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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 10, 2005
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VISTEON CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-15827 38-3519512
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
One Village Center Drive, Van Buren Township, Michigan 48111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (800)-VISTEON
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Visteon Corporation ("Visteon") and Ford Motor Company ("Ford")
entered into a funding agreement, dated as of March 10, 2005. Pursuant to the
funding agreement, Ford has agreed (a) to advance the payment on or prior to
March 31, 2005 of not less than $120 million of payables that are currently not
required to be paid to Visteon until after March 31, 2005; (b) to accelerate the
payment terms for certain payables to Visteon arising on or after April 1, 2005
from an average of 33 days after the applicable entry date to an average of 26
days; (c) to reduce the amount of wages that Visteon is currently obligated to
reimburse Ford with respect to Ford hourly employees assigned to work at
Visteon, which will result in cash savings of approximately $25 million per
month; and (d) to release Visteon from its obligation to reimburse Ford for Ford
profit sharing payments with respect to Ford hourly employees assigned to work
at Visteon that accrue in 2005.
Under the funding agreement, Visteon has agreed (a) to continue to
provide an uninterrupted supply of components to Ford in accordance with
applicable purchase orders and to continue to comply with its other contractual
agreements with Ford and the UAW, including continuing to use its best efforts
to quote competitive prices for new business to be produced at Visteon's UAW
master agreement plants; (b) not to request reimbursement from Ford for any
material cost surcharges for any component that is produced for Ford at certain
of Visteon's non-core plants located in North America; and (c) that, except with
respect to sales of inventory or the disposal of obsolete equipment in the
ordinary course of business, Visteon will not sell, close or otherwise dispose
of any of the assets at certain of Visteon's non-core plants located in North
America, without Ford's consent.
Ford and Visteon also have entered into a master equipment bailment
agreement, dated as of March 10, 2005, pursuant to which Ford has agreed to pay
third party suppliers for certain machinery, equipment, tooling, fixtures and
related assets, which are primarily used to produce certain components for Ford
at some of Visteon's non-core plants located in North America. This agreement is
expected to reduce Visteon's 2005 capital expenditures by approximately $150
million.
Each of the funding agreement and the master equipment bailment
agreement may be terminated by Visteon or Ford at anytime on or after January 1,
2006 upon 10 business days' notice or upon the occurrence of certain customary
events of default.
The description of the above-referenced documents does not purport to
be complete and is qualified in its entirety by reference to the complete text
of the documents referred to above, copies of which are filed as Exhibits 10.1
and 10.2 hereto and incorporated herein by reference.
2
ITEM 8.01 OTHER EVENTS.
On March 10, 2005, Visteon issued a press release that included
statements regarding the status of its discussions with Ford on Visteon's need
to make strategic and structural changes to its U.S. business. The press
release, filed as Exhibit 99.1 to this Current Report on Form 8-K, is
incorporated herein by this reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
10.1 Funding Agreement, dated as of March 10, 2005, between Visteon
Corporation and Ford Motor Company.
10.2 Master Equipment Bailment Agreement, dated as of March 10, 2005,
between Visteon Corporation and Ford Motor Company.
99.1 Press Release dated March 10, 2005.
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VISTEON CORPORATION
By: /s/ James F. Palmer
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Name: James F. Palmer
Title: Executive Vice President
and Chief Financial Officer
Date: March 10, 2005
4
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
10.1 Funding Agreement, dated as of March 10, 2005, between
Visteon Corporation and Ford Motor Company.
10.2 Master Equipment Bailment Agreement, dated as of March 10,
2005, between Visteon Corporation and Ford Motor Company.
99.1 Press Release dated March 10, 2005.
5
EXHIBIT 10.1
FUNDING AGREEMENT
-----------------
This Funding Agreement is dated as of March 10, 2005 (this "Agreement") and is
by and between FORD MOTOR COMPANY ("Ford") and VISTEON CORPORATION ("Visteon").
Each of Ford and Visteon is referred to as a "party" and collectively, the
"parties."
R E C I T A L S
A. Ford has agreed to provide certain financial assistance to Visteon
so as to protect and provide for the continued supply of Components to Ford.
B. In exchange for the actions taken by Ford, Visteon has agreed to
undertake certain actions with respect to the supply of Components to Ford.
The parties agree as follows:
1. Definitions: The following capitalized terms shall have the meanings
specified below unless otherwise specifically stated.
"Components" has the meaning specified in the P&SA.
"Defaulting Party" has the meaning specified in Section 8.1.
"Event of Default" has the meaning specified in Section 8.1.
"HEAA" means that certain Amended and Restated Hourly Employee
Assignment Agreement dated as of December 19, 2003 between Ford and
Visteon.
"Master Agreement Plant" has the meaning specified in the P&SA.
"New Business" has the meaning specified in the P&SA.
"Non-Defaulting Party" has the meaning specified in Section 8.1.
"Plants" means the Visteon manufacturing facilities listed on
Attachment A hereto.
"P&SA" means that certain Purchase and Supply Agreement dated as of
December 19, 2003 between Ford and Visteon.
"Termination Date" means the date on which termination is effected
either pursuant to Section 7 or Section 8 hereof.
2. Capital Expenditures: Ford will pay for and acquire certain machinery and
equipment not currently owned by Visteon that will be associated with the
production of certain Components for Ford in accordance with the terms of the
Master Equipment Bailment Agreement (the "Master Equipment Bailment Agreement"),
which agreement will be executed and delivered by Ford and Visteon
simultaneously with this Agreement. The effective date of the Master Equipment
Bailment Agreement will be January 1, 2005.
