CONFIDENTIAL TREATMENT REQUESTED

 

<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

<PAGE>

 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

<PAGE>

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

 

 

                                      -2-

<PAGE>

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.

 

 

                                      -3-

<PAGE>

"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.

 

 

                                      -4-

<PAGE>

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.

 

 

                                      -5-

<PAGE>

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

 

 

                                      -6-

<PAGE>

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; therefore, if Visteon has made a lump sum

payment for any calendar quarter and Ford later receives a retroactive price

adjustment, Ford will reimburse Visteon any amounts that are charged twice to

Visteon. For the avoidance of doubt, Visteon's lump-sum payment of 75% of such

estimated amount will not affect Ford's right to receive 100% of the

productivity price reduction due for the applicable calendar year.

 

3.3 In regard to any Design Change to any parts, components, or systems supplied

by Newco to Visteon for inclusion in Components or Tier 2 Components, the price

increase or decrease, as approved by Ford, to such parts, components, or systems

resulting from such Design Change will be flowed through, unaltered, to Ford and

reflected in a corresponding adjustment to the price payable by Ford for such

Components or Tier 2 Components. Sec. 9.03 of the Global Terms and the Supplier

Frequently Asked Question dated September 30, 2005 on Sec. 9.03 issued by Ford

will apply in regard to any such Design Change requested by Ford (i.e., Visteon

will promptly notify Ford in a Written Notice as defined in the Global Terms if