<PAGE>
Exhibit 10.13
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT
REQUESTED
UNDER 17 C.F.R.
200.80(b)(4) AND 240.24b-2
PURCHASE AND SUPPLY AGREEMENT
REGARDING SUPPLY OF COMPONENTS BY VISTEON TO FORD
BETWEEN
VISTEON CORPORATION
AND
FORD MOTOR COMPANY
October 1, 2005
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PURCHASE AND SUPPLY AGREEMENT
REGARDING SUPPLY OF COMPONENTS BY VISTEON TO FORD
This Purchase and Supply Agreement
Regarding Supply of Components by Visteon to
Ford ("AGREEMENT") dated as of October 1,
2005 is entered into by and between
Visteon Corporation, a Delaware corporation
("VISTEON"), and Ford Motor Company
("FORD"), a Delaware corporation. Each of
Ford and Visteon is herein referred to
as a "PARTY" and collectively, the
"PARTIES."
RECITALS
A. Ford and Visteon entered into a Purchase
and Supply Agreement dated as of
December 19, 2003 (the "2003 AGREEMENT")
covering the purchase from Visteon and
certain of its subsidiaries and affiliates
and supply to Ford and certain of its
subsidiaries and affiliates worldwide of
motor vehicle-related components and
systems.
B. As part of an overall restructuring of
Visteon operations, the Parties intend
to terminate the 2003 Agreement and to
substitute this Agreement for the 2003
Agreement.
NOW, THEREFORE, in consideration of the
mutual promises contained in this
Agreement and intending to be legally
bound, Visteon and Ford hereby agree as
follows:
1. DEFINED TERMS
1.1 All terms with initial capitalization
used herein shall have the following
definitions unless specifically stated
otherwise. In this Agreement, except as
otherwise expressly provided or the context
otherwise clearly requires, words in
the singular include the plural, and vice
versa.
"AAI" means AutoAlliance International,
Inc.
"AFFILIATE" means, with respect to any
Person, any other Person directly or
indirectly Controlling, Controlled by or
under common Control with such first
Person. For the purpose of this definition,
the term "Control" (including, with
correlative meanings, the terms
"Controlling," "Controlled by" and "under common
Control with"), as used with respect to any
Person, means having the right to
elect a majority of the board of directors
or other comparable body responsible
for management and direction of such
Person, or otherwise having, directly or
indirectly, the power to direct or cause
the direction of the management and
policies of such Person, by contract or by
virtue of share ownership. For the
avoidance of doubt, neither Newco, any of
its subsidiaries, Mazda Motor
Corporation, nor Mazda Motor America, Inc.
shall be deemed to be an Affiliate
(or subsidiary) of Ford or any of its
Affiliates for the purposes of this
Agreement, but AAI will be an Affiliate of
Ford to the extent it purchases
Components from Visteon.
"BUSINESS DAY" means a day, other than
Saturday, Sunday or other day on which
commercial banks in Detroit, Michigan are
authorized or required by law to
close.
"COMPETITIVE GAP CLOSURE PLAN" means the
gap closure plans specified in Exhibit
3 attached hereto.
"COMPONENTS" means motor-vehicle-related
parts, components and systems that are
produced by Visteon or its wholly-owned
subsidiaries in North America and that
are shipped directly to Ford facilities in
North America or to AAI for use in
vehicles that are sold under the Ford,
Lincoln or Mercury brand. Notwithstanding
anything to the contrary in the foregoing
sentence, parts, components and
systems that are produced by Visteon
Affiliates (other than
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its wholly-owned subsidiaries), as well as
Tier 2 Components and Service Parts
(except as provided for in Section 13.12
below), are not considered
"Components".
"CONTRIBUTION AGREEMENT" means the
contribution Agreement between Visteon and
Automotive Components Holdings, Inc. (f/k/a
VFH Holdings, Inc.) dated September
12, 2005.
"DAMAGES" means any and all obligations,
liabilities, damages, penalties,
deficiencies, losses, judgments, costs and
expenses (including, but not limited
to, costs and expenses incurred in
connection with performing obligations,
interest, bonding and appellate costs and
reasonable attorneys', accountants',
engineers' and investigators' fees and
disbursements), in each case, after the
application of any and all amounts
recovered under insurance contracts or
similar arrangements and from third parties
by the person claiming indemnity.
"DEFAULTING PARTY" has the meaning
specified in Section 8.1.
"DESIGN CHANGE" means any change to the
physical Component, its performance, or
its interface with other parts or systems
that results in a change to the part
number.
