EXHIBIT 10.6
HOURLY EMPLOYEE ASSIGNMENT AGREEMENT
This Assignment Agreement (the "Agreement") is entered into as
of the first day of April, 2000, by and among Visteon Corporation, a corporation
organized under the laws of the state of Delaware, with offices at 0000 Xxxx
Xxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000 ("Visteon"), and Ford Motor Company, a
corporation organized under the laws of the state of Delaware, with offices at
The American Road, Dearborn, Michigan 48121 ("Ford"). Ford and Visteon are
referred to herein individually as a "Party" and collectively as the "Parties".
RECITALS
X. Xxxx employs directly approximately 23,580 U.S. hourly employees
("Ford Hourly Employees") who are engaged in the business of manufacturing and
assembling automotive parts and services now being conducted under the name of
Visteon Automotive Systems, an enterprise of Ford Motor Company, including those
activities conducted by its subsidiaries and affiliates (the "Business");
B. The Ford Hourly Employees are represented by the International
Union, United Automobile, Aerospace and Agricultural Implement Workers of
America, UAW and its affiliated Locals 228, 400, 600, 723, 737, 848, 849, 892,
898, 1111, 1216 and 1895 (collectively, "UAW") and are covered under the terms
and conditions of the Ford-UAW Collective Bargaining Agreement dated as of
September 30, 1999 between Ford and the UAW and various local agreements by and
between Ford and UAW ("Ford-UAW CBA"). For purposes of this Agreement, the Ford
Hourly Employees do not include the hourly employees of subsidiaries or
affiliates of Ford which are included in the Business.
C. Pursuant to a Master Transfer Agreement dated as of even date
herewith by and among Visteon and Ford ("Master Transfer Agreement"), Visteon
will acquire the assets and assume the liabilities of the Business from Ford;
D. Visteon desires to continue to utilize the services of the Ford
Hourly Employees for its Business; and
X. Xxxx desires to assign its Ford Hourly Employees to Visteon for the
purpose of enabling Visteon to conduct the Business in accordance with the terms
set forth below.
NOW, THEREFORE, in consideration of the premises and mutual
promises herein made, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Term. The term of this Agreement shall commence on a date to be
agreed by Ford and Visteon, but no later than the date that Ford will distribute
to the holders of its common stock and Class B stock, by means of an exchange
offer and/or a prorata distribution, all of the shares of Visteon common stock
owned by Ford, such date being referred to hereafter as the Effective Date, and
shall terminate at the earlier to occur of (a) the termination of employment of
all of the Ford Assigned Employees, as defined in Paragraph 2 below, or (b) the
agreement of the Parties to terminate. The term shall be known as the "Assigned
Period." Nothing herein contained shall be construed to imply that Visteon's
obligations to hourly employees represented by the UAW and hired by Visteon
after the Effective Date ("Visteon Hourly Employees") extend beyond the Mirror
Period, as defined in Paragraph 13.
2. Purchased Services. During the Assigned Period, Ford shall supply
Visteon with those Ford Assigned Employees who are assigned to the Business as
of the Effective Date, including any inactive employees (the "Initial Ford
Assigned Employees"). On the Effective Date, Ford shall provide to Visteon a
preliminary list of the Initial Ford Assigned Employees as of the Effective
Date, together with their base hourly wage rate, Ford service date, job
classification, location code, social security number, and the reason for any
absence of an inactive employee and the date any leave expires. Ford shall
finalize the list of Initial Ford Assigned Employees as of the Effective Date no
later than thirty (30) days after the Effective Date, subject to Visteon review.
Ford shall update such list at least monthly for employee quits, retirements,
transfers from Ford facilities to Visteon's facilities, transfers from Visteon's
facilities to Ford facilities or transfers between hourly and salaried status at
Visteon, in connection with the invoice procedure specified in Section 8. The
Initial Ford Assigned Employees and any replacement employees under the process
described above, shall be known for purposes of this Agreement as the "Ford
Assigned Employees." Ford Assigned Employees and all other hourly employees
employed by Ford and covered by the Ford-UAW CBA shall retain their transfer
rights under the Ford-UAW CBA including rights to placement in Visteon or Ford
facilities.