3. Payment Terms: Notwithstanding the provisions of Section 9.1(a) of the P&SA,
(a) On or before March 31, 2005, Ford will pay to Visteon, by wire
transfer in immediately available funds to the EFT account previously
designated by Visteon, not less than $120 million of payables of
Ford's choice that are not currently due and payable to Visteon until
after March 31, 2005 for shipments received into Ford plants; and
(b) Commencing with payables covered by Section 9.1(a) of the P&SA
associated with Components and tooling received from and after April
1, 2005, payment terms shall average 26 days after the applicable
entry date rather than 33 days. For payables associated with
Components and tooling received before April 1, 2005, the payment
terms shall remain at 33 days after the applicable entry date. If this
Agreement is terminated for any reason, then the payment terms for all
payables associated with Components and tooling received from and
after the Termination Date shall revert to the payment terms specified
in Section 9.1(a) of the P&SA.
4. Labor Reimbursement: For each Pay Period, Visteon's obligation to reimburse
Ford on the corresponding Pay Date pursuant to Section 7(i) (wages) of the HEAA
shall be reduced using the following formula:
Wages reimbursable for each Pay Period o 23.75% = Amount of reduction in
Visteon's reimbursement obligation
Where:
"Wages" means the elements of wages listed on Attachment B hereto. Nothing
herein contained shall be construed to change the definition of "wages" under
Section 7(i) of the HEAA, but the change to the definition of wages as described
in Attachment B is intended solely for the purpose of calculating the amount of
the discount.
"Pay Date" means each Friday following a Pay Period through the Termination
Date.
"Pay Period" means each week from Monday through Sunday commencing Monday,
February 21, 2005.
5. Profit Sharing. Notwithstanding anything to the contrary in Section 7(viii)
of the HEAA, beginning with profit sharing accrued during 2005 and payable in
2006, Visteon shall not be required to reimburse Ford for Ford profit sharing
payments made to the Ford hourly employees assigned to work at Visteon.
6. Visteon Commitments. In exchange for the actions to be taken by Ford as
outlined in the preceding four sections, Visteon shall undertake the following
actions commencing on the date hereof:
6.1 Visteon shall in accordance with the terms of the P&SA or any applicable
purchase orders or other written agreements between the parties:
(a) Provide an uninterrupted supply of Components to Ford in the
quantities, quality, specifications and timing required by
the applicable purchase orders;
(b) Supply all prototypes, design and engineering required for
Ford programs;
(c) Comply with the terms of existing agreements with Ford; and
(d) To the extent that the actions do not compromise Ford
production and program support, withdraw and not implement
its list of Potential Cost Improvement Actions dated
February 17, 2005 attached hereto as Attachment C.
6.2 Visteon shall meet its commitments to the UAW, as set forth in the existing
collective bargaining agreement or other written agreements binding on Visteon.
6.3 Visteon shall use its best efforts to quote competitive prices for New
Business to be produced at a Master Agreement Plant.
6.4 Visteon shall not request (a) any material cost surcharges for any of the
Components that are produced at the Plants; and (b) reimbursement for material
cost surcharges for Components that are produced at the Plants prior to the
Termination Date.
6.5 Without the consent of Ford which shall not be unreasonably withheld,
Visteon shall not sell, transfer, close or otherwise dispose of any assets at
the Plants except for the sale of inventory and disposal of obsolete equipment
in the ordinary course.
7. Term: Ford may terminate any one or all of its commitments under Sections 2,
3, 4 and 5 of this Agreement or this Agreement itself at any time on or after
January 1, 2006 by giving at least ten (10) business days' notice in advance to
Visteon. Visteon may terminate this Agreement at any time on or after January 1,
2006 by giving at least ten (10) business days' notice in advance to Ford. The
Master Equipment Bailment Agreement shall not be deemed terminated upon any
termination of this Agreement, but rather its termination shall be governed by
the terms specified therein.
8. Default
8.1. A party (a "Non-Defaulting Party") may give notice to the other party (the
"Defaulting Party"), upon occurrence of any of the following events, any one of
which, after the expiration of the applicable cure period if such default is not
cured by the end of such period, will be considered to be an "Event of Default":
(a) Default by a Party. Any default by the Defaulting Party in the
performance of any obligation or in the observance of any covenant or
agreement (i) in this Agreement, (ii) in the P&SA, or (iii) in the
Master Equipment Bailment Agreement, which default cannot be cured or
is not effectively cured after a period of 30 days after written
notice thereof has been given by the Non-Defaulting Party; provided
that if such default cannot be cured within 30 days, but can be cured
within 60 days, then if the Defaulting Party so requests, the
Defaulting Party shall have a reasonable period to cure the default
(not to exceed 60 days), during which period the Defaulting Party
shall at all times diligently pursue a cure;
(b) Termination of Existence Initiated by a Party. The Defaulting Party
commences any proceeding to wind up, dissolve, or otherwise terminate
its legal existence;
(c) Termination of Existence Initiated by Another Person. Any proceeding
is commenced against the Defaulting Party or any significant
subsidiary (as defined in Section 1-02(w) of Regulation S-X to the
Securities Act of 1933, as amended) (a "Significant Subsidiary") that
seeks or requires the winding up, dissolution, or other termination of
its legal existence, unless the proceeding is defended or contested in
good faith by the Defaulting Party or such Significant Subsidiary
within 30 days of the commencement of the proceeding in a manner that
stays it and such defense or contest is pursued diligently thereafter;
(d) Bankruptcy. Either (a) the Defaulting Party or any Significant
Subsidiary seeks relief by any proceedings of any nature under any
applicable laws for the relief of debtors; or (b) the institution
against the Defaulting Party or any Significant Subsidiary of a
proceeding under any applicable bankruptcy or similar law of any
jurisdiction in which the Defaulting Party or such Significant
Subsidiary carries on its business and thereafter continues unstayed
and is not dismissed within 60 days of the commencement of the
proceeding;
(e) Appointment of a Receiver. The appointment of a receiver,
receiver-manager, trustee, custodian or like officer for all or a
substantial part of the business or assets of the Defaulting Party or
any Significant Subsidiary, unless the appointment is defended or
contested in good faith by the Defaulting Party or such Significant
Subsidiary within 30 days of the commencement of the appointment in a
manner that stays the appointment and then only so long as such
defense or contest is pursued diligently thereafter; or
(f) Assignment for Benefit of Creditors. The Defaulting Party or any
Significant Subsidiary makes an assignment of a substantial part of
its assets for the benefit of its creditors. For the avoidance of
doubt, an assignment for the benefit of creditors does not include a
bona fide financing arrangement, whether secured or unsecured, entered
into with a third party.
