EXHIBIT 10.7
EMPLOYEE TRANSITION AGREEMENT
This Employee Transition Agreement relating to certain employment
matters and employee benefit plans (this "Agreement") dated as of April 1, 2000
is made and entered into by and among Ford Motor Company, a Delaware
corporation ("Ford") and Visteon Corporation, a Delaware corporation and a
wholly owned subsidiary of Ford, ("Visteon"). Ford and Visteon are referred to
herein individually as a "Party" and collectively as the "Parties".
Recitals
1. Ford has determined that it would be appropriate and beneficial to separate
the activities now being conducted under the name of "Visteon Automotive
Systems, an enterprise of Ford Motor Company," including those activities
conducted by any entity in which Ford, directly or indirectly, owns or
controls 50% or more of its stock or other equity interests (a
"Subsidiary") and by any entity in which Ford, directly or indirectly,
owns or controls less than 50% but more than 20% of its stock or other
equity interests (an "Affiliate") which is aligned with such enterprise,
which presently includes the Chassis Systems, Climate Control Systems,
Interior and Exterior Systems, Energy Transformation Systems, Glass
Division, and the Visteon Technology Office (collectively, with historic
operations, including the former Automotive Products Operations,
Automotive Components Division, Electronics, Plastics and Trim, Climate
Control, Chassis, Electrical and Fuel Handling, and Glass Divisions, the
"Business");
2. Ford has concluded that the separation of the Business from its automaking
business would (i) alleviate competitive barriers to expanding the
Business beyond sales to ▇▇▇▇, ▇▇▇▇ Subsidiaries and Ford Affiliates, (ii)
allow Ford to overcome competitive barriers to making purchases from
third-party automotive suppliers, and (iii) enhance the Business' ability
to attract employees and permit the Business to offer employee incentives
more directly tied to the performance of the Business;
3. Ford has caused Visteon to be formed for the purpose of carrying on and
conducting the Business;
4. Ford and Visteon have entered into various agreements, including a Master
Transfer Agreement dated as of even date herewith, to effect the
separation of the Business; and
5. The parties desire that Ford transfer to Visteon certain employees who are
presently engaged in doing work for the Business and to provide for the
orderly transition of employee benefit plans.
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Agreement
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Article I
Definitions
1.01 "Benefit Transition Date" shall mean the first day of the month coincident
with or preceding the Distribution Date except with respect to the Ford
Flexible Benefits Plan shall mean June 1, 2000.
1.02 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.03 "Distribution Date" shall mean the date Ford will distribute to Ford
shareholders all of the shares of Visteon common stock then owned by Ford.
1.04 "DOL" shall mean the U.S. Department of Labor.
1.05 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.06 "Ford Business Employees" shall mean
(i) Persons who are enrolled on the Ford salaried payroll (U.S.
or non-U.S) or enrolled on the Ford hourly payroll in non-U.S
jurisdictions and who are actively at work at the Business
the day prior to the Transfer Date including those on paid
time off (i.e. Jury Duty Pay, Bereavement Pay, Short Term
Military Pay, Vacation and Paid Holiday) and those on reduced
or alternate work schedules, but excluding Ford employees who
are on temporary assignment to the Business ("Active Ford
Business Employees"); and
(ii) Persons who are absent from such salaried or hourly
employment as of the day prior to the Transfer Date on
account of short term or long term disability leave or other
approved leaves of absence, or layoff ("Inactive Ford
Business Employees").
1.07 "Ford Retiree" shall mean a former Ford Business Employee, or a surviving
spouse or beneficiary of a former Ford Business Employee, who had terminated
service with Ford or Visteon and is receiving retirement benefits under a Ford
sponsored
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retirement plan as of the Benefit Transition Date or who terminated
employment with Ford or Visteon on or before the Benefit Transition Date and is
eligible on the Benefit Transition Date to receive immediate or future
retirement benefits (including deferred vested benefits) under the Ford
sponsored retirement plan.
1.08 "General Retirement Plan" or "GRP" shall mean the General Retirement Plan
of Ford Motor Company and its participating subsidiaries.
1.09 "Global Ford Business Employees" shall mean all employees of Ford or its
Subsidiaries or Affiliates who are engaged in the conduct of the Business prior
to the Transfer Date, including but not limited to
(i) Ford Business Employees; and
(ii) Persons who are enrolled on the payroll of a Subsidiary or
Affiliate of Ford engaged in the Business as of the Transfer
Date, or persons who are no longer active but who had been
employed by a Subsidiary or Affiliate engaged in the Business
at any time prior to the Transfer Date ("Subsidiary
Employees").
1.10 "Global Visteon Employees" shall mean all employees of Visteon or its
subsidiaries or affiliates who are engaged in the conduct of the Business after
the Transfer Date, including but not limited to
(i) Visteon Employees; and
(ii) Subsidiary Employees who as a result of the transfer of
Ford's interest in the Subsidiary or Affiliate to Visteon as
of the Transfer Date, became employed by, or became the
responsibility of, a subsidiary or affiliate of Visteon on
the Transfer Date.
For purposes of this Agreement, Global Visteon Employees shall not include any
employees hired directly by Visteon or its subsidiaries or affiliates after the
Transfer Date.
1.11 "Group I Employee" shall mean a U.S. Visteon Employee who as of the
Benefit Transition Date is eligible for immediate normal or regular early
retirement under the provisions of the GRP as in effect on the Benefit
Transition Date.
1.12 "Group II Employee" shall mean a U.S. Visteon Employee who
(i) is not a Group I Employee;
(ii) has as of the Benefit Transition Date a combination of age and
continuous service that equals or exceeds sixty (60) points (partial
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months disregarded); and
(iii) could become eligible for normal or regular early retirement
under the provisions of the GRP as in effect on the Benefit
Transition Date within the period after the Benefit
Transition Date equal to the employee's Ford service as of
the Benefit Transition Date.
1.13 "Group III Employee" shall mean any U.S. Visteon Employee who participates
in the GRP other than a Group I or II Employee.
1.14 "IRS" means the U.S. Internal Revenue Service.
1.15 "OSHA" shall mean the Occupational Safety and Health Act of 1970, as
amended.
1.16 "PBGC" shall mean the Pension Benefit Guaranty Corporation.
1.17 "SFAS No. 87" shall mean the Statement of Financial Accounting Standards
No. 87.
1.18 "SFAS No. 106" shall mean the Statement of Financial Accounting Standards
No. 106.
1.19 "Transfer Date" shall mean the date specified in the Master Transfer
Agreement with respect to each entity or interest to be transferred pursuant
thereto.
1.20 "Visteon Balance Sheet" shall mean the balance sheet for Visteon
Automotive Systems as of March 31, 2000, as prepared by Ford.
1.21 "Visteon Employees" shall mean
(i) Active Ford Business Employees who are transferred to Visteon
pursuant to the terms hereof and who are at work on the Transfer
Date including those on paid time off (i.e., Jury Duty Pay,
Bereavement Pay, Short Term Military Pay, Vacation Pay and Paid
Holiday) and those on reduced or alternate work schedules; and
(ii) Inactive Ford Business Employees or Ford Retirees on a disability
retirement who are transferred to Visteon pursuant to the terms
hereof on the Reinstatement Date or Disability Retiree
Reinstatement Date.
For purposes of this Agreement, Visteon Employees shall not include
any employees hired directly by Visteon after the Transfer Date, except for
those specified in (ii) above.
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1.22 "Visteon Retiree" shall mean a former Ford Business Employee, or a
surviving spouse or beneficiary of a former Ford Business Employee, who became
a Visteon Employee and who terminated service with Visteon after the Benefit
Transition Date and is receiving retirement benefits under a Ford sponsored
retirement plan and a Visteon sponsored retirement plan.
Article II
Employment Responsibility
2.01 Employee Census.
On the Transfer Date, Ford shall provide Visteon a preliminary
employee census ("Employee Census") containing the following information:
(i) a list of all Active Ford Business Employees by location;
(ii) a list of all Inactive Ford Business Employees by location;
(iii) the job classification of each Ford Business Employee;
(iv) the Ford Service Date of each Ford Business Employee;
(v) the base monthly salary of each Ford Business Employee;
(vi) the reason for any absence of any Ford Inactive Business Employee
and the date any leave expires.
Ford shall finalize the Employee Census no later than thirty (30) days after
the Transfer Date, subject to Visteon review. Ford shall not be responsible for
providing Visteon an Employee Census of the Global Ford Business Employees.