"DIRECTED TIER 2 SOURCING" means the
situation where Ford directs a supplier (as
the tier 1 supplier to Ford) to purchase a
specific motor-vehicle-related part,
component or system from a specific
supplier (the tier 2 supplier to Ford) for
incorporation into a motor-vehicle-related
part, component or system to be
supplied by such tier 1 supplier to
Ford.
"EVENT OF DEFAULT" has the meaning
specified in Section 8.1.
"EXISTING BUSINESS" means all Components
that are the subject of an Existing
Agreement.
"EXISTING AGREEMENTS" means all Purchase
Orders, Long Term Supply Agreements,
Target Agreements, and Sourcing Agreements
with Pricing, in each case: (1) for
Components; and, (2) which were entered
into by Ford and Visteon and effective
as of May 1, 2005. Existing Agreements also
include the: Target Agreement dated
7/21/06 for the PCM for the 2008 MY C170
& B410 program; and, the Target
Agreement dated 7/20/05 for the PCM/ECM for
the 2009MY P415/U222-228 program.
In the event that a Target Agreement or
Sourcing Agreement with Pricing for
Components was entered into and effective
as of May 1, 2005, but a Purchase
Order or Long Term Supply Agreement
relating to such Target Agreement or
Sourcing Agreement with Pricing was entered
into and effective after May 1,
2005, such Purchase Order or Long Term
Supply Agreement will be an Existing
Agreement for the purposes of this
Agreement. In such event, such Purchase Order
or Long Term Supply Agreement became (or
will become) the Existing Agreement for
such Components for purposes of this
Agreement (as opposed to such Target
Agreement or Sourcing Agreement with
Pricing, which will survive only in regard
to such Purchase Order or Long Term Supply
Agreement as described in the Global
Terms).
In the event that the vehicle or
power-train program to which a Component that
is Existing Business relates is or will be
subject to a major refreshening or
will be replaced by, or will become, a new
program (such Components are referred
to herein as "AFFECTED COMPONENTS"), and
the motor-vehicle-related parts,
components, or systems for the refreshened
or new program which replace the
Affected Components are (or were prior to
the date of this Agreement) put up for
award by Ford, such Affected Components
will no longer be considered to be
Existing Business for the purposes of this
Agreement (and, as such, the Existing
Agreement for such Affected Components will
no longer be considered to be an
Existing Agreement for the purposes of this
Agreement) as of the date that Ford
begins purchasing the motor-vehicle-related
parts, components, or systems for
the refreshened or new program which
replace the Affected Components. Nothing in
this Agreement or in any Purchase Order,
Long Term Supply Agreement, Sourcing
Agreement, or Target Agreement prohibits
Ford from sourcing such
motor-vehicle-related parts, components, or
systems which replace the Affected
Components to a supplier of its choice, or
from purchasing
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the same from such supplier. For the
purposes of this definition: "put up for
award" means the issuance of a Request for
Quote by Ford for such
motor-vehicle-related parts, components, or
systems for the refreshened or new
program which replace the Affected
Components; and, "Request for Quote" means a
request issued by Ford to one or more
suppliers to provide a quotation for the
supply of such parts, components, or
systems. "Put up for award" does not mean
quoting design changes to a carryover
component for a new program or following
the change control process.
For the purposes of the prior paragraph, a
"major refreshening" or "new program"
means a change to a vehicle or power-train
program with a "S3" or higher
designation, for a vehicle program, or a
"P3" or higher designation, for a
power-train program, under the Ford Product
Development System (FPDS), or the
equivalent designation in Ford's Global
Product Development System (GPDS) or any
future product development system of Ford
replacing FPDS or GPDS (as
applicable).
"FORD BUY TURNOVER" has the meaning
specified in Section 3.1.
"FORD CARRYOVER FROZEN TURNOVER" has the
meaning specified in Section 3.1.
"FORD-DIRECTED TIER 2 COMPONENTS" means all
Tier 2 Components subject to
Directed Tier 2 Sourcing to Visteon (as the
directed tier 2 supplier) by Ford
for which Ford negotiated the price
directly with Visteon (i.e., Tier 2
Components that Ford has directed the
applicable Ford Tier 1 Supplier
(including, without limitation, Newco) to
purchase from Visteon and for which
Ford has negotiated the price directly with
Visteon). Ford-Directed Tier 2
Components include, without limitation,
instrument clusters, EATCs, and audio
parts and components which were, prior to
the date of this Agreement,
direct-sourced by Ford to a Visteon
facility in North America (as the tier 2
supplier) for supply to (a) another Visteon
facility in North America (as the
tier 1 supplier), which facility was
transferred to Newco, or (b) another Ford
Tier 1 Supplier, in each case in regard to
which Ford negotiated the price
directly with Visteon or the applicable
Visteon facility.
