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Exhibit 10.3
VISTEON SALARIED EMPLOYEE LEASE AGREEMENT
AGREEMENT (this
"AGREEMENT") dated as of October 1, 2005 between Visteon
Corporation, a Delaware corporation
("VISTEON"), and Automotive Components
Holdings, LLC f/k/a VFH Holdings, LLC, a
Delaware limited liability company,
("ACH"). Visteon and ACH are referred to
herein individually as a "PARTY" and
collectively as the "PARTIES".
WITNESSETH:
WHEREAS, Visteon
and Ford Motor Company ("FORD") have agreed to restructure
their business and commercial
relationships, resulting, among other matters, in
a Ford-controlled entity acquiring, through
the purchase of Automotive
Components Holdings, Inc. f/k/a/ VFH
Holdings, Inc., certain assets and
liabilities related to Visteon's North
America business, (the "BUSINESS")
pursuant to a Visteon "B" Purchase
Agreement dated as of September 12, 2005;
WHEREAS, ACH is
a wholly owned subsidiary of Automotive Components
Holdings, Inc. f/k/a/ VFH Holdings, Inc and
the Business shall be contributed by
Visteon to ACH in connection with the
transactions; and
WHEREAS, ACH
desires to obtain the services of certain Visteon salaried
employees ("VISTEON SALARIED EMPLOYEES") to
enable it to continue to conduct the
Business and Visteon is willing to provide
the services of certain Visteon
Salaried Employees to ACH.
NOW THEREFORE,
in consideration of the above premises and the mutual
covenants herein contained, and for other
good and valuable consideration given
by each Party hereto to the other, the
sufficiency and receipt of which are
hereby acknowledged, the Parties hereto,
intending to be legally bound, hereby
agree as follows:
ARTICLE 1
TERM
Section 1.01.
Term. The term of this Agreement shall commence on October 1,
2005, such date being referred to hereafter
as the "Effective Date" and shall
terminate on the earlier of (i) the
termination of employment of all of the
Leased Employees (as defined below); (ii)
the agreement of the Parties to
terminate this Agreement or (iii) December
31, 2009 ("TERM"). The Term may be
extended at ACH's option for an additional
twelve month period ending December
31, 2010 ("EXTENDED TERM").
ARTICLE 2
ASSIGNMENT OF VISTEON SALARIED EMPLOYEES
Section 2.01.
Employee Census. (a) A preliminary employee census is
attached as Schedule 2.01 ("PRELIMINARY
CENSUS"). The Preliminary Census sets
forth a list of the Visteon Salaried
Employees to be leased to ACH as of the
Effective Date, together with their
base
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salary, any other targeted or mandatory
cash compensation, and including without
limitation, applicable bonus levels, job
classification, and Global
Identification Number. Within ten days of
the date hereof, Visteon shall update
the Preliminary Census with any applicable
changes and deliver the Preliminary
Census to ACH. ACH shall have an additional
ten days to approve the revised
Preliminary Census. After the revised
Preliminary Census is approved by ACH, it
shall be substituted for Schedule 2.01 and
shall be known as the "EMPLOYEE
CENSUS". Employees who are identified on
the Employee Census shall be known as
"LEASED EMPLOYEES". Visteon shall update
the Employee Census at least monthly
for any employee transaction (i.e., quits,
death, transfers, etc.) in accordance
with this Agreement and any employees added
shall also be known as Leased
Employees.
(b) The period
during which Leased Employees are leased to ACH is referred
to as the "LEASE PERIOD". During the Lease
Period, Visteon shall make available
to ACH the services of the Leased Employees
as requested by ACH. For avoidance
of doubt, no Inactive Visteon Salaried
Employee (as hereafter defined) shall be
leased to ACH as of the Effective Date. An
Inactive Visteon Salaried Employee
shall be any Visteon Salaried Employee who
is absent from work and who is
entitled to reinstatement on return to
employment, including those on leave of
absence, workers' compensation leave or
short or long term disability leave, but
excluding those who are on paid absence for
jury duty, bereavement, short term
military service, vacation or holiday. If a
Leased Employee becomes an Inactive
Visteon Salaried Employee and is removed
from Visteon's active payroll at
anytime during the Lease Period, such
Leased Employee shall be removed from the
Employee Census and ACH shall bear no
further financial responsibility with
respect to such employee.
Section 2.02.
