<PAGE>
EXHIBIT 10.3
AMENDED AND RESTATED EMPLOYEE TRANSITION AGREEMENT
This Employee
Transition Agreement relating to certain employment
matters and employee benefit plans (this "Agreement") dated as of
April 1, 2000
and restated as of December 19, 2003 is made and entered into by
and among Ford
Motor Company, a Delaware corporation ("Ford") and Visteon
Corporation, a
Delaware corporation and a wholly owned subsidiary of Ford,
("Visteon"). Ford
and Visteon are referred to herein individually as a "Party" and
collectively as
the "Parties".
RECITALS
1. Ford determined that it was
appropriate and beneficial to separate the
activities
conducted under the name of "Visteon Automotive Systems, an
enterprise of Ford
Motor Company," including those activities conducted
by any entity in
which Ford, directly or indirectly, owns or controls
50% or more of its
stock or other equity interests (a "Subsidiary") and
by any entity in
which Ford, directly or indirectly, owns or controls
less than 50% but
more than 20% of its stock or other equity interests
(an "Affiliate")
which is aligned with such enterprise, which presently
includes the
Chassis Systems, Climate Control Systems, Interior and
Exterior Systems,
Energy Transformation Systems, Glass Division, and
the Visteon
Technology Office (collectively, with historic operations,
including the
former Automotive Products Operations, Automotive
Components
Division, Electronics, Plastics and Trim, Climate Control,
Chassis,
Electrical and Fuel Handling, and Glass Divisions, the
"Business");
2. Ford concluded that the
separation of the Business from its automaking
business would (i)
alleviate competitive barriers to expanding the
Business beyond
sales to Ford, Ford Subsidiaries and Ford Affiliates,
(ii) allow Ford to
overcome competitive barriers to making purchases
from third-party
automotive suppliers, and (iii) enhance the Business'
ability to attract
employees and permit the Business to offer employee
incentives more
directly tied to the performance of the Business;
3. Ford caused Visteon to be
formed for the purpose of carrying on and
conducting the
Business;
4. Ford and Visteon have
entered into various agreements, including a
Master Transfer
Agreement dated as April 1, 2000 to effect the
separation of the
Business;
5. The Parties desired that
Ford transfer to Visteon certain employees who
were engaged in
doing work for the Business and to provide for the
orderly transition
of employee benefit plans and the Parties executed
this Employee
Transition Agreement as of April 1, 2000;
<PAGE>
2
6. Pursuant to Amendment Number
One to Employee Transition Agreement dated
as of January 12,
2001 between Ford and Visteon, the Employee
Transition
Agreement was amended; and
7. The Parties desire to
further amend and restate the Employee Transition
Agreement in its
entirety as provided below, effective as of
restatement date
first written above.
AGREEMENT
NOW, THEREFORE, in
consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is
hereby
acknowledge, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 "BENEFIT TRANSITION DATE" shall mean the first day of the
month coincident
with or immediately following the Distribution Date except with
respect to the
Ford Flexible Benefits Plan shall mean June 1, 2000.
1.02 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.03 "DISTRIBUTION DATE" shall mean the date Ford will distribute
to Ford
shareholders all of the shares of Visteon common stock then owned
by Ford.
1.04 "DOL" shall mean the U.S. Department of Labor.
1.05 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as
amended.
1.06 "FORD BUSINESS EMPLOYEES" shall mean
(i) Persons who are enrolled on the
Ford salaried payroll (U.S. or
non-U.S) or enrolled on the Ford hourly payroll in non-U.S
jurisdictions and who are actively at work at the Business the
day prior to the Transfer Date including those on paid time
off (i.e. Jury Duty Pay, Bereavement Pay, Short Term Military
Pay, Vacation and Paid Holiday) and those on reduced or
alternate work schedules, but excluding Ford employees who are
on temporary assignment to the Business ("Active Ford Business
Employees"); and
(ii) Persons who are absent from such
salaried or hourly employment
as of the day prior to the Transfer Date on account of short
term or long term
<PAGE>
3
disability leave or other approved leaves of absence, or
layoff (Inactive Ford Business Employees").