3. Employer Definition. During the Assigned Period, Ford shall retain
responsibility for all payments and benefits due to the Ford Assigned Employees
in connection with the work relating to the Business, including but not limited
to
(i) the payment of Ford Assigned Employees' base hourly wage or other
components of pay as required under the Ford-UAW CBA now in
existence or as modified hereafter (less any applicable
withholding or other taxes or any amounts deducted from such
wages pursuant to normal payroll practices of Ford);
(ii) the provision of all other employee benefits generally provided
by Ford to other hourly employees of Ford covered by the Ford-UAW
CBA;
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(iii) payment of all federal, state, or local taxes withheld or
otherwise required to be paid with respect thereto; and
(iv) the liability for statutory benefits, including workers'
compensation, payable to employees.
4. Management of Employees. While Ford will retain legal responsibility
for administering the terms of the Ford-UAW CBA with respect to the Ford
Assigned Employees, Visteon, as Ford's agent, will have full and complete
authority to exercise day to day supervision over the Ford Assigned Employees,
including assigning work and evaluating, supervising, disciplining and
discharging such employees in accordance with the terms of the Ford-UAW CBA. If
any of those decisions are challenged by a Ford Assigned Employee through a
grievance procedure, in judicial proceedings, or in any other forum, Visteon
will have the sole responsibility for determining how those challenges should be
handled and resolved (including but not limited to the sole authority for making
a decision whether to settle or defend the challenged matter), provided,
however, that Visteon shall comply with any decision rendered by an umpire,
arbitrator, officer of a state administrative agency or judge of any court of
competent jurisdiction with respect to such matter, subject to Visteon's right
of appeal. Notwithstanding the provision set forth above, Visteon will advise
Ford of any major issues that arise under the Ford-UAW CBA, or other major
employment related matters affecting or potentially affecting UAW hourly
represented Ford employees, or matters that could materially impact the Ford-UAW
relationship. If Visteon advises Ford of any such issue or matter, or if such
issue or matter otherwise comes to the attention of Ford and Ford in its sole
judgment considers the issue or matter to fit the criteria above, Ford will
notify Visteon that Ford desires to participate in the resolution of such issue
or matter. As soon as practical after such notice is given, Visteon and Ford
will meet to discuss the issue or matter through the Joint Advisory Board
described in Section 17 and determine the appropriate course of action for
handling or resolving the issue or matter. If a common approach cannot be agreed
and Ford decides to pursue its own resolution of the issue or matter, then Ford
shall relieve Visteon of its role as agent of Ford with respect to such issue or
matter and Ford shall pursue the issue or matter in Ford's sole discretion.
Visteon shall provide Ford on a weekly basis a summary of the hours of service
rendered by each of the Ford Assigned Employees during the preceding week. In
addition, Visteon shall provide Ford with such information or documents as Ford
may reasonably request with respect to Ford Assigned Employees. Visteon will
share any such information with Ford (other than non-job related personal care
received by the Ford Assigned Employees unless related to a legitimate business
interest of Ford) regardless of any claim of privilege or confidentiality
because Ford is an employer of the Ford Assigned Employees.
5. Payroll and Related Services. During the Assigned Period, Ford shall
provide payroll processing services for the Ford Assigned Employees including,
but not limited to, the following: weekly payroll, quarterly and annual payroll
tax deductions and filings, including deductions and payments for income and
Social Security tax requirements under local, state and federal laws; personnel
record maintenance,
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authorized income withholding orders, insurance or other withholdings; employee
verification; retirement plan processing and annual W-2 forms; and reporting of
hours by Visteon location for Visteon to administer the Visteon local training
funds.
6. Employee Benefit Plans.
6.1 Identification of Plans. During the Assigned Period, Ford shall
cover the Ford Assigned Employees under the same employee benefit and
fringe benefit plans and arrangements generally offered to other hourly
represented UAW employees of Ford, at the same time, and the Ford
Assigned Employees shall be ineligible to participate in any employee
benefit plan or fringe benefit program sponsored by Visteon. Ford
reserves the right to modify, terminate or suspend any plan applicable
to any Ford Assigned Employee, subject to the Ford-UAW CBA.
6.2 Administration of Plans. During the Assigned Period, Ford or its
designee shall maintain, administer and manage all employee benefit and
fringe benefit plans and arrangements offered to the Ford Assigned
Employees.