"FORD TIER 1 SUPPLIER" means a supplier
(including, without limitation, Newco)
who directly provides goods and services to
Ford including (a) production parts,
components, assemblies and accessories; (b)
raw materials; (c) tooling; and (d)
design, engineering or other services that
are covered by the Global Terms.
"Ford Tier 1 Supplier" also includes a
supplier who directly provides the
foregoing types of goods and services to
AAI relating to vehicles that are sold
under the Ford, Lincoln or Mercury
brand.
"GLOBAL TERMS" means the Ford Production
Purchasing Global Terms and Conditions
(PPGTC Jan. 1, 2004) and any revisions made
by Ford to the same.
"GOOD CAUSE" means:
(i) A significant quality or delivery
issue for a given Component; or
(ii) A
unilateral upward re-pricing of the applicable Component
(including,
without limitation, uncompetitive pricing by Visteon for Design
Changes to the Component), excluding mutually agreed price
increases;
or
(iii) A default,
within the prior twelve months, of a commitment by Visteon
to adhere to a Competitive Gap Closure Plan identified on Exhibit
3
for a given Component; or
(iv) A material
default by Visteon under the terms of a Purchase Order or
Long Term Supply Agreement with respect to a given Component.
"LONG TERM SUPPLY AGREEMENT" means a
multiple-year contract with a supplier
committing Ford to procure and the supplier
to supply goods or services for a
specified time period on specified
terms.
"MASTER AGREEMENT" means the collective
bargaining agreement and all supplements
thereto between Ford and the UAW dated
September 15, 2003, as well as any
successor agreement (and supplements
thereto) to such collective bargaining
agreement entered into prior to the
expiration of this Agreement.
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"MASTER AGREEMENT PLANT" means a facility
where some or all of the hourly
employees working there are represented by
the UAW under the Master Agreement.
"NEWCO" means Automotive Components
Holdings, LLC (f/k/a VFH Holdings, LLC) and
its Affiliates.
"NEWCO - VISTEON PSA" means the Purchase
and Supply Agreement Regarding Sales of
Components from Automotive Components
Holdings, LLC to Visteon Corporation
between Automotive Components Holdings, LLC
(f/k/a VFH Holdings, LLC) and
Visteon dated as of September 30, 2005.
"NON-DEFAULTING PARTY" has the meaning
specified in Section 8.1.
"NORTH AMERICA" means Canada, Mexico and
the United States.
"PARTY" or "PARTIES" has the meaning
specified in the opening paragraph of this
Agreement.
"PERSON" means an individual, a
partnership, a corporation, a limited liability
company, an association, a joint stock
company, a trust, a joint venture, an
unincorporated organization or a
governmental entity or any department, agency
or political subdivision thereof.
"PURCHASE ORDER" means a Purchase Order (as
defined in the Global Terms) issued
for Components, except in regard to the
tooling referenced in Section 5.2, in
which case it also refers to the Purchase
Order (as defined in the Global Terms)
issued for such tooling.
"SERVICE PARTS" means parts, components and
systems that Ford or its Related
Companies (as defined in the Global Terms),
including, without limitation, FCSD,
Ford Component Sales, Ford Racing or Ford
Power Products, may offer for resale
to authorized Ford, Lincoln, or Mercury
vehicle dealers and others as service
parts or replacement parts or accessories.
By way of illustration, the term
"Service Parts" includes both those parts,
components and systems that are an
exact match of a part, component or system
that is sold to Ford or such of its
Related Companies for use in production of
vehicles as well as Component Parts.
For the purposes of this definition:
"COMPONENT PART" means a Service Part that
is a component of a larger assembly or
system.
"SOURCE" means the awarding of a Target
Agreement or a Sourcing Agreement with
Pricing as to a Component for an estimated
program volume over a specified
number of years. The term "Source" does not
include the issuance of a Sourcing
Agreement with Preliminary Targets or a
Sourcing Agreement without Pricing.
"SOURCING AGREEMENT" means an agreement
that may be entered into before a
Purchase Order is issued to advise the
supplier that Ford intends to Source
goods or services to such supplier assuming
that the requirements of the
Sourcing Agreement are met. There are three
types of Sourcing Agreements:
Sourcing Agreements with Pricing, Sourcing
Agreements with Preliminary Targets,
and Sourcing Agreements without
Pricing.