Replacement of Attrition. (a) If ACH requires a replacement
for a Leased Employee who is no longer
providing services to ACH, and ACH
determines that Visteon should provide the
replacement employee, ACH will inform
Visteon of its requirements together with
direction that the vacancy should be
filled by a Visteon new hire, an existing
Visteon employee or an agency
employee, in its sole discretion, subject
to Section 2.02(d) below. If ACH
directs that the position be filled by a
Visteon new hire, Visteon shall use
commercially reasonable efforts to fill the
position using Visteon's standard
employment practice, policies and
procedures. If Visteon has an existing Visteon
employee who Visteon believes is qualified
for the position, ACH shall consider
such qualified employee. Visteon may
utilize its normal job posting procedures
for M7 and below positions or its personnel
development process for M6 or above
positions to identify internal candidates
for the position, either among the
Leased Employees or among other Visteon
employees. Either Visteon or ACH may
suspend or narrow the scope of the internal
candidate identification process,
upon ten days prior written notice to the
other Party. In any event, for a
period of up to six months from the date
hereof, a Visteon employee who is not a
Leased Employee shall not be considered for
an open position at ACH; provided,
however, that the Parties may mutually
agree to waive, modify or restore (if
previously waived) the six month
restriction. Candidates for the position shall
be reviewed with the manager who initiated
the employment request to determine
if the candidate is qualified for the
position and the employment decision shall
be made in accordance with Visteon's
applicable employment policies. If Visteon
hires the candidate and assigns such
candidate to ACH, or if an existing Visteon
employee is approved
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by ACH for lease, Visteon shall modify the
Employee Census to add any such
employee to the Employee Census in which
case the employee shall become a Leased
Employee.
(b) If ACH
determines that Visteon shall provide an agency employee to
fill
a position, Visteon shall supply such
agency employee to ACH at cost without
markup until the expiration of the Term.
Visteon shall not supply any agency
employees to ACH for the Extended Term,
provided however, that Visteon will
assign any contract for agency personnel to
ACH, at ACH's request and shall use
commercially reasonable efforts to obtain
the consent of the employment agency.
(c) ACH may
contract directly with employment agencies or technical service
firms to supply required personnel, in its
sole discretion. If ACH contracts
directly with such agencies or firms, it
will furnish Visteon a census similar
in content and frequency to the Employee
Census furnished to ACH by Visteon
pursuant to Section 1.01, and ACH shall
reimburse Visteon for any applicable
occupancy charge with respect to such
contracted employees on the same basis as
is provided in Section 4.01(iv) hereof.
This provision shall not be subject to
the Agency Threshold described below.
(d) ACH shall
instruct Visteon to replace a Leased Employee with a Leased
Employee and an agency employee with an
agency employee; provided, however, that
ACH may, in its sole discretion, instruct
Visteon to replace an agency employee
with a Leased Employee if the percentage of
agency employees assigned to the
Business is not less than 5.7% of the
number of Leased Employees assigned to the
Business as of the month end immediately
prior to the date of such replacement
instruction (the "AGENCY THRESHOLD"). If
the percentage of agency employees is
below the Agency Threshold, the Parties
shall mutually agree on whether a
replacement shall be a Leased Employee or
an agency employee.
Section 2.03.
Return to Visteon by Mutual Agreement. In the event that
there is a promotional or other career
development opportunity at Visteon
available for a Leased Employee, and upon
mutual agreement between the Parties,
a Leased Employee may be removed from this
Agreement and returned to Visteon on
a mutually agreeable date. Visteon shall
modify the Employee Census accordingly
and any reimbursements from ACH with
respect to such employee shall cease as of
the date the employee is returned to
Visteon. Such attrition shall be replaced
as provided in Section 2.02 above.
Notwithstanding the above, for a period of up
to six months after the date hereof, no
Leased Employee shall be returned to
Visteon under the provisions of this
Section 2.03 unless mutually agreed by the
Parties.
Section 2.04.