7. Fees. Unless otherwise specifically provided herein, Ford shall be
reimbursed monthly for the direct wage and benefit costs for the Ford Assigned
Employees, except with respect to reimbursement for item (iii) below with
respect to Retiree Health Care and Retiree Life Insurance, in which case any
such reimbursement shall be made directly to the applicable benefit plan. For
purposes of this Section 7, "direct wage and benefit costs" for which
reimbursement is required shall include:
(i) The weekly gross wage, and any other type of compensation, such
as Christmas bonus, moving allowance, and any other cash
compensation not included in the Standard Monthly Group Fringe
cost referred to in (ii) below, except with respect to profit
share, see item (viii) below, payable by Ford to each Ford
Assigned Employee for work performed during the Assigned Period;
(ii) A per-employee Standard Monthly Group Fringe cost as published
from time to time by Ford in the PF-4 (U.S. Labor Assumptions)
less the accrual rates for Retirement Plans-Pensions, Retiree
Health Care, and Retiree Life Insurance;
(iii) An annual payment for Retirement Plans-Pensions, Retiree Health
Care and Retiree Life Insurance related to the Ford Assigned
Employees, according to the methodology set forth in Attachment A
hereto;
(iv) Expenses incurred by Ford with respect to each Ford Assigned
Employee that are not included in (i) through (iii) above and
arises as a result of such employee's work for the Business, such
as reserves for any workers' compensation claims arising out of
any work accident while
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the Ford Assigned Employee was performing work for the Business,
regardless of when the claim occurred and disability claims with
respect to each Ford Assigned Employee to the extent such claims
are not covered by insurance. Visteon will assume responsibility
as Ford's agent, for accruing and administering the local
training funds pursuant to the Ford-UAW CBA. In the event Ford
incurs expense for local training funds relating to the Business,
Visteon shall reimburse Ford for such expense;
(v) Reasonable and necessary travel and business related expenses
related to Ford Assigned Employees incurred by Ford on behalf of
the Business and paid or reimbursed to such employee by Ford as
authorized by Ford's standard travel and business expense
reimbursement policy;
(vi) All assessments, premiums or other taxes incurred and paid by
Ford with respect to the Ford Assigned Employees not otherwise
paid under section (i) through (v) above, including the annual
Michigan Single Business Tax cost to Ford resulting from the
assignment of the Ford Assigned Employees to Visteon under this
Agreement;
(vii) Direct out-of-pocket incremental costs incurred by Ford in the
establishment and administration of benefit programs applicable
to Ford Assigned Employees including, but not limited to, legal
fees, record keeping, actuarial, and accounting fees not
otherwise payable from the Ford-UAW Retirement Plan trust or the
Tax Efficient Savings Plan for Hourly Employees; and
(viii) Annual profit share payable by Ford to each Ford Assigned
Employee, provided, however, that for each of calendar years 2000
through 2004, any aggregate profit share reimbursement shall be
limited to the lesser of (A) $50 million, or (B) the aggregate
actual profit share payable for such year with respect to the
Ford Assigned Employees.
8. Payment. Within fifteen (15) days after the end of each calendar
month during the Assigned Period, Ford shall render an invoice to Visteon in
such form and containing such detail as Visteon shall reasonably require, for
direct wage and benefit costs which Ford has incurred with respect to the Ford
Assigned Employees consistent with the Ford-UAW CBA and which were not
previously invoiced. In rendering such reports, Ford will not be required to
undertake any modifications to its information systems in order to render the
detail requested by Visteon. Unless some other form of payment is agreed between
Visteon and Ford, Visteon shall pay Ford this amount within ten (10) business
days of receipt of the invoice by wire transfer into a Ford designated account.
Visteon shall have a right to audit the invoices and related records of Ford
upon reasonable notice during normal business hours, at a place mutually agreed
by the Parties. To the extent the Parties agree the payment should be adjusted
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as a result of such audit, any overpayments will be applied to the next
payment(s) due from Visteon and any underpayments will be added to the next
invoice issued by Ford.
9. Workers' Compensation and Unemployment Insurance. Ford shall
continue to provide Workers' Compensation and Unemployment Compensation coverage
for the Ford Assigned Employees at all times during the term of this Agreement.