8.2. Upon the occurrence of an Event of Default, the Non-Defaulting Party may
terminate this Agreement, in whole or in part, and any such termination shall
not be deemed a waiver or release of, or otherwise prejudice or affect, any
rights, remedies or claims, whether for damages or otherwise, which the
Non-Defaulting Party may then possess under this Agreement or which arise as a
result of such termination.
8.3 The provisions of this Section 8 are without prejudice to any other rights
or remedies either party may have by reason of the default of the other party
under this or any other agreement between the parties. Nothing in this Agreement
shall be construed to extend the time period to cure a default under any other
agreement between the parties.
9. Notices. All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed to have been duly given (a) when
delivered, if sent by first class mail, (b) when delivered, if delivered
personally, (c) when delivered, if sent by telephonic facsimile, or (d) on the
second following business day, if sent by overnight mail or overnight courier,
in each case to the parties at the following addresses (or at such other
addresses as shall be specified by like notice);
If to Visteon:
Visteon Corporation
One Village Center Drive
Van Buren Township, MI 48111
Attention: General Counsel
Fax: (734) 736-5563
If to Ford:
Ford Motor Company
Office of the Secretary
One American Road
12th Floor World Headquarters
Dearborn, Michigan 48126
Fax: (313) 248-7036
The parties by notice hereunder may designate other addresses to which notices
will be sent.
10. GENERAL PROVISIONS
10.1 No Agency. This Agreement does not constitute either party the agent or
legal representative of the other party. Neither party is authorized to create
any obligation on behalf of the other party.
10.2 Subsidiaries and Affiliates. Subsidiaries and affiliates of Ford and
Visteon are bound by the provisions herein to the extent that they are bound by
the P&SA.
10.3 Amendments. No amendment to this Agreement will be binding upon either
party unless it is in writing and is signed by a duly authorized representative
of each party. Except as specifically modified herein, the P&SA and the HEAA
shall remain in full force and effect. In the event of a conflict between the
terms of the Master Equipment Bailment Agreement and this Agreement, the terms
of the Master Equipment Bailment Agreement shall apply.
10.4 Assignments. This Agreement shall be binding upon and inure to the benefit
of the parties, and their respective successors and permitted assigns, but no
rights, interests or obligations of either party herein may be assigned without
the prior written consent of the other, which consent shall not be unreasonably
withheld.
10.5 Severability. If any provision of this Agreement, or portion thereof, is
invalid or unenforceable under any statute, regulation, ordinance, executive
order or other rule of law, such provision, or portion thereof, shall be deemed
reformed or deleted, but only to the extent necessary to comply with such
statute, regulation, ordinance, order or rule, and the remaining provisions of
this Agreement shall remain in full force and effect.
10.6 Governing Law. This Agreement will be construed and enforced in accordance
with the laws of the State of Michigan, excluding its conflict of laws rules.
Each party consents, for purposes of enforcing this Agreement, to personal
jurisdiction, service of process and venue in any state or federal court within
the State of Michigan having jurisdiction over the subject matter.
10.7 Disputes. If a dispute arises between the parties relating to this
Agreement, the following shall be the sole and exclusive procedure for enforcing
the terms hereof and for seeking relief, including but not limited to damages,
hereunder; provided, however, that a party may seek injunctive relief from a
court where appropriate solely for the purpose of maintaining the status quo
while this procedure is being followed:
(a) The parties promptly shall hold a meeting of senior managers of each
party who have decision-making authority to attempt in good faith to
negotiate a mutually satisfactory resolution of the dispute; provided,
however, that no party shall be under any obligation whatsoever to
reach, accept or agree to any such resolution; provided further, that
no such meeting shall be deemed to vitiate or reduce the obligations
and liabilities of the parties or be deemed a waiver by a party hereto
of any remedies to which such party would otherwise be entitled.
(b) If the parties are unable to negotiate a mutually satisfactory
resolution as provided above, any party may so notify the other. In
that event, the parties agree to participate in good faith in
mediation of the dispute. Such mediation shall conclude no later than
forty-five (45) days from the date that the mediator is appointed. If
the parties are not successful in resolving the dispute through
mediation, then the parties agree to submit the matter to binding
arbitration before a sole arbitrator in accordance with the CPR Rules
for Non-Administered Arbitration. Within five business days after the
selection of the arbitrator, each party shall submit its requested
relief to the other party and to the arbitrator with a view toward
settling the matter prior to commencement of discovery. If no
settlement is reached, then discovery shall proceed. Upon the
conclusion of discovery, each party shall again submit to the
arbitrator its requested relief (which may be modified from the
initial submission) and the arbitrator shall select only the entire
requested relief submitted by one party or the other, as the
arbitrator deems most appropriate. The arbitrator shall not select one
party's requested relief as to certain claims or counterclaims and the
other party's requested relief as to other claims or counterclaims.
