*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. 200.80(b)(4) AND 240.24b-2
Exhibit 10.4
PURCHASE AND SUPPLY AGREEMENT
REGARDING SALES OF COMPONENTS FROM VISTEON CORPORATION TO AUTOMOTIVE
COMPONENTS HOLDINGS, LLC
BETWEEN
AUTOMOTIVE COMPONENTS HOLDINGS, LLC (F/K/A VFH HOLDINGS, LLC)
AND
VISTEON CORPORATION
SELLER: VISTEON
BUYER: AUTOMOTIVE COMPONENTS HOLDINGS, LLC
September 30, 2005
PURCHASE AND SUPPLY AGREEMENT REGARDING SALES OF COMPONENTS FROM VISTEON
CORPORATION TO AUTOMOTIVE COMPONENTS HOLDINGS, LLC
This Purchase and Supply Agreement Regarding Sales of Components from Visteon
Corporation to Automotive Components Holdings, LLC ("AGREEMENT") dated as of
September 30, 2005 is entered into by and between Visteon Corporation, a
Delaware corporation ("VISTEON"), and Automotive Components Holdings, LLC (f/k/a
VFH Holdings, LLC) ("NEWCO"), a Delaware limited liability company. Each of
Newco and Visteon is herein referred to as a "PARTY" and collectively, the
"PARTIES."
RECITALS
A. Newco owns and operates manufacturing and assembly facilities in North
America that were formerly owned and operated by Visteon or its wholly-owned
subsidiaries ("NEWCO FACILITIES"). Visteon or its wholly-owned subsidiaries
supply motor-vehicle-related parts, components and systems from their
manufacturing and assembly facilities in North America ("VISTEON FACILITIES") to
Newco Facilities.
B. Except as described in Recital C, the purpose of this Agreement is to
describe supply obligations, pricing, and related matters for certain
motor-vehicle-related parts, components and systems that are manufactured by a
Visteon Facility and supplied by such Visteon Facility to a Newco Facility. It
does not cover the sale of motor-vehicle-related parts, components and systems
by Newco to Visteon (which is addressed in the Purchase and Supply Agreement
Regarding Sales of Components from Automotive Components Holdings, LLC to
Visteon Corporation between Newco and Visteon dated as of the date of this
Agreement). References in this Agreement to motor-vehicle-related parts,
components or systems that are "manufactured by a Visteon Facility and supplied
by such Visteon Facility to a Newco Facility" mean that such parts, components
or systems are manufactured by such Visteon Facility and supplied by such
Visteon Facility directly, or through a warehouse or shipping facility, to a
Newco Facility. Except as provided for in Exhibit 4, parts, components, or
systems that are merely supplied by a Visteon Facility to a Newco Facility, but
which are not manufactured by such Visteon Facility, are not covered under this
Agreement.
C. This Agreement does not cover motor-vehicle-related parts, components or
systems: (i) supplied by a Visteon facility that is not a facility of Visteon
Corporation or any of its wholly-owned subsidiaries in North America to a Newco
Facility; or (ii) which are Service Parts (as defined in Exhibit 5); in each
case except to the extent expressly set forth in EXHIBIT 4 or 5, as applicable
(or in Section 15.13 below, which shall apply to Service Parts). EXHIBIT 6 to
this Agreement lists (i) Visteon's Affiliates, including its wholly-owned
subsidiaries in North America, its Affiliates in North America which are not
wholly-owned subsidiaries, and its Affiliates outside of North America, and (ii)
Visteon Related Companies.
NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement and intending to be legally bound, Visteon and Newco agree:
1. DEFINED TERMS
1.1 All terms with initial capitalization used herein shall have the following
definitions unless specifically stated otherwise. In this Agreement, except as
otherwise expressly provided or the context otherwise clearly requires, words in
the singular include the plural, and vice versa. The Recitals above are an
integral part of this Agreement.
"2003 PSA" means the Purchase and Supply Agreement Between Visteon Corporation
and Ford Motor Company dated December 19, 2003.
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly Controlling, Controlled by or under common Control with such first
Person; provided, that neither Ford, nor any of its Affiliates, shall be deemed
to be an Affiliate (or subsidiary) of Newco for the purposes of this Agreement.
For the purpose of this
definition, the term "Control" (including, with correlative meanings, the terms
"Controlling," "Controlled by" and "under common Control with"), as used with
respect to any Person, means having the right to elect a majority of the board
of directors or other comparable body responsible for management and direction
of such Person, or otherwise having, directly or indirectly, the power to direct
or cause the direction of the management and policies of such Person, by
contract or by virtue of share ownership.
"BUSINESS DAY" means a day, other than Saturday, Sunday or other day on which
commercial banks in Detroit, Michigan are authorized or required by law to
close.
"COMPONENTS" means motor-vehicle-related parts, components or systems
manufactured by a Visteon Facility and supplied by such Visteon Facility (or, in
regard to Existing Business - Future Model, to be manufactured by a Visteon
Facility and supplied by such Visten Facility) to a Newco Facility.
Notwithstanding anything to the contrary in the foregoing sentence, parts,
components and systems that are supplied to Newco by Visteon Affiliates (other
than wholly-owned subsidiaries of Visteon in North America), parts, components
and systems supplied by Visteon Related Companies, and Service Parts, are not
considered "Components".
"CONFIDENTIAL INFORMATION" has the meaning specified in Section 11.1.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement between Visteon and
Automotive Components Holdings, Inc. (f/k/a VFH Holdings, Inc.) dated September
12, 2005.
"DAMAGES" means any and all obligations, liabilities, damages, penalties,
deficiencies, losses, judgments, costs and expenses (including, but not limited
to, costs and expenses incurred in connection with performing obligations,
interest, bonding and appellate costs and reasonable attorneys', accountants',
engineers' and investigators' fees and disbursements), in each case, after the
application of any and all amounts recovered under insurance contracts or
similar arrangements and from third parties by the person claiming indemnity.
"DEFAULTING PARTY" has the meaning specified in Section 9.1.
"DESIGN CHANGE" means any change to the physical Component, its performance, or
its interface with other parts or systems that results in a change to the part
number.
"DIRECTED TIER 2 SOURCING" means the situation where Newco directs a supplier
(as the tier 1 supplier to Newco) to purchase a specific Component from a
specific supplier (the tier 2 supplier to Newco) for incorporation into a
Component to be supplied by such tier 1 supplier to Newco.
"EVENT OF DEFAULT" has the meaning specified in Section 9.1.
"EXISTING AGREEMENTS" means the Purchase Orders, and Long Term Supply Agreements
(if any), covering Existing Business, as described in Section 2.3 or 2.4.
"EXISTING BUSINESS" means the Components that are Existing Business in
Production or Existing Business - Future Model.
In the event that the vehicle or power-train program of Ford (or of another OEM
Customer of Newco or its customer), in regard to which Newco is purchasing (or
intends to purchase) Components which are Existing Business, is or will be
subject to a major refreshening or will be replaced by, or will become, a new
program, as determined by Ford as described below, or as determined by such
other OEM Customer in accordance with its then-current processes and policies,
respectively, such Components ("AFFECTED COMPONENTS") will no longer be
considered to be Existing Business for the purposes of this Agreement as of the
date that Newco begins purchasing the motor-vehicle-related parts, components,
or systems for the refreshened or new program which
3
replace the Affected Components; provided, however, that:
(i) the motor-vehicle-related parts, components, or systems for the
refreshened or new program ("REPLACEMENT END-ITEM") which replace the
parts, components, or systems supplied by Newco to Ford (or to the
applicable other OEM Customer of Newco) into which such Affected
Components purchased by Newco from Visteon are incorporated are (or
were prior to the date of this Agreement) put up for award by Ford or
such other OEM Customer of Newco; and,
(ii) the motor-vehicle-related parts, components, or systems for the
refreshened or new program which replace the Affected Components are
(or were prior to the date of this Agreement) put up for award by
Newco. For components put up for award prior to this agreement, the
status of such components will be evaluated during reconciliation of
Exhibit 2.
For the purposes of this definition: "put up for award" means the issuance of a
Request for Quote by Ford or Newco for the Replacement End-Item or such
motor-vehicle-related parts, components, or systems for the refreshened or new
program which replace the Affected Components, respectively; and, "Request for
Quote" means a request issued by Ford or Newco to one or more suppliers to
provide a quotation for the supply of the Replacement End-Item or such
motor-vehicle-related parts, components, or systems for the refreshened or new
program which replace the Affected Components, respectively. "Put up for award"
does not mean quoting design changes to a carryover component for a new program
or following the change control process.
