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Exhibit 10.5
*** 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 SALES OF
COMPONENTS FROM AUTOMOTIVE COMPONENTS HOLDINGS, LLC TO
VISTEON CORPORATION
BETWEEN
AUTOMOTIVE COMPONENTS HOLDINGS, LLC (F/K/A VFH HOLDINGS, LLC)
AND
VISTEON CORPORATION
SELLER: AUTOMOTIVE COMPONENTS HOLDINGS, LLC
BUYER: VISTEON
September 30, 2005
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PURCHASE AND SUPPLY
AGREEMENT REGARDING SALES OF COMPONENTS FROM AUTOMOTIVE
COMPONENTS HOLDINGS, LLC TO VISTEON CORPORATION
This Purchase and Supply Agreement
Regarding Sales of Components from Automotive
Components Holdings, LLC to Visteon
Corporation ("AGREEMENT") dated as of
September 30, 2005 is entered into by and
between Visteon Corporation, a
Delaware corporation ("VISTEON"), and
Automotive Components Holdings, LLC (f/k/a
VFH Holdings, LLC) ("NEWCO"), a Delaware
limited liability company. Each of
Newco and Visteon is herein referred to as
a "PARTY" and collectively, the
"PARTIES."
RECITALS
A. Newco owns and operates manufacturing
and assembly facilities in North
America that were formerly owned and
operated by Visteon or its wholly-owned
subsidiaries ("NEWCO FACILITIES"). Newco
Facilities supply motor-vehicle-related
parts, components and systems to Visteon's
or its wholly-owned subsidiaries'
manufacturing and assembly facilities in
North America ("VISTEON FACILITIES").
B. Except as described in Recital C, the
purpose of this Agreement is to
describe supply obligations, pricing, and
related matters for certain
motor-vehicle-related parts, components and
systems that are manufactured by a
Newco Facility and supplied by such Newco
Facility to a Visteon Facility. It
does not cover the sale of
motor-vehicle-related parts, components and systems
by Visteon to Newco (which is addressed in
the Purchase and Supply Agreement
Regarding Sales of Components from Visteon
Corporation to Automotive Components
Holdings, LLC between Newco and Visteon
dated as of the date of this Agreement).
References in this Agreement to
motor-vehicle-related parts, components or
systems that are "manufactured by a Newco
Facility and supplied by such Newco
Facility to a Visteon Facility" mean that
such parts, components or systems are
manufactured by such Newco Facility and
supplied by such Newco Facility
directly, or through a warehouse or
shipping facility, to a Visteon Facility.
C. This Agreement does not cover
motor-vehicle-related parts, components or
systems: (i) supplied by Newco to a Visteon
facility that is not a facility of
Visteon Corporation or any of its
wholly-owned subsidiaries in North America; or
(ii) which are Service Parts (as defined in
Exhibit 5); in each case except to
the extent expressly set forth in EXHIBIT 4
or 5, as applicable. EXHIBIT 6 to
this Agreement lists (i) Visteon's
Affiliates, including its wholly-owned
subsidiaries in North America, its
Affiliates in North America which are not
wholly-owned subsidiaries, and its
Affiliates outside of North America, and (ii)
Visteon Related Companies.
NOW, THEREFORE, in consideration of the
mutual promises contained in this
Agreement and intending to be legally
bound, Visteon and Newco agree:
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. The Recitals above are an
integral part of this Agreement.
"2003 PSA" means the Purchase and Supply
Agreement between Visteon Corporation
and Ford Motor Company dated December 19,
2003.
"AFFILIATE" means, with respect to any
Person, any other Person directly or
indirectly Controlling, Controlled by or
under common Control with such first
Person; provided, that neither Ford, nor
any of its Affiliates, shall be deemed
to be an Affiliate (or subsidiary) of Newco
for the purposes of this Agreement
or any Existing Agreement, Purchase Order,
Long Term Supply Agreement, Target
Agreement, Sourcing Agreement, or other
agreement between Newco and Visteon for
the supply of Components from Newco to
Visteon. For the purpose
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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.
"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.
"COMPONENTS" means motor-vehicle-related
parts, components or systems
manufactured by a Newco Facility and
supplied by such Newco Facility (or, in
regard to Existing Business - Future Model,
to be manufactured by a Newco
Facility and supplied by such Newco
Facility) to a Visteon Facility.