Rather, the arbitrator must only select one or the other party's
entire requested relief on all of the asserted claims and
counterclaims, and the arbitrator will enter a final ruling that
adopts in whole such requested relief. The arbitrator will limit
his/her final ruling to selecting the entire requested relief he/she
considers the most appropriate from those submitted by the parties.
(c) Mediation and, if necessary, arbitration shall take place in the City
of Dearborn, Michigan unless the parties agree otherwise or the
mediator or the arbitrator selected by the parties orders otherwise.
Punitive or exemplary damages shall not be awarded. This clause is
subject to the Federal Arbitration Act, 28 U.S.C.A. Section 1, et
seq., or comparable legislation in non-U.S. jurisdictions, and
judgment upon the award rendered by the arbitrator may be entered by
any court having jurisdiction.
10.8 Counterparts. This Agreement may be executed by the parties in separate
counterparts, each of which when so executed and delivered will be an original,
but all such counterparts will together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their authorized representatives as of the date first above
written.
FORD MOTOR COMPANY VISTEON CORPORATION
By: /s/ Don R. Leclair By: /s/ James F. Palmer
------------------------------- ----------------------------------
Don R. Leclair James F. Palmer
Title: Executive Vice President and Title: Executive Vice President and
Chief Financial Officer Chief Financial Officer
Date: March 10, 2005 Date: March 10, 2005
EXHIBIT 10.2
MASTER EQUIPMENT BAILMENT AGREEMENT
-----------------------------------
This Master Equipment Bailment Agreement is dated as of March 10, 2005 (this
"Agreement") and is by and between FORD MOTOR COMPANY ("Ford") and VISTEON
CORPORATION ("Visteon"). Each of Ford and Visteon is herein referred to as a
"party" and collectively the "parties."
R E C I T A L S
A. Pursuant to that certain Funding Agreement dated as of the date
hereof, Ford has, among other matters, agreed to acquire and pay for certain
Equipment (as defined below) associated with the production of Components for
Ford at the Plants.
B. This Agreement establishes the terms and conditions under which Ford
will loan such Equipment to Visteon to be held and used in accordance with this
Agreement. The loan of the Equipment shall be deemed to be a bailment.
The parties agree as follows:
1. Definitions: The following capitalized terms shall have the meanings
specified below unless otherwise specifically stated.
"Approved Capital Expenditure" means the following Capital Expenditures:
a. Capital Expenditures for Equipment listed on Exhibit A,
each of which represents a Capital Expenditure that was
committed by Visteon before January 1, 2005 where less
than one-half of the full amount of the Project was paid
as of January 1, 2005; and
b. Capital Expenditures for Equipment where the Capital
Expenditure has not yet been committed by Visteon and
which is subsequently approved in writing by Ford's
Executive Director, Global FM&SP Purchasing.
"Capital Expenditure" includes spending for Equipment that would be
carried on books of account as assets in accordance with United States
GAAP together with associated capitalized spending for installation.
Capital Expenditures may include expenditures for replacements of
Equipment, but will cover repairs only if title to the Equipment
undergoing the repair is transferred to Ford.
"commit" or "committed" or "commitment" refers to approved spending
related to an entire Project involving one or more purchase orders
between Visteon and an equipment supplier for the purchase of Equipment
related to a Ford product program.
"Components" has the meaning specified in the P&SA.
"Equipment" means the assets covered by this Agreement that are not
currently owned by Visteon, which shall include only machinery,
equipment, tooling, and fixtures that do not constitute real property,
and associated software, accessories and other assets that meet the
following criteria and otherwise meet the requirements for Ford to pay
for and acquire as provided in this Agreement:
a. They will be used primarily for the manufacture of Components,
unless otherwise agreed in writing by Ford; and
b. They will be installed in a Plant.
For the avoidance of doubt, the term "Equipment" does not include
tooling purchased by Ford and provided to Visteon in the ordinary
course of business.
"P&SA" means that certain Purchase and Supply Agreement dated as of
December 19, 2003 between Ford and Visteon.
"Plants" means the Visteon manufacturing facilities listed on Exhibit B
hereto.
"Project" refers to a group of Capital Expenditures that relate to a
single spending project designed to facilitate Visteon's manufacture of
a Component or group of related Components to Ford.
2. Purchase of Equipment: Upon Visteon's request, Ford will purchase Equipment
on the following terms:
2.1 (a) For Approved Capital Expenditures that are not listed on Exhibit
A, Ford will select the supplier and negotiate the price and project
detail with the supplier. At Ford's request and (subject to Section
2.1(b)) at Visteon's expense, Visteon will assist Ford with the
procurement of the Equipment. Such assistance shall include, without
limitation, identifying the supplier, negotiating the price and
project detail with the supplier and providing reasonable and
customary engineering and other expertise necessary or desirable to
assure that the supplier is capable of performing the work and that
the statement of work and specifications for the Equipment are
adequate. Ford (or its designee) and the supplier will enter into a
purchase order on terms specified by Ford. Visteon will then manage
the procurement of the Equipment and arrange and be responsible for
its proper installation.
(b) As Equipment for those Approved Capital Expenditures contemplated
by Section 2.1(a) above is received by Visteon, Visteon shall
promptly report to Ford its receipt and confirm that the payment was
properly due and payable (i.e., the work for which the payment was
due had been performed in accordance with the supply contract and the
equipment has proved out in accordance with Ford's requirements). At
Ford's request, Visteon shall provide appropriate supporting
documentation regarding its conclusion that the payment was properly
due and payable no later than ten (10) business days before the
payment is due or, if later, five business days after Ford requests
the documentation. As invoices for such Approved Capital Expenditures
are received from the suppliers and Visteon has confirmed receipt and
prove out, Ford (or its designee) shall promptly pay amounts due
under such invoices as required by subsection 2.1(a).