Nothing in this Agreement or in any Purchase Order, Long Term Supply Agreement,
Sourcing Agreement, or Target Agreement prohibits Newco from sourcing such
motor-vehicle-related parts, components, or systems which replace the Affected
Components to a supplier of its choice, or from purchasing the same from such
supplier.
For the purposes of the prior paragraph, a "major refreshening" or "new program"
means, in regard to a Ford vehicle or power-train program, a change to a vehicle
or power-train program with a "S3" or higher designation, for a vehicle program,
or a "P3" or higher designation, for a power-train program, under the Ford
Product Development System (FPDS), or the equivalent designation in Ford's
Global Product Development System (GPDS) or any future product development
system of Ford replacing FPDS or GPDS (as applicable).
"EXISTING BUSINESS IN PRODUCTION" has the meaning specified in Section 2.1(a).
"EXISTING BUSINESS - FUTURE MODEL" has the meaning specified in Section 2.1(b).
"FORD" means Ford Motor Company, a Delaware corporation.
"FORD MASTER AGREEMENT WORKERS" means the Ford hourly employees who are
represented by the UAW under the Master Agreement and who have been assigned to
work at Ford or Newco plants.
"FORD VEHICLE" means a Ford, Lincoln, or Mercury-brand vehicle manufactured in
North America by Ford or one of its Affiliates.
"FORD-VEHICLE COMPONENTS" mean Components which are, or which are supplied for
incorporation into another part, component, or system, for ultimate use in a
Ford Vehicle.
"FORD - VISTEON DIRECTED COMPONENTS" means Components which were, prior to the
date of this Agreement, direct-sourced by Ford to a Visteon Facility (as the
Tier 2 supplier) for supply to a Newco Facility (as the Tier 1 supplier) (which
was, prior to the date of this Agreement, a Visteon Facility) for which Ford
negotiated the price directly with the Visteon Facility supplying the Component
(such Components include, without limitation, EATCs, instrument clusters, and
audio parts and components supplied by Visteon Facilities to Newco Facilities).
4
For the purposes of this definition, "direct-sourced" means that Ford directed
the Tier 1 supplier (i.e., the applicable Visteon Facility) to purchase the
specific Component from the Tier 2 supplier (i.e., the supplying Visteon
Facility) for supply by, or for incorporation into another Component to be
supplied by, Visteon to Ford for use in a Ford Vehicle.
"FORD - VISTEON DIRECTED AUDIO COMPONENTS" means audio parts and components
which are Ford-Visteon Directed Components.
"GLOBAL TERMS" means, subject to Section 14, Xxxxxxx's Global Terms for
Production and Non-Production Goods and Services (VGT Rev. 04/03), which will be
used by Newco, instead of Visteon (i.e., with Newco as the "Buyer" and Visteon
as the "Seller").
"GOOD CAUSE" means:
(i) A significant quality or delivery issue for a given Component; or
(ii) An unilateral upward re-pricing on the applicable Component
(including, without limitation, uncompetitive pricing by Visteon for
Design Changes to the Component), excluding mutually agreed price
increases; or
(iii) A material default by Visteon under the terms of a Purchase
Order or Long Term Supply Agreement with respect to a given Component.
"LONG TERM SUPPLY AGREEMENT" means a multiple-year contract with a supplier
committing Newco to procure and the supplier to supply goods or services for a
specified time period on specified terms.
"MASTER AGREEMENT" means the collective bargaining agreement and all supplements
thereto between Ford and the UAW dated September 15, 2003, as well as any
successor agreement (and supplements thereto) to such collective bargaining
agreement entered into prior to the expiration of this Agreement.
"MASTER AGREEMENT PLANT" means a facility where some or all of the hourly
employees working there are represented by the UAW under the Master Agreement.
"NON-DEFAULTING PARTY" has the meaning specified in Section 9.1.
"NON-FORD COMPONENTS" mean Components which are, or which are supplied for
incorporation into another part, component or system, for ultimate use in a
vehicle other than a Ford Vehicle.
"NORTH AMERICA" means Canada, Mexico and the United States.
"NORTH AMERICAN SOURCING COUNCIL" means a Ford process to ensure that Ford
honors commitments to Ford Master Agreement Workers at Ford or Newco facilities
in the United States with respect to sourcing actions; to provide a framework
for avoiding labor disturbances and lost production; and to ensure that Ford
senior management concurs with sourcing decisions.
For the purposes of this Agreement, in determining whether the North American
Sourcing Council process was or is required to be followed, or its approval was
or is required, in regard to a particular action:
(i) taken prior to the date of this Agreement, the North American
Sourcing Council process and requirements in effect at the time the
applicable action was taken (including, without limitation, any
applicable requirements under the 2003 PSA) apply; and,
(ii) for actions taken on or after the date of this Agreement, the
North American Sourcing Council process will be required to be
followed, and its approval obtained, if one or more Ford Master
5
Agreement Workers' jobs would be impacted by such action.
"OEM CUSTOMER" means a Person in the business of manufacturing motor vehicles.
"PARTY" or "PARTIES" has the meaning specified in the opening paragraph of this
Agreement.
"PERSON" means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.
"PURCHASE ORDER" means, in regard to particular Components, the Purchase Order
or Long Term Supply Agreement between Visteon and Newco covering such Components
(as described in Section 2.3 or 2.4, in regard to Existing Business).
"SERVICE PARTS" is as defined in Exhibit 5.
"SUBCOMPONENTS" means Components incorporated into, or that are a part of,
another Component.
"VISTEON RELATED COMPANY" is as defined in Exhibit 4.
1.2 Subject to Section 15.3, except in regard to the identification of the
Parties to this Agreement above or where the context clearly requires otherwise,
a reference in this Agreement to "Newco" includes Newco and its applicable
Affiliates, and to "Visteon" includes Visteon and its wholly-owned subsidiaries
in North America.
2. PURCHASE AND SUPPLY COMMITMENTS
2.1 General. Subject to the terms and conditions of this Agreement, but
notwithstanding any term or condition of any Existing Agreement, Purchase Order,
Long Term Supply Agreement, Sourcing Agreement, or Target Agreement, Visteon
shall supply to Newco, and Newco shall purchase from Visteon, each of the
following Components during the term of this Agreement:
(a) "EXISTING BUSINESS IN PRODUCTION," which means all Components which, as
of May 1, 2005, were manufactured by a Visteon Facility and supplied by
such Visteon Facility to a Newco Facility. Such Components are set forth in
EXHIBIT 1 to this Agreement.
(b) "EXISTING BUSINESS - FUTURE MODEL," which means Components which, as of
May 1, 2005, were planned by Visteon to be manufactured by a Visteon
Facility and supplied by such Visteon Facility to a Newco Facility (i)
pursuant to a reasonably developed and documented plan, and (ii) for supply
to, or for inclusion in another part, component, or system to be supplied
to, Ford or another customer of Visteon that was sourced to Visteon
pursuant to a signed Sourcing Agreement with Pricing, Target Agreement, or
purchase order (in the case of Ford) or a written sourcing commitment with
pricing established or purchase order (in the case of another customer of
Visteon), in each case issued prior to May 1, 2005, but which were not
being manufactured and supplied as of May 1, 2005. Such Components are set
forth in EXHIBIT 2 to this Agreement.
Subject to Sections 2.1(c) and (d) below, Components which do not meet the
requirements set forth in Section 2.1(a) or (b) are not Existing Business,
except as Newco and Visteon specifically agree otherwise in writing. References
in this Section 2.1 to a "Newco Facility" refer, for the avoidance of doubt, to
facilities which were manufacturing or assembly facilities of Visteon or its
Affiliates in North America as of May 1, 2005, but were transferred to Newco.
Visteon warrants and represents to Newco that, to the best of its knowledge as
of the date of this Agreement, Exhibits 1 and 2 are accurate and complete.
6
(c) Without limiting any rights or remedies of either Party, and subject
to, and without limiting, Section 2.1(d) below:
(i) In the event that Components which should have been included in
Exhibit 1 (as determined in accordance with Section 2.1(a)) are
excluded from such Exhibit, and such Components are discovered to have
been excluded:
(A) on or before 6 months after the date of this Agreement, such
Components will be added to Exhibit 1, unless the Parties
otherwise agree in writing; or,
(B) after 6 months after the date of this Agreement, the Parties
will discuss in good faith as to whether such Components will be
added to Exhibit 1, and such Components will be added if the
Parties agree in writing.