Notwithstanding anything to the contrary in
the foregoing sentence, parts,
components and systems that are supplied by
Newco to Visteon Affiliates (other
than wholly-owned subsidiaries of Visteon
in North America), parts, components
and systems supplied by Visteon Related
Companies, and Service Parts are not
considered "Components".
"CONTRIBUTION AGREEMENT" means Contribution
Agreement between Visteon and
Automotive Components Holdings, Inc. (f/k/a
VFH Holdings, Inc.) dated September
12, 2005.
"CONFIDENTIAL INFORMATION" has the meaning
specified in Section 11.1.
"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 9.1.
"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.
"EVENT OF DEFAULT" has the meaning
specified in Section 9.1.
"EXISTING AGREEMENTS" means the Purchase
Orders, and Long Term Supply Agreements
(if any), covering Existing Business, as
described in Section 2.3 or 2.4.
"EXISTING BUSINESS" means the Components
that are Existing Business in
Production or Existing Business - Future
Model.
In the event that the vehicle or
power-train program of Ford (or of another OEM
Customer of Visteon or its customer), in
regard to which Visteon is purchasing
(or intends to purchase) Components which
are Existing Business, is or will be
subject to a major refreshening or will be
replaced by, or will become, a new
program, as determined by Ford as described
below, or as determined by such
other OEM Customer in accordance with its
then-current processes and policies,
respectively, such Components ("AFFECTED
COMPONENTS") will no longer be
considered to be Existing Business for the
purposes of this Agreement as of the
date that Visteon begins purchasing the
motor-vehicle-related parts, components,
or systems for the refreshened or new
program which replace the Affected
Components; provided, however, that:
(i) the
motor-vehicle-related parts, components, or systems for the
refreshened or
new program ("REPLACEMENT END-ITEM") which replace the
parts,
components, or systems supplied by Visteon to Ford (or to the
applicable other
OEM Customer of Visteon) into which such Affected
Components
purchased by
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Visteon from
Newco are incorporated are (or were prior to the date of this
Agreement) put
up for award by Ford or such other OEM Customer of Visteon;
and,
(ii) the
motor-vehicle-related parts, components, or systems for the
refreshened or
new program which replace the Affected Components are put up
for award by
Visteon. For components put up for award prior to this
agreement, the
status of such components will be evaluated during
reconciliation
of Exhibit 2.
For the purposes of this definition: "put
up for award" means the issuance of a
Request for Quote by Ford or Visteon for
the Replacement End-Item or such
motor-vehicle-related parts, components, or
systems for the refreshened or new
program which replace the Affected
Components, respectively; and, "Requet for
Quote" means a request issued by Ford or
Visteon to one or more suppliers to
provide a quotation for the supply of the
Replacement End-Item or such
motor-vehicle-related parts, components, or
systems for the refreshened or new
program which replace the Affected
Components, respectively. "Put up for award"
does not mean quoting design changes to a
carryover component for a new program
or following the change control
process.
Nothing in this Agreement or in any
Purchase Order, Long Term Supply Agreement,
Sourcing Agreement, or Target Agreement
prohibits Visteon from sourcing such
motor-vehicle-related parts, components, or
systems which replace the Affected
Components to a supplier of its choice, or
from purchasing the same from such
supplier; provided that Visteon follows the
proper approval procedures and
policies of Ford or such other OEM Customer
(as applicable) for the replacement
part, component, or system, and North
American Sourcing Council approval is
obtained (if applicable).
For the purposes of the prior paragraph, a
"major refreshening" or "new program"
means, in regard to a Ford vehicle or
power-train program, 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).
"EXISTING BUSINESS IN PRODUCTION" has the
meaning specified in Section 2.1(a).
"EXISTING BUSINESS - FUTURE MODEL" has the
meaning specified in Section 2.1(b).
"FORD" means Ford Motor Company, a Delaware
corporation.
"FORD MASTER AGREEMENT WORKERS" means the
Ford hourly employees who are
represented by the UAW under the Master
Agreement and who have been assigned to
work at Ford or Newco plants.