1.07 "FORD RETIREE" shall mean a former Ford Business Employee, or
a surviving
spouse or beneficiary of a former Ford Business Employee, who had
terminated
service with Ford or Visteon and is receiving retirement benefits
under a Ford
sponsored retirement plan as of the Benefit Transition Date or who
terminated
employment with Ford or Visteon on or before the Benefit Transition
Date and is
eligible on the Benefit Transition Date to receive immediate or
future
retirement benefits (including deferred vested benefits) under the
Ford
sponsored retirement plan.
1.08 "GENERAL RETIREMENT PLAN" or "GRP" shall mean the General
Retirement Plan
of Ford Motor Company and its participating subsidiaries.
1.09 "GLOBAL FORD BUSINESS EMPLOYEES" shall mean all employees of
Ford or its
the Subsidiaries or Affiliates who are engaged in the conduct of
the Business
prior to the Transfer Date, including but not limited to
(i) Ford Business Employees; and
(ii)
Persons who are enrolled on the payroll of
a Subsidiary or
Affiliate of Ford engaged in the Business as of the
Transfer Date, or persons who are no longer active but who had
been employed by a Subsidiary or Affiliate engaged in the
Business at any time prior to the Transfer Date ("Subsidiary
Employees").
1.10 "GLOBAL VISTEON EMPLOYEES" shall mean all employees of Visteon
or its
subsidiaries or affiliates who are engaged in the conduct of the
Business after
the Transfer Date, including but not limited to
(i) Visteon Employees; and
(ii) Subsidiary Employees who as a result
of the transfer of Ford's
interest in the Subsidiary or Affiliate to Visteon as of the
Transfer Date, became employed by, or became the
responsibility of, a subsidiary or affiliate of Visteon on the
Transfer Date.
For purposes of this Agreement, Global Visteon Employees shall not
include any
employees hired directly by Visteon or its subsidiaries or
affiliates after the
Transfer Date.
1.11 "GOVERNANCE COUNCIL" shall mean the governance council
described in Section
6.1 of the Relationship Agreement between Ford and Visteon dated as
of the date
of this Amended and Restated Employee Transition Agreement between
Ford and
Visteon.
<PAGE>
4
1.12 "GROUP I EMPLOYEE" shall mean a U.S. Visteon Employee who as
of the Benefit
Transition Date is eligible for immediate normal or regular early
retirement
under the provisions of the GRP as in effect on the Benefit
Transition Date.
1.13 "GROUP II EMPLOYEE" shall mean a U.S. Visteon Employee who
(i) is not a Group I Employee;
(ii) has as of the Benefit Transition Date
a combination of age and
credited service under the GRP that equals or exceeds sixty
(60) points (partial months disregarded); and
(iii)
could have become eligible for normal or regular
early
retirement under the provisions of the GRP as in effect as of
the Benefit Transition Date within the period after the
Benefit Transition Date equal to the employee's credited
service under the GRP as of the Benefit Transition Date.
1.14 "GROUP III EMPLOYEE" shall mean any U.S. Visteon Employee who
participants
in the GRP other than a Group I or II Employee.
1.15 "IRS" means the U.S. Internal Revenue Service.
1.16 "OSHA" shall mean the Occupational Safety and Health Act of
1970, as
amended.
1.17 "PBGC" shall mean the Pension Benefit Guaranty
Corporation.
1.18 "SFAS NO. 87" shall mean the Statement of Financial Accounting
Standards
No. 87.
1.19 "SFAS NO. 106" shall mean the Statement of Financial
Accounting Standards
No. 106.
1.20 "TRANSFER DATE" shall mean the date specified in the Master
Transfer
Agreement with respect to each entity or interest to be transferred
pursuant
thereto.
1.21 "VISTEON BALANCE SHEET" shall mean the balance sheet for
Visteon Automotive
Systems as of March 31, 2000, as prepared by Ford.