10. Work Environment.
10.1 Compliance With All Health and Safety Laws. Visteon shall maintain
its facilities at its sole cost and expense so as to provide a work environment
in conformance with legal requirements.
10.2 Compliance with Employment Laws. The Parties shall comply with all
applicable national, federal, state and local employment laws, including, but
not limited to, wage and hour, overtime, discrimination laws, and/or local
employment ordinances.
11. Noninterference. In the event that Visteon desires to hire a Ford
Assigned Employee to become a Visteon Hourly Employee or a Visteon salaried
employee, Ford shall not interfere or restrict such employee from accepting any
Visteon offer of employment.
12. Assumption of Liability. As of the Effective Date, Visteon will
assume liability and responsibility for all pending employment claims with
respect to the Ford Assigned Employees that relate to the Business, provided,
however, that Visteon shall not assume any obligation or liability of 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 claims assumed, Visteon will
have sole responsibility for deciding how to defend the claims (e.g. whether to
settle or litigate).
13. Visteon Role in Ford-UAW Bargaining. Pursuant to the terms of a
Plant Closing and Sale Moratorium letter dated October 9, 1999 by and between
Ford and the UAW, the parties agreed that Ford would be permitted to spin-off,
sell or otherwise transfer the Business pursuant to certain conditions including
that (i) Visteon would agree to adopt a collective bargaining agreement for the
Visteon Hourly Employees that would mirror the Ford-UAW CBA for the 1999-2003
contract period and for the next two contract periods ("Restricted Period") and
(ii) in accordance with the Visteon-UAW CBA, Visteon Hourly Employees hired
during the Restricted Period are to be provided with wages, benefits and other
terms and conditions of employment by Visteon which are a mirror of the
successive Ford-UAW CBA's for the duration of their employment with and
retirement from Visteon ("Continuation Period") (the Restricted Period and the
Continuation Period to be known collectively as the "Mirror Period"). For a
period at least equal to the Mirror Period, Ford will include Visteon in
negotiations planning and
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strategy development and will consult in good faith with Visteon concerning the
terms of any CBA applicable to Ford Assigned Employees before entering into such
CBA. Nothing in this Agreement shall be construed to preclude Visteon and the
UAW or any other union from negotiating different terms and conditions of
employment for the Visteon Hourly Employees which are mutually satisfactory to
those parties.
14. Future Changes. Under the Ford-UAW CBA, the local parties may agree
to local continuous improvement initiatives to improve operational
effectiveness. Ford will support Visteon's efforts to secure appropriate changes
in work rules and practices, or other local continuous improvement initiatives,
to improve operational effectiveness. Nothing herein contained in this Agreement
shall be construed as to interfere with Visteon's rights as an employer to
pursue its own aims in the collective bargaining process with the UAW with
respect to Visteon Hourly Employees. If Visteon and the UAW agree that Ford
Assigned Employees should become Visteon Hourly Employees subject to the terms
of the Visteon-UAW CBA, Ford shall cooperate in transferring the employment of
the Ford Assigned Employees to Visteon, provided however, that Ford incurs no
additional cost with respect thereto.
15. Management of Worker's Compensation Claims. The Parties recognize
that because Ford will remain an employer of the Ford Assigned Employees,
Visteon may have limitations on its ability to control and manage worker's
compensation claims relating to the Ford Assigned Employees. Ford and Visteon
will work together to develop and implement a strategy and process for
minimizing and reducing those claims.
16. Business Costs Related to Insufficient Business and/or Business
Restructuring. The Parties recognize that significant business costs relating to
the Ford Assigned Employees will be incurred in the event that Visteon does not
have sufficient work to perform during the term of this Agreement ("Insufficient
Business"). The Parties further recognize that Visteon will seek ways to
restructure and streamline its business to improve competitiveness which may
also result in significant business costs relating to the Ford Assigned
Employees ("Business Restructuring"). Ford and Visteon agree to jointly work
together in good faith through the Joint Advisory Board to attempt to minimize
the business costs to Visteon and Ford in the event of Insufficient Business or
Business Restructuring. Ford shall consider in good faith proposals by Visteon
to minimize the cost impact, for example, considering placements of the Ford
Assigned Employees in Ford hourly open positions without a cost penalty to Ford
or accelerating the termination of this Agreement. To the extent that such a
proposal requires agreement by the UAW, Ford and Visteon shall use their
respective best efforts with the UAW to secure such approval. Nothing herein
contained however shall be construed as a Ford commitment to assume liability
for all or any part of such labor costs, or to take any specific action with
respect to any proposal.