(ii) In the event that Components which should have been included in
Exhibit 2 (as determined in accordance with Section 2.1(b)) are
excluded from such Exhibit, and such Components are discovered to have
been excluded:
(A) on or before three months after the date of this Agreement,
and such Components are to go into production prior to or on such
date, such Components will be added to Exhibit 2; or,
(B) after three months after the date of this Agreement (or prior
to such date, but which are not covered under Section
2.1(c)(ii)(A) above), the Parties will discuss in good faith as
to whether such Components will be added to Exhibit 2, and such
Components will be added if the Parties agree in writing.
(d) Without limiting any rights or remedies of Newco, if a part, component,
or system is listed on Exhibit 2 ("LISTED COMPONENT"), which Listed
Component replaces a part, component, or system manufactured, as of May 1,
2005, at a Newco Facility, and North American Sourcing Council approval was
not obtained to have such Listed Component manufactured at a facility other
than a Master Agreement Plant, such Listed Component will, upon Newco's
written request to Visteon, be removed from Exhibit 2 and may be added to
Exhibit 2 to the Purchase and Supply Agreement Regarding Sales of
Components from Automotive Components Holdings, LLC to Visteon Corporation
between Newco and Visteon dated as of the date of this Agreement.
2.2 Expiration of Term or Cessation of Existing Business Designation. Upon the
termination or expiration of this Agreement, or when any Components that are
Existing Business cease to be designated as Existing Business as provided for
under this Agreement, Newco's rights to cease purchasing such Components from
Visteon, and Visteon's rights to cease supply of such Components to Newco, shall
be as specified under the applicable Purchase Order or Long Term Supply
Agreement, including the Global Terms, for such Components (without regard to
any amendment or supplement to the same provided for under this Agreement, but
subject to Sections 13 and 14 below).
2.3 Contract Covering Sale and Purchase of Components Which Are Existing
Business In Production.
(a) Purchase Order or Long Term Supply Agreement Issued. When a Purchase
Order or Long Term Supply Agreement (as applicable) is issued after the
date of this Agreement by Newco to Visteon for Components which are
Existing Business In Production, the terms and conditions of the same
(including the Global Terms) will apply in regard to the sale and purchase
of such Components, except to the extent that such Purchase Order, Long
Term Supply Agreement, or Global Terms are modified or supplemented under,
or conflict with, this Agreement in regard to such Components. Visteon
agrees to accept any such Purchase Order or Long Term Supply Agreement (as
applicable) issued by Newco to Visteon for such Components, provided that
the terms and conditions of the same are consistent with
7
this Agreement in regard to such Components. Newco agrees to issue such
Purchase Orders and Long Term Supply Agreements as soon as reasonably
practicable after the date of this Agreement. Any such Purchase Order or
Long Term Supply Agreement issued will be an Existing Agreement for the
purposes of this Agreement.
(b) Prior to Issuance of Purchase Order or Long Term Supply Agreement.
Until such time as a Purchase Order or Long Term Supply Agreement (as
applicable) is issued after the date of this Agreement by Newco to Visteon
for Components which are Existing Business In Production, a Purchase Order,
on Visteon's standard form (as of May 1, 2005) attached hereto as Exhibit 3
(including the Global Terms) (as if issued by Newco, not Visteon) will be
deemed to apply in regard to the sale by Visteon and purchase by Newco of
such Components, except to the extent that such Purchase Order, Long Term
Supply Agreement, or Global Terms are modified or supplemented under, or
conflict with, this Agreement in regard to such Components. Any such
Purchase Order deemed to apply will be an Existing Agreement for the
purposes of this Agreement.
2.4 Contract Covering Sale and Purchase of Existing Business - Future Model.
Components which are Existing Business - Future Model supplied by Visteon to
Newco will be supplied under the Purchase Order or Long Term Supply Agreement
(as applicable) (including the Global Terms) issued after the date of this
Agreement by Newco to Visteon for the same, except to the extent that such
Purchase Order, Long Term Supply Agreement, or Global Terms are modified or
supplemented under, or conflict with, this Agreement in regard to such
Components. Visteon agrees to accept any such Purchase Order or Long Term Supply
Agreement (as applicable) issued by Newco to Visteon for such Components,
provided that the terms and conditions of the same are consistent with this
Agreement in regard to such Components. Newco agrees to issue such Purchase
Orders and Long Term Supply Agreements as soon as reasonably practicable after
the date of this Agreement. Any such Purchase Order or Long Term Supply
Agreement issued will be an Existing Agreement for the purposes of this
Agreement.
2.5 Volumes. No specific volume commitments by Newco for Existing Business will
exist. However, without limiting the foregoing sentence, Newco will continue to
purchase at least the same percentage of its requirements (at a Component-level)
for Existing Business from Visteon as Newco Facilities were purchasing or
receiving (at normal, non-exceptional, operational levels) from Visteon
Facilities on and prior to May 1, 2005 (when such Newco Facilities were Visteon
Facilities), and Visteon will supply such percentage, in each case except to the
extent that Newco Facilities are sold, transferred, exited, or closed (in regard
to the applicable Components purchased by the same), Newco's purchase
obligations relating to such Components are terminated, expire, or are assigned
in accordance with this Agreement, or as otherwise agreed upon by the Parties in
writing. For example, if Newco Facilities were purchasing or receiving 70% of
their requirements for a specific Component from Visteon Facilities on and prior
to May 1, 2005 at normal operational levels, Newco will continue to purchase at
least 70% of its requirements for such specific Component from Visteon during
the term of this Agreement (subject to the specific exceptions referred to in
the prior sentence). The foregoing will not, however, permit Visteon to cease
supplying at such percentage to the assignee of any Existing Agreement upon
assignment of such Existing Agreement by Newco to such assignee.
2.6 No Obligation to Issue Long Term Supply Agreement; Conflict with this
Agreement. Newco shall have no obligation under this Agreement to issue a Long
Term Supply Agreement (as opposed to a Purchase Order) to Visteon for any
Existing Business or other Components. In the event of a conflict between the
terms of any Purchase Order, Long Term Supply Agreement, or Global Terms and
this Agreement in regard to specific Components, the terms of this Agreement
shall control in regard to such Components.
2.7 Use of Standard-Form Visteon Purchasing Documents. It is anticipated that
Newco will need to utilize standard-form Visteon purchasing documents (e.g.,
Purchase Orders, Long Term Supply Agreements, Sourcing Agreements, Target
Agreements, etc.) as its own purchasing documents for some period of time after
the date of this Agreement in regard to Newco's procurement of Components from
Visteon. As such, for the purposes of
8
applying any such documents, the following terms used in such documents shall
have the following meanings: "Buyer" will mean Newco; "Seller" will mean
Visteon; and, "Supplies" will mean the applicable Components. In addition, in
any such Visteon documents a reference to Visteon's Global Terms For Production
Parts and Non-Production Goods and Services (VGT REV 4/03) will be deemed to
refer to the Global Terms.
2.8 Affect on Other Agreements. Any agreements between a Newco Facility (which,
at the time, would have been a Visteon Facility) and a Visteon Facility in
effect as of the date of this Agreement relating to the supply of Components
from such Visteon Facility to such Newco Facility covered under this Agreement
are superseded (except for use in establishing pricing as described in Section
3.1(a) or (b)) by the applicable terms and conditions of this Agreement, and by
any Purchase Order or Long Term Supply Agreement issued pursuant to this
Agreement, relating to such Components.
3. PRICING
3.1 Pricing.
(a) Existing Business in Production. Subject to Sections 3.1(c) - (e), for
Existing Business in Production, the prices of such Components will be the
documented and substantiated prices in effect for the same, as of May 1,
2005, between the Visteon Facility manufacturing and supplying such
Components and the Newco Facility to which such Components were supplied as
of May 1, 2005 (which Newco Facility was, at the time, a Visteon Facility),
as set forth in Exhibit 1, adjusted for productivity price reductions taken
after May 1, 2005 but prior to the date of this Agreement, as set forth in
Exhibit 1. In regard to any Components listed in Exhibit 1 for which no
prices are specified, Visteon and Newco will negotiate in good faith and
agree upon such prices.
(b) Existing Business - Future Model. Subject to Sections 3.1(c) - (e), for
Existing Business - Future Model, the prices of such Components will be the
documented and substantiated prices (as determined in accordance with the
reasonably developed and documented plan described in Section 2.1(b)), in
effect as of May 1, 2005, (if available) for the same between the Visteon
Facility planned to manufacture and supply such Components and the Newco
Facility to which such Components were planned to be supplied as of May 1,
2005 (which Newco Facility was, at the time, a Visteon Facility), as set
forth in Exhibit 2. In regard to any Components listed in Exhibit 2 for
which no prices are specified, Visteon and Newco will negotiate in good
faith and agree upon such prices.