1.22 "VISTEON EMPLOYEES" shall mean
(i) Active Ford Business Employees
who are transferred to Visteon
pursuant to the terms hereof and who are at work on the
Transfer Date including those on paid time off (i.e., Jury
Duty Pay, Bereavement Pay, Short Term Military Pay, Vacation
Pay and Paid Holiday) and those on reduced or
<PAGE>
5
alternate worK schedules; and
(ii) Inactive Ford Business Employees or
Ford Retirees on a
disability
retirement who are transferred to Visteon pursuant
to the terms hereof on the Reinstatement Date or Disability
Retiree Reinstatement Date.
For purposes of
this Agreement, Visteon Employees shall not include any
employees hired directly by Visteon after the Transfer Date, except
for those
specified in (ii) above. "Visteon Employees" shall also include any
Ford
employee who transferred to Visteon after the Transfer Date and on
or prior to
the Distribution Date.
1.23 "VISTEON RETIREE" shall mean a former Ford Business Employee,
or a
surviving spouse or beneficiary of a former Ford Business Employee,
who became a
Visteon Employee and who terminated service with Visteon after the
Benefit
Transition Date and is receiving retirement benefits under a Ford
sponsored
retirement plan and a Visteon sponsored retirement plan.
ARTICLE II
EMPLOYMENT RESPONSIBILITY
2.01 EMPLOYEE CENSUS.
On the Transfer
Date, Ford shall provide Visteon a preliminary employee
census ("Employee Census") containing the following
information:
(i) a list of all Active Ford
Business Employees by location;
(ii) a list of all Inactive Ford Business
Employees by location;
(iii) the job classification of each Ford
Business Employee;
(iv) the Ford Service Date of each Ford
Business Employee;
(v) the base monthly salary of each
Ford Business Employee;
(vi) the reason for any absence of any Ford
Inactive Business
Employee and the date any leave expires.
Ford shall finalize the Employee Census no later than thirty (30)
days after the
Transfer Date, subject to Visteon review. Ford shall not be
responsible for
providing Visteon an Employee Census of the Global Ford Business
Employees.
2.02 EMPLOYMENT TRANSFER.
Unless otherwise
agreed, Ford shall transfer the employment of the
Active Ford Business Employees to Visteon effective on the Transfer
Date and the
Active Ford Business Employees shall become Visteon Employees
effective on the
Transfer Date. Ford shall transfer to Visteon the employment of an
Inactive Ford
Business Employee who is recalled from layoff or other inactive
status or
requests reinstatement on or
<PAGE>
6
before the date such employee's leave of absence expires or as of
the date such
employee's medical disability ceases and such employee is released
by their
personal physician to return to their former position of employment
or a
comparable position consistent with any medical restrictions, as
applicable (the
"Reinstatement Date"). In addition, Ford shall transfer to Visteon
employment
responsibility for a Ford Retiree on a disability retirement
("Disability
Retiree") on the date the medical disability ceases, such employee
is released
by their personal physician to return to their former position of
employment or
a comparable position consistent with any medical restrictions, and
the
retirement committee approves the return to work ("Disability
Retiree
Reinstatement Date"). The Transfer Date, the Reinstatement Date and
the
Disability Retiree Reinstatement Date shall be known as the
"Employment Date".
Notwithstanding the above, Visteon shall remain financially
responsible for any
costs incurred by Ford or its benefit plans and programs related to
the Inactive
Ford Business Employees between the Transfer Date and the
Employment Date, and
Visteon shall reimburse Ford for any such costs under a method to
be mutually
agreed by the Parties. A Ford Business Employee who is on an
international
service assignment to a non-Business activity as of the
Distribution Date shall
remain in such assignment until scheduled to return and shall
return to the
originating activity. A Ford employee who is on international
service assignment
to a Business activity as of the Distribution Date shall remain in
such
assignment until scheduled to return and shall return to the
originating
activity. Visteon or Ford, as applicable, shall reimburse the other
for the
costs of such employees after the Distribution Date under a method
to be
mutually agreed by the Parties. A Ford Business Employee who is on
international
service assignment to a non-Business activity as of the
Distribution Date shall
be considered a Visteon Employee as of the Transfer Date, and
generally shall be
covered under the terms of this Agreement to the same extent as
other Visteon
Employees. Visteon and Ford shall determine at a later date
appropriate
transition measures for such employees, and for a Ford employee who
is on
international service assignment to a Business activity as of the
Distribution
Date, pursuant to the process described in Section 3.13.