2.02 Employment Transfer.
Unless otherwise agreed, Ford shall transfer the employment of the
Active Ford Business Employees to Visteon effective on the Transfer Date and
the Active Ford Business Employees shall become Visteon Employees effective on
the Transfer Date. Ford shall transfer to Visteon the employment of an Inactive
Ford Business Employee who is recalled from layoff or other inactive status or
requests reinstatement on or before the date such employee's leave of absence
expires or as of the date such employee's medical disability ceases and such
employee is released by their personal physician to return to their former
position of employment or a comparable position consistent with any medical
restrictions, as applicable (the "Reinstatement Date"). In addition, Ford shall
transfer to Visteon employment responsibility for a Ford Retiree on a
disability retirement ("Disability Retiree") on the date the medical disability
ceases, such employee is released by their personal physician to return to
their former position of employment or a comparable position consistent with
any medical restrictions, and the retirement committee approves the return to
work ("Disability Retiree Reinstatement Date"). The Transfer Date, the
Reinstatement Date and the Disability Retiree
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Reinstatement Date shall be known as the "Employment Date". Notwithstanding the
above, Visteon shall remain financially responsible for any costs incurred by
Ford or its benefit plans and programs related to the Inactive Ford Business
Employees between the Transfer Date and the Employment Date, and Visteon shall
reimburse Ford for any such costs under a method to be mutually agreed by the
Parties. A Ford Business Employee who is on an international service assignment
to a non-Business activity as of the Distribution Date shall remain in such
assignment until scheduled to return and shall return to the originating
activity. A Ford employee who is on international service assignment to a
Business activity as of the Distribution Date shall remain in such assignment
until scheduled to return and shall return to the originating activity. Visteon
or Ford, as applicable, shall reimburse the other for the costs of such
employees after the Distribution Date under a method to be mutually agreed by
the Parties.
2.03 Recognition of Service.
Visteon shall recognize, or shall cause its subsidiaries or affiliates
to recognize, the Ford Service Date or Subsidiary Service Date, as applicable,
of each Global Visteon Employee in determining years of service under the
employee benefit plans and other compensation and benefit practices and polices
of Visteon or its subsidiaries or affiliates both prior to the Benefit
Transition Date and thereafter, except as otherwise provided in this Agreement.
2.04 Compensation and Benefit Plans.
Visteon shall pay each Global Visteon Employee at the same base salary
rate or hourly rate as was applicable to them as a Global Ford Business
Employee, and shall implement any merit, promotional or other increases that
were scheduled to go into effect as of the Transfer Date. Effective on the
Transfer Date, and except as otherwise provided in this Agreement, Visteon
shall adopt the same benefit plans and programs for Visteon Employees as are in
effect for Ford Business Employees as of the Transfer Date, and shall
participate in the Ford employee benefit plans and programs as a participating
subsidiary or its equivalent until the Benefit Transition Date. Visteon shall
reimburse Ford for any such cost and expense consistent with the methods
presently in effect for charging such expenses to participating subsidiaries or
their equivalents using methodology consistent with U.S. GAAP and acceptable to
both Parties. In addition, Visteon shall reimburse Ford for any costs and
expense incurred prior to the Benefit Transition Date and that relate to Ford
Retirees under an incentivized separation program. Effective on the Benefit
Transition Date, and except as otherwise provided herein, Visteon shall adopt,
or shall cause its subsidiaries or affiliates to maintain or adopt, benefit
plans and programs for the U.S. Global Visteon Employees that are substantially
comparable in the aggregate to those that were in effect on the day immediately
preceding the Benefit Transition Date and shall continue such programs
substantially in effect for at least four (4) years after the Distribution
Date, provided, however, if Ford makes changes in the benefit plans and
programs applicable to Ford employees during the four (4) year period, Visteon
or its subsidiaries or affiliates, as applicable, shall be permitted, but shall
not be required, to make a comparable change.
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The comparability period shall not be effective with respect to U.S. employees
of Visteon who were hired as new hires by Visteon after the Transfer Date or
with respect to non-U.S. Global Visteon Employees. Except as otherwise provided
in this Agreement, Ford shall take such action as is necessary to eliminate
Global Visteon Employees from Ford sponsored benefit plans and programs as of
the Benefit Transition Date unless otherwise agreed by the Parties, and
thereafter Global Visteon Employees shall have no rights under any such plans
or programs.
2.05 Paid Time Off.
Effective as of the Employment Date, each Global Visteon Employee
shall retain the same paid time off eligibility they had under Ford's paid time
off policy, or the policy of Ford's Subsidiaries or Affiliates. Any paid time
off used by a Global Ford Business Employee in 2000 prior to the Employment
Date shall be counted against such employee's entitlement as a Global Visteon
Employee after the Distribution Date until December 31, 2000.
2.06 Collective Bargaining Agreements.
Certain of the Ford Business Employees are covered under the terms of
the collective bargaining agreements listed on Attachment A. Effective as of
the Transfer Date, Visteon shall assume the obligation of Ford under the
collective bargaining agreements applicable to such employees, and Ford shall
be relieved of any further obligations under such agreements with respect to
such employees. The Agreement Governing the Separation of the Ford Visteon
Organization dated January 25, 2000 between Ford and the Ford European Works
Council, attached hereto as Attachment B, shall apply to the Ford Business
Employees represented by the Ford European Works Council, and Visteon agrees to
abide by its terms.
2.07 Reemployment Restriction.
Except with the consent of Visteon, Ford shall not hire any Global
Visteon Employee during the period commencing as of the Distribution Date and
terminating twelve months thereafter, unless otherwise required by law.
Article III
Employee Benefit Plans
3.01 U.S. Qualified Defined Benefit Retirement Plans.
a. GRP Participating Subsidiary. U.S. Ford Business Employees participate
in the GRP as employees of Ford. Effective as of the Transfer Date,
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Visteon shall take such corporate action as is necessary to
participate in the GRP as a "Participating Subsidiary" as defined in
the GRP with respect to the Visteon Employees until the Benefit
Transition Date. Ford hereby consents to such participation by
Visteon. Visteon shall reimburse Ford for the cost of any early
separation incentive programs applicable to U.S. Ford Business
Employees prior to the Benefit Transition Date.
b. Visteon Mirror GRP.
(i) Establishment of Plan. Effective on the Benefit Transition
Date, or such later date as the Parties may mutually agree,
Visteon shall establish its own defined benefit pension plan
that with respect to Group III Employees contains provisions
that duplicate the benefit provisions of the GRP as it pertains
to service prior to the Benefit Transition Date and with
respect to Group I and II Employees, contains substantially
comparable benefit provisions with respect to service after the
Benefit Transition Date ("Visteon Mirror GRP"). The Visteon
Mirror GRP shall be responsible for providing retirement
benefits for Group I and Group II Employees for service on or
after the Benefit Transition Date and, subject to receipt of
the asset transfer described below, for Group III Employees for
service recognized under the GRP prior to the Benefit
Transition Date and for service with Visteon after the Benefit
Transition Date. The Visteon Mirror GRP shall recognize
credited service of Visteon Employees under the GRP through the
Benefit Transition Date for purposes of eligibility to
participate and eligibility for benefits to the same extent as
such credited service (or ERISA service) was counted under the
GRP. Notwithstanding the above, for purposes of calculating the
Part B Contributory Benefit, only a total of thirty five (35)
years of combined Ford and Visteon service may be used.
(ii) Asset Transfer Valuation. Ford shall cause to be transferred
from the GRP assets in cash or cash equivalents, or marketable
securities reasonably acceptable to Visteon, that shall equal
the projected benefit obligation, as defined in SFAS No. 87, of
the liabilities related to the Group III Employees as of the
Benefit Transition Date ("GRP PBO Value") determined by an
independent actuary appointed by Ford ("Ford Actuary") in
accordance with the principles stated below:
(A) The present value of liabilities will be
determined under SFAS No. 87 as the projected
benefit obligation, using the actuarial
assumptions and methods that are published in
the most recent actuarial valuation for
accounting purposes for the GRP prepared by
Buck Consultants.
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(B) A discount rate as of the Benefit Transition
Date determined by Ford using its normal
methods for developing a SFAS No. 87 discount
rate but based on market interest rates as of
the Benefit Transition Date.