"FORD VEHICLE" means a Ford, Lincoln, or
Mercury-brand vehicle manufactured in
North America by Ford or one of its
Affiliates.
"FORD-VEHICLE COMPONENTS" mean Components
which are, or which are supplied for
incorporation into another part, component
or system, for ultimate use in a Ford
Vehicle.
"GLOBAL TERMS" means Visteon's Global Terms
For Production Parts and
Non-Production Goods and Services (VGT REV
4/03).
"LONG TERM SUPPLY AGREEMENT" means a
multiple-year contract with a supplier
committing Visteon 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.
"NON-DEFAULTING PARTY" has the meaning
specified in Section 9.1.
"NON-FORD COMPONENTS" mean Components which
are, or which are supplied for
incorporation into another part, component
or system, for ultimate use in a
vehicle other than a Ford Vehicle.
"NORTH AMERICA" means Canada, Mexico and
the United States.
"NORTH AMERICAN SOURCING COUNCIL" means a
Ford process to ensure that Ford
honors commitments to Ford Master Agreement
Workers at Ford or Newco facilities
in the United States with respect to
sourcing actions; to provide a framework
for avoiding labor disturbances and lost
production; and to ensure that Ford
senior management concurs with sourcing
decisions.
For the purposes of this Agreement, in
determining whether the North American
Sourcing Council process was or is required
to be followed, or its approval was
or is required, in regard to a particular
action:
(i) taken prior to the date of this
Agreement, the North American Sourcing
Council process and requirements in effect at the time the
applicable
action was taken (including, without limitation, any applicable
requirements under the 2003 PSA) apply; and,
(ii) for actions
taken on or after the date of this Agreement, the North
American Sourcing Council process will be required to be followed,
and
its approval obtained, if one or more Ford Master Agreement
Workers'
jobs would be impacted by such action.
"OEM CUSTOMER" means a Person in the
business of manufacturing motor vehicles.
"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, in regard to
particular Components, the Purchase Order
or Long Term Supply Agreement between
Visteon and Newco covering the Components
(as described in Section 2.3 or 2.4, in
regard to Existing Business).
"SERVICE PARTS" is as defined in Exhibit
5.
"VISTEON - FORD PSA" means the Purchase and
Supply Agreement Regarding Supply of
Components by Visteon Corporation to Ford
Motor Company between Visteon and Ford
dated as of October 1, 2005.
"VISTEON RELATED COMPANY" is as defined in
Exhibit 4.
1.2 Subject to Section 13.3, except in
regard to the identification of the
Parties to this Agreement above or where
the context clearly requires otherwise,
a reference in this Agreement to "Newco"
includes Newco and its applicable
Affiliates, and to "Visteon" includes
Visteon and its wholly-owned subsidiaries
in North America.
2. PURCHASE AND SUPPLY
COMMITMENTS
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2.1 General. Subject to the terms and
conditions of this Agreement, but
notwithstanding any term or condition of
any Existing Agreement, Purchase Order,
Long Term Supply Agreement, Sourcing
Agreement, or Target Agreement, Newco shall
supply to Visteon, and Visteon shall
purchase from Newco, each of the following
Components during the term of this
Agreement:
(a) "EXISTING
BUSINESS IN PRODUCTION," which means all Components which, as
of May 1, 2005,
were manufactured by a Newco Facility and supplied by such
Newco Facility
to a Visteon Facility. Such Components are set forth in
EXHIBIT 1 to
this Agreement.
(b) "EXISTING
BUSINESS - FUTURE MODEL," which means all Components which,
as of May 1,
2005, were planned by Visteon to be manufactured by a Newco
Facility and
supplied by such Newco Facility to a Visteon Facility (i)
pursuant to a
reasonably developed and documented plan, and (ii) for supply
to, or for
inclusion in another part, component or system to be supplied
to, Ford or
another customer of Visteon that was sourced to Visteon
pursuant to a
signed Sourcing Agreement with Pricing, Target Agreement, or
purchase order
(in the case of Ford) or a written sourcing commitment with
pricing
established or purchase order (in the case of another customer
of
Visteon), in
each case issued prior to May 1, 2005, but which were not
being manufactured and
supplied as of May 1, 2005. Such Components are set
forth in EXHIBIT
2 to this Agreement.