(c) Design or Other Changes. The prices of Components described in Sections
3.1(a) and (b) will be adjusted for any Design Change or productivity price
reduction agreed upon by Visteon and Ford in writing prior to the date of
this Agreement, or agreed upon by Visteon and Newco in writing after the
date of this Agreement (including, without limitation, the productivity
reductions specified in Section 3.2 below), or for any price change
resulting from Directed Tier 2 Sourcing (as described in Section 8.2). No
other changes to the prices of such Components will occur unless agreed
upon by the Parties in writing.
(d) Prices for Ford - Visteon Directed Components. Notwithstanding Section
3.1(a) or (b), the price to Newco for a Ford - Visteon Directed Component
will be the price for the same agreed upon by Visteon and Ford, and such
price will be adjusted for any Design Change or productivity price
reduction agreed upon by Visteon and Ford in writing (including, without
limitation, the productivity reductions specified in Section 3.2 below).
(e) Prices for Non-Ford Components. In the event that Newco's customer for
parts, components, or systems supplied by Newco incorporating Non-Ford
Components supplied by Visteon requests a price reduction for such parts,
components, or systems supplied by Newco, or for such Non-Ford Components
supplied by Visteon, Visteon will, to the extent requested by Newco,
negotiate in good faith with Newco regarding the price reduction.
9
3.2 Productivity Price Reductions. (a) Visteon shall reduce the prices for all
Ford-Vehicle Components (including, without limitation, any Ford - Visteon
Directed Components, but excluding Ford - Visteon Directed Audio Components
after December 31, 2006) supplied to Newco and included in the calculation of
Newco Carryover Frozen Turnover (as described below) beginning on the date of
this Agreement through December 8, 2008 by the following percentages (such
reductions will be made effective as of January 1 of the applicable calendar
year as described in Subsection 3.3 below):
Calendar Year 2005 2006 2007 2008
-------------------- ---- ---- ---- ----
Percentage Reduction *** *** *** ***
For a given calendar year, the aggregate productivity price reduction for all
Components included in the calculation of Newco Carryover Frozen Turnover will
be calculated by applying the applicable Percentage Reduction for such calendar
year against the "Newco Carryover Frozen Turnover." The "Newco Carryover Frozen
Turnover" shall be equal to the Total Frozen Turnover, less the Target Agreement
Turnover, less the Newco Buy Turnover, less any Components excluded from the
calculation of the Newco Carryover Frozen Turnover as described in Section
3.2(b) below, less Ford - Visteon Directed Audio Components after December 31,
2006. The following definitions shall apply to this calculation:
"Total Frozen Turnover" shall be equal to the total projected sales of
Components by Visteon to Newco using Newco's budgeted volume, mix and rates
assumptions for the applicable calendar year.
"Target Agreement Turnover" means that portion of the Total Frozen Turnover for
Components that will be launched during the applicable calendar year where Newco
and Visteon have entered into signed Target Agreements (or the sourcing document
of Newco that is the equivalent of a Ford Target Agreement).
"Newco Buy Turnover" means that portion of the Total Frozen Turnover for which
Newco has negotiated the price on behalf of Visteon pursuant to Section 8.2.
The productivity price reductions for 2005 described above will not be
duplicative of or in addition to any productivity price reduction to the price
of a Component implemented by Visteon prior to the date of this Agreement as a
result of the productivity reductions required of Visteon for 2005 under the
2003 PSA. The productivity price reductions for Components above are not
duplicative of or in addition to those that apply to the same Components under
the Purchase and Supply Agreement Regarding Sales of Components by Visteon to
Ford between Visteon and Ford dated as of October 1, 2005.
(b) Where Newco and Visteon agree (or have agreed) in writing on different
productivity price reductions than those specified above, such separate
agreements shall supersede the provisions of Subsection 3.2(a) if such
different price reductions replace (and are not incremental to) the price
reductions required under Subsection 3.2(a). In these cases, the Components
to which such different price reductions apply will be excluded from the
calculation of Newco Carryover Frozen Turnover. If such different price
reductions are incremental to (and do not replace) the price reductions
required under Subsection 3.2(a), the Components to which such incremental
price reductions apply will be included in the calculation of Newco
Carryover Frozen Turnover and the incremental price reductions will apply
in addition to those required under Subsection 3.2(a).
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3.3 All productivity price reductions will be retroactive to January 1 of the
applicable year. If the productivity price reductions are not processed prior to
the end of any calendar quarter during the applicable year, Visteon shall pay to
Newco a lump sum equal to seventy five percent (75%) of a reasonable estimate of
the effect of the productivity price reductions based on Visteon's shipments of
Components to Newco during such calendar quarter. Such amount shall be paid on
or before the last day of such calendar quarter. The Parties acknowledge that
once the actual productivity price reductions are determined, they will be
entered into a system that will result in productivity price reductions
retroactive to January 1 of the applicable year; therefore, if Visteon has made
a lump sum payment for any calendar quarter and Newco later receives a
retroactive price adjustment, Newco will reimburse Visteon any amounts that are
charged twice to Visteon. For the avoidance of doubt, Visteon's lump-sum payment
of 75% of such estimated amount will not affect Newco's right to receive 100% of
the productivity price reduction due for the applicable calendar year.
3.4 Notwithstanding Section 3.2 or 3.3, in regard to Non-Ford Components
supplied by a Visteon Facility to Newco, in the event Visteon entered into an
agreement with its customer (other than Ford), prior to or on the date of this
Agreement, pursuant to which Newco is obligated to provide such customer with
productivity price reductions on parts, components, or systems supplied by Newco
to such customer which are, or which incorporate, Components supplied by Visteon
to Newco, Visteon shall provide the equivalent productivity price reductions to
Newco on such Components supplied by Visteon.
3.5 In the event that a customer of Newco requests productivity price reductions
on parts, components or systems supplied by Newco to such customer which are, or
which incorporate, Components supplied by Visteon to Newco, Newco and Visteon
shall discuss in good faith potential mechanisms for achieving equivalent
productivity prices reductions to Newco on such Components supplied by Visteon.
4. DESIGN CHANGES & PAYMENT TERMS
4.1 Except for any Design Change negotiated by Ford directly with Visteon, and
notwithstanding any term or condition of any Purchase Order, Long Term Supply
Agreement, or the Global Terms, the Parties will negotiate equitable increases
or decreases in the prices of Components supplied by Visteon to Newco for
Newco-requested Design Changes in good faith.
4.2 For any Components manufactured by a Visteon Facility and supplied by such
Visteon Facility to a Newco Facility, and for any tooling received at Visteon
Facilities (or a Visteon Facility's supplier's facilities) in the United States,
Visteon will be paid in accordance with the following terms during the term of
this Agreement: ***. In the event that systems issues prevent the Parties from
implementing such payment terms immediately after the date of this Agreement,
the Parties will work together in good faith to promptly address the problem
and, in the interim, promptly implement a mechanism which results, in effect, in
payment terms as close as possible to such payment terms.
As used in this Section 4.2, the term "tooling" refers only to tooling owned by
Newco or its customer and funded by Newco in an up-front payment (rather than in
the piece price) that is used for the production of Components manufactured by a
Visteon Facility and supplied by such Visteon Facility to a Newco Facility and
which is located in Visteon Facilities (or a Visteon Facility's supplier's
facilities) in the United States.