(c) For Approved Capital Expenditures that are included in Projects
listed on Exhibit A, Visteon will manage the procurement of the
Equipment and arrange for its installation. Ford (or its designee)
will pay the unpaid balance of Approved Capital Expenditures up to
the amount specified in the purchase order for any such Approved
Capital Expenditures, excluding any amounts that become due to the
supplier as a result of Visteon's default under the purchase order.
(d) Ford (or its designee) will take title to the Equipment related
to Approved Capital Expenditures. Visteon will pay for any costs
under a purchase order that do not constitute Approved Capital
Expenditures and for any costs that exceed the amounts originally
specified in the applicable purchase order unless otherwise approved
by Ford; provided that if cancellation costs become due and payable
under the purchase order as a result of Ford's cancellation of a
program, then Ford shall be responsible for such cancellation costs
in accordance with Visteon's standard purchase order terms and
conditions, subject to audit.
(e) Ford may, at its option, require Visteon to assign to Ford or its
designee the applicable purchase order for any Approved Capital
Expenditures that are included in Projects listed on Exhibit A. Such
assignment shall be in the form attached hereto as Exhibit C. If Ford
elects to require such assignment, then invoicing and payment will be
handled as described in Section 2.1(b). If any such purchase order is
not or cannot be assigned to Ford, then as invoices for Approved
Capital Expenditures that are included in Projects listed on Exhibit
A are received from the suppliers, Visteon shall pay the invoices and
then shall promptly submit such invoices to Ford for reimbursement,
along with appropriate supporting documentation showing that payment
was properly due and payable (i.e., the work for which the payment
was due had been performed in accordance with the supply contract and
the equipment has proved out in accordance with Ford's requirements).
Ford shall promptly reimburse Visteon for any such invoices, but in
any event within 30 days of Ford's receipt of any such invoice. All
such invoices shall be sent to:
Ford Motor Company
One American Road
Dearborn, Michigan 48126
Attention: Executive Director, Global FM&SP Purchasing
Fax: (313) 337-1925
(f) With respect to all Approved Capital Expenditures that are
included in the Projects listed on Exhibit A, Visteon shall provide,
within five business days after signing this Agreement, the following
information:
(i) Project information including line item detail
(ii) In addition to the purchase orders, which have been provided
to Ford prior to signing this Agreement, all documentation associated
with the project that reflect the agreements between Visteon and the
supplier; e.g., the statement of work, sourcing agreement, etc.; and
(iii) If available, the request from Ford that generated the
project. With respect to all other Approved Capital Expenditures,
Visteon shall provide all available project information including line
item detail within fifteen (15) days after Ford's request.
(g) If a purchase order associated with a Capital Expenditure for
Equipment included in Projects listed on Exhibit A has terms and
conditions that vary from the Visteon Terms & Conditions (rev4/03)
such that, in Ford's reasonable opinion, the rights or obligations of
an assignee of such purchase order would be materially and adversely
different than those anticipated under the Visteon Terms &
Conditions, then the parties will discuss in good faith a means by
which to handle such purchase orders by entering into some other
mutually acceptable accommodation for achieving the intent of this
Agreement.
2.2 Ford (or its designee) shall hold title to all Equipment for which Ford (or
its designee) either partially or wholly funds the Approved Capital
Expenditures. If the applicable purchase order was entered into between Visteon
and the supplier, then Visteon shall transfer title to Ford (or its designee)
when the Equipment is delivered to the Plant or, if already delivered, within
five business days after the date of this Agreement.
2.3 Visteon shall complete all spending for Capital Expenditures for Projects at
any Plant where one-half or more of the full amount of the Project was paid as
of January 1, 2005.
3. Term: The effective date of this Agreement shall be January 1, 2005. Ford or
Visteon may terminate this Agreement at any time on or after January 1, 2006 by
giving at least ten (10) business days' notice in advance to the other party.
Notwithstanding any termination of this Agreement, Ford or its designee shall
continue to pay for all Approved Capital Expenditures and acquire the related
Equipment.
4. Installation and Use of Equipment: Visteon shall be responsible for the
proper installation of the Equipment and, except to the extent included in the
Approved Capital Expenditure, shall bear the cost thereof. Visteon shall use the
Equipment only for production of Components. Unless consented to in writing by
Ford, which consent shall not be unreasonably withheld, the Equipment may not be
used for any other purpose. While the Equipment is in the possession or control
of Visteon, Visteon shall, at its cost and expense, (a) properly use and
maintain the Equipment in accordance with its current internal preventive
maintenance policies and the instructions provided by the manufacturer of the
Equipment, including, without limitation the manufacturer's warranty and
preventive maintenance schedules and (b) keep it in good condition and repair.