Subject to
Sections 2.1(c) and (d) below, Components which do not meet the
requirements set forth in Section 2.1(a) or
(b) are not Existing Business,
except as Newco and Visteon specifically
agree otherwise in writing. References
in this Section 2.1 to a "Newco Facility"
refer, for the avoidance of doubt, to
facilities which were manufacturing or
assembly facilities of Visteon or its
Affiliates in North America as of May 1,
2005, but were transferred to Newco.
Visteon warrants and represents to Newco
that, to the best of its knowledge as
of the date of this Agreement, Exhibits 1
and 2 are accurate and complete.
(c) Without limiting any rights or remedies
of either Party, and subject to, and
without limiting, Section 2.1(d) below:
(i) In the event
that Components which should have been included in Exhibit
1 (as determined
in accordance with Section 2.1(a)) are excluded from such
Exhibit, and
such Components are discovered to have been excluded:
(A) on or before 6 months after the date of this Agreement,
such
Components will be added to Exhibit 1, unless the Parties
otherwise
agree in writing; or,
(B) after 6 months after the date of this Agreement, the Parties
will
discuss in good faith as to whether such Components will be added
to
Exhibit 1, and such Components will be added if the Parties agree
in
writing.
(ii) In the
event that Components which should have been included in
Exhibit 2 (as
determined in accordance with Section 2.1(b)) are excluded
from such
Exhibit, and such Components are discovered to have been
excluded:
(A)
on or before three months after the date of this Agreement, and
such Components are to go into production prior to or on such
date,
such Components will be added to Exhibit 2; or,
(B) after three months after the date of this Agreement(or prior
to
such date, but which are not covered under Section
2.1(c)(ii)(A)
above), the Parties will discuss in good faith as to whether
such
Components will be added to Exhibit 2, and such Components will
be
added if the Parties agree in writing.
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(d) Without limiting any rights or remedies
of Newco, if a part, component or
system is not listed on Exhibit 2
("EXCLUDED COMPONENT"), which Excluded
Component replaces a part, component or
system manufactured, as of May 1, 2005,
at a Newco Facility, and North American
Sourcing Council approval was not
obtained to have such Excluded Component
manufactured at a facility other than a
Master Agreement Plant, such Excluded
Component will, upon Newco's written
request to Visteon, be added to Exhibit
2.
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, Newco's rights to
cease supplying Components which are
Existing Business to Visteon, and Visteon's
rights to cease the purchase of such
Components from Newco, 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 Sections 12,
6.2(b), 7(h), and 14).
2.3 Contract Covering Sale and Purchase of
Components Which Are Existing
Business In Production.
(a) Purchase
Order or Long Term Supply Agreement Issued. When a Purchase
Order or Long
Term Supply Agreement (as applicable) is issued after the
date of this
Agreement by Visteon to Newco for Components which are
Existing
Business in Production, the terms and conditions of the same
(including the
Global Terms) will apply in regard to the sale and purchase
of such
Components, except to the extent that such Purchase Order, Long
Term Supply
Agreement, or Global Terms are modified or supplemented under,
or conflict
with, this Agreement in regard to such Components. Newco agrees
to accept any
such Purchase Order or Long Term Supply Agreement (as
applicable)
issued by Visteon to Newco for such Components, provided that
the terms and
conditions of the same are consistent with this Agreement in
regard to such
Components. Visteon agrees to issue such Purchase Orders and
Long Term Supply
Agreements as soon as reasonably practicable after the
date of this
Agreement. Any such Purchase Order or Long Term Supply
Agreement issued
will be an Existing Agreement for the purposes of this
Agreement.
(b) Prior to
Issuance of Purchase Order or Long Term Supply Agreement.
Until such time
as a Purchase Order or Long Term Supply Agreement (as
applicable) is
issued after the date of this Agreement by Visteon to Newco
for Components which are
Existing Business in Production, a Purchase Order,
on Visteon's
standard form (as of May 1, 2005) attached hereto as Exhibit 3
(including the
Global Terms) will be deemed to apply in regard to the sale
by Newco and
purchase by Visteon of such Components, except to the extent
that such
Purchase Order, Long Term Supply Agreement, or Global Terms are
modified or
supplemented under, or conflict with, this Agreement in regard
to such
Components. Any such Purchase Order deemed to apply will be an
Existing
Agreement for the purposes of this Agreement.