Removal of Leased Employee from Lease Without Cause. If ACH
desires to discontinue the lease of any
individual Leased Employee or group of
Leased Employees under circumstances that
would make the Leased Employee
eligible for benefits under the Visteon
Separation Program ("VSP") and not for
reasons related to "performance issues" or
"cause" as described in Section 3.02,
ACH shall use commercially reasonable
efforts to give Visteon at least ten
business days notice prior to the end of
the calendar month. Upon receipt of
notice, Visteon shall attempt to place the
Leased Employee in a comparable
position at Visteon. The Leased Employee
will remain under lease until the
earlier of (i) the date such
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employee is placed at Visteon or (ii)
thirty (30) days following the date of the
notice of termination to the employee,
provided the termination shall occur no
later than the end of the month following
the month during which the notice of
lease discontinuance occurs. ACH shall
remain responsible for the lease fees for
such time period. At ACH discretion, it may
retain the services of the Leased
Employee at ACH for such time period or may
dismiss such Leased Employee. In any
event, the Leased Employee shall not return
to Visteon unless to report to work
at a comparable Visteon position. In the
event of a sale of a facility or other
extraordinary event, the Parties may
mutually agree to terminate the lease of a
group of Leased Employees prior to the end
of a month.
Section 2.05.
Buyer Employment. (a) Visteon will be responsible for
transitioning Leased Employees to any buyer
of all or any part of the Business
under terms mutually agreed by Visteon, the
buyer and ACH. Visteon shall
cooperate with ACH and buyer to support and
facilitate such transfers and
promptly shall provide any information
reasonably required by Ford or a buyer in
the conduct of buyer's due diligence in
connection with such transaction
pursuant to the terms of the Master
Services Agreement dated as of even date
herewith between the Parties and subject to
any confidentiality provisions.
Visteon shall not impose any
confidentiality obligations on a Leased Employee
who is transferred to a buyer that are
greater than the obligations the Leased
Employee had as a Visteon Salaried Employee
and any such confidentiality
obligations shall be no greater than those
imposed on a Leased Employee to ACH.
Any Leased Employee who transfers to a
buyer shall be removed from the Employee
Census effective on the date of transfer to
buyer and all future lease fees with
respect thereto shall cease. At buyer's
request, Visteon shall lease the Leased
Employees affected by the sale to the buyer
for a period not to exceed six
months from the sale date, at the same cost
as such employees had been leased to
ACH.
(b) In the event
of a sale or transfer of all or any part of the Business
to a buyer, and a transfer of Leased
Employees to such buyer in accordance with
(a) above, Visteon shall make any
appropriate arrangements concerning HR
services as is determined by ACH, Visteon
and a buyer for up to twenty-four (24)
months as provided under the terms of the
Master Services Agreement. Visteon
shall provide such HR services to a buyer
at the following rates:
<TABLE>
<CAPTION>
TERM
PRICE
----
-----
<S>
<C>
9 months post-sale
Cost + 5%
10-15 months post-sale
Cost + 8%
16 months and beyond post-sale Cost + 12%
</TABLE>
Section 2.06.
Terminations. (a) If a Leased Employee's services are no
longer required pursuant to Section 2.04
above, and Visteon terminates such
employee because no comparable job is
available at Visteon, Visteon shall
terminate the Leased Employee under the
terms of the
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VSP as applicable to Leased Employees and
as in effect as of the date hereof. A
Leased Employee who declines a comparable
job at Visteon or a buyer shall not be
eligible for benefits under the VSP.
Visteon and ACH shall mutually agree on the
definition of "comparable job". During the
Lease Period, Visteon shall make no
change in the terms of the VSP that reduces
the schedule of separation benefits,
duration of welfare benefit continuation or
continuation of outplacement
assistance as applicable to Leased
Employees as of the date hereof. Any waiver
and release obtained from a Leased Employee
in connection with the VSP shall
include as released parties ACH, Ford and
their affiliates, as well as present
and former officers, directors, employees
and agents of each of them. Visteon
shall not terminate a Leased Employee under
the terms of the VSP if such Leased
Employee is being terminated "for cause" or
for failure to achieve acceptable
performance under the Visteon Performance
Improvement Program ("PIP"), as
described in Section 3.02 (b). Visteon
shall be reimbursed for costs under the
VSP only to the extent provided in the
Reimbursement Agreement dated as of even
date herewith among Ford and Visteon and
the Escrow Agreement dated as of even
date herewith between Ford, Visteon and
Deutsche Bank Trust Company Americas. No
reimbursement for VSP costs shall be
allowable under Article 4 hereof.