"TARGET AGREEMENT" has the meaning
specified in the Global Terms.
"TARGET AGREEMENT TURNOVER" has the meaning
specified in Section 3.1.
"TIER 2 COMPONENTS" means all motor vehicle
related parts, components and
systems produced by Visteon or its
wholly-owned subsidiaries in North America
that are supplied by Visteon or its
wholly-owned subsidiaries in North America
to Ford Tier 1 Suppliers (including,
without limitation, Newco) where such
components are ultimately sold to Ford, its
wholly-owned subsidiaries, or AAI
for use in Ford, Lincoln and
Mercury-branded vehicles. Service Parts are not
Tier 2 Components for the purposes of this
Agreement.
"TOTAL FROZEN TURNOVER" has the meaning
specified in Section 3.1.
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1.2 Subject to Section 13.3, except in
regard to the identification of the
Parties to this Agreement above, the
definitions of Components and Tier 2
Components in Section 1.1, and where the
context clearly requires otherwise, a
reference in this Agreement to "Ford"
includes Ford and its applicable
Affiliates, and to "Visteon" includes
Visteon and its applicable Affiliates.
2. PURCHASE AND SUPPLY
COMMITMENTS
2.1 Existing Agreements. (a) Subject to the
terms and conditions of this
Agreement, Visteon and Ford each shall,
during the term of this Agreement,
continue to honor the terms and conditions
of all Existing Agreements regarding
the purchase and sale of Components.
(b) Except as modified or supplemented
under this Agreement, the Global Terms:
(i) apply to each Existing Agreement (other
than Sourcing Agreements with
Pricing or Target Agreements, in regard to
which the Global Terms will apply to
any Purchase Orders or Long Term Supply
Agreements issued pursuant to such
Sourcing Agreements with Pricing or Target
Agreements), except to the extent
that such Existing Agreement specifically
states otherwise; and (ii) will apply
to all other Purchase Orders and Long Term
Supply Agreements issued by Ford to
Visteon for Components. In the event of a
conflict between the terms of an
Existing Agreement and this Agreement, then
the terms of this Agreement shall
control.
2.2 Expiration of Term or Cessation of
Existing Business Designation. Upon the
termination or expiration of this
Agreement, or when any Components that are
Existing Business cease to be designated as
Existing Business as provided for
under this Agreement, Ford's and Visteon's
rights and obligations regarding the
purchase and sale of the Components shall
be as specified under the applicable
Purchase Order or Long Term Supply
Agreement, including the Global Terms, for
such Components (without regard to any
amendment or supplement to the same
provided for under this Agreement, but
subject to Section 11 below).
2.3 Service Parts. The Parties' rights and
obligations relating to the purchase
by Ford from Visteon, and supply by Visteon
to Ford, of Service Parts will be as
set forth in the applicable purchase order
from Ford to Visteon relating to such
Service Parts (including, without
limitation, that relating to the production
end-item [to Ford] part, component, or
material to which they relate) and will
be unaffected by this Agreement (except as
provided for in Section 13.12 below).
2.4 Ford Actions Regarding Ford-Directed
Tier 2 Components During Term. Subject
to Section 2.5 below, Ford may not direct
the Ford Tier 1 Supplier (which may
be, without limitation, Newco) relating to
a Ford-Directed Tier 2 Component to
terminate its purchases of such
Ford-Directed Tier 2 Component from Visteon
during the term of this Agreement, except
Ford may, at its option, do so if: (i)
Visteon fails to comply with the
Competitive Gap Closure Plan set forth in
Exhibit 3 relating to such Ford-Directed
Tier 2 Component or to provide the
productivity price reductions for such
Ford-Directed Tier 2 Component required
under Section 3 below; or (ii) Ford would
otherwise have the right to terminate
a Purchase Order issued by Ford directly to
Visteon for such Ford-Directed Tier
2 Component under this Agreement, if such
Ford-Directed Tier 2 Component were a
Component under this Agreement, a Purchase
Order had been issued by Ford
directly to Visteon for it, and such
Purchase Order was an Existing Agreement
under this Agreement.
2.5 Ford-Directed Audio Components.
Notwithstanding any other term or condition
of this Agreement, any audio parts or
components which are Ford-Directed Tier 2
Components ("FORD-DIRECTED AUDIO
COMPONENTS") shall cease to be covered under
Section 2.4 above as of December 31, 2006.