2.4 Contract Covering Sale and Purchase of
Existing Business - Future Model.
Components which are Existing Business -
Future Model supplied by Newco to
Visteon will be supplied under the Purchase
Order or Long Term Supply Agreement
(as applicable) (including the Global
Terms) issued after the date of this
Agreement by Visteon to Newco for the same,
except to the extent that such
Purchase Order, Long Term Supply Agreement,
or Global Terms are modified or
supplemented under, or conflict with, this
Agreement in regard to such
Components. Newco agrees to accept any such
Purchase Order or Long Term Supply
Agreement (as applicable) issued by Visteon
to Newco for such Components,
provided that the terms and conditions of
the same are consistent with this
Agreement in regard to such Components.
Visteon agrees to issue such Purchase
Orders and Long Term Supply Agreements as
soon as reasonably practicable after
the date of this Agreement. Any such
Purchase Order or Long Term Supply
Agreement issued will be an Existing
Agreement for the purposes of this
Agreement.
2.5 Volumes. No specific volume commitments
by Visteon for Existing Business
will exist. However, without limiting the
foregoing sentence, Visteon will
continue to purchase at least the same
percentage of its
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requirements (at a Component-level) for
Existing Business from Newco as Visteon
Facilities were purchasing or receiving (at
normal, non-exceptional, operational
levels) from Newco Facilities on and prior
to May 1, 2005 (when such Newco
Facilities were Visteon Facilities), and
Newco will supply such percentage, in
each case except to the extent that such
requirements or supply pattern is to be
altered pursuant to a plan or action
approved by the North American Sourcing
Council (if required), that Newco
Facilities are sold, transferred, exited, or
closed (in regard to the applicable
Components supplied by the same), Newco's
supply obligations relating to such
Components are terminated, expire, or are
assigned in accordance with this Agreement,
or as otherwise agreed upon by the
Parties in writing. For example, if Visteon
Facilities were purchasing or
receiving 70% of their requirements for a
specific Component from Newco
Facilities on and prior to May 1, 2005 at
normal operational levels, Visteon
will continue to purchase at least 70% of
its requirements for such specific
Component from Newco during the term of
this Agreement (subject to the specific
exceptions referred to in the prior
sentence). The foregoing will not, however,
permit Visteon to cease purchasing at such
percentage from the assignee of any
Existing Agreement upon assignment of such
Existing Agreement by Newco to such
assignee.
2.6 No Obligation to Issue Long Term Supply
Agreement; Conflict with this
Agreement. Visteon shall have no obligation
under this Agreement to issue a Long
Term Supply Agreement (as opposed to a
Purchase Order) to Newco for any Existing
Business or other Components. In the event
of a conflict between the terms of
any Purchase Order, Long Term Supply
Agreement, or Global Terms and this
Agreement in regard to specific Components,
the terms of this Agreement shall
control in regard to such Components.
2.7 Affect on Other Agreements. Any
agreements between a Newco Facility (which,
at the time, would have been a Visteon
Facility) and a Visteon Facility in
effect as of the date of this Agreement
relating to the supply of Components
from such Newco Facility to such Visteon
Facility covered under this Agreement
are superseded (except for use in
establishing pricing as described in Section
3.1(a) or (b)) by the applicable terms and
conditions of this Agreement, and by
any Purchase Order or Long Term Supply
Agreement issued pursuant to this
Agreement, relating to such Components.
3. PRICING
3.1 Pricing.
(a) Existing
Business in Production. Subject to Sections 3.1(c) and (d),
for Existing
Business in Production, the prices of such Components will be
the documented
and substantiated prices in effect for the same, as of May
1, 2005, between
the Newco Facility manufacturing and supplying such
Components and
the Visteon Facility to which such Components were supplied
as of May 1,
2005 (which Newco Facility was, at the time, a Visteon
Facility), as
set forth in Exhibit 1, adjusted for productivity price
reductions taken
after May 1, 2005 but prior to the date of this Agreement,
as set forth in
Exhibit 1. In regard to any Components listed in Exhibit 1
for which no
prices are specified, Visteon and Newco will negotiate in good
faith and agree
upon such prices.
