visteon is entitled to exercise the rights contained
in Sections 4 and 29 of the Global Terms with respect to those suppliers, with
"Visteon" substituted for "Buyer" in those Sections. Ford further grants Visteon
the right to remove from the premises of Visteon's suppliers any Ford-owned
Visteon Tooling whenever Visteon, in its sole discretion, decides to remove any
Ford-owned Visteon Tooling. Visteon is responsible for the payment of any
personal property taxes incurred on account of the Ford-owned Visteon Tooling.
At Ford's request, Visteon will provide to Ford the location and other
information about any Ford-owned
12
13
Visteon Tooling.
10. LIMITED USE OF FORD TRADEMARKS.
(a) Ford has a proprietary interest in certain trademarks and
tradenames historically used in the Business that were not transferred to
Visteon under the Master Transfer Agreement, including, without limitation,
"Ford" and the blue oval xxxx ("Ford Marks"). The parties recognize that the
Business will have existing signage, supplies and other materials that are Ford
Marks on the date of Distribution ("Existing Materials"). Ford grants Visteon
and the Visteon Subsidiaries and Visteon Affiliates, a royalty-free,
non-exclusive license to use the Ford Marks on the Existing Materials, on a
worldwide basis, for a period of two hundred forty (240) days from the
Distribution ("Phase Out Period"). Visteon agrees that, as of the Distribution,
it shall not, and will cause the Visteon Subsidiaries and Visteon Affiliates not
to, produce, or have produced, any additional supplies or other goods bearing
the Ford Marks, other than as permitted under separate agreements with Ford for
the manufacture of goods. In addition, Visteon agrees that neither it nor its
Subsidiaries or Affiliates will use the Ford Marks on the forms, labels or other
items where it would cause confusion regarding the contracting entity or imply
Ford was conducting activities for which Ford is not licensed. On expiration of
the Phase Out Period, Visteon shall destroy all remaining Existing Materials in
Visteon's inventory and not produced under a separate license from or authority
by Ford or remove the Ford Marks from such goods. At Ford's request, Visteon
will give Ford satisfactory evidence of the destruction or removal.
(b) Ford hereby grants to Ford Microelectronics, Inc. (a Visteon
Subsidiary) a royalty free, non-exclusive, non-transferable license, within the
United States, and subject to the quality control, termination and other
provisions set forth in this Agreement, to use the term FORD MICROELECTRONICS
solely as a corporate name ("Ford Microelectronics License"). Notwithstanding
the foregoing, the Ford Microelectronics License shall terminate at the first to
occur of (i) three hundred sixty five (365) days from the Distribution, or (ii)
the date Visteon transfers any shares of stock in Ford Microelectronics to a
third party. Visteon agrees to cause Ford Microelectronics, Inc. to change its
name to delete use of "Ford" by such termination date.
(c) All use of the Ford Marks to under the licenses granted above shall
inure solely to the benefit of Ford. Visteon, the Visteon Subsidiaries and the
Visteon Affiliates shall not claim any title or any proprietary right to the
Ford Marks by virtue of these licenses granted to Visteon, the Visteon
Subsidiaries and the Visteon Affiliates. Visteon agrees to, and to cause the
Visteon Subsidiaries and Visteon's Affiliates to, use the Ford Marks only in
connection with the conduct of the Business to provide goods and services which
meet quality standards at least as great as those used by the Business prior to
the Distribution.
11. FORCE MAJEURE.
(a) If either party hereto or any Subsidiary or Affiliate thereof is
rendered unable wholly or in part by Force Majeure (as defined herein) to
perform its obligations hereunder (other than the obligation to pay money), such
party shall give prompt notice to the other party with the
13
14
reasonable particulars thereof and the probable extent of the inability to
perform such obligation, whereupon the obligation of such party shall be
suspended so far as it is affected by such Force Majeure during but no longer
than the continuance thereof. The affected party shall use all possible
diligence to remove such Force Majeure.
(b) For the purposes of this Agreement, the term "Force Majeure" shall
mean any act of God, strike or lockout or other labor dispute, act of the public
enemy, war, blockade, revolution, riot, insurrection, civil commotion,
lightning, fire storm, flood, earthquake, explosion, governmental restraint,
embargo, inability to obtain or delay in obtaining equipment or transport,
inability to obtain or delay in obtaining governmental approvals, permits,
licenses or allocations and any other cause whether of the kind specifically
enumerated above or otherwise which is not reasonably within the control of the
party claiming Force Majeure.
12. MISCELLANEOUS.
(a) This Agreement, including all Exhibits and Schedules attached
hereto and descriptions of Transitional Services executed pursuant to this
Agreement, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.
(b) This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Michigan.
(c) 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) All notices and other communications hereunder shall be in writing
and shall be given to the parties as provided in the Master Transfer Agreement.
(e) This Agreement shall be binding upon and inure to the benefit of
each party hereto and the respective successors and assignees of the parties. In
no event will a party be released from its indemnity obligations without the
written consent of the party indemnified.