5. RIGHT TO TERMINATE OR NOT RENEW
5.1 (a) Notwithstanding any term or condition of this Agreement or of any
Purchase Order, Long Term Supply Agreement, Sourcing Agreement, or Target
Agreement, or any other termination rights Newco may have, but
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subject to Section 6(b), Newco may, upon advance written notice to Visteon,
terminate or not renew, in whole or in part, its purchase of a Component which
is Existing Business, the applicable Existing Agreement or this Agreement as it
relates to such Component:
(1) for a Change of Control in accordance with Section 9.3(b) and (c)
below;
(2) in accordance with Section 22 (Excusable Delay) of the Global Terms in
regard to such Component;
(3) as a result of the: (i) cancellation by Ford or another OEM Customer of
Newco of the program for which such Component is supplied; or, (ii) the
failure of Newco to require such Component any longer because the end-item
part, component or system into which such Component supplied by Visteon is
incorporated by Newco is changed, by the applicable program team of Ford
(in regard to a Ford-Vehicle Component) or by another customer of Newco (in
regard to a Non-Ford Component), such that neither such Component supplied
by Visteon, nor a similar part, component or system, is required in such
end-item part, component or system any longer, provided Newco has acted in
good faith toward Visteon in regard to such change;
(4) as a result of an assignment by Visteon in breach of Section 21 of the
Global Terms in regard to such Component;
(5) for Good Cause with respect to such Component;
(6) for a default by Visteon in the performance of any obligation or in the
observance of any restriction described in Section 9.1(a) below in regard
to such Component that is not fully cured within 90 days after written
notice thereof has been given by Visteon;
(7) as a result of the termination of this Agreement under Section 9;
(8) in regard to a Non-Ford Component supplied by Visteon, upon the
termination or expiration (for any reason) of the purchase order or other
agreement between Newco and its customer for such Non-Ford Component or for
the part, component, or system supplied by Newco into which such Non-Ford
Component is incorporated;
(9) upon the sale, exit, closure, or transfer (for any reason) of the Newco
Facility purchasing such Component from Visteon; or
(10) for Ford - Visteon Directed Components, if Visteon fails to comply
with the Competitive Gap Closure Plan relating to the same under the
Purchase and Supply Agreement Regarding Sales of Components by Visteon to
Ford between Visteon and Ford dated as of October 1, 2005; or
(11) for Ford - Visteon Directed Audio Components, any time after December
31, 2006; or
(12) in regard to Existing Agreement(s) for Fuel Delivery Modules (FDMs)
supplied by Visteon's Bedford facility to Newco, in the event that the FDM
business is transferred to a Master Agreement Plant as described in Section
10 of the Purchase and Supply Agreement Regarding Sales of Components by
Visteon to Ford between Visteon and Ford dated as of October 1, 2005.
Nothing in this Agreement shall in any way mitigate or affect any of
Newco's rights to terminate or not renew any Purchase Order, Long Term Supply
Agreement, or other agreement other than an Existing Agreement (i.e., a Purchase
Order, Long Term Supply Agreement, or other agreement relating to Components
other than Existing Business).
(b) In regard to any termination or non-renewal described in Section 5.1,
the terms of the applicable Existing Agreement will govern the right to
notification, remediation and compensation, if any; provided, however, that
a termination by Newco under Sections 5.1(a)(1), (2), (8), or (10) above
shall be without liability to Newco, under Sections 5.1(a)(4) through (7)
above will be treated as a termination for breach under Section 24(f) of
the Global Terms, and under Sections 5.1(a)(3), (9), and (11) will be
without liability to Newco, except in regard to any cancellation claim paid
by Newco pursuant to Section 5.1(c) below. In no event will termination or
non-renewal by Newco made in accordance with this Agreement (including,
without limitation, under this Section 5.1 or Section 9) be considered a
default or breach by Newco under any Existing Agreement or other agreement
(including, without limitation, any Purchase Order or Long Term Supply
Agreement) between Newco and Visteon.
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(c) In the event of a termination by Newco under Section 5.1(a)(3) or (9)
above, Visteon shall have a right to submit a cancellation claim to Newco
in the same manner, and to the same extent, as provided for under Sec.
29.02 of Ford Motor Company's Production Purchasing Global Terms and
Conditions (PPGTC Jan. 1, 2004) (as if Newco were the "Buyer" and Visteon
were the "Supplier" under such Global Terms and Conditions).
5.2 Notwithstanding any term or condition of this Agreement or of any Purchase
Order or Long Term Supply Agreement, or any other termination rights of Visteon,
Visteon may not terminate or not renew an Existing Agreement or its supply to
Newco of Components which are Existing Business without Newco's prior written
consent, except if Newco fails to pay Visteon any sums due and payable under
such Existing Agreement, which failure is a material default by Newco under the
applicable Purchase Order or Long Term Supply Agreement covering such Component,
and Newco has failed to materially cure such default within 60 days after
written notice of such default is provided by Visteon to Newco. Notwithstanding
the foregoing in this Section 5.2, if Visteon notifies Newco, in writing, that
it desires to terminate or not renew an Existing Agreement or Visteon's supply
to Newco of Components which are Existing Business, Newco shall discuss and
evaluate Visteon's request in good faith with Visteon.
6. NEWCO EXITING OF BUSINESSES AND ASSIGNMENT
(a) It is specifically intended by the Parties that Newco be able to freely
sell, exit, close, or transfer any or all of its facilities or business
operations. In this regard, notwithstanding any term or condition of this
Agreement or of any Purchase Order, Long Term Supply Agreement, Sourcing
Agreement, or Target Agreement, Newco may (but is not obligated to) sell,
exit, close, or transfer any Newco Facilities at any time.
(b) In addition, Newco may (but is not obligated to) freely assign (without
Visteon's consent), in whole or in part, any or all of the following: (i)
any Existing Agreement, Purchase Order, Long Term Supply Agreement, Target
Agreement, Sourcing Agreement, or other agreement between Newco and Visteon
for Components (whether Existing Business or otherwise) (A) supplied (or to
be supplied) to a Newco Facility to be closed, sold, or transferred, or (B)
which are (or will be) purchased by Newco for inclusion in a part,
component, or material sold by Newco to its customer which will be, or for
which manufacturing or supply responsibility will be, transferred or
assigned to another supplier or facility as part of a restructuring of the
applicable Newco Facility; or, (ii) any rights or obligations of Newco
under this Agreement relating to such Components. Without limiting the
foregoing, for the avoidance of doubt, Newco may assign, in whole or in
part, its rights and obligations under this Agreement relating to such a
Component, but retain (or assign, in whole or in part, to another party)
its rights and obligations under this Agreement relating to another such
Component.
(c) Each of the following shall apply in regard to any assignment by Newco
under Section 7(b):
(i) In the event that Newco assigns any right to any productivity
price reductions for any Components provided for in Section 3.2 above,
it must also assign the corresponding obligation of Newco to purchase
such Components under this Agreement for the time period for which the
assigned productivity price reductions apply. For example, if Newco
assigns the productivity price reductions for a Component for 2006 and
2007, it must also assign the corresponding obligation of Newco to
purchase such Components under this Agreement for 2006 and 2007.
(ii) If Newco assigns only an Existing Agreement, Purchase Order, Long
Term Supply Agreement, Target Agreement, or Sourcing Agreement as
described in Section 6(b)(i) above, and does not also assign any of
its rights or obligations under this Agreement relating to the
Component supplied by Visteon under such Existing Agreement, Purchase
Order, Long Term Supply Agreement, Target Agreement, or Sourcing
Agreement as described in Section 6(b)(ii) above, this PSA shall cease
to apply to such Component (and to such Existing Agreement, Purchase
Order, Long Term Supply Agreement, Target Agreement, or Sourcing
Agreement) as of the date of such assignment, provided such assignment
is for a duration equal to or in excess of one year, is otherwise to a
bona-fide purchaser, acquirer, or transferee of
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a Newco Facility or of the part, component, or material (or of
manufacturing or supply responsibility for the part, component, or
material) sold by Newco to its customer referred to in Section
6(b)(i)(B) above, or relates to the exit or closure of a Newco
Facility.
(iii) If Newco assigns its rights under an Existing Agreement,
Purchase Order, Long Term Supply Agreement, Target Agreement, or
Sourcing Agreement as described in Section 6(b)(i) above, and also
assigns any of its rights or obligations under this Agreement relating
to the Component supplied by Visteon under such Existing Agreement,
Purchase Order, Long Term Supply Agreement, Target Agreement, or
Sourcing Agreement as described in Section 6(b)(ii) above, this PSA
shall cease to apply to such Component (or such Existing Agreement,
Purchase Order, Long Term Supply Agreement, Target Agreement, or
Sourcing Agreement) as of the date of such assignment, except in
regard to the specific rights and obligations (and only such specific
rights and obligations) assigned, provided such assignment is for a
duration equal to or in excess of one year, is otherwise to a
bona-fide purchaser, acquirer, or transferee of a Newco Facility or of
the part, component, or material (or of manufacturing or supply
responsibility for the part, component, or material) sold by Newco to
its customer referred to in Section 6(b)(i)(B) above, or relates to
the exit or closure of a Newco Facility.
For example, if Newco assigns its right to productivity price
reductions for a Component for 2006 and 2007 under this Agreement (in
addition to assigning the applicable Purchase Order or Long Term
Supply Agreement), but it has an obligation under this Agreement to
purchase such Component for 2008 as well, upon such assignment this
PSA will cease to apply to such Component (as well as to the
applicable Purchase Order or Long Term Supply Agreement), except in
regard to the right to productivity price reductions assigned (and the
corresponding purchase obligation assigned pursuant to Section
6(c)(i)) only. As such, upon such assignment Newco will have no
further purchase obligation for such Component for 2008.