In no event shall the GRP PBO Value as calculated on the basis
described above result in an asset transfer less than the amount
necessary to reflect the requirements of the provisions of Code
Section 411(d) and 414(l) and the Treasury Regulations issued
thereunder and the actuarial methods and assumptions established by
the PBGC with respect to spin-offs of pension plans where
liabilities, for purposes of Code Section 411(d) and 414(l), are
calculated using a discount rate equal to the applicable rate or
rates published by the PBGC and in effect for plans terminating on
the Benefit Transition Date. The determination of the GRP PBO Value
by the Ford Actuary shall be submitted to an independent actuary
appointed by Visteon (the "Visteon Actuary") for verification but
such verification shall relate only to the calculation of the GRP
PBO Value on the basis set forth above. If the Visteon Actuary and
the Ford Actuary are unable to agree on a verification, they shall
jointly designate a third independent actuary whose verification
shall be final and binding. Ford and Visteon shall each pay
one-half of the costs of such third actuary.
(iii) Transfer to Qualified Plan. Within ninety (90) days of the
Transfer Date (but in no event later than the Benefit
Transition Date), Visteon shall provide Ford with the plan
document for the Visteon Mirror GRP, together with either (A)
an opinion letter of counsel reasonably acceptable to Ford that
the Visteon Mirror GRP satisfies the requirements for
qualification under Section 401(a) of the Code as of its
effective date or will be amended to meet the qualification
requirements in the event the IRS requires retroactive
amendments to the Visteon Mirror Plan as part of the
determination letter process and that the transfer of assets
provided in (iv) below shall not affect the qualification of
such plan, or (B) a favorable determination letter issued by
the IRS that the Visteon Mirror GRP satisfies the requirements
for qualification under Section 401(a) of the Code as of its
effective date.
(iv) Asset Transfer. As soon as practicable after the latest of (A)
the date on which the GRP PBO Value is determined and verified
pursuant to (ii) above, (B) the expiration of thirty days
following the filing of Forms 5310 with the IRS and PBGC in
respect of the GRP and the Visteon Mirror GRP or (C) the
receipt by Ford of the opinion or determination letters
described in (iii) above and determination by Ford that the
Visteon Mirror GRP satisfies the terms of this Agreement (the
"Asset Transfer Date"), Ford shall
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cause the trustee of the GRP to transfer assets and respective
liability therefor to the Visteon Mirror Pension Plan in such
amount and in such form as provided in (ii) above, together
with interest from the Benefit Transition Date to the first of
the month immediately preceding the Asset Transfer Date, at the
Ford Master Trust rate of return, and thereafter until the
Asset Transfer Date, interest at the 90-day Treasury ▇▇▇▇ rate
on a bond equivalent yield in effect on the last business day
of the month immediately preceding or coincident with the Asset
Transfer Date as quoted in the Wall Street Journal.
(v) No Further Liability. Upon receipt of the transferred assets
from the GRP, neither Ford nor the GRP shall have any further
liability to the Group III Employees for benefits for service
under the GRP with respect to which liabilities and assets have
been transferred. Ford and Visteon shall use their respective
best efforts to make amendments to their respective plans and
trusts as may be necessary or appropriate to effect the
transfers contemplated by these provisions.
(vi) Pension Security. The assets of the Visteon Mirror GRP that are
transferred from the GRP trust as provided in section (iv)
above, and any earnings thereon, shall be held in a separate
trust for a period equal to five years commencing as of the
Benefit Transition Date. Such assets shall be available only
for the purposes of providing pension benefits for plan
participants and their beneficiaries for service under the Ford
GRP through the Benefit Transition Date ("Visteon Past Service
Trust"). In the event the assets in the Visteon Past Service
Trust are insufficient to pay the liability for accrued
benefits measured on a plan termination basis, determined as of
each year end, using PBGC assumptions, including the PBGC
discount rates, mortality tables and expected retirement ages
unless Ford agrees to such other rates, tables and assumptions
certified to by the Visteon Actuary as appropriate for
measuring liabilities on a plan termination basis. While such
Visteon Past Service Trust is maintained, Visteon shall
contribute sufficient cash within thirty days of the date the
year-end calculation is complete to restore the assets in the
Visteon Past Service Trust to be at least equal to such
termination liability; provided, however, that Visteon need not
contribute in any year an amount greater than the maximum tax
deductible contribution allowed for such year, and provided
further, that if the contribution required would exceed $10
million in any year, Visteon shall have the option to pay $10
million the first year, and shall pay the balance in succeeding
years in annual installments of at least $5 million until the
obligation is satisfied, together with interest on the
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obligation at the 90 day Treasury ▇▇▇▇ rate as quoted in the
Wall Street Journal for the relevant period (the "Financial
Burden Formula"). Visteon shall not terminate the Visteon
Mirror GRP and revert assets to Visteon for a period of five
years after the Benefit Transition Date. Visteon shall not
invest any assets of the Visteon Past Service Trust in an
employer security as defined in Section 407(d)(1) of ERISA for
a period of five years after the Benefit Transition Date.
▇. ▇▇▇▇ GRP Pension Liability.
(i) Ford Retirees. The GRP shall retain liability for retirement
benefits for all Ford Retirees, and shall retain all GRP assets
with respect thereto. The benefits payable shall be based on
the benefit provisions applicable under the GRP as of the date
of retirement, and as may be subsequently amended. To the
extent that such benefit is based on final average salary under
the GRP, the GRP will take into account any base salary paid at
Visteon while an employee as of the December 31 prior to the
Benefit Transition Date. Ford shall amend the GRP to provide
that Ford Retirees may be employed at Visteon after the
Distribution Date and remain eligible to receive benefits under
the GRP.
(ii) Group I and Group II Employees For Pre-Benefit Transition Date
Service. The GRP shall retain liability for retirement benefits
of Group I and Group II Employees, but only for service through
the Benefit Transition Date. The GRP shall recognize credited
service (or ERISA service) of U.S. Visteon Employees under the
Visteon Mirror GRP for purposes of eligibility to participate
and eligibility for benefits to the same extent as if such
credited service (or ERISA service) was earned under the GRP,
but not for purposes of benefit calculation. The retirement
benefits paid to Group I and Group II Employees from the GRP
shall be based on the benefits in effect as of the retirement
date using the final average salary of the Group I or Group II
Employee at retirement from Visteon, giving effect to Visteon
base salary increases after the Benefit Transition Date.
Visteon shall reimburse Ford for the following additional
costs: (A) the cost of benefit increases under the GRP that
occur after the Benefit Transition Date and relate to service
prior to the Benefit Transition Date; (B) for the effect on the
PBO related to Group I and Group II Employees for any Visteon
average merit salary increase which exceeds the average Ford
merit increase by one-half percent in any given year, provided
Visteon shall receive credit if the Visteon average merit
salary increase is less than the average Ford merit increase by
one-half percent in any given year; and (C) for the effect on
the PBO related to Group I and Group II
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Employees as a result of Visteon's implementation of any early
separation incentive programs, provided however that Visteon
shall receive credit if the effect of such programs reduces the
PBO. The method of computing the reimbursements shall be as
described on Schedules X, Y and Z. The amount of reimbursement
shall be determined by Ford's Actuary and shall be subject to
verification by Visteon's Actuary. If the Visteon Actuary and
the Ford Actuary are unable to agree on a verification, they
shall jointly designate a third independent actuary whose
verification shall be final and binding. Ford and Visteon shall
each pay one-half of the cost of such third actuary. The
reimbursements shall be done annually within thirty days after
the annual actuarial valuation of the GRP is completed by the
Ford Actuary and verified by Visteon's Actuary. If the
reimbursements for either Party exceeds in the aggregate $10
million per year (relating to costs under (A), (B) and (C)
above and under (A), (B) and (C) of Section 3.02c(ii) incurred
in that year, but not including costs under (A), (B), and (C)
above or under (A), (B) and (C) of Section 3.02c(ii) incurred
in prior years) the Party with the obligation shall have the
option to pay the obligation according to the Financial Burden
Formula. Group I and Group II Employees who retire under the
GRP will be eligible for the same Ford postretirement benefits,
such as health care and life insurance and certain other Ford
sponsored programs on the same basis as other Ford employees
retiring at the same time.
d. Prorated GRP Supplements.
(i) Early Retirement Supplement. To the extent that any Early
Retirement Supplement is payable under the GRP to a Group I or
Group II Employee, the amount of the total monthly benefit used
for determining the Early Retirement Supplement shall be
determined as follows: The amount of the total monthly benefit
that would otherwise be used for determining the Early
Retirement Supplement under the GRP at the time the Group I or
Group II Employee retires shall be multiplied by a fraction,
the numerator of which is the number of years of credited
service, including fractions of a year, under the GRP not to
exceed thirty years, and the denominator of which is thirty. To
the extent that any Early Retirement Supplement is payable
under the Visteon Mirror GRP to a Group I or Group II Employee,
the amount of the total monthly benefit that would otherwise be
used for determining the Early Retirement Supplement under the
Visteon Mirror GRP at the time the Group I or Group II Employee
retires shall be multiplied by a fraction, the numerator of
which is thirty less the number of years (not to exceed thirty)
of credited service, including fractions of a year, under the
GRP to the Benefit Transition Date and the
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denominator of which is thirty. In the event the Group I or
Group II Employee has credited service under the GRP of thirty
or more years as of the Benefit Transition Date, no Visteon
Mirror Supplement shall be payable.