(f) The parties agree that Section 7 of the Master Transfer Agreement
applies to claims and indemnities hereunder. In addition, the parties each waive
all rights of subrogation, which would otherwise be available to their insurers,
relating to any loss, direct or indirect, caused by or related to (i) the
provision of shared services under this Agreement, the Master Transfer Agreement
or the IT Agreement, or (ii) a claim under Section 8 above.
(g) If a dispute arises between the parties relating to this Agreement,
they will follow the procedures and terms set forth in Section 10(f) of the
Master Transfer Agreement, unless a different procedure is explicitly provided
for herein.
14
15
(h) 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 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.
(i) 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.
(j) 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.
(k) No change or amendment will be made to this Agreement except by an
instrument in writing signed on behalf of each of the parties hereto.
15
16
IN WITNESS WHEREOF, the parties hereto have caused this Master
Separation Agreement to be executed by their fully authorized representatives as
of the day and year first above written.
VISTEON CORPORATION
By:
------------------------
Name:
----------------------
Title:
---------------------
FORD MOTOR COMPANY
By:
------------------------
Name:
----------------------
Title:
----------------------
16
17
SCHEDULE 1
DEFINITIONS
"A Plan" - has its meaning set forth in Section 9(a).
"Action" - means any claim, suit, action, arbitration, inquiry, investigation or
other proceeding by or before any court, governmental or other regulatory or
administrative agency or commission or any other tribunal.
"Affiliate" - means any entity in which a party owns or controls, directly or
indirectly, less than 50%, but more than 20%, of its stock or other equity
interests.
"Agent" - has its meaning set forth in Section 6(a).
"Agreement" - has its meaning set forth in the opening paragraph.
"Ancillary Agreements" - has its meaning set forth in Recitals.
"Business" - has its meaning set forth in Recitals.
"Class B Stock" - has its meaning set forth in Recitals.
"Code" - has its meaning set forth in Recitals.
"Confidential Information" - has its meaning set forth in Section 7(a).
"Connectivity Program" - has its meaning set forth in Section 9(b).
"Continued Service" - has its meaning set forth in Section 2(d).
"Controls or Controlled" - means the possession, directly or indirectly, of the
power to direct or cause management to direct the policies of an entity, whether
through the ownership of equity, by contract or otherwise.
"Distribution" - has its meaning set forth in Recitals.
"Dividend" - has its meaning set forth in Recitals.
"Exchange Act" - means the Securities Exchange Act of 1934, as amended.
"Existing Materials" - has its meaning set forth in Section 10(a).
"FGTI" - has its meaning set forth in Recitals.
17
18
"Force Majeure" - has its meaning set forth in Section 11(b).
"Ford" - has its meaning set forth in the opening paragraph.
"Ford Affiliate" - means any Affiliate of Ford other than a Visteon Affiliate.
"Ford Common Stock" - has its meaning set forth in Recitals.
"Ford Group" - means Ford or any entity controlled by Ford.
"Ford Idemnitees" - has its meaning set forth in Section 8(a).
"Ford Marks" - has its meaning set forth in Section 10(a).
"Ford Microelectronics License" - has its meaning set forth in Section 10(b).
"Ford-owned Visteon Tooling" - has its meaning set forth in Section 9(d).
"Ford Subsidiary" - means any Subsidiary of Ford, other than Visteon or a
Visteon Subsidiary.
"Global Terms" - has its meaning set forth in Section 8(d).
"ICBAs" - has its meaning set forth in Section 9(c).
"Indemnifying Party" - has its meaning set forth in Section 8(c).
"Indemnitee" - has its meaning set forth in Section 8(c).
"IT Agreement" - has its meaning set forth in Recitals.
"Losses" - means, with respect to any Person, any and all damage, loss,
liability and expense incurred or suffered by such Person (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any and all Actions or threatened Actions).
"Master Transfer Agreement" - has its meaning set forth in Recitals.
"Person" - means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
governmental or political subdivision or an agency or instrumentality thereof.
18
19
"Phase Out Period" - has its meaning set forth in Section 10(a).
"Plans" - has its meaning set forth in Recitals.
"Principal" - has its meaning set forth in Section 6(a).
"Securities Act" - means the Securities Act of 1933, as amended.
"Reasonable Care" - has its meaning set forth in Section 7(b).
"Subsidiary" - means any entity in which a party owns or controls, directly or
indirectly, 50% or more of its stock or other equity interests.
"Tax Cost" - has its meaning set forth in Section 8(h).
"Tax Sharing Agreement" - has its meaning set forth in Recitals.
"Transfer" - has its meaning set forth in Recitals.
"Transition Termination Date" - has its meaning set forth in Section 2(a).
"Transitional Services" - has its meaning set forth in Section 2(a).
"VGTI" - has its meaning set forth in Recitals.
"Visteon" - has its meaning set forth in the opening paragraph.
"Visteon Affiliate" - means any entity that is or would be an Affiliate of
Visteon after the completion of the Transfer.