2.03 RECOGNITION OF SERVICE.
Visteon shall
recognize, or shall cause its subsidiaries or affiliates
to recognize, the Ford Service Date or Subsidiary Service Date, as
applicable,
of each Global Visteon Employee in determining years of service
under the
employee benefit plans and other compensation and benefit practices
and polices
of Visteon or its subsidiaries or affiliates both prior to the
Benefit
Transition Date and thereafter, except as otherwise provided in
this Agreement.
2.04 COMPENSATION AND BENEFIT PLANS.
Visteon shall pay
each Global Visteon Employee at the same base salary
rate or hourly rate as was applicable to them as a Global Ford
Business
Employee, and shall implement any merit, promotional or other
increases that
were scheduled to go into effect as of the Transfer Date. Effective
on the
Transfer Date, and except as otherwise provided in this Agreement,
Visteon shall
adopt the same benefit plans and programs
<PAGE>
7
for Visteon Employees as are in effect for Ford Business Employees
as of the
Transfer Date, and shall participate in the Ford employee benefit
plans and
programs as a participating subsidiary or its equivalent until the
Benefit
Transition Date. Visteon shall reimburse Ford for any such legally
incurred cost
and expense consistent with the methods presently in effect for
charging such
expenses to participating subsidiaries or their equivalents using
methodology
consistent with U.S. GAAP and acceptable to both Parties. In
addition, Visteon
shall reimburse Ford for any costs and expense incurred prior to
the Benefit
Transition Date and that relate to Ford Retirees under an
incentivized
separation program. Effective on the Benefit Transition Date, and
except as
otherwise provided herein, Visteon shall adopt, or shall cause its
subsidiaries
or affiliates to maintain or adopt, benefit plans and programs for
the U.S.
Global Visteon Employees that are substantially comparable in the
aggregate to
those that were in effect on the day immediately preceding the
Benefit
Transition Date and shall continue such programs substantially in
effect for at
least four (4) years after the Distribution Date, provided,
however, if Ford
makes changes in the benefit plans and programs applicable to Ford
employees
during the four (4) year period, Visteon or its subsidiaries or
affiliates, as
applicable, shall be permitted, but shall not be required, to make
a comparable
change. The comparability period shall not be effective with
respect to U.S.
employees of Visteon who were hired as new hires by Visteon after
the Transfer
Date or with respect to non-U.S. Global Visteon Employees. Except
as otherwise
provided in this Agreement, Ford shall take such action as is
necessary to
eliminate Global Visteon Employees from Ford sponsored benefit
plans and
programs as of the Benefit Transition Date unless otherwise agreed
by the
Parties, and thereafter Global Visteon Employees shall have no
rights under any
such plans or programs.
2.05 PAID TIME OFF.
Effective as of
the Employment Date, each Global Visteon Employee shall
retain the same paid time off eligibility they had under Ford's
paid time off
policy, or the policy of Ford's Subsidiaries or Affiliates. Any
paid time off
used by a Global Ford Business Employee in 2000 prior to the
Employment Date
shall be counted against such employee's entitlement as a Global
Visteon
Employee after the Distribution Date until December 31, 2000.
2.06 COLLECTIVE BARGAINING AGREEMENTS.
Certain of the
Ford Business Employees are covered under the terms of
the collective bargaining agreements listed on Attachment A.
Effective as of the
Transfer Date, Visteon shall assume the obligation of Ford under
the collective
bargaining agreements applicable to such employees, and Ford shall
be relieved
of any further obligations under such agreements with respect to
such employees.
The Agreement Governing the Separation of the Ford Visteon
Organization dated
January 25, 2000 between Ford and the Ford European Works Council,
attached
hereto as Attachment B, shall apply to the Ford Business Employees
represented
by the Ford European Works Council, and Visteon agrees to abide by
its terms.