(d) In regard to any assignment under Section 6(b), upon Xxxxx's request,
Visteon will provide to Newco, in a form reasonably satisfactory to Newco,
a release of Newco of, and covenant not to sue the same for, all claims
Visteon has or may have against Newco relating to the agreement or rights
or obligations assigned, to the extent that Newco has assigned
responsibility for any such claims to the assignee of such agreement or
rights or obligations assigned and such assignee has assumed such claims
and obligations. In this regard, as a condition of supplying such release,
Visteon shall have the right to request that Newco certify, in writing,
that, to Newco's knowledge, the extent to which Xxxxx has assigned
responsibility for any such claims to the assignee, and the release and
covenant not to sue granted by Visteon will not include any claims Visteon
may have against Newco that were not assigned. Such release and covenant
not to sue will not apply to any assignment by Newco to any Affiliate of
Newco, or any subsidiary or affiliate of Ford, that does not have the
financial capability to satisfy the claims and obligations assumed.
(e) Visteon will cooperate diligently and in good faith with Xxxxx, in
regard to any sale, exit, closure, transfer, or assignment described in
this Section 6.
(f) If Newco assigns, in whole or in part, any Existing Agreement, Purchase
Order, Long Term Supply Agreement, Target Agreement, Sourcing Agreement, or
other agreement between Newco and Visteon for Components supplied (or to be
supplied) to a Newco Facility to be closed, transferred, or sold as
described in Section 6(b)(i) above, the terms and conditions of such whole
or part of such Existing Agreement, Purchase Order, Long Term Supply
Agreement, Target Agreement, Sourcing Agreement, or other agreement
assigned shall be as specified in the same, without regard to any amendment
or supplement to the same provided for under this Agreement (subject to
Sec. 14). If Newco assigns any rights or obligations of Newco under this
Agreement relating to such Components as described in Section 6(b)(ii)
above, such rights and obligations shall be additional and supplemental to
the Existing Agreement, Purchase Order, Long Term Supply Agreement, Target
Agreement, Sourcing Agreement, or other agreement between Newco and Visteon
for such Components assigned as described in the prior sentence.
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7. VISTEON EXITING OF BUSINESSES AND ASSIGNMENT
Notwithstanding any term or condition of this Agreement or of any Purchase
Order, Long Term Supply Agreement, Sourcing Agreement, or Target Agreement,
Visteon may not, without Newco's prior written consent, assign, in whole or in
part, any: (i) Existing Agreement, Purchase Order, Long Term Supply Agreement,
Target Agreement, Sourcing Agreement, or other agreement between Newco and
Visteon for Components supplied (or to be supplied) by Visteon to a Newco
Facility; or, (ii) rights or obligations of Visteon under this Agreement.
Notwithstanding the foregoing in this Section 7, if Visteon notifies Newco, in
writing, that it desires to make any such assignment, Xxxxx shall discuss and
evaluate Visteon's request in good faith with Visteon.
8. PARTICIPATION IN FORD RAW MATERIALS PROGRAMS AND DIRECTED SOURCING
8.1 To the extent consistent with all applicable laws and regulations and
consistent with the terms of all Existing Agreements, Visteon will, to the
extent requested by Newco, participate in Ford's raw materials supply system or
directed buy programs for raw materials as amended from time to time, in the
same manner as other Ford Tier 1 Suppliers. In the event that such participation
by Visteon would or may conflict with existing contractual obligations of
Visteon, Xxxxx and Visteon will discuss in good faith how to address the matter.
8.2 Visteon will participate in Directed Tier 2 Sourcing for Existing Business
if and as requested by Xxxxx after the date of this Agreement. Any price
reductions or increases approved by Newco for parts, components, or materials of
Components subject to such new Directed Tier 2 Sourcing will be flowed through,
unaltered, to Newco and reflected in a corresponding adjustment to the price
payable by Newco for such Components. If any such new Directed Tier 2 Sourcing
affects Visteon's cost or timing (aside from the cost of the directed parts,
components, or materials), Sec. 2(b) of the Global Terms will apply and, if
Visteon's claim is adequately substantiated, Newco will make an equitable
adjustment to the price or delivery schedules, and the adjustment will be
negotiated in good faith with Visteon, provided Visteon's claim is provided to
Newco within the time period required under Section 2(b).
9. DEFAULT
9.1. A Party (a "NON-DEFAULTING PARTY") may give notice to the other Party (the
"DEFAULTING PARTY"), upon occurrence of any of the following events, any one of
which will be considered to be an "EVENT OF DEFAULT":
(a) Default by a Party. Any default by the Defaulting Party in the
performance of any obligation or in the observance of any restriction in
this Agreement, which default may not be cured or is not effectively cured
after a period of 30 days after written notice thereof has been given by
the Non-Defaulting Party; provided that if such default cannot be cured
within 30 days, then the Defaulting Party shall have a reasonable period to
cure the default (not to exceed 90 days), during which period the
Defaulting Party shall at all times diligently pursue a cure;
(b) Termination of Existence Initiated by a Party. The Defaulting Party
commences any Proceeding to wind up, dissolve, or otherwise terminate its
legal existence;
(c) Termination of Existence Initiated by Another Person. Any proceeding is
commenced against the Defaulting Party that seeks or requires the winding
up, dissolution, or other termination of its legal existence, unless the
proceeding is defended or contested in good faith by the Defaulting Party
within 30 days of the commencement of the proceeding in a manner that stays
it and such defense or contest is pursued diligently thereafter;
(d) Bankruptcy. Either (a) the Defaulting Party seeks relief by any
proceedings of any nature under any applicable laws for the relief of
debtors; or (b) the institution against the Defaulting Party of
15
a proceeding under any applicable bankruptcy or similar law of any
jurisdiction in which the Defaulting Party carries on its business, unless
the proceeding is defended or contested in good faith by the Defaulting
Party within 15 days of the commencement of the proceeding in a manner that
stays the proceedings and then only so long as such defense or contest is
pursued diligently thereafter;
(e) Appointment of a Receiver. The appointment of a receiver,
receiver-manager, trustee, custodian or like officer for all or a
substantial part of the business or assets of the Defaulting Party, unless
the appointment is defended or contested in good faith by the Defaulting
Party within 30 days of the commencement of the appointment in a manner
that stays the appointment and then only so long as such defense or contest
is pursued diligently thereafter; or
(f) Assignment for Benefit of Creditors. The Defaulting Party makes an
assignment of a substantial part of its assets for the benefit of its
creditors.
9.2. Upon the occurrence of an Event of Default, the Non-Defaulting Party may
elect one or more of the following remedies:
(a) Subject to Section 9.4 below, termination of this Agreement, in whole
or in part, and any such termination shall not be deemed a waiver or
release of, or otherwise prejudice or affect, any rights, remedies or
claims, whether for Damages or otherwise, which the Non-Defaulting Party
may then possess under this Agreement or which arise as a result of such
termination; provided, however, that the Non-Defaulting Party may only
elect to terminate this Agreement (in whole or in part) for an Event of
Default under Section 9.1(a) above (Default by a Party) if the default by
the Defaulting Party under Section 9.1(a) is a material default under this
Agreement; and
(b) Set off and recoupment against sums owed by the Non-Defaulting Party or
one of its Affiliates to the Defaulting Party or one of its Affiliates any
amounts for which the Non-Defaulting Party determines in good faith that
the Defaulting Party or one of its Affiliates is liable to the
Non-Defaulting Party or one of its Affiliates under this Agreement or any
Purchase Order; and
(c) Recovery of Damages arising from the Default.
9.3 (a) In addition to any termination rights Newco may have under this
Agreement or applicable law, Newco may terminate this Agreement in the following
events: (i) a Change of Control of Visteon occurs; (ii) all of the Existing
Agreements become subject to termination or cancellation for Good Cause; or
(iii) all of the Existing Agreements are terminated or not renewed in accordance
with this Agreement.
(b) As used in this Section 9.3, the term "CHANGE OF CONTROL" means (i) a
liquidation or dissolution of Visteon; (ii) the sale, lease, transfer,
conveyance or other disposition, in one or a series of related
transactions, of all or substantially all of the assets of Visteon and its
subsidiaries, taken as a whole; (iii) a merger, consolidation, share
exchange, business combination or similar extraordinary transaction as a
result of which the persons possessing, immediately prior to the
consummation of such transaction, beneficial ownership of the voting
securities of Visteon entitled to vote generally in elections of directors
of Visteon, cease to possess, immediately after consummation of such
transaction, beneficial ownership of voting securities entitling them to
exercise at least 50% of the total voting power of all outstanding
securities entitled to vote generally in elections of directors of Visteon
(or, if not Visteon, the surviving entity resulting from such transaction);
or (iv) a transaction or series of transactions (including by way of
merger, consolidation, sale of stock or otherwise) the result of which is
that any Person or "group" (as defined in Section 13 of the Securities
Exchange Act of 1934) becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 promulgated under the Securities
Exchange Act of 1934), directly or indirectly, of more than 50% of the
voting power of the outstanding voting stock of Visteon.