Visteon shall have no obligation to
provide Ford with productivity price
reductions for Ford-Directed Audio
Components under this Agreement after such
date, and Ford may, at its option,
freely direct the applicable Ford Tier 1
Supplier (including, without
limitation, Newco) to cease purchasing
Ford-Directed Audio Components from
Visteon after such date; provided, however,
that nothing in this Section 2.5
shall limit or affect any rights Visteon
may have to submit a cancellation claim
relating to any such action by Ford.
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3. PRICING
3.1 Productivity Price Reductions. (a)
Visteon shall reduce the prices for all
Components included in the calculation of
Ford Carryover Frozen Turnover (as
described below), as well as for all Tier 2
Components (except for Ford-Directed
Audio Components after December 31, 2006,
as described in Section 2.5 above),
beginning on the date of this Agreement
through December 31, 2008 by the
following percentages (such reductions will
be made effective as of January 1 of
the applicable calendar year as described
in Subsection 3.2 below):
<TABLE>
<CAPTION>
Calendar Year 2005 2006 2007 2008
------------- ---- ---- ---- ----
<S>
<C>
<C>
<C>
<C>
Percentage ***
***
***
***
Reduction
</TABLE>
For a given calendar year, the aggregate
productivity price reduction for all
Components included in the calculation of
Ford Carryover Frozen Turnover will be
calculated by applying the applicable
Percentage Reduction for such calendar
year against the "Ford Carryover Frozen
Turnover." The "Ford Carryover Frozen
Turnover" shall be equal to the Total
Frozen Turnover, less the Target Agreement
Turnover, less the Ford Buy Turnover, less
any Components excluded from the
calculation of the Ford Carryover Frozen
Turnover as described in Section 3.1(b)
below. The following definitions shall
apply to this calculation:
"Total Frozen Turnover" shall be equal to
the total projected sales of
Components by Visteon to Ford using Ford's
budgeted volume, mix and rates
assumptions for the applicable calendar
year.
"Target Agreement Turnover" means that
portion of the Total Frozen Turnover for
Components that will be launched during the
applicable calendar year where Ford
and Visteon have entered into signed Target
Agreements.
"Ford Buy Turnover" means that portion of
the Total Frozen Turnover for which
Ford has negotiated the price on behalf of
Visteon (except for parts,
components, or materials supplied by Newco
to a Visteon facility for which Newco
is obligated to pay productivity under the
Newco - Visteon PSA). All
productivity price reductions negotiated by
Ford with respect to such portion of
the Total Frozen Turnover will be flowed
through, unaltered, to Ford and
reflected in a corresponding adjustment to
the price payable by Ford for the
Components to which such portion of the
Total Frozen Turnover relates.
The productivity price reductions for 2005
described above will not be
duplicative of or in addition to any
productivity price reductions implemented
by Ford for 2005 for the applicable
Components prior to the date of this
Agreement pursuant to the 2003 Agreement.
The productivity price reductions
above for Tier 2 Components are not
duplicative of or in addition to those that
apply to the same Tier 2 Components under
the Purchase and Supply Agreement
Regarding Sales of Components from Visteon
Corporation to Automotive Components
Holdings, LLC between Visteon and Newco
dated as of September 30, 2005.
(b) Where Ford and Visteon agree (or have
agreed) in writing on different
productivity price reductions than those
specified above, such separate
agreements shall supersede the provisions
of Subsection 3.1(a) if such different
price reductions replace (and are not
incremental to) the price reductions
required under Subsection 3.1(a). In these
cases, the Components to which such
different price reductions apply will be
excluded from the calculation of Ford
Carryover Frozen Turnover. If such
different price reductions are incremental to
(and do not replace) the price
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reductions required under Subsection
3.1(a), the Components to which such
incremental price reductions apply will be
included in the calculation of Ford
Carryover Frozen Turnover and the
incremental price reductions will apply in
addition to those required under Subsection
3.1(a). Exhibit 3 contains a list of
the Components for which separate
agreements exist as of the date of this
Agreement. The list describes separate and
incremental agreements the Parties
have identified as of the date of this
Agreement, but is not to be considered an
exhaustive list.
3.2 All productivity price reductions will
be retroactive to January 1 of the
applicable year. If the productivity price
reductions are not processed prior to
the end of any calendar quarter during the
applicable year, Visteon shall pay to
Ford a lump sum equal to seventy five
percent (75%) of a reasonable estimate of
the effect of the productivity price
reductions based on Visteon's shipments of
Components to Ford during such calendar
quarter. Such amount shall be paid on or
before the last day of such calendar
quarter. The Parties acknowledge that once
the actual productivity price reductions
are determined, they will be entered
into a system that will result in
productivity price reductions retroactive to
January 1 of the applicable year; there