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17. Joint Advisory Board. The Parties recognize that it is in their
mutual interest to establish and maintain cooperative working relationships with
each other not only from the point of view of ongoing reliability of competitive
supply, but also because of the continuing relationship of both Parties with
their employees, particularly those represented by the UAW. It is also
recognized that there will be instances in the future where each Party's labor
policy and negotiations strategy and practice may vary from each other's.
Similarly, the Parties recognize that as Visteon attempts to streamline its
operations, and adjust its workforce, there may be a need to cooperatively deal
with the effect of these efforts on the performance of each Party.
In order to achieve these objectives, the Parties agree to establish a
Joint Advisory Board for the purpose of assuring cooperative relationships
between the Parties and to be used as the forum to discuss significant issues
that may arise between the Parties as a result of their business relationships
that cannot otherwise be resolved through normal processes. The Advisory Board
will meet regularly and will consist of senior representatives of the labor
relations, purchasing, technology and general business functions of Ford and
Visteon. The Advisory Board will seek mutually beneficial solutions to resolve
significant issues that arise between the Parties in a fair and cooperative
manner and in the interest of securing a positive business relationship.
18. Indemnity.
18.1 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, 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 Ford
Assigned Employees (or their 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,
whenever made, including, without limitation, claims made to the
Pension Benefit Guaranty Corporation ("PBGC"), the Department of Labor
("DOL"), or the Internal Revenue Service ("IRS"); or (iii) employment
claims of Ford Assigned Employees whenever made based on conditions or
actions arising prior to or during the Assigned Period, except as
provided in Section 18.2 (iii) below.
18.2 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 arising out of (i)
breach of any agreement made by Ford hereunder; (ii) any claim by Ford
Assigned Employees (or their dependents or beneficiaries) arising out
of or in connection with the operation, administration, funding or
termination of any of the employee benefit plans or programs applicable
to the Ford Assigned Employees, whenever made, including without
limitation, claims made to the PBGC, the DOL, or the IRS; or (iii)
employment claims of the Ford
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Assigned Employees that arise before or during the Assigned Period
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).
18.3 Procedure for Indemnity. The procedure for indemnification under
this Section 17 shall be as set forth in Section 7(c) through (j) of
the Master Transfer Agreement and shall be incorporated herein by
reference.
19. 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:
19.1 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.
19.2 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 appointment
within twenty (20) days from the conclusion of the negotiation period.
19.3 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.
19.4 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.
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20. Miscellaneous.
20.1 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.
20.2 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.
20.3 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 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
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If to Visteon:
Visteon Corporation
Auto Club Drive
Dearborn, Michigan 48121-1899
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.
20.4 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.
20.5 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.
20.6 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 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.
20.7 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.
20.8 Governing Laws. This Agreement is governed by the internal laws
of the State of Michigan.
20.9 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.
20.10 Relationship. Nothing contained in this Agreement will be
construed to make any of the Parties partners, principals, agents or
employees of the other,
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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. Nothing contained in this Agreement shall be construed
to imply multiemployer bargaining with respect to the labor affairs of
the other Party.
20.11 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.
20.12 Consents, Approvals and Requests. Except as specifically set
forth in this Agreement, all consents and approvals to be given by any
of the Parties under this Agreement will not be unreasonably withheld
or delayed.
20.13 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.
20.14 Excusable Delays. Neither Party will be liable for a failure to
perform any obligation under this Agreement that arises from causes or
events beyond its reasonable control and without its fault or
negligence, including labor disputes. The Party claiming the excusable
delay shall give notice in writing as soon as possible to the other
Party after the occurrence of the cause relied on and after termination
of the condition.
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement as __________, 2000.
FORD MOTOR COMPANY VISTEON CORPORATION
By: By:
-------------------------------- ------------------------------
Title: Title:
----------------------------- ---------------------------
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Attachment A
Pension, Retiree Health Care and Retiree Life Insurance Expense
For purposes of Section 7(iii) of the Hourly Employee Assignment Agreement, (the
"Agreement') the expense for Retirement Plans-Pension, Retiree Health Care and
Retiree Life Insurance for the Ford Assigned Employees shall be determined in
accordance with the methodology described in this Attachment A.