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(c) Notwithstanding Section 5.1(a)(1) or 9.3(a) above, in the event of an
occurrence described in Section 9.3(b)(ii), (iii), or (iv) above, Newco may
not terminate an Existing Agreement relating to a Component during the term
of this Agreement, or terminate this Agreement, as a result of a Change of
Control of Visteon unless and until it has made a good faith effort to
discuss (if Visteon requests, in writing, that Newco have such discussion)
the potential continuation of the applicable Existing Agreement, in regard
to Section 5.1(a)(1), or of this Agreement, with: (1) the transferee of
all, or substantially all, of the assets of Visteon and its Subsidiaries
described in Section 9.3(b)(ii); (2) the Person Controlling Visteon (if
any) as a result of the merger, consolidation, share exchange, business
combination or similar extraordinary transaction described in Section
9.3(b)(iii) (for this purpose, "Control" will be as defined in the
definition of the term "Affiliate" in Section 1.1 above); or, (3) the
Person or "group" that will become the "beneficial owner" of more than 50%
of the voting power of the outstanding voting stock of Visteon described in
Section 9.3(b)(iii).
9.4 A Non-Defaulting Party intending to terminate this Agreement pursuant to
this Article 9 as a result of an Event of Default occurring under Subsections
9.1(a) or (b) shall first notify the Defaulting Party of the grounds for the
intended termination. If the Defaulting Party fails to remedy such grounds for
termination within sixty (60) days of such notice (or any longer period of time
as mutually agreed by the Parties), then the Non-Defaulting Party may terminate
this Agreement effective upon notice to the Defaulting Party without the need
for any judicial action.
9.5 The provisions of this Article 9 are without prejudice to any other rights
or remedies either Party may have by reason of the Event of Default of the other
Party; provided, however, that the Parties' rights to terminate this Agreement
shall in all cases be as described in this Article 9.
10. TERM
The term of this Agreement shall commence on the date of this Agreement and
continue through December 31, 2008, unless terminated earlier in accordance with
the terms and conditions of this Agreement.
11. CONFIDENTIALITY
11.1 "Confidential Information" is defined as information that is disclosed in
connection with this Agreement and which is furnished in the following forms:
(a) Any information whether or not it is provided in writing or orally,
including drawings, documents, financial statements and projections,
demonstrations, product and product cycle plans and any other information
or machine readable data, of a Party furnished to another Party that is
marked "Confidential" or contains a proprietary notice clause or, if
disclosed orally, was identified as confidential at the time of oral
disclosure;
(b) Confidential Information includes also any item of hardware, including
samples, devices and any other physical embodiments, if such hardware is
delivered to the receiving Party.
(c) In the event that Confidential Information shall be incorporated into
or reflected in other documents, whether separately or jointly generated by
the Parties, such other documents shall be deemed Confidential Information
subject to the terms of this Agreement.
11.2 Notwithstanding Section 11.1, "Confidential Information" does not include
information provided pursuant to a Purchase Order, Target Agreement, Long Term
Supply Agreement or Sourcing Agreement issued by Newco for Components supplied
(or to be supplied) by Visteon to Newco, and the confidentiality of such
information shall be governed by the terms and conditions of the applicable
Purchase Order, Target Agreement, Long Term Supply Agreement or Sourcing
Agreement.
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11.3 The receiving Party shall, for a period beginning with the first date of
receipt of each respective disclosure and continuing for three years thereafter,
use the same standard of care it uses to protect its own information of similar
kind and importance, but not less than reasonable care, to maintain the
confidentiality of Confidential Information and to limit its disclosure to such
of its directors, employees, agents, advisors or Affiliates as have a need to
know such Confidential Information in order that the objectives of this
Agreement can be achieved. In addition, if Newco is the receiving party, Newco
shall limit disclosure of Confidential Information of Visteon to only those
directors, employees, agents, advisors or Affiliates of Ford who have a need to
know such Confidential Information and are receiving such Confidential
Information in connection with a legitimate business interest of Xxxxx. The
receiving Party shall be responsible for the compliance by such directors,
employees, agents, advisors or Affiliates (including, with respect to Newco,
Ford) with the provisions of this Agreement. Notwithstanding the foregoing,
Newco shall be permitted to provide to potential or actual acquirers of all or
any part of Newco, its business, or any Newco Facilities, such Confidential
Information (as well as any confidential information of Visteon under any
Purchase Order, Long Term Supply Agreement, Sourcing Agreement, or Target
Agreement for any Components) as Newco deems necessary to conduct discussions
with such potential acquirers, or to sell, transfer, exit, or close all or any
part of Newco, its business, or any Newco Facilities, provided that such
potential acquirers, or such purchasers or transferees, enter into a
confidentiality agreement with Newco substantially comparable to the terms and
conditions of this Article 11.
11.4 The confidentiality obligations of this Agreement shall not apply to
confidential information received pursuant to this Agreement which:
(a) is or becomes publicly known other than through a breach of this
Agreement by the receiving Party; or
(b) is already known to the receiving Party at the time of disclosure as
evidenced by the receiving Party's written documentation; or
(c) 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
(d) is independently developed by employees of the receiving Party who have
not had access to or received any Confidential Information under this
Agreement; or
(e) is furnished to a third party by the disclosing Party without
restriction on the third party's rights to disclose; or
(f) is authorized in writing by the disclosing Party to be released from
the confidentiality obligations herein.
Specific information shall not be deemed to be within such exceptions merely
because it is included within general information, which is within such
exceptions, nor shall a combination of features be deemed to be within such
exceptions merely because the individual features of the combination are
separately within such exceptions.
11.5 Confidential Information shall remain the exclusive property of the
disclosing Party. The receiving Party agrees that Confidential Information
disclosed hereunder is being received subject to the disclosing Party's
ownership rights in such Confidential Information and, further, subject to all
relevant intellectual and/or proprietary property rights of the disclosing
Party, including the relevant laws governing patents, trademarks, copyrights,
semiconductor chip protection, trade secrets and unfair competition.
11.6 Upon the termination of this Agreement, the receiving Party shall, at its
own expense, promptly return to the disclosing Party all originals and copies of
the writings and hardware in its possession which contain
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Confidential Information. If any writing or hardware has been destroyed, an
adequate response to a return request therefor by the disclosing Party will be
written notice, executed by the receiving Party, that such writing or hardware
has been destroyed.
11.7 If the receiving Party becomes legally compelled (by oral questions,
interrogatories, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information, the receiving Party will provide the disclosing parties 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.
12. QUALITY IMPROVEMENT INITIATIVES
Without limiting or expanding any of the terms and conditions of the Global
Terms, to insure a robust quality improvement process, Visteon will participate
in Newco's and Ford's quality improvement programs and Newco can require Visteon
to achieve reasonable increased quality standards, consistent with the
requirements for other Ford Tier 1 Suppliers, as they may exist from time to
time. Without limiting the foregoing (including the Global Terms), all Visteon
facilities that produce Components for Newco shall achieve and retain Q1 status
and shall also maintain ISO9000 compliance during the terms of any applicable
Purchase Order.
13. CONFLICT WITH OTHER AGREEMENTS
Nothing in this Agreement, any Existing Agreement, or in any Purchase
Order, Long Term Supply Agreement, Target Agreement, or Sourcing Agreement for
Components or the Global Terms affects, limits or supersedes in any way any
Master Transaction Agreement or any rights, obligations, or limitations of
liability of either of Newco or Visteon under any Master Transaction Agreement,
including, without limitation, any limitations of liability of Newco or Visteon
relating to any Components (or parts, components, or materials thereof)
contained in any Master Transaction Agreement, or any rights relating to
intellectual property, or responsibility for infringement of intellectual
property rights, contained in any Master Transaction Agreement. In the event of
any conflict between the provisions of this Agreement and any Master Transaction
Agreement, the Master Transaction Agreement shall prevail. This Section 13 will
survive the termination or expiration of this Agreement. Without limiting the
generality of the foregoing, the Parties agree that nothing in this Agreement,
or in any any Purchase Order, Long Term Supply Agreement, Target Agreement,
Sourcing Agreement, or the Global Terms, shall in any respect limit or restrict
Visteon's obligations with respect to the liabilities retained by Visteon under
Section 2.04(iii) of the Contribution Agreement, and Newco shall have no
liability to Visteon under this Agreement or under any Purchase Order, Long Term
Supply Agreement, Target Agreement, Sourcing Agreement, or the Global Terms with
respect to such liabilities retained.