(ii) Interim Supplement or Temporary Benefit. To the extent that any
Interim Supplement or Temporary Benefit is payable under the
GRP to a Group I or Group II Employee, the amount of the
Interim Supplement or Temporary Benefit as applicable, shall be
determined by multiplying the number of years of credited
service (not to exceed 30), including fractions of a year,
under the GRP as of the Benefit Transition Date by the monthly
Interim Supplement Rate, or Temporary Benefit Rate, as
applicable, in effect at the time of retirement. To the extent
that any Interim or Temporary Benefit is payable under the
Visteon Mirror GRP to a Group I or Group II Employee, the
amount of the benefit shall be shall be determined by
multiplying the number of years of credited service (except if
the combined Ford and Visteon service exceeds thirty, then the
Visteon benefit shall be determined by subtracting from thirty
years the years of Ford credited service), including fractions
of a year, under the Visteon Mirror GRP by the monthly Interim
Supplement Rate, or Temporary Benefit Rate, as applicable, in
effect at the time of retirement. In the event a Group I or
Group II Employee has credited service under the GRP of thirty
or more years as of the Benefit Transition Date, no Visteon
Mirror Interim Supplement or Temporary Benefit shall be
payable.
e. Group II Employees Who Fail Grow-in. Except as otherwise provided by
law, for those Group II Employees who do not continue to be employed
by Visteon or a successor to Visteon until such time as their age and
combined service with Ford through the Benefit Transition Date and
with Visteon or its successor after the Benefit Transition Date would
be sufficient to result in eligibility for retirement under the GRP,
any benefit payable for years of service prior to the Benefit
Transition Date shall be based on the benefit rate and final average
salary, if applicable, in effect under the GRP on the date such
employee breaks service under the Visteon Mirror GRP. In such event,
such employee shall be treated as a "deferred vestee" under the GRP,
if otherwise eligible based on combined service. Benefits for service
at Visteon after the Benefit Transition Date shall be payable by
Visteon.
f. U.S. Master Trust. After the Transfer Date, the defined benefit plans
of Ford Electronics and Refrigeration, LLC. ("FE&R") may continue to
participate in the U.S. Ford Master Trust until the Benefit Transition
Date. Visteon shall establish a U.S. Visteon Master Trust no later
than the Benefit Transition Date and Ford shall cause the Trustee of
the U.S. Ford
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Master Trust to transfer the assets in such U.S. Ford Master Trust
allocable to FE&R's defined benefit plans to the trustee of the U.S.
Visteon Master Trust. Assets shall be valued at the end of the month
coincident with or following the Distribution Date ("Valuation Date")
and cash or cash equivalents, or marketable securities acceptable to
Visteon, shall be transferred within thirty (30) days thereafter,
together with interest from the Valuation Date to the asset transfer
date at the 90-day Treasury ▇▇▇▇ rate on a bond equivalent yield in
effect on the last business day of the month immediately preceding the
asset transfer date as quoted in the Wall Street Journal. Assets
attributable to such plans that are held outside the Ford Master Trust
also shall be transferred to Visteon on or before the asset transfer
date, in such form as such assets are presently held. Nothing herein
contained shall be construed as to prohibit Ford from causing Visteon
to transfer assets and liabilities from FE&R sponsored salaried
defined benefit plans to Ford sponsored defined benefit plans prior to
the Benefit Transition Date for the purpose of aligning appropriate
liabilities with respect to the Business, provided such transfers
comply with applicable law and result in each such FE&R salaried
defined benefit plan having assets with a fair market value as of
January 1, 2000 equal to the projected benefit obligation, as defined
in SFAS No. 87, of the liabilities related to non-transferred
participants in each such plan as of January 1, 2000. Visteon shall
cooperate with Ford in effectuating such transfers in the period
between the Transfer Date and the Benefit Transition Date.
3.02 U.S. Non-Qualified Retirement Plans.
a. Participating Subsidiary. Ford maintains the following U.S.
non-qualified retirement plans in which certain U.S. Ford Business
Employees who are eligible under the terms of the plans participate:
The Benefit Equalization Plan ("BEP"), the Supplemental Executive
Retirement Plan ("SERP") and the Executive Separation Allowance Plan
("ESAP") and the Select Retirement Plan ("SRP"). As of the Transfer
Date, Visteon shall take such corporate action as is necessary to
become a Participating Subsidiary under the SERP, ESAP and SRP and
Ford hereby consents to such participation.
b. Visteon Mirror NQPs. Effective on the Benefit Transition Date,
Visteon shall establish for the benefit of the U.S. Visteon Employees
who are otherwise eligible as of the Benefit Transition Date for a
BEP, SERP or ESAP benefit, its own non-qualified retirement plans that
with respect to eligible Group III Employees contain provisions that
duplicate the benefit provisions of the BEP, SERP and ESAP as it
pertains to service prior to the Benefit Transition Date and with
respect to eligible Group I and Group II Employees, contains
substantially comparable benefit provisions with respect to service
after the Benefit Transition Date ("Visteon Mirror
15
NQPs"). For eligible Group I and Group II Employees, Visteon shall be
responsible for paying a benefit for service after the Benefit
Transition Date under the Visteon Mirror NQPs. For eligible Group III
Employees, the liability for any service prior to the Benefit
Transition Date under the BEP, SERP and ESAP shall be transferred to
the respective Visteon Mirror NQPs, and Visteon shall be responsible
for paying a benefit based on combined service at Ford and Visteon.
Visteon's Mirror NQPs shall recognize service at Ford for purposes of
determining any minimum years of service to achieve eligibility for
benefits under such plans.
▇. ▇▇▇▇ Liability.
(i) Ford Retirees. Ford shall retain the liability for eligible Ford
Retirees. The benefit payable under the BEP, SERP, ESAP and SRP
shall be based on the benefit provisions applicable under such
plans as of the date of retirement, and as may be subsequently
amended. To the extent such benefit is based on final average
salary or final salary, the applicable plan will take into
account any base salary paid at Visteon prior to the Benefit
Transition Date. Ford Retirees may be employed at Visteon after
the Distribution Date and remain eligible to receive benefits
under the BEP, SERP, ESAP and SRP.
(ii) Group I and Group II Employees for Pre-Benefit Transition Date
Service. Ford shall retain the liability for benefits for Group
I or Group II Employees who have attained the minimum
Leadership Level required for such benefits as of the Benefit
Transition Date, but only for service through the Benefit
Transition Date. For example, a Group I or Group II Employee
who attains Leadership Level 1 or 2 on or after the Benefit
Transition Date shall have no benefit payable under the Ford
ESAP. As soon as practical after the Benefit Transition Date,
Visteon shall pay cash to Ford in an amount equal to the BEP,
SERP and ESAP projected benefit obligation with respect to the
eligible Group I or Group II Employees determined by the Ford
Actuary and verified by the Visteon Actuary as of the Benefit
Transition Date. If the Visteon Actuary and the Ford Actuary
are unable to agree on a verification, they shall jointly
designate a third independent actuary whose verification shall
be final and binding. Ford and Visteon shall each pay one-half
of the costs of such third actuary. The benefits paid to an
eligible Group I and Group II Employee from the BEP, SERP and
ESAP shall be based on the accrued benefits and eligibility, at
rates in effect as of the retirement date using the final
average salary, or final salary as applicable, of the eligible
Group I or Group II Employee at retirement, giving effect to
Visteon salary increases after the Benefit Transition Date.