5. Indemnification and Release:
(a) Visteon shall defend, indemnify and save harmless Ford, its subsidiaries,
its designees, and their respective officers, directors, agents and employees
(herein collectively called "Indemnitees") and hereby releases the Indemnitees
from and against any and all losses, damages, claims, actions, costs, and
expenses, including, but not limited to, reasonable and out-of-pocket fees and
expenses of legal counsel and expert witnesses, that may be imposed upon or
incurred by or asserted or entered against the Indemnitees, or any of them, by
reason of actual or alleged
(i) injury to or death of persons (including, without limitation,
any employee or employees of one or more of the Indemnitees or of
Visteon or of one or more of its contractors, subcontractors, vendors
or agents);
(ii) loss of or damage to the property of any person or legal
entity (including without limitation any property of any employee or
employees of one or more of the Indemnitees or of Visteon or of one or
more of its contractors, subcontractors, vendors or agents) or,
(iii) Violation of any law, ordinance or regulation of any
governmental authority (including, without limitation, the United
States of America or Mexico or any of their respective states or
localities) by Visteon or by any of its contractors, subcontractors,
vendors, agents or employees,
as a result of or arising out of or in connection with the testing, evaluation,
possession, installation, maintenance, repair, or use of the Equipment by or on
behalf of Visteon, or the condition thereof; provided, however, that the
foregoing agreement to indemnify and hold the Indemnitees harmless shall not be
applicable to the extent that any such loss, damage, claim, action, suit,
judgment, decree, order, cost, or expense are attributable to the sole
negligence or the willful or wanton misconduct of the Indemnitees. Visteon shall
promptly notify Ford of any event covered by this Paragraph of which Visteon has
actual notice, and the Indemnitees shall be entitled to participate in the
defense of any claim for expenses.
6. Return of Equipment: Upon Ford's request and at Visteon's expense, Visteon
promptly shall deliver without restriction any or all of the Equipment and all
related instructions and records to Ford, at Ford's option F.O.B. carrier
Visteon's plant or F.O.B. Ford's facility freight collect, properly packed and
marked in accordance with the requirements of the carrier and Ford. The
Equipment shall be returned in the same condition in which it was delivered to
Visteon, ordinary wear and tear excepted.
7. Title to the Equipment:
7.1 At all times title to the Equipment shall remain in Ford or its designee.
Visteon agrees to keep the Equipment free of all liens and encumbrances. Visteon
has no property rights or interest in the Equipment and may not grant any rights
or interest in such Equipment to a third party. Ford shall have the right to
enter Visteon's premises at reasonable times to inspect the Equipment and
Visteon's records with respect thereto.
7.2 Visteon authorizes Ford, at its option, to file UCC financing statement(s)
or similar notices for Equipment located in Mexico evidencing this bailment and
Ford's ownership of the Equipment.
8. Risk of Loss: Visteon shall bear the risk of loss of or damage to the
Equipment while it is in the possession or control of Visteon, including loss or
damage that occurs despite Visteon's exercise of reasonable care. Visteon shall
be responsible for any and all damage to the Equipment, whether caused by
accident or otherwise. In the event of any material damage to the Equipment,
Visteon shall notify Ford to that effect and follow such instructions as Ford
may provide with respect to repair or disposal of the Equipment. The Equipment
shall at all times be properly housed by Visteon and shall be marked "Property
of Ford Motor Company" by Visteon. Visteon agrees to advise Ford in writing as
to the location of the Equipment and shall not remove the Equipment from
Visteon's premises without the prior written consent of Ford.
9. Insurance: Visteon shall insure the Equipment against damage, loss and theft
and maintain insurance coverage and waive subrogation rights, all as provided in
Exhibit D to this Agreement.
10. Default
10.1. A party (a "Non-Defaulting Party") may give notice to the other party (the
"Defaulting Party"), upon occurrence of any of the following events, any one of
which, after the expiration of the applicable cure period if such default is not
cured by the end of such period, will be considered to be an "Event of Default":
(a) Default by a Party. Any default by the Defaulting Party in the
performance of any obligation or in the observance of any
covenant or agreement (i) in this Agreement, or (ii) in the P&SA,
which default may not be cured or is not effectively cured after
a period of 30 days after written notice thereof has been given
by the Non-Defaulting Party; provided that if such default cannot
be cured within 30 days, then the Defaulting Party shall have a
reasonable period to cure the default (not to exceed 60 days),
during which period the Defaulting Party shall at all times
diligently pursue a cure;
(b) Termination of Existence Initiated by a Party. The Defaulting
Party commences any proceeding to wind up, dissolve, or otherwise
terminate its legal existence;
(c) Termination of Existence Initiated by Another Person. Any
proceeding is commenced against the Defaulting Party or any
significant subsidiary (as defined in Section 1-02(w) of
Regulation S-X to the Securities Act of 1933, as amended) (a
"Significant Subsidiary") that seeks or requires the winding up,
dissolution, or other termination of its legal existence, unless
the proceeding is defended or contested in good faith by the
Defaulting Party or such Significant Subsidiary within 30 days of
the commencement of the proceeding in a manner that stays it and
such defense or contest is pursued diligently thereafter;
(d) Bankruptcy. Either (a) the Defaulting Party or any Significant
Subsidiary seeks relief by any proceedings of any nature under
any applicable laws for the relief of debtors; or (b) the
institution against the Defaulting Party or any Significant
Subsidiary of a proceeding under any applicable bankruptcy or
similar law of any jurisdiction in which the Defaulting Party or
such Significant Subsidiary carries on its business and
thereafter continues unstayed and is not dismissed within 60 days
of the commencement of the proceeding;
(e) Appointment of a Receiver. The appointment of a receiver,
receiver-manager, trustee, custodian or like officer for all or a
substantial part of the business or assets of the Defaulting
Party or any Significant Subsidiary, unless the appointment is
defended or contested in good faith by the Defaulting Party or
such Significant Subsidiary within 30 days of the commencement of
the appointment in a manner that stays the appointment and then
only so long as such defense or contest is pursued diligently
thereafter; or
(f) Assignment for Benefit of Creditors. The Defaulting Party or any
Significant Subsidiary makes an assignment of a substantial part
of its assets for the benefit of its creditors. For the avoidance
of doubt, an assignment for the benefit of creditors does not
include a bona fide financing arrangement, whether secured or
unsecured, entered into with a third party.