<PAGE>
8
2.07 REEMPLOYMENT RESTRICTION.
Except with the
consent of Visteon, Ford shall not hire any Global
Visteon Employee during the period commencing as of the
Distribution Date and
terminating twelve months thereafter, unless otherwise required by
law.
Notwithstanding
the above, Ford shall be permitted to hire any Global
Visteon Employee during the twelve month period in the event such
Global Visteon
Employee incurs an employment loss as a result of a Reduction in
Force (as
hereafter defined). A "Reduction In Force" means an action by
Visteon that
results in an employment loss for (i) at least ten (10) employees
either within
a thirty (30) day period or at any time if the employment loss was
related to a
single employment decision or (ii) any number of employees in the
event of a
plant or facility closing. An employee suffers an employment loss
if (i) the
individual's employment ends for any reason other than a discharge
for cause,
voluntary resignation or voluntary retirement; (ii) the individual
is placed on
a layoff which is reasonably expected to exceed six months; or
(iii) the
individual's hours of employment are reasonably expected to be
involuntarily
reduced by more than fifty (50) percent during each month of a six
month period.
An employment loss shall not be deemed to have occurred if the
employee was
transferred to a successor employer in connection with a sale,
disposition or
reorganization of all or any part of Visteon's business.
ARTICLE III
EMPLOYEE BENEFIT PLANS
3.01 U.S. QUALIFIED DEFINED BENEFIT
RETIREMENT PLANS.
a. GRP Participating
Subsidiary. U.S. Ford Business Employees
participate in the GRP as employees of Ford. Effective as of
the Transfer Date, Visteon shall take
such corporate action as
is necessary to participate in the GRP as a "Participating
Subsidiary" as defined in the GRP with respect to the Visteon
Employees until the Benefit Transition Date. Ford hereby
consents to such participation by Visteon. Visteon shall
reimburse Ford for the cost of any early separation incentive
programs applicable to U.S. Ford Business Employees prior to
the Benefit Transition Date.
b. Visteon Mirror GRP.
(i) Establishment of Plan. Effective
on the Benefit
Transition Date, or such later date as the Parties
may mutually agree, Visteon shall establish its own
defined benefit pension plan that with respect to
Group III Employees contains provisions that
duplicate the benefit provisions of
the GRP as it
pertains to service prior to the Benefit Transition
Date and with respect to Group I and II Employees,
contains substantially comparable benefit provisions
with respect to
<PAGE>
9
service after the Benefit Transition Date ("Visteon
Mirror
GRP"). The Visteon Mirror GRP shall be
responsible for providing retirement benefits for
Group I and Group II Employees for service on or
after the Benefit Transition Date and, subject to
receipt of the asset transfer described below, for
Group III Employees for service recognized under the
GRP prior to the Benefit Transition Date and for
service with Visteon after the Benefit Transition
Date. The Visteon Mirror GRP shall recognize credited
service of Visteon Employees under the GRP through
the
Benefit Transition Date for purposes of
eligibility to participate and eligibility for
benefits to the same extent as such credited service
(or ERISA service) was counted under the GRP.
Notwithstanding the above, for purposes of
calculating the Part B Contributory Benefit, only a
total of thirty five (35) years of combined Ford and
Visteon service may be used. Apportionment of the
Part B Contributory Benefit between the GRP and the
Visteon Mirror GRP when total years of Contributory
Service
exceed 35, shall be computed as follows:
GRP:
PB x N / 35
Visteon Mirror GRP: PB x (35 - N) / 35
where PB is the total Part B Contributory Benefit
payable under the GRP computed as if the participant
had 35 years of GRP Contributory Service at date of
retirement and N is the number of years (and months)
of Contributory Service under the GRP to a maximum of
35 years.