Visteon shall reimburse Ford for the following additional
costs: (A) the cost of benefit increases under the BEP, SERP
and ESAP
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that occur after the Benefit Transition Date (including changes
in the accrual rate) and which relate to service prior to the
Benefit Transition Date, when such increases occur; (B) for the
effect on the PBO for any Visteon average merit salary increase
which exceeds the average Ford merit increase by one-half
percent in any given year provided that Visteon shall receive
credit if the Visteon average merit salary increase is less
than the average Ford merit increase by one-half percent in any
given year; and (C) for the effect of the PBO as a result of
Visteon's implementation of any early separation incentive
programs, provided however that Visteon shall receive credit if
the effect of such programs reduces the PBO. The method of
computing the reimbursements shall be as described on Schedules
X, Y and Z. The amount of reimbursement shall be determined by
Ford's Actuary and shall be subject to verification by
Visteon's Actuary. If the Visteon Actuary and the Ford Actuary
are unable to agree on a verification, they shall jointly
designate a third independent actuary whose verification shall
be final and binding. Ford and Visteon shall each pay one-half
of the costs of such third actuary. Such reimbursements shall
be done annually within thirty days after the annual actuarial
valuation of the BEP SERP and ESAP is completed by the Ford
Actuary and verified by the Visteon Actuary. If the
reimbursements for either Party exceeds in the aggregate $10
million per year (relating to costs under (A), (B) and (C)
above or under (A), (B) or (C) under Section 3.01c(ii) incurred
in that year, but not including costs under (A), (B) and (C)
above or under (A), (B) or (C) under Section 3.01c(ii) incurred
in prior years), the Party with the obligation shall have the
option to pay the obligation according to the Financial Burden
Formula.
(iii) Group III Employees. After the Benefit Transition Date, Ford
shall have no liability for benefits payable to eligible Group
III Employees with respect to service prior to the Benefit
Transition Date.
3.03 Retiree Health Care and Retiree Life Insurance.
Visteon shall pay the cost of providing post-retirement health and
life benefits for Group I and Group II Employees under the Ford Health and
Group Life and Disability Insurance Plan (the "Plans") ("OPEB") beginning as of
the Benefit Transition Date as provided below.
a. Determination of Annual Cash OPEB Reimbursement. For the
portion of 2000 that follows the Benefit Transition Date and
for each calendar year thereafter until the OPEB liability
for the Group I and Group II Employees is extinguished, the
annual cash OPEB reimbursement to the Plans for any given
year shall be an amount equal to the sum of (i) and (ii)
where
17
(i) is the estimated amount of OPEB claims paid during
the period to the Group I and Group II Employees who
retire after the Benefit Transition Date, together
with their spouses or dependents, determined on the
basis of average per contract claims costs for Ford
salaried retirees; and
(ii) is an allocable share of administration expenses
based on ratio of OPEB Liability for Group I and II
Employees to the total Ford salaried OPEB liability
unless Ford and Visteon agree to another method.
The Annual Cash OPEB Reimbursement shall be determined by the
Ford Actuary; the Visteon Actuary will have the opportunity
to verify the calculation.
b. Pre-Funding of SFAS 106 Liability. Visteon will establish and
maintain a Voluntary Employees' Beneficiary Association, other
tax-advantaged funded vehicle, such as a 401(h) medical account
under a qualified pension plan, or a similar bankruptcy remote
trust (collectively "VEBA") whose purpose is to reimburse the
Plans in respect of the claims and administration costs
described in Section 2.1 above. Visteon agrees that it will make
a series of cash payments to the VEBA with the intent that by
December 31, 2020 the assets in the VEBA will equal Visteon's
balance sheet liability at the same date for OPEB benefits in
respect of Group I and Group II Employees The cash payment to
the VEBA shall commence no later than January 1, 2011 and shall
be payable in advance in twelve equal monthly installments. The
amount of cash paid to the VEBA in each year commencing no later
than January 1, 2011 shall be an amount equal to the sum of (i),
(ii) and (iii) where
(i) is the Visteon SFAS 106 expense for that year as
computed by the Ford Actuary (and verified by the
Visteon Actuary) and based on assumptions used by
Ford for its salaried employees;
(ii) is an allocable share of expenses as described in Section a
(ii) above; and
(iii) is the amount of Visteon's OPEB balance sheet
liability in respect of Group I and Group II
Employees at the beginning of each calendar year
divided by the number of years remaining to December
31, 2020.
Notwithstanding the above, Visteon may accelerate payments to
the VEBA in its discretion. In the event tax law would not
permit Visteon a current deduction for the level of funding
described above, Visteon may make only such contributions to
the VEBA that would be tax deductible,
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provided, however that the balance of the funding obligation which
exceeds the permitted deduction is otherwise deposited into a
separate trust. Visteon and Ford shall cooperate with each other to
design, and Visteon agrees it will take necessary action to
implement, an appropriate method approved by the Parties'
respective auditors that would have the effect of eliminating
Ford's FAS 106 OPEB balance sheet liability for Group I and Group
II Employees beginning on the Benefit Transition Date. In the event
that the tax benefits contemplated by the Parties as being
available to Visteon with respect to prefunding of OPEB liabilities
are not or cease to be available, Visteon and Ford agree to
renegotiate the structure provided the new structure does not
increase Ford's costs or jeopardize Ford's security. If Ford and
Visteon cannot agree on a replacement structure, then Visteon will
pay to Ford directly the payments it otherwise would have paid to
the VEBA. Ford shall credit interest on such amount at the pretax
rate of return on Ford's cash portfolio.
c. Recordkeeping. In connection with administering Section 3.03
(a) above, Ford may decide to retain a third party service to
determine the correct amount of Visteon reimbursements
according to the methodology set forth in this Section 3.03.
If Ford decides to retain a third party service, Ford shall
consult with Visteon prior to appointing a third party
service, but Ford shall retain the right to appoint a third
party service in its sole discretion. Ford shall pay the
expense of such third party service and Visteon shall
reimburse Ford for such expense.
d. Continuation of Arrangements. The terms set forth in this
Section 3.03 shall be in force until the last survivors and
dependents of Group I and Group II Employees in service as of
the Benefit Transition Date who are eligible for GRP
retirement or OPEB benefits are deceased, or upon earlier
termination agreed jointly by Ford and Visteon, including any
VEBA or other arrangements or methods agreed in Section
3.03(b) (unless the Parties' respective auditors advise that
joint agreement to terminate would jeopardize the expected
accounting treatment of such arrangements or methods).
e. Ability to Substitute. The Parties may agree to substitute an
alternative method of computing reimbursement under this
Section 3.03. The method substituted shall have as its
objective to produce a fair estimate of the OPEB expense and
other reimbursement charges set forth in this Section, and
should preserve for each Party, to the extent possible, the
economic benefits bargained under this Section.
f. Actuarial Verification. If the Ford Actuary and the Visteon Actuary
are unable to agree on a verification, they shall jointly designate
a third independent actuary whose verification shall be final and
binding. Ford and Visteon shall each pay one-half of the cost of
such third actuary.
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3.04 U.S Defined Contribution Retirement Plans.
a. Participating Subsidiary. Ford sponsors the Ford Motor Company
Savings and Stock Investment Plan ("Ford SSIP") for the benefit of
the employees of Ford and its participating subsidiaries and
certain U.S. Ford Business Employees elect to participate in the
SSIP. Effective on the Transfer Date, Visteon shall take such
corporate action as is necessary to participate in the SSIP as a
"Participating Subsidiary" as defined in the SSIP with respect to
the U.S. Visteon Employees who participate in the SSIP until the
Benefit Transition Date. Ford hereby consents to such participation
by Visteon. Ford shall amend the SSIP to vest all U.S. Ford
Business Employees who participate in the SSIP in the Ford matching
contributions contained in their SSIP accounts as of the Benefit
Transition Date.
b. Visteon SSIP. Effective on the Benefit Transition Date, Visteon
shall establish its own defined contribution pension plan for the
benefit of U.S. Visteon Employees that had participated in the SSIP
that contains provisions substantially comparable to the SSIP,
except that the number of investment elections may be reduced and
the Ford Stock Fund election will be replaced with a Visteon Stock
Fund election. The Visteon SSIP shall provide benefits related to
contributions on or after the Benefit Transition Date. Within
ninety days after the Benefit Transition Date, U.S. Visteon
Employees who have accounts in the SSIP will be given a one time
opportunity to transfer no less than the entire balance in such
accounts to the Visteon SSIP. U.S. Visteon Employees who choose to
continue to participate in the SSIP with respect to contributions
made prior to the Benefit Transition Date shall be treated as
terminated employees under the provisions of the SSIP. However, no
distributions will be permitted until the U.S. Visteon Employee
separates from Visteon employment or a successor employer. Plan
loans will be permitted subject to the SSIP rules and U.S. Visteon
Employees who have SSIP loans currently or who take new SSIP Loans
after the Benefit Transition Date shall be issued coupon books for
their loan repayments. Hardship withdrawals will not be permitted.