10.2. Upon the occurrence of an Event of Default, the Non-Defaulting Party may
terminate this Agreement, in whole or in part, and any such termination shall
not be deemed a waiver or release of, or otherwise prejudice or affect, any
rights, remedies or claims, whether for damages or otherwise, which the
Non-Defaulting Party may then possess under this Agreement or which arise as a
result of such termination.
10.3 The provisions of this Section 10 are without prejudice to any other rights
or remedies either party may have by reason of the default of the other party
under this Agreement or any other agreement between the parties. Nothing in this
Agreement shall be construed to extend the time period to cure a default under
any other agreement between the parties.
11. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given (a)
when delivered, if sent by first class mail, (b) when delivered, if delivered
personally, (c) when delivered, if sent by telephonic facsimile, or (d) on the
second following business day, if sent by overnight mail or overnight courier,
in each case to the parties at the following addresses (or at such other
addresses as shall be specified by like notice);
If to Visteon:
Visteon Corporation
One Village Center Drive
Van Buren Township, MI 48111
Attention: General Counsel
Fax: (734) 736-5563
If to Ford:
Ford Motor Company
Office of the Secretary
One American Road
12th Floor World Headquarters
Dearborn, Michigan 48126
Fax: (313) 248-7036
With a copy to:
Ford Motor Company
One American Road
Dearborn, Michigan 48126
Attention: Executive Director, Global FM&SP Purchasing
Fax: (313) 337-1925
Notwithstanding the foregoing, invoices submitted by Visteon to Ford pursuant to
Section 2.2(b) hereof shall be sent as specified in Section 2.2(b).
The parties by notice hereunder may designate other addresses to which notices
will be sent.
12. Miscellaneous:
12.1 No Agency. This Agreement does not make either party the agent or legal
representative of the other party. Neither party is authorized to create any
obligation on behalf of the other party.
12.2 Amendments and Conflicts. No amendment to this Agreement will be binding
upon either party unless it is in writing and is signed by a duly authorized
representative of each party. In the event of a conflict between this Agreement
and the Funding Agreement, the terms of this Agreement shall control. Except as
specifically stated herein, nothing in this Agreement shall be construed to
amend or otherwise alter the responsibilities of the parties under any purchase
orders or other agreements between Ford (and its affiliates) and Visteon (and
its affiliates) for the purchase and supply of parts and components.
12.4 Assignments. This Agreement shall be binding upon and inure to the benefit
of the parties, and their respective successors and permitted assigns, but
Visteon may not assign this Agreement or delegate performance of any of its
obligations hereunder without the prior written consent of Ford. Ford may sell,
assign, transfer, or otherwise encumber any interest or right hereunder with
respect to the Equipment. No such action by Ford shall be interpreted as
releasing Visteon from any of its obligations as specified in this Agreement.
12.5 Severability. If any provision of this Agreement, or portion thereof, is
invalid or unenforceable under any statute, regulation, ordinance, executive
order or other rule of law, such provision, or portion thereof, shall be deemed
reformed or deleted, but only to the extent necessary to comply with such
statute, regulation, ordinance, order or rule, and the remaining provisions of
this Agreement shall remain in full force and effect.
12.6 Governing Law. This Agreement will be construed and enforced in accordance
with the laws of the State of Michigan, excluding its conflict of laws rules.
Each party consents, for purposes of enforcing this Agreement, to personal
jurisdiction, service of process and venue in any state or federal court within
the State of Michigan having jurisdiction over the subject matter.
12.7 Disputes. If a dispute arises between the parties relating to this
Agreement, the following shall be the sole and exclusive procedure for enforcing
the terms hereof and for seeking relief, including but not limited to damages,
hereunder; provided, however, that a party may seek injunctive relief from a
court where appropriate solely for the purpose of maintaining the status quo
while this procedure is being followed:
(a) The parties promptly shall hold a meeting of senior managers of each
party who have decision-making authority to attempt in good faith to
negotiate a mutually satisfactory resolution of the dispute; provided,
however, that no party shall be under any obligation whatsoever to
reach, accept or agree to any such resolution; provided further, that
no such meeting shall be deemed to vitiate or reduce the obligations
and liabilities of the parties or be deemed a waiver by a party hereto
of any remedies to which such party would otherwise be entitled.
(b) If the parties are unable to negotiate a mutually satisfactory
resolution as provided above, any party may so notify the other. In
that event, the parties agree to participate in good faith in
mediation of the dispute. Such mediation shall conclude no later than
forty-five (45) days from the date that the mediator is appointed. If
the parties are not successful in resolving the dispute through
mediation, then the parties agree to submit the matter to binding
arbitration before a sole arbitrator in accordance with the CPR Rules
for Non-Administered Arbitration. Within five business days after the
selection of the arbitrator, each party shall submit its requested
relief to the other party and to the arbitrator with a view toward
settling the matter prior to commencement of discovery. If no
settlement is reached, then discovery shall proceed. Upon the
conclusion of discovery, each party shall again submit to the
arbitrator its requested relief (which may be modified from the
initial submission) and the arbitrator shall select only the entire
requested relief submitted by one party or the other, as the
arbitrator deems most appropriate. The arbitrator shall not select one
party's requested relief as to certain claims or counterclaims and the
other party's requested relief as to other claims or counterclaims.
Rather, the arbitrator must only select one or the other party's
entire requested relief on all of the asserted claims and
counterclaims, and the arbitrator will enter a final ruling that
adopts in whole such requested relief. The arbitrator will limit
his/her final ruling to selecting the entire requested relief he/she
considers the most appropriate from those submitted by the parties.