(b) Visteon
shall be responsible for complying with any applicable Worker
Adjustment and Retraining Notification
("WARN") Act and any other legal
requirements in connection with a
termination of a Leased Employee, provided
that Visteon receives notice from ACH
sufficiently in advance to permit such
compliance, including notification
requirements. If Visteon does not receive
sufficient notice from ACH, ACH shall be
responsible for all costs of compliance
with WARN or any similar law, including
cost of any period of continued
employment or pay in lieu of notice.
Section 2.07.
Baseline. The sum of the number of Visteon Salaried Employees
who (i) are initially leased to ACH as of
October 1, 2005 under this Agreement;
(ii) have been identified as TBD positions
under the Employee Roster delivered
to ACH pursuant to Section 5.06 of the
Contribution Agreement; and (iii) are
leased under the lease agreement dated as
of even date herewith between Visteon
and Ford concerning the Rawsonville and
Sterling Visteon Salaried Employees
("FORD LEASE AGREEMENT") (the lease
transaction being subject to adoption of
competitive operating agreements at the
plants), shall establish a baseline
("BASELINE"). In the event of attrition,
Visteon shall replace employees on a
one for one basis up to the Baseline, in
accordance with the terms of Section
2.02. The Baseline shall be adjusted as
follows:
A. In the event of a corporate
transaction involving (i) the sale of all
or any part of the Business; (ii) a transfer of any part of the
Business to Ford (i.e., Rawsonville/Sterling); or (iii) closure of
all
or any part of the Business, where Leased Employees are either
transferred to Ford, a buyer or are terminated by Visteon, the
Baseline shall be reduced by the number of the Leased Employees
who
are transferred or terminated in connection with such
transaction.
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B. In the event a Leased
Employee receives a VSP benefit and is not
otherwise part of a corporate transaction described in (A) above,
the
baseline will be reduced by one.
The Baseline so reduced shall be known as
the "ADJUSTED BASELINE". Visteon shall
not be obligated to fill ACH requisitions
for replacement employees under this
Agreement through new Leased Employees in
excess of the lesser of the Baseline
or Adjusted Baseline, as applicable.
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ARTICLE 3
EMPLOYER MATTERS
Section 3.01.
Employer Definition. Visteon shall be the employer of the
Leased Employees and ACH shall not be
considered the employer. Visteon will
instruct Leased Employees while at ACH
facilities (i) to conform to ACH policies
and applicable law regarding safety and
health, and personal and professional
conduct (including wearing an
identification badge or personal protective
equipment and adhering to plant regulations
and general safety practices or
procedures) generally applicable to such
facilities, which policies, procedures,
rules and regulations ACH will provide as
soon as practicable after the date
hereof, and as soon as practicable upon any
modification, termination or
adoption of any such policy, procedure,
rule or regulation; and (ii) to
otherwise conduct themselves in a lawful
and businesslike manner. Leased
Employees also shall be subject at all
times to Visteon's policies and
procedures. During the Lease Period,
Visteon shall retain responsibility for all
payments and benefits due to the Leased
Employees in connection with their work
relating to the Business, including but not
limited to:
(i) the payment of Leased Employees'
base salary or other components of pay
(less any
applicable withholding or other taxes or any amounts deducted
from such wages
pursuant to normal payroll practices of Visteon);
(ii) the provision of employee benefits
applicable to Leased Employees;
(iii) payment of all federal, state, or
local taxes withheld or otherwise
required to be
paid with respect thereto, and
(iv) the liability for statutory benefits,
including workers' compensation.
Section 3.02.
Employer Rights. (a) Visteon shall retain all employer
rights, except as specifically provided
below, including the right to terminate
Leased Employees, after notice to ACH.
Visteon shall have the right to change
the salary and job classification of the
Leased Employees upon reasonable notice
to ACH. Although Visteon shall remain
responsible for performance management and
personnel development, ACH and its
management shall have the right to assign to,
and structure work for, Leased Employees.
Leased Employees shall administer
Visteon's human resources management
policies and practices, such as performance
reviews, compensation planning, discipline,
and personnel development policies,
and other Visteon policies, procedures,
rules and regulations applicable to the
Leased Employees, and ACH shall permit the
Leased Employees to conduct such
activities. Visteon may request ACH to
provide information or documents with
respect to the Leased Employees' job
performance and other matters, and ACH
shall cooperate with Visteon in providing
such information or documents.