1. Retirement Plans-Pension. Visteon shall be responsible for
reimbursing Ford with cash for the Statement of Financial Accounting
Standards No. 87 ("SFAS No. 87") annual future pension accruals with
respect to the Ford Assigned Employees, determined as provided below.
1.1 Visteon Pension Account Established. Solely for purposes of
determining the correct reimbursement, and not for purposes of
establishing a separate trust or pension plan with respect to the Ford
Assigned Employees, a notional Visteon-UAW Pension Asset Account
("Visteon Pension Account") will be established, as if the Ford-UAW
Pension Plan in which the Ford Assigned Employees participate had been
segregated into a separate trust which continued to participate in the
Ford Master Trust. The Visteon Pension Account shall be established as
of the first of the month coincident with or prior to the date of the
distribution of Visteon stock to Ford shareholders ("Start Date"). The
opening balance of the Visteon Pension Account will be established by
crediting such account with assets equal in amount to the projected
benefit obligation as defined in SFAS No. 87 ("PBO") of the active
Ford Assigned Employees as of the Start Date ("Hourly PBO"). The
Hourly PBO shall be determined by an independent actuary appointed by
Ford ("Ford Actuary") using:
(i) the actuarial assumptions and methods used in the most
recent SFAS 87 actuarial valuation developed for accounting
purposes under the Ford-UAW Retirement Plan prepared by the
Ford Actuary; and
(ii) a discount rate as of the Start Date determined by Ford
using its normal methods for developing a SFAS 87 discount
rate but based on market interest rates as of the Start
Date.
An independent actuary appointed by Visteon ("Visteon Actuary") shall
have the opportunity to verify the calculation of the Hourly PBO.
1.2 Visteon Pension Account Activity. After the opening balance of
the Visteon Pension Account is determined in accordance with Section
1.1 above, it shall be managed as follows:
It shall be credited with
(i) any cash contribution paid by Visteon to Ford under
this Section One; and
(ii) the Ford U.S. Pension Master Trust actual rate of
investment return.
It shall be debited with
(iii) the amount of retirement benefits payable to the Ford
Assigned Employees who retire after the Start Date; and
(iv) an allocable share of Ford-UAW Plan expenses based on
the ratio of PBO of the Ford Assigned Employees to the
total PBO of the Ford UAW Retirement Plan, unless Ford
and Visteon agree to another method.
If for administrative reasons, the exact amount of retirement
benefits payable to the Ford Assigned Employees cannot be
determined precisely, then Ford shall be able to substitute a
fair approximation of the retirement benefits paid. The Visteon
Actuary shall have the opportunity to verify the calculation.
1.3 Determination of Annual Cash Pension Reimbursement. The cash
payable by Visteon to Ford for any given year shall be equal to the
sum of (A), (B) and (C) where :
(A) is the SFAS 87 pension expense for that year (or, at the
outset, a part year) based on:
(i) as of each annual actuarial valuation date, the
liabilities of the Ford Assigned Employees;
(ii) the Ford-UAW Retirement Plan assumptions used in the
Ford Actuary`s SFAS 87 valuation of the Ford-UAW
Retirement Plan for the applicable year; and
(iii) the value of the Visteon Pension Account
(B) is the administration expenses as defined in Section 1.2
(iv) of this Attachment; and
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(C) SFAS 88 pension expense for Ford Assigned Employees related
to any termination incentive programs occurring in the year.
2. Retiree Health Care and Retiree Life Insurance. Visteon shall pay
the cost of providing post-retirement health and life benefits for Ford Assigned
Employees under the Ford-UAW Hospital-Surgical-Medical-Drug-Dental-Vision
Program and the Ford-UAW Group Life and Disability Insurance Plan (the "Plans")
("OPEB") beginning as of the Start Date as provided below.
