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