(b) Existing
Business - Future Model. Subject to Sections 3.1(c) and (d),
for Existing
Business - Future Model, the prices of such Components will be
the documented
and substantiated prices (as determined in accordance with
the reasonably
developed and documented plan described in Section 2.1(b)),
in effect as of
May 1, 2005, (if available) for the same between the Newco
Facility planned
to manufacture and supply such Components and the Visteon
Facility to
which such Components were planned to be supplied as of May 1,
2005 (which
Newco Facility was, at the time, a Visteon Facility), as set
forth in Exhibit
2. In regard to any Components listed in Exhibit 2 for
which no prices
are specified, Visteon and Newco will negotiate in good
faith and agree
upon such prices.
(c) Design or
Other Changes. The prices of Components described in Section
3.1(a) and (b)
will be adjusted for any Design Change or productivity price
reduction agreed
upon by Visteon and Ford in writing prior to the date of
this Agreement,
or agreed upon by Visteon and Newco in writing after the
date
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of this
Agreement (including, without limitation, the productivity
reductions
specified in Section 3.2 below). No other changes to the prices
of such
Components will occur unless agreed upon by the Parties in
writing.
(d) Prices for
Existing Business on Assignment to Buyer of Newco Facility.
In the event
that:
(1) Newco assigns a Purchase Order or Long Term Supply Agreement
for a
Component that is Existing Business ("ASSIGNED COMPONENT") to a
buyer
or transferee of the Newco Facility from which such Assigned
Component
is supplied ("TRANSFERRED FACILITY") (as described in Section 7
below);
and
(2) such Transferred Facility supplies, as of the date of the
assignment, such Assigned Component, or a similar part, component
or
system, directly to Ford (in addition to supplying such
Assigned
Component to Visteon), and such supply to both Ford and Visteon
will
continue after the date of assignment; then
Newco will amend
such Purchase Order or Long Term Supply agreement prior to
assignment to
provide that the price payable by Visteon for such Assigned
Component under
such Purchase Order or Long Term Supply Agreement to be
assigned will,
during the time period beginning on the date of such
assignment and
ending on 12/31/08, be the price payable by Ford to such
buyer or transferee for such
Assigned Component that will be supplied
directly by such
Transferred Facility to Ford (or the price of such similar
part, component
or system, if such Assigned Component will not be supplied
directly to Ford
by the Transferred Facility). (Such price payable by
Visteon which
matches such price payable by Ford is referred to as the
"Matched Ford
Price" in the Visteon - Ford PSA.)
3.2 Productivity Price Reductions.
(a) Newco shall reduce the prices for all
Ford-Vehicle Components supplied to
Visteon included in the calculation of
Visteon Carryover Frozen Turnover (as
described below) 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 3.3 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
Visteon Carryover Frozen Turnover will
be calculated by applying the applicable
Percentage Reduction for such calendar
year against the "Visteon Carryover Frozen
Turnover." The "Visteon Carryover
Frozen Turnover" shall be equal to the
Total Frozen Turnover, less the Target
Agreement Turnover, less any Components
excluded from the calculation of the
Visteon Carryover Frozen Turnover as
described in Section 3.2(b) below. The
following definitions shall apply to this
calculation:
"Total Frozen Turnover" shall be equal to
the total projected sales of
Components by Newco to Visteon using
Visteon's budgeted volume, mix and rates
assumptions for the applicable calendar
year.
9
<PAGE>
"Target Agreement Turnover" means that
portion of the Total Frozen Turnover for
Components to be supplied by Newco to
Visteon that will be launched during the
applicable calendar year where Newco and
Visteon have entered into signed Target
Agreements (or the sourcing document of
Visteon that is the equivalent of a Ford
Target Agreement).
(b) Where Newco and Visteon agree in
writing on different productivity price
reductions than those specified above, such
separate agreements shall supersede
the provisions of Subsection 3.2(a) if such
different price reductions replace
(and are not incremental to) the price
reductions required under Subsection
3.2(a). In these cases, the Components to
which such different price reductions
apply will be excluded from the calculation
of Visteon Carryover Frozen
Turnover. If such different price
reductions are incremental to (and do not
replace) the price reductions required
under Subsection 3.2(a), the Components
to which such inc