(c) Mediation and, if necessary, arbitration shall take place in the
City of Dearborn, Michigan unless the parties agree otherwise or the
mediator or the arbitrator selected by the parties orders otherwise.
Punitive or exemplary damages shall not be awarded. This clause is
subject to the Federal Arbitration Act, 28 U.S.C.A. Section 1, et
seq., or comparable legislation in non-U.S. jurisdictions, and
judgment upon the award rendered by the arbitrator may be entered by
any court having jurisdiction.
12.8 Counterparts. This Agreement may be executed by the parties in separate
counterparts, each of which when so executed and delivered will be an original,
but all such counterparts will together constitute one and the same instrument.
12.9 No Waiver: Failure by Ford to enforce any term, provision or condition
hereof, or to exercise any of its rights hereunder, shall not be construed as
thereafter waiving any such terms, provisions, conditions or rights. In no event
shall any course of dealing, custom or usage of trade modify, alter or
supplement any of the terms or provisions contained herein.
12.10 Right to Audit: (a) If requested by Ford, Visteon will permit Ford (which,
for purposes of this Section 12.10, includes its authorized representatives) to:
(i) Examine all pertinent documents, data and other information
relating to Visteon's obligations under this Agreement, any payment
made to Visteon or to any Equipment supplier or installer or any claim
by Visteon;
(ii) View the Equipment and any of Visteon's activities relating
to the Equipment; and
(iii) Audit any facility or process to determine compliance with
the requirements of this Agreement.
Any examination under this Section 12.10 will be conducted during
normal business hours and upon advance written notice to Visteon.
(b) If requested by Ford, Visteon will use its best efforts to permit
Ford to obtain from the subcontractors of, and suppliers to, Visteon
the information and permission to conduct the reviews specified in
Section 12.10, regardless of any other right Ford may have to that
information or facilities.
(c) Visteon will keep all relevant documents, data and other written
information for at least two years following the termination of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their authorized representatives as of the date first above
written.
FORD MOTOR COMPANY VISTEON CORPORATION
By: /s/ Don R. Leclair By: /s/ James F. Palmer
------------------------------ ------------------------------
Don R. Leclair James F. Palmer
Title: Executive Vice President and Title: Executive Vice President and
Chief Financial Officer Chief Financial Officer
Date: March 10, 2005 Date: March 10, 2005
EXHIBIT 99.1
NEWS RELEASE -- FOR IMMEDIATE RELEASE
[Visteon Corp. logo]
VISTEON ANNOUNCES FINANCIAL AGREEMENT WITH FORD; STRATEGIC AND STRUCTURAL
DISCUSSIONS CONTINUE
VAN BUREN TOWNSHIP, Michigan, March 10, 2005 -- Visteon Corporation (NYSE:VC)
today announced a financial agreement with Ford Motor Company that will improve
Visteon's operating results and cash flow and strengthen the operations that
directly serve the automaker. The details of the financial agreement are being
reported in a Securities and Exchange Commission filing.
"This financial agreement is the right step forward with Ford and supports the
operations that directly serve our largest customer," said Mike Johnston,
president and chief executive officer. "The commitments made by Ford and Visteon
under this agreement will improve Visteon's operating results and cash flow.
It's a mutually beneficial agreement that is in the best interest of both
companies."
Under the financial agreement, Ford agreed to reduced wage reimbursements from
Visteon for hourly Ford-UAW employees assigned to Visteon facilities; accelerate
payment terms to Visteon; and pay for capital expenditures at certain Visteon
plants in North America. Visteon agreed to continue uninterrupted supply to Ford
and to comply with contractual agreements with Ford and the UAW.
FORD DISCUSSIONS CONTINUE
- -------------------------
On Sept. 9, 2004, Visteon announced it would explore strategic and structural
changes to its US business to achieve a sustainable and competitive business
model. Such changes would include Ford and Visteon's legacy businesses.
The discussions with Ford are progressing positively. The goal is to ensure the
long-term competitiveness of Visteon and a continued supply of components to
Ford, while being mindful of obligations to the Ford-UAW employees assigned to
Visteon.
"We are spending a great deal of time working with Ford to reach a conclusion,"
said Johnston. "For some time now, we have had a concept that both parties are
working toward achieving. We are spending our time working out the details of
that concept. Other than our conversations with Ford, we are not in active
discussions with anyone else."
Visteon Corporation is a leading full-service supplier that delivers
consumer-driven technology solutions to automotive manufacturers worldwide and
through multiple channels within the global automotive aftermarket. Visteon has
about 70,000 employees and a global delivery system of more than 200 technical,
manufacturing, sales and service facilities located in 25 countries.
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
are not guarantees of future results and conditions but rather are subject to
various factors, risks and uncertainties that could cause our actual results to
differ materially from those expressed in these forward-looking statements,
including the automotive vehicle production volumes and schedules of our
customers, and in particular Ford's North American vehicle production volumes;
the successful completion of our discussions with Ford and, if successful,
implementing structural changes that result from those discussions to achieve a
competitive and sustainable business; our ability to satisfy our future capital
and liquidity requirements; our successful execution of internal performance
plans and other cost-reduction and productivity efforts; charges resulting from
restructurings, employee reductions, acquisitions or dispositions; our ability
to offset or recover significant material surcharges; the timely completion of
the review of our prior period financial statements referred to in our press
release of January 31, 2005;and any adjustments that may result from such
review; the effect of pension and other post-employment benefit obligations; as
well as those factors identified in our filings with the SEC (including our
Annual Report on Form 10-K for the year-ended December 31, 2003). We assume no
obligation to update these forward-looking statements.
###
Visteon news releases, photographs and product specification details
are available at www.visteon.com