3.05 Flexible Benefits Plan.
Visteon shall establish a Flexible Benefits Plan for the benefit of
U.S. Visteon Employees who participated in the Ford Flexible Benefits Plan
("Ford Flex Plan"), commencing on the Benefit Transition Date ("Visteon Flex
Plan"). The Visteon Flex Plan shall include health care, life and accident
insurance, health care spending account, dependent care spending account,
purchased vacation, the legal plan, vision care and financial planning on terms
identical to those provided under the Ford Flex Plan for plan year 2000, and
benefits substantially comparable thereafter, and shall be
20
designed to comply with the requirements of Code Section 125 with respect to
those benefits that are eligible to be included in a Section 125 arrangement.
For plan year 2000, Visteon shall make available to U.S. Visteon Employees who
participated in the Ford Flex Plan at least the same amount of FCA dollars and
Bonus Flex Dollars as was made available under the Ford Flex Plan. For plan
years commencing 2001 through 2003, Visteon shall make available to U.S.
Visteon Employees who participated in the Ford Flex Plan at least the same
amount of FCA dollars as was available under the Ford Flex Plan and the amount
of Bonus Flex Dollars shall be determined on the basis of the same formula as
was applicable under the Ford Flex Plan, but shall be based on Visteon's before
tax return on sales.
3.06 Salaried Income Security Plan.
As of the Transfer Date, Visteon shall become a participating
subsidiary under the Ford Salaried Income Security Plan ("SISP"), and Ford
hereby consents to such participation. Effective on the Benefit Transition
Date, Visteon shall adopt its own severance plan with terms substantially
comparable to those under the Ford SISP. Ford's limit on liability under the
SISP shall be reduced prorata by the number of U.S. Global Visteon Employees.
Effective as of the Transfer Date, Visteon shall assume the liability for any
U.S. Visteon Business Employee who is receiving benefits under the Ford SISP.
Ford shall retain the responsibility for paying such benefit payments and
continuing any applicable insurance under the Ford SISP, and Visteon shall
reimburse Ford annually for any such cost.
3.07 Annual Incentive Compensation Plan.
Global Visteon Employees who are otherwise eligible to participate in
the Ford Annual Incentive Compensation Plan ("FAICP") shall continue to be
eligible to participate under the same terms applicable to Ford employees after
the Distribution Date through December 31, 2000, with awards for 2000 payable
in March, 2001, provided that the pro forma award amounts, adjusted for Ford
performance, under the FAICP for such Global Visteon Employees shall equal 50%
of the adjusted target amounts. Adjustments for individual performance may be
made to the extent of 50% of the amount of the Extraordinary Contribution Fund
that would normally be allocated to the Visteon Employees. Visteon shall
reimburse Ford for any amounts paid to Global Visteon Employees for 2000 under
the FAICP. Visteon shall establish an interim bonus program for the remainder
of 2000 following the Distribution Date for these Global Visteon Employees. If
the Distribution Date occurs prior to January 1, 2001, Visteon shall adopt a
Visteon Annual Incentive Compensation Plan ("VAICP"), subject to stockholder
approval effective January 1, 2001. The Global Visteon Employees who were
otherwise eligible to participate under the FAICP shall be eligible to
participate under the VAICP. If the Distribution Date occurs on or after
January 1, 2001, the Parties shall agree to alternate arrangements.
21
3.08 Stock Option and Performance Stock Rights Programs.
▇. ▇▇▇▇ Stock Option and Performance Stock Rights Programs. Ford
Business Employees who are eligible to participate in the Ford 1998
Long-Term Incentive Plan ("FLTIP") shall be eligible for grants of
Ford stock options in March, 2000. In general, any options granted
in March, 2000 or in prior years under the FLTIP and the Ford 1990
Long-Term Incentive Plan to Ford Business Employees who become
Visteon Employees continue and shall accrue until five years after
the Distribution Date (provided that the Ford Business Employee had
remained an employee of Ford or its Subsidiaries for at least three
months after the date the option was granted) unless the option
expires earlier or such employee's employment with Visteon
terminates (other than due to disability, death or retirement with
Visteon approval). Outstanding Ford Options designated as
"incentive stock options" held by Visteon Employees will retain
their tax attributes only if exercised within three months after
the Distribution Date. Subject to approval of the Ford Compensation
and Option Committee, Ford Retirees who received option grants in
March, 2000 while employed by Ford but who retired from Ford prior
to the date six months after the option grant date, shall be
treated in accordance with the immediately preceding sentence with
respect to those grants. Ford Business Employees who are eligible
to participate under the FLTIP shall be eligible for grants of Ford
Performance Stock Rights ("FPSRs") in the first quarter of 2000.
Any grants of FPSRs to an eligible Ford Business Employee shall
continue to be earned out and shall be paid out under the FLTIP as
if such employee were still employed at Ford unless such employee's
employment at Visteon terminates.
b. Visteon Stock Option and Performance Stock Rights Programs. Visteon
shall adopt a Visteon Long-Term Incentive Plan ("VLTIP"), subject
to stockholder approval and regulatory restrictions. The Visteon
Employees who were otherwise eligible to participate under the
FLTIP shall be eligible to participate under the VLTIP in those
countries where it is practicable based on the number of employees
and difficulty and cost to comply with regulatory requirements.
Visteon shall make grants of Visteon stock options under the VLTIP
to eligible Visteon Employees in March 2001, and shall make grants
of Performance Stock Rights to eligible Visteon Employees in March,
2001.
3.09 U.S. Performance Bonus Plan.
U.S. Global Visteon Employees who are otherwise eligible to
participate in the U.S. Ford Performance Bonus Plan ("FPBP") shall continue to
be eligible to participate under the same terms as applicable to Ford Employees
after the Distribution Date through December 31, 2000, with awards for 2000
payable in March, 2001.
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Visteon shall reimburse Ford for any amounts paid to
U.S. Global Visteon Employees for 2000 under the FPBP. If the Distribution Date
occurs prior to January 1, 2001, Visteon shall adopt a Visteon Performance
Bonus Plan ("VPBP") effective January 1, 2001. The U.S. Global Visteon
Employees who were otherwise eligible to participate under the FPBP shall be
eligible to participate under the VPBP. If the Distribution Date occurs on or
after January 1, 2001 or later, the Parties shall agree to alternate
arrangements.
3.10 U.S. Deferred Compensation Plan.
Ford shall request the Ford Compensation and Option Committee to
approve effective as of the Transfer Date the participation of U.S. Visteon
Employees in the Ford Deferred Compensation Plan ("FDCP") and ability to make
new deferral elections under the FDCP until the pay ending immediately prior to
the Distribution Date. Visteon shall adopt a Visteon Deferred Compensation Plan
("VDCP") effective on the Distribution Date, and shall offer as an investment
option a Visteon Stock Fund. Any deferral of compensation on or after the
Distribution Date shall be made under the VDCP, even if the election to defer
was made prior to the Distribution Date, and unless the participant changes
his/her investment options for any such deferral, the VDCP shall honor any
investment elections that were in effect under the FDCP for such class year and
type of compensation to the extent the VDCP has the same investment choices. If
a U.S. Visteon Employee had made deferrals under the FDCP prior to the
Distribution Date, the book entry account balance of such employee's deferred
compensation account in the FDCP, valued as of 5:00 P.M. EST on the
Distribution Date, shall be transferred to the VDCP as of the Distribution Date
("Transferred Accounts"). The Transferred Account balances may not be
immediately available for further transfer to VDCP investment options until
account balances have been properly verified by the plan administrators.
Visteon shall cause the VDCP to offer a Ford Stock Fund investment option for
those Transferred Accounts that had deferrals based on the FDCP Ford Stock Fund
as of the Distribution Date, but the VDCP Ford Stock Fund shall be a "sell"
only fund, and would not be available for any new deferrals or redesignations
into such fund from other funds or for credits based on dividend earnings.
Visteon shall assume the liability with respect to the Transferred Accounts and
shall be responsible for making any subsequent distributions in the form
specified by the participant while employed by Ford from the Transferred
Accounts. If Visteon is unable to make distributions from the Transferred
Accounts at the end of any applicable deferral period due to insolvency or
otherwise, Ford shall make the appropriate distributions. Ford shall have no
responsibility with respect to any other VDCP accounts.