For the purposes of this Section 13, "Master Transaction Agreements" means the
following, collectively: All of the agreements referenced in Section 8 of the
Master Agreement by and between Ford and Visteon dated as of September 12, 2005.
14. CHANGES TO GLOBAL TERMS
The Parties acknowledge that the Global Terms allow Newco to amend the
Global Terms from time to time. In this regard, Newco may amend the Global Terms
that apply to Existing Agreements, but only as and to the extent that such
amendments are intended to apply to its suppliers generally. Given Newco's
situation, it is anticipated that Newco may need to do so, primarily in regard
to its operational practices (i.e., areas relating to delivery, shipment, taxes,
releases, title transfer, packing, marking, or shipping. The Parties will
discuss in good faith any such amendments.
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15. GENERAL PROVISIONS
15.1 No Agency. This Agreement does not constitute either Party the agent or
legal representative of the other Party. Neither Party is authorized to create
any obligation on behalf of the other Party.
15.2 Notices. All notices, requests and other communications to any Party
hereunder shall be in writing (including facsimile transmission and electronic
mail ("E-MAIL") transmission, so long as a receipt of such e-mail is requested
and received) and shall be given,
if to Newco, to:
Automotive Components Holdings, LLC
c/o Ford Motor Company
Office of the Secretary
One American Road
11th Floor World Headquarters
Dearborn, Michigan 48126
Attention: Xxxxx X. Xxxxxx, Xx.
Facsimile No.: (000) 000-0000
E-mail: xxxxxxx@xxxx.xxx
with a copy to:
Automotive Components Holdings, LLC
One American Road
000 Xxxxx Xxxxxxxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, General Counsel
Facsimile No.: (000) 000-0000
E-mail: xxxxx@xxxx.xxx
if to Visteon, to:
Visteon Corporation
Xxx Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx, General Counsel
Facsimile No.: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxx.xxx
or such other address, facsimile number or e-mail address as such Party may
hereafter specify for the purpose by notice to the other Parties hereto. All
such notices, requests and other communications shall be deemed received on the
date of receipt by the recipient thereof if received prior to 5:00 p.m. in the
place of receipt and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding Business Day in the place of receipt.
15.3 Subsidiaries and Affiliates. Subject to the scope of this Agreement
described in Recitals A and B, subsidiaries and other Affiliates of Newco and
Visteon are bound by the provisions herein to the extent that such subsidiaries
or Affiliates produce Components supplied to Newco or its Affiliates (in regard
to Visteon and its Affiliates) or purchase Components supplied by Visteon or its
Affiliates (in regard to Newco and its
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Affiliates). Each Party warrants and represents to the other Party that it has
the authority to bind its Affiliates to this Agreement as described in this
Section 15.3.
15.4 Amendments and Waivers.
(a) Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each Party to this Agreement, or in the case of a waiver, by
the Party against whom the waiver is to be effective.
(b) No failure or delay by any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
15.5 Entire Agreement. This Agreement contains all Exhbits hereto. Subject to
Section 13, this Agreement supersedes any prior agreements between the Parties
concerning the subject matter herein.
15.6 Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns; provided that neither Party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other Party hereto, except as expressly
provided for otherwise in this Agreement.
15.7 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated 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 a
determination, the Parties 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 in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
15.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Michigan, without regard to the
conflicts of law rules of such state. The Parties exclude the application of the
1980 United Nations Convention on Contracts for the International Sale of Goods,
if otherwise applicable.
15.9 Disputes. If a dispute arises between the Parties relating to this
Agreement, the following shall be the sole and exclusive procedure for enforcing
the terms hereof; provided, however, that a Party may seek injunctive relief
from a court where appropriate for the purpose of maintaining the status quo
while this procedure is being followed:
(i) The Parties promptly shall hold a meeting of senior executives
with decision-making authority to attempt in good faith to negotiate a
mutually satisfactory resolution of the dispute; provided that no
Party shall be under any obligation whatsoever to reach, accept or
agree to any such resolution; provided further, 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.
(ii) If the parties are unable to negotiate a mutually satisfactory
resolution as provided above, then upon request by either Party, the
matter shall be submitted to binding arbitration before a sole
arbitrator in accordance with the CPR Rules, including discovery
rules, for Non-Administered Arbitration. Within five Business Days
after the selection of the arbitrator, each Party shall submit its
requested relief to the other Party and to the arbitrator with a view
toward settling the
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matter prior to commencement of discovery. If no settlement is
reached, then discovery shall proceed. Upon the conclusion of
discovery, each Party shall again submit to the arbitrator its
requested relief (which may be modified from the initial submission)
and the arbitrator shall select only the entire requested relief
submitted by one Party or the other, as the arbitrator deems most
appropriate. The arbitrator shall not select one Party's requested
relief as to certain claims or counterclaims and the other Party's
requested relief as to other claims or counterclaims. Rather, the
arbitrator must only select one or the other Party's entire requested
relief on all of the asserted claims and counterclaims, and the
arbitrator shall enter a final ruling that adopts in whole such
requested relief. The arbitrator shall limit his/her final ruling to
selecting the entire requested relief he/she considers the most
appropriate from the requests submitted by the Parties.
(iii) Arbitration shall take place in the City of Dearborn, Michigan
unless the parties agree otherwise or the arbitrator selected by the
Parties orders otherwise. Punitive or exemplary damages shall not be
awarded. This Section 15.9 is subject to the Federal Arbitration Act,
28 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
may be entered by any court having jurisdiction.
15.10 Counterparts; Effectiveness; Third Party Beneficiaries. This Agreement may
be signed in counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective as of the date first set forth above when
each Party hereto shall have received a counterpart hereof signed by the other
Party hereto. Until and unless each Party has received a counterpart hereof
signed by the other Party hereto, this Agreement shall have no effect and no
party shall have any right or obligation hereunder (whether by virtue of any
other oral or written agreement or other communication). Except as specifically
provided for herein, no provision of this Agreement is intended to confer any
rights, benefits, remedies, obligations or liabilities hereunder upon any Person
other than the Parties hereto and their respective successors and permitted
assigns under Section 6 or Section 15.6.
15.11 Right to Audit.
(a) If requested by Xxxxx, Visteon will permit Newco (which, for purposes
of this Section 15.11, includes its authorized representatives of Newco)
to:
(i) Examine all non-privileged pertinent documents, data and other
information relating to Visteon's obligations under this Agreement,
any payment made to Visteon or any claim by Visteon;
(ii) View any facility or process relating to the Components or this
Agreement, including those relating to production quality; and
(iii) Audit any facility or process to determine compliance with the
requirements of this Agreement.
Any examination under this Section 15.11 will be conducted during normal
business hours and upon advance written notice to Visteon.
(b) If requested by Xxxxx, Visteon will use its best efforts to permit
Newco to obtain from the subcontractors of, and vendors to, Visteon the
information and permission to conduct the reviews specified in Section
15.11, regardless of any other right Newco may have to that information or
facilities.
(c) Visteon will keep all relevant documents, data and other written
information for at least two years following the termination of this
Agreement.
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15.12 Agreement or Consent of Newco. In regard to any agreement or consent of
Newco referenced or required under this Agreement, such agreement or consent
shall mean the agreement or consent of Newco given after the date of this
Agreement only (and not prior to the date of this Agreement).
15.13 Visteon Acknowledgement Regarding Ford Global Terms. Visteon acknowledges
that Newco will be subject to Ford's Production Purchasing Global Terms and
Conditions (PPGTCs Jan. 1, 2004) ("Ford GTCs") in regard to parts, components,
or systems supplied by Newco to Ford which are, or which include, Components
supplied by Visteon to Newco under this Agreement. As such, pursuant to, and
without limiting, Section 25 of the Global Terms (Customer Requirements),
Visteon agrees to comply with Xxxx's Vehicle Parts Branding Directive (as
described in Section 15.02 of the Ford GTCs), as well as with Section 33 of the
Ford GTCs (except as expressly provided for in Exhibit 5), in regard to such
Components supplied by Visteon.
[signatures appear on following page]
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IN WITNESS WHEREOF, Xxxxx and Visteon have caused this Agreement to be executed
in multiple counterparts by their duly authorized representatives.
VISTEON CORPORATION AUTOMOTIVE COMPONENTS HOLDINGS, LLC
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------------- --------------------------------
Title: Executive Vice President and Title: President
Chief Financial Officer
Date: September 30, 2005 Date: September 30, 2005
---------------------- ----------------------
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