(ii) Asset Transfer Valuation. Ford shall
cause to be
transferred from the GRP assets in cash or cash
equivalents, or marketable securities reasonably
acceptable to Visteon, that shall equal the projected
benefit obligation, as defined in SFAS No. 87, of the
liabilities related to the Group III Employees as of
the Benefit Transition Date ("GRP PBO Value")
determined by an independent actuary appointed by
Ford
("Ford Actuary") in accordance with the
principles stated below:
(A) The present value of liabilities
will be
determined under SFAS No. 87 as the
projected benefit obligation, using the
actuarial assumptions and methods that are
published in the most recent actuarial
valuation
for accounting purposes for the
GRP prepared by Buck Consultants.
(B) A discount rate as of the Benefit
Transition
Date determined by Ford using its normal
methods for developing a SFAS No. 87
discount rate but based on market interest
rates as of the Benefit Transition Date.
<PAGE>
10
In no event shall the GRP PBO Value as calculated on
the basis described above result in an asset transfer
less than the amount necessary to reflect the
requirements of the provisions of Code Section 411(d)
and 414(l) and the Treasury Regulations issued
thereunder and the actuarial methods and assumptions
established by the PBGC with respect to spin-offs of
pension plans where liabilities, for purposes of Code
Section 411 (d) and 414(l), are calculated using a
discount rate equal to the applicable rate or rates
published by the PBGC and in effect for plans
terminating on the Benefit Transition Date. The
determination of the GRP PBO Value by the Ford
Actuary shall be submitted to an independent actuary
appointed by Visteon (the "Visteon Actuary") for
verification but such verification shall relate only
to the calculation of the GRP PBO Value on the basis
set forth above. If the Visteon Actuary and the Ford
Actuary are unable to agree on a verification, they
shall jointly designate a third independent actuary
whose verification shall be final and binding. Ford
and Visteon shall each pay one-half of the costs of
such
third actuary.
(iii) Transfer to Qualified Plan. Within ninety
(90) days
of the Transfer Date (but in no event later than the
Benefit Transition Date), Visteon shall provide Ford
with the plan document for the Visteon Mirror GRP,
together with either (A) an opinion letter of counsel
reasonably acceptable to Ford that the Visteon Mirror
GRP satisfies the requirements for qualification
under Section 401 (a) of the Code as of its effective
date or will be amended to meet the qualification
requirements in the
event the IRS requires
retroactive amendments to the Visteon Mirror Plan as
part of the determination letter process and that the
transfer of assets provided in (iv) below shall not
affect the qualification of such plan, or (B) a
favorable determination letter issued by the IRS that
the Visteon Mirror GRP satisfies the requirements for
qualification under Section 401 (a) of the Code as of
its effective date.
(iv) Asset Transfer. As soon as practicable
after the
latest of (A) the date on which the GRP PBO Value is
determined and verified pursuant to (ii) above, (B)
the expiration of thirty days following the filing of
Forms 5310 with the IRS and PBGC in respect of the
GRP and the Visteon Mirror GRP or (C) the receipt by
Ford of the opinion or determination letters
described in (iii) above and determination by Ford
that the Visteon Mirror GRP satisfies the terms of
this Agreement (the "Asset Transfer Date"), Ford
shall cause the trustee of the GRP to transfer assets
and respective liability
therefore to the Visteon
Mirror Pension Plan in such amount and in such form
as provided in (ii) above, together with interest
<PAGE>
11
from the Benefit Transition Date to the first of the
month immediately preceding the Asset Transfer Date,
at the Ford Master Trust rate or return, and
thereafter
until the Asset Transfer Date, interest at
the 90-day Treasury Bill rate on a bond equivalent
yield in effect on the last business day of the month
immediately preceding or coincident with the Asset
Transfer Date as quoted in the Wall Street Journal.
(v) No Further Liability. Upon
receipt of the transferred
assets from the GRP, neither Ford nor the GRP shall
have any further liability to the Group III Employees
for benefits for service under the GRP with respect
to which liabilities and assets have been
transferred. Ford and Visteon shall use their
respective best efforts to make amendments to their
respective plans and trusts as may be necessary or
appropriate to effect the transfers
contemplated by
these provisions.
