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CONFIDENTIAL TREATMENT REQUESTED

Confidentiality Agreement

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This Confidentiality Agreement involves

VISTEON CORP

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Title: CONFIDENTIAL TREATMENT REQUESTED
Governing Law: Michigan     Date: 10/6/2005
Industry: Auto and Truck Parts     Sector: Consumer Cyclical

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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

<PAGE>

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

 

 

                                        3

<PAGE>

     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.

 

 

                                        4

<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.

 

"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

 

 

                                        5

<PAGE>

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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<PAGE>

(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

 

 

                                        7

<PAGE>

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

 

 

                                        8

<PAGE>

     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


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