3.11 Non-U.S. Benefit Plans and Programs.
Unless provided otherwise in Schedule 3.11 attached hereto, Global
Ford Business Employees who participate in benefit plans and programs sponsored
by non-U.S. Subsidiaries or Affiliates of Ford, shall transition to the benefit
plans and programs of the non-U.S subsidiaries of Visteon as of the Benefit
Transition Date, except with respect to retirement liabilities as provided in
the next sentence. Ford shall retain liabilities for non-U.S. Ford Retirees as
of the Benefit Transition Date and Visteon shall
23
assume liabilities for non-U.S. Visteon Employees with appropriate asset
transfers from funded plans. To the extent there are any benefit plans or
programs which are unfunded or underfunded, Visteon shall assume the liability
for the benefit payments in respect of the non-U.S. Visteon Employees and Ford
shall retain the liability for non-U.S. Ford Retirees.
3.12 Non-Embedded Plans.
Notwithstanding anything herein to the contrary, to the extent that
Ford has a Subsidiary or Affiliate that maintains pension, savings and or
welfare benefit plans separate and apart from the Ford plans, and such
Subsidiary or Affiliate becomes a subsidiary or affiliate of Visteon pursuant
to the Master Transfer Agreement, the plans of such Subsidiary or Affiliate
shall remain the responsibility of such Subsidiary or Affiliate, and no
division or allocation of such plans will occur as a result of such transfer on
the Transfer Date. After the Distribution Date, Ford shall have no
responsibility attributable to a parent corporation with respect to such plans,
except as otherwise may be required by law.
3.13 Future Benefit Changes.
Nothing contained herein shall be construed to prohibit Ford or its
Subsidiaries or Affiliates from amending, terminating or otherwise modifying
the terms of employee benefit plans or programs applicable to Global Visteon
Employees, Ford Retirees or Visteon Retirees, except as may otherwise be
provided by applicable law. Except as otherwise specifically provided herein or
by applicable law, no Global Visteon Employee, Ford Retiree or Visteon Retiree
shall have any vested right to any employee benefit plan or program sponsored
by Ford or its Subsidiaries or Affiliates. Except as provided in Sec.
3.01(b)(vi), and as may be provided by applicable law, nothing in this
Agreement shall prohibit Visteon or its subsidiaries or affiliates from
amending, modifying or terminating benefit plans or programs applicable to
Global Visteon Employees, Visteon Retirees or any other Visteon retirees or
employees.
Article IV
Vehicle Programs
4.01 U.S. Lease and Evaluation Programs.
Except as specifically provided herein, participation of the U.S.
Global Visteon Employees in Ford's U.S. Lease and Evaluation Vehicle Program
shall be terminated as of the Distribution Date. U.S. Global Visteon Employees
who participate in such programs shall be given a reasonable period of time
after the Benefit Transition Date not to exceed sixty (60) days or such other
time as the Parties mutually agree, to either
24
purchase the vehicles leased or assigned to them or to return them to Ford, or
Ford's agents as provided below ("Vehicle Transition Period"). During the
Vehicle Transition Period, Ford shall offer for sale to each lessee and
assignee of such vehicles as are presently leased to such lessee or assignee
under the terms of Ford's Used Vehicle Purchase ("B") Plans, or to continue a
lease under the terms of the Ford Credit's Red Carpet Lease Plan, subject to
credit evaluation and dealer acceptance. In the event a lessee or assignee of a
lease or evaluation vehicle declines to purchase or continue to lease such
vehicle within the Vehicle Transition Period, the lessee or assignee shall
return such vehicle to its original servicing garage. Visteon shall collect, or
shall cause its subsidiaries or affiliates to collect, the applicable lease fee
from the Global U.S. Visteon Employees for such lease vehicles during the
Vehicle Transition Period. Visteon shall reimburse Ford in cash on a monthly
basis, within ten days of the last day of the month, an amount equal to (i) the
aggregate amount on the monthly lease fees for lease vehicles owed by U.S.
Global Visteon Employees and (ii) the aggregate amount of the monthly
evaluation vehicle fees, determined on the same basis as if the evaluation
vehicles were lease vehicles, and paid by Visteon. U.S. Ford Retirees shall
continue to be eligible to participate in Ford's U.S. Lease and Evaluation
Vehicle Programs according to the terms of such programs. Group I and Group II
Employees shall be eligible to participate in Ford's U.S. Lease and Evaluation
Vehicle Programs, if otherwise eligible under the terms of such Programs, on
the same terms as a Ford Retiree upon their retirement from Visteon or its
subsidiaries or affiliates.
4.02 Non-U.S. Lease and Evaluation Programs.
Participation of the Global Visteon Employees in Ford's Non-U.S. Lease
and Evaluation Programs shall terminate as of the Distribution Date, or such
other date as the Parties may agree. Ford shall cooperate with Visteon in
providing appropriate transition services comparable to those described in
Section 4.01 with respect to the U.S. Lease and Evaluation Programs.
4.03 Vehicle Purchase Plans.
U.S. Global Visteon Employees shall be permitted to participate in
Ford's Vehicle Purchase Plan consisting of the "A Plan" indefinitely. After the
Distribution Date, U.S. Global Visteon Employees shall not be eligible to
participate in Ford's "B Plan" (except as provided above in Section 4.01).
After the Distribution Date, U.S. Global Visteon Employees shall not be
eligible to nominate purchasers under the "X-Plan". Ford Retirees shall
continue to be eligible to participate in such plans after the Distribution
Date according to the terms of such plans.
4.04 U.S. Surviving Spouse Car Programs.
Visteon shall not be required to provide a benefit substantially
comparable to the U.S. Surviving Spouse Car Program after the Benefit
Transition Date. Ford shall have no responsibility to provide a benefit under
the U.S. Surviving Spouse Car Program to a spouse of any U.S. Global Visteon
Employee who dies after the Distribution Date.
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Article V
U.S. Workers Compensation
Visteon shall assume all liability for workers' compensation claims,
damages, expenses, liabilities or administrative expenses of any kind
whatsoever, related to U.S. Ford Business Employees regardless of when filed or
reported effective as of the Transfer Date. Visteon shall indemnify and hold
Ford harmless in respect of any such claims paid by Ford on Visteon's behalf
under any insured or self insured program operated by Ford. Effective on the
Distribution Date, and at such time as may be required thereafter, Visteon
shall transfer to Ford any reserves established in connection with claims which
applicable state workers' compensation laws require Ford to continue to pay on
behalf of Visteon. Effective on the Distribution Date, Ford shall transfer to
Visteon any reserves established in connection with claims for which Visteon
assumes payment responsibility to the extent allowed by state law and to the
extent such reserves are not reflected on Visteon's balance sheet. Where
transfer of claim liability is prohibited by state law, Ford will continue to
pay such claims on Visteon's behalf and shall be reimbursed by Visteon as
described herein. Effective on 12:01 a.m. on the Distribution Date, Visteon
shall cease to be covered by any of the workers compensation liability
insurance policies sponsored by Ford or any self insurance program of Ford
applicable to the U.S. Ford Business Employees for injuries or occupational
disablements occurring subsequent to the Distribution Date. Visteon shall
assume responsibility for its allocable share of future retrospective premium
adjustments for periods preceding the Distribution Date. Visteon shall take all
steps necessary under applicable law to provide workers compensation coverage
on or after the Distribution Date, either through self-insurance where
permissible under state law or by the purchase of insurance. Visteon shall
notify state and federal regulatory agencies of the above. Visteon shall
cooperate with Ford in obtaining the return or release of all bonds, letters of
credit, securities, indemnifications, cash or other assets given by Ford to any
state or federal agency in connection with workers compensation self-insurance
with respect to U.S. Ford Business Employees, and to the extent required by any
state or federal agency, post its own bonds, letters of credit,
indemnifications, securities, cash or other assets in substitution therefor.
Article VI
Employee Liabilities
Effective as of the Transfer Date, and except as otherwise provided
under the terms of this Agreement, Visteon will assume, and agrees to perform,
the debts, liabilities, guarantees, contingencies and obligations of Ford,
whether asserted or
26
unasserted, fixed or contingent, accrued or unaccrued, known or unknown, and
howsoever arising, relating to the Global Visteon Employees. Ford shall
transfer any funded or unfunded reserves it may maintain with respect to such
liabilities, unless such reserves are reflected on the Visteon Balance Sheet.
Article VII
Indemnification
7.01 Visteon Indemnity.
Visteon shall indemnify Ford against and agrees to hold it harmless
from any and all damage, loss, claim, liability and expense (including without
limitation, reasonable attorneys' fees and expense in connection with any
action, suit or proceeding brought against Ford) incurred or suffered by Ford
arising out of (i) breach of any agreement made by Visteon hereunder; (ii) any
claim by a Global Visteon Employee (or such employee's dependents or
beneficiaries) arising out of or in connection with the operation,
administration, funding or termination of any of Visteon's employee benefit
plans or programs or the employee benefit plans or programs of a Visteon
subsidiary or affiliate, whenever made, including, without limitation, claims
made to the PBGC, the DOL, or the IRS; or (iii) employment claims of Global
Visteon Employees whenever made based on conditions or actions arising prior to
or after the Transfer Date, except as provided in Section 7.02 below (iii).