2.1 Determination of Annual Cash OPEB Reimbursement. For the portion
of 2000 that follows the Start Date and for each calendar year
thereafter until the OPEB liability for the Ford Assigned Employees is
extinguished, the Annual Cash OPEB Reimbursement to the Plans for any
given year shall be an amount equal to the sum of (A) and (B) where
(A) is the estimated amount of OPEB claims paid during the
period to the Ford Assigned Employees who retire after the
Start Date, together with their spouses or dependents,
determined on the basis of average per contract claims costs
for Ford-UAW retirees; and
(B) is an allocable share of administration expenses based on
the ratio of OPEB liability for Ford Assigned Employees to
total Ford-UAW 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.
2.2 Pre-Funding of SFAS 106 Liability. Visteon will establish and
maintain a Voluntary Employees' Beneficiary Association ("VEBA") trust
whose purpose is to reimburse the Plans in respect of the claims and
administration costs described in Section 2.1 above. Visteon agrees
that it will make a series of cash payments to the VEBA so 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 Ford
Assigned Employees The cash payment to the VEBA shall commence no later
than January 1, 2006 and shall be payable in advance in twelve equal
monthly installments. The amount of cash paid to the VEBA in each year
commencing no later than January 1, 2006 shall be an amount equal to
the sum of (A), (B) and (C ) where
(A) 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 Ford-UAW
employees;
(B) is an allocable share of expenses as described in Section
2.1(B) above; and
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(C) is the amount of Visteon's OPEB balance sheet liability in
respect of Ford Assigned 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 the 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 the Ford's FAS 106 OPEB balance sheet
liability for the Ford Assigned Employees beginning on the Start 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, or if Visteon fails to
suggest 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.
3. Recordkeeping. In connection with administering Section One and Two
above, Ford may decide to retain a third party service to maintain the notional
Visteon Pension Account and to determine the correct amount of Visteon
reimbursements according to the methodology set forth in this Attachment A. 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.
4. Continuation of Arrangements. The terms set forth in this Attachment
A shall be in force until the last survivors and dependents of Ford Assigned
Employees in service as of the Start Date who are eligible for Ford-UAW
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 2.2 (unless the Parties' respective auditors advise that joint
agreement to terminate would jeopardize the expected accounting treatment of
such arrangements or methods). As soon as practical following the death of the
last survivor and covered dependents of the Ford Assigned Employees who are
eligible for Ford-UAW retirement benefits, Ford shall pay to Visteon either cash
or provide equivalent monetary value, in an amount equal to the balance (if any)
remaining in the Visteon Pension Account.
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5. Ability to Substitute. The Parties may agree to substitute an
alternative method of computing reimbursement under this Attachment. The method
substituted shall have as its objective to produce a fair estimate of the
pension and OPEB expense and other reimbursement charges set forth in this
Attachment, and should preserve for each Party, to the extent possible, the
economic benefits bargained under this Attachment. Without limiting the rights
of Ford and Visteon as provided above, the Parties agree to jointly evaluate and
equitably refine the reimbursement mechanism described in this Attachment as
applied to periods following the earlier to occur of (A) termination of the
Agreement, and (B) the date, if any, on which all or a significant portion of
the Ford Assigned Employees become Visteon Hourly Employees.
6. Definitions. Unless otherwise specifically defined herein, the
capitalized terms herein shall have the same meanings as set forth in the
Agreement.
7. Actuarial Verification. 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.
8. Employee Transfers. In the event that an employee ceases to be a
Ford Assigned Employee, but remains an employee of Ford, then Visteon shall not
be responsible for the cost of pension, retiree health or retiree life benefits
for such employee. Ford will assume the obligation and Visteon will reimburse
Ford as follows:
(A) Pensions: The balance in the Visteon Pension Account will be
reduced by the amount of the SFAS 87 PBO transferred to Ford;
(B) Retiree health and life benefits: Visteon will pay Ford an amount
equal to the SFAS 106 APBO transferred to Ford.
All adjustments should be handled on a quarterly basis based on SFAS 87 and SFAS
106 assumptions appropriate for that quarter.
Visteon shall retain appropriate records in order to identify these transfers.
In the event that a Ford employee becomes a Ford Assigned Employee, then Visteon
shall assume the obligation for pensions, retiree health and retiree life
benefits for such employee, and the financial arrangements shall be the reverse
of those described above.
If the reimbursements for retiree health and life benefits exceeds $10 million
per year, the Party with the obligation shall have the option to pay $10 million
in 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.
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