"Visteon Common Stock" - has its meaning set forth in Recitals.
"Visteon Entities" - has its meaning set forth in Section 7(d).
"Visteon Indemnitees" - has its meaning set forth in Section 8(b).
"Visteon Group" - means Visteon or any entity controlled by Visteon.
"Visteon Subsidiary" - means any entity that is or would be a Subsidiary of
Visteon after the completion of the Transfer.
"Z Plan"n - has its meaning set forth in Section 9(a).
19
20
SCHEDULE 2(A)
TRANSITIONAL SERVICES
1. Accounting services
2. Advance manufacturing engineering services, including developing,
conducting, and/or providing support for certain training programs
and/or laboratory testing
3. Asia Pacific services, including accounting, canteen, fire and
ambulance, fuel, general affairs, company-sponsored employee events,
company cars, lease cars, human resources, medical center, insurance,
parking, power, process leadership, pump house, purchasing, office
automation, systems, telecommunications, tool room, treasury, and/or
wastewater and sewage treatment services to certain Visteon Asia
Pacific locations, and liaison services to Visteon International
Business Development, Inc. at its branches or representative offices in
the Asia Pacific, including identifying new business opportunities,
government relations and monitoring of local developments
4. Finance services to certain Visteon European and Visteon Asia Pacific
locations
5. Human resources services, including corporate relations, certain
customs operations, business operations, labor affairs, corporate
travel, and/or healthcare services (but not medical services)
6. Intellectual property services, including administrative and operating
personnel (but not legal advice or services), intellectual property
database maintenance and administration, and/or information technology
support services
7. Manufacturing and plant engineering services to certain Visteon
European locations
8. Material planning and logistics services, including customs, logistics,
transportation purchasing, freight payments, hazardous materials,
and/or CMMS support services
9. Product development services, including global testing operations
and/or materials engineering and testing services
10. Purchasing services, including FM&SP, production purchasing, and/or
purchasing systems support services
11. Quality services, including CIRS, Global 8D, and/or quality focus test
fleet services
12. Real estate services, including plant engineering, energy,
environmental, property tax, and/or site management services
20
21
13. Tax services, including accounting, counseling, and/or planning
services
14. Treasury services
15. Certain Insurance coverage and services
21
22
SCHEDULE 4
PAYMENTS
SCHEDULE 4 IS ATTACHED AS C:/WINDOWS/TEMP/MSAPYMTSCH.XLS
22
23
SCHEDULE 6A
VISTEON ENTITIES GIVING AUTHORITY TO AGENT
Visteon Global Technologies Inc.
Visteon AC Holdings Corp.
Visteon International Holdings, Inc. (US)
Visteon Systems, LLC (formerly FE&R LLC and FERCO)
Autopal s.r.o. (Czech)
Autovidrio SA de CV (Mexico)
Cadiz Electronica SA (Spain)
Carplastic SA de CV (Mexico)
Climate Systems Mexicana SA de CV (95%)
Coclisa SA de CV (Mexico)
Ford Microelectronics Inc. (US)
Grupo Visteon SRL (Mexico)
Japan Climate Systems Corp.
Lamosa SA de CV (Mexico)
LeatherWorks, LLC (US) (40%)
Naldec (Japan)
Visteon Ardennes Industries SAS (France)
Visteon Asia Pacific, Inc. (Japan)
Visteon Canada Inc. (Canada)
Visteon Caribbean Inc., AKA Ford Motor Company Caribbean, Inc.
Visteon Centro SA
Visteon Corporation (US)
Visteon de Mexico SRL
Visteon Deutschland GmbH
Visteon European Holdings Corp. (US)
Visteon Global Treasury, Inc.
Visteon Interior Holdings France, SAS
Visteon International Business Development, Inc.
Visteon LA Holdings Corp.
Visteon Portugesa (Bermuda)
Visteon Systemes Interieur France SA
Visteon Technologies, LLC (US)
Visteon UK Limited
23
24
SCHEDULE 6B
AUTHORIZED AGENTS
Ford Motor Company, a corporation organized under the laws of the State of
Delaware/U.S.A.
Ford Motor Land Services Corporation
Ford Motor Company Limited of Brentwood, Essex/UK
Ford-Werke Aktiengesellschaft of Cologne/Germany
Ford France S.A. of Rueil Malmaison/France
Ford Espana, S.A. of Madrid/Spain
Ford Lusitana, S.A. of Lisbon/Portugal
Ford Nederland B.V. of Amsterdam/Netherlands
Ford Motor Company (Belgium) N.V. of Antwerp/Belgium
Ford Italiana S.p.A. of Rome/Italy
Ford Motor Company AB of Stockholm/Sweden
Ford Motor Company (Switzerland) S.A. of Zurich/Switzerland
FOLAT, S.A. de X.X.
Xxxx Motor Company of Canada, Limited
Ford Brasil Ltda.
Ford Argentina X.X.
Xxxx Motor Company Philippines, Inc.
Ford Motor Hungaria Kft
24