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(b) In the event
that ACH has a concern regarding a Leased Employee during
the Lease Period, including but not limited
to a concern regarding a Leased
Employee's performance or conduct, ACH
shall provide written notice of its
concern to Visteon and such notice shall
identify specifically the nature of
ACH's concern. Upon receipt of such notice,
Visteon shall implement a PIP in
accordance with its policies. If the
identified concern is not cured to the
satisfaction of ACH by the end of the PIP,
ACH shall have the right to notify
Visteon in writing that the Leased Employee
is to be returned to Visteon and
removed from the Employee Census effective
at the end of the month immediately
following the end of the PIP. If a Leased
Employee commits an offense which
would justify a "for cause" termination
under Visteon's personnel policies, as
determined by Visteon, such employee shall
be immediately escorted from the
worksite and removed from the Employee
Census. ACH's obligation to reimburse
Visteon for any such employee removed from
the Employee Census shall terminate
on the last day worked for ACH.
Section 3.03.
Management of Hourly Employees. Pursuant to a Ford Hourly
Employee Assignment Agreement dated as of
even date herewith between Ford Motor
Company and ACH, ACH intends to lease
certain Ford hourly employees represented
by the International Union, United
Automobile, Aerospace and Agricultural
Implement Workers of America, UAW and its
affiliated locals (collectively,
"UAW") who are covered under the terms and
conditions of the Ford-UAW Collective
Bargaining Agreement dated as of September
15, 2003 between Ford and the UAW and
various local agreement by and between Ford
and the UAW, and any successor
agreements ("FORD-UAW CBA") ("FORD HOURLY
EMPLOYEES"). Pursuant to a Visteon
Hourly Employee Lease Agreement dated as of
even date herewith between Visteon
and ACH, ACH intends to lease certain
Visteon hourly employees represented by
the UAW who are covered under the terms and
conditions of the (i) Master
Visteon-UAW Collective Bargaining Agreement
dated June 29, 2000 and the
Supplemental Agreement dated as of May 4,
2004 and extensions or successor
agreements by and between Visteon and the
UAW (collectively, "MASTER VISTEON
CBA") ("VISTEON HOURLY SUPPLEMENTAL
AGREEMENT EMPLOYEES") or (ii) the UAW Local
#1216-Visteon Corporation Regional Assembly
and Manufacturing LLC, Bellevue
Plant, Labor Agreement ("BELLEVUE CBA")
("BELLEVUE HOURLY EMPLOYEES").
The Leased
Employees who are engaged in hourly supervision have authority
to exercise day to day supervision over the
Ford Hourly Employees, the Visteon
Hourly Supplemental Agreement Employees and
the Bellevue Hourly Employees
(collectively, "HOURLY EMPLOYEES") in
accordance with the terms of the Ford-UAW
CBA, Master Visteon CBA, and Bellevue CBA,
respectively. In the event that any
employment concern arises in connection
with administration of the applicable
CBA, the Leased Employee shall consult with
ACH, and Visteon or Ford, as
applicable, and shall resolve the concern
consistent with Visteon's or Ford's
application of the applicable CBA to their
general hourly populations, if any.
Section 3.04.
Employer Representations. Visteon represents and warrants
that as of the date a Visteon Salaried
Employee becomes a Leased Employee, (i)
the Leased Employee shall be paid by
Visteon on a salaried basis; (ii) shall not
be subject to any collective bargaining
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agreement or have elected to be represented
by a collective bargaining
representative unless otherwise disclosed
in Section 3.07(a)(v) of the
Contribution Agreement dated as of
September 12, 2005 between Visteon and ACH
Holdings, Inc. and (iii) shall be subject
to Visteon's annual compensation
planning process as set forth in Visteon's
policies and procedures.
Section 3.05.
ACH Confidentiality Agreement. A Leased Employee shall be
required to execute the ACH Leased Employee
Confidentiality Agreement attached
hereto as Schedule 3.05 ("CONFIDENTIALITY
AGREEMENT"). ACH shall not require a
Leased Employee to divulge Visteon's
confidential information to ACH except to
the extent that any confidential
information was otherwise acquired by ACH in
connection with the transactions. Visteon
will use commercially reasonable
efforts to require Leased Employees to
comply with the terms of the
Confidentiality Agreement. Visteon shall
not use confidential information of
either ACH or Ford that is provided by a
Leased Employee in breach of the
Confidentiality Agreement.
Section 3.06.
Payroll and Related Services. During the Lease Period,
Visteon