7.02 Ford Indemnity.
Ford shall indemnify Visteon against and agrees to hold it harmless
from any and all damage, loss, claim, liability and expense (including without
limitation, reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding brought against Visteon) incurred or suffered by
Visteon (i) arising out of breach of any agreement made by Ford hereunder; (ii)
any claim made by a Global Visteon Employee (or such employee's dependents or
beneficiaries) arising out of or in connection with the operation,
administration, funding or termination of any of the benefit plans or programs
sponsored by Ford (excluding any programs sponsored by Ford subsidiaries that
have been transferred to Visteon), whenever made, including, without
limitation, claims made to the PBGC, DOL or the IRS; or (iii) employment claims
of Global Visteon Employees that arise prior to or after the Transfer Date
where the liability, if any, is primarily the result of and arising from
conduct of a Ford supervisor or manager not employed by the Business (as
opposed to the actions or inaction of Visteon or its subsidiaries or
affiliates).
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7.03 Procedure for Indemnity.
The procedure for indemnification under this Section 7 shall be the
same procedure as set forth in Section 7(C) through (j) of the Master Transfer
Agreement and shall be incorporated herein by reference.
7.04 Assumption of Liability.
As of the Transfer Date, Visteon will assume liability and
responsibility for all pending employment litigation by Global Ford Business
Employees transferred to Visteon pursuant to the terms hereof that relate to
the Business, provided, however that Visteon shall not assume any obligation or
liability and Ford with respect to the following litigation: ▇▇▇▇▇▇▇ ▇▇▇▇▇ et
▇▇ ▇. ▇▇▇▇ Motor Company filed on June 9, 1993 in U.S. District Court, District
of Minnesota, regarding discrimination allegations. With respect to those cases
assumed, Visteon will have sole responsibility for deciding how to defend the
claims (e.g., whether to settle or litigate).
Article VIII
Miscellaneous
8.01 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:
(a) Initial Meeting. The Parties shall hold a meeting promptly,
attended by persons with decision-making authority regarding the
dispute, to attempt in good faith to negotiate a resolution of
the dispute; provided, however, that no such meeting shall be
deemed to vitiate or reduce the obligations and liabilities of
the Parties or be deemed a waiver by a party hereto of any
remedies to which such Party would otherwise be entitled.
(b) Mediation. If, within thirty (30) days after such meeting, the
Parties have not succeeded in negotiating a resolution of the
dispute, they agree to submit the dispute to mediation in
accordance with the then-current Model Procedure for Mediation of
Business Disputes of the Center for Public Resources and to bear
equally the costs of the mediation. The Parties will jointly
appoint a mutually acceptable mediator, seeking assistance in
such regard from the Center for Public Resources if they have
been unable to agree upon such
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appointment within twenty (20) days from the conclusion of the
negotiation period.
(c) Arbitration. The Parties agree to participate in good faith in
the mediation and negotiations related thereto for a period of
thirty (30) days. If the Parties are not successful in resolving
the dispute through the mediation, then the Parties agree to
submit the matter to binding arbitration in accordance with the
Center for Public Resources Rules for Non-Administered
Arbitration, by a sole arbitrator.
(d) Procedure. Mediation or arbitration shall take place in the City
of Dearborn, Michigan. Equitable remedies shall be available in
any arbitration. Punitive or exemplary damages shall not be
awarded. This clause is subject to the Federal Arbitration Act, 9
U.S.C.A. Section 1 et seq., or comparable legislation in non-U.S.
jurisdictions, and judgment upon the award rendered by the
arbitrator, if any, may be entered by any court having
jurisdiction thereof.
8.02 Assignment.
This Agreement has been executed in consideration of the Parties
involved and therefore may not be assigned or transferred to a third party
without the prior written consent of the other Party. This Agreement will be
binding on the agreed successors to or assignees of either Party. In no event
will a Party be released from their indemnity obligations without the prior
written consent of the other Party.
8.03 Entire Agreement, Amendment, Waiver.
This Agreement embodies the entire agreement of the Parties and
supersedes any other agreements or understandings between them, whether oral or
written, relating to this subject matter. In the event of a conflict between
this Agreement and any other agreement between or among any of the Parties with
respect to the subject matter hereof, this Agreement shall control. No
amendment or modification or waiver of a breach of any term or condition of
this Agreement shall be valid unless in a writing signed by each of the
Parties. The failure of either Party to enforce, or the delay by either of them
in enforcing, any of its respective rights under this Agreement will not be
deemed a continuing waiver or a modification of any rights hereunder and either
Party may, within the time provided by applicable law and consistent with the
provisions of this Agreement, commence appropriate legal proceedings to enforce
any or all of its rights.
8.04 Notices.
Any notice or other communication hereunder must be given in writing
and either (a) delivered in person, (b) transmitted by facsimile transmission
or other telecommunications mechanism, (c) sent by a nationally recognized
29
overnight courier service (delivery charges prepaid) or (d) sent by registered
or certified mail (postage prepaid, return receipt requested) as follows:
If to Ford:
Ford Motor Company
▇▇▇▇▇ ▇▇▇▇ II ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Visteon:
Visteon Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All notices personally delivered shall be deemed received on the date
of delivery. Any notice sent via facsimile transmission shall be
deemed received on date shown on the confirmation advice. Any notice
by registered or certified mail shall be deemed to have been given on
the date of receipt or refusal thereof. The date of any notice by
overnight courier service shall be the date the airbill is signed by
the recipient. Any Party may change its address for the receipt of
notices by giving Notice thereof to the other.
8.05 Partial Invalidity.
Any provision of this Agreement which is found to be invalid or
unenforceable by any court in any jurisdiction will, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability, and the
invalidity or unenforceability of such provision will not affect the validity
or enforceability of the remaining provisions hereof.
8.06 Title and Headings.
Titles and headings of Sections and Subsections of this Agreement are
for convenience only and will not affect the construction of any provision of
this Agreement.
8.07 Negotiated Terms.
The Parties agree that the terms and conditions of this Agreement are
the result of negotiations between the Parties and that this Agreement will not
be construed in favor of or against any Party by reason of the extent to which
any Party or its professional advisors participated in the preparation of this
Agreement.
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8.08 Counterparts.
This Agreement may be executed in counterparts, each of which will be
deemed an original, but all of which taken together will constitute one and the
same instrument.
8.09 Governing Laws.
This Agreement is governed by the internal laws of the State of
Michigan.
8.10 Third Party Beneficiaries.
This Agreement is for the sole benefit of the Parties hereto and no
third party may claim any right, or enforce any obligation of the Parties,
hereunder.
8.11 Relationship.
Nothing contained in this Agreement will be construed to make any of
the Parties partners, principals, agents or employees of the other, except as
explicitly provided. None of the Parties will have any right, power or
authority, express or implied, to bind any of the other Parties. For purposes
of this Agreement, Affiliate means any individual, partnership, corporation,
limited liability company, trust, or other entity directly or indirectly,
through one or more intermediaries, controlling, controlled by or, under common
control with a Party.
8.12 Good Faith and Fair Dealing.
In entering into this Agreement, the Parties each acknowledge and
agree that all aspects of the relationship among the Parties contemplated by
this Agreement, including the performance of all obligations under this
Agreement, will be governed by the fundamental principle of good faith and fair
dealing.
8.13 Consents, Approvals and Requests.
Except as specifically set forth in this Agreement, all consents and
approvals to be given by any of the Parties or any of its respective Affiliates
under this Agreement will not be unreasonably withheld or delayed.
8.14 Further Assurances.
The Parties will execute such further assurances and other documents
and instruments and do such further and other things as may be necessary to
implement and carry out the intent of this Agreement.
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8.15. Sale of Visteon Business.
If Visteon sells all or part of the assets comprising the Business
after the Distribution Date, and transfers Global Visteon Employees to a
successor employer in connection with the sale of such Business assets, Visteon
shall attempt to negotiate in good faith with the successor employer provisions
with respect to benefit comparability and pension security no less favorable
than those set forth in Section 2.04 and Section 3.01 b.(vi).
IN WITNESS WHEREOF, the Parties hereto have duly executed
this Agreement as of the day and year first above written.
FORD MOTOR COMPANY VISTEON CORPORATION
By: By:
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Title: Title:
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