(vi) Pension Security. The assets of the
Visteon Mirror
GRP that are transferred from the GRP trust as
provided in section (iv) above, and any earnings
thereon, shall be held in a separate trust for a
period equal to five years commencing as of the
Benefit Transition Date. Such assets shall be
available only for the purposes of providing pension
benefits for plan participants and their
beneficiaries for service under the Ford GRP through
the Benefit Transition Date ("Visteon Past Service
Trust"). In the event the assets in the Visteon Past
Service Trust are insufficient to pay the liability
for
accrued benefits measured on a plan termination
basis, determined as of each year end, using PBGC
assumptions, including the PBGC discount rates,
mortality tables and expected retirement ages unless
Ford agrees to such other rates, tables and
assumptions certified to by the Visteon Actuary as
appropriate for measuring liabilities on a plan
termination basis, while such Visteon Past Service
Trust is maintained, Visteon shall contribute
sufficient cash within thirty days of the date the
year-end
calculation is complete to restore the
assets in the Visteon Past Service Trust to be at
least equal to such termination liability.
Notwithstanding the above, Visteon need not
contribute in any year an amount greater than the
maximum tax deductible contribution allowed for such
year, and provided further, that if the contribution
required would exceed $10 million in any year,
Visteon shall have the option to pay $10 million the
first year, and shall pay the balance in succeeding
years
in annual installments of at least $5 million
until the obligation is satisfied, together with
interest on the obligation at the 90 day Treasury
Bill rate as quoted in the Wall Street Journal for
the relevant period (the "Financial Burden Formula").
Visteon shall not terminate the Visteon Mirror GRP
and revert assets to Visteon for a
<PAGE>
12
period of five years after the Benefit Transition
Date. Visteon shall not invest any assets of the
Visteon Past Service Trust in an employer security as
defined in Section 407(d)(1) of ERISA for a period of
five years after the Benefit Transition Date.
c. Ford GRP Pension
Liability.
(i) Ford Retirees. The GRP shall
retain liability for
retirement benefits for all Ford Retirees, and shall
retain all GRP assets with respect thereto. The
benefits payable shall be based on the benefit
provisions applicable under the GRP as of the date of
retirement, and as may be subsequently amended. To
the extent that such benefit is based on final
average salary under the GRP, the GRP will take into
account any base salary paid at Visteon while an
employee as of the December 31 prior to the Benefit
Transition
Date. Ford shall amend the GRP to provide
that Ford Retirees may be employed at Visteon after
the Distribution Date and remain eligible to receive
benefits under the GRP.
(ii) Group I and Group II Employees For
Pre-Benefit
Transition Date Service. The GRP shall retain
liability for retirement benefits of Group I and
Group
II Employees, but only for service through the
Benefit Transition Date. The GRP shall recognize
credited service (or ERISA service) of U.S. Visteon
Employees under the Visteon Mirror GRP for purposes
of eligibility to participate and eligibility for
benefits to the same extent as if such credited
service (or ERISA service) was earned under the GRP,
but not for purposes of benefit calculation. The
retirement benefits paid to Group I and Group II
Employees from the GRP shall be based on the benefits
in effect as of the retirement date using the final
average salary of the Group I or Group II Employee at
retirement from Visteon, giving effect to Visteon
base salary
increases after the Benefit Transition
Date. Visteon shall reimburse Ford for the following
additional costs: (A) the cost of benefit increases
under the GRP that occur after the Benefit Transition
Date and relate to service prior to the Benefit
Transition Date; (B) for the effect on the PBO
related to Group I and Group II Employees for any
Visteon average merit salary increase which exceeds
the average Ford merit increase by one-half percent
in any given year, provided Visteon shall receive
credit
if the Visteon average merit salary increase
is less than the average Ford merit increase by
one-half percent in any given year; and (C) for the
effect on the PBO related to Group I and Group II
Employees as a result of Visteon's implementation of
any early separation incentive programs or a
Reduction in Force, provided however, that Visteon
shall receive credit if the effect of such programs
reduces the PBO. For purposes of the 2001 Visteon
Separation Programs, as defined
<PAGE>
13
below, it is acknowledged and agreed that the present
value as of July 1, 2001 for the effect of the 2001
Visteon Separation Program (phase 1) on the PBO
related to the Group I and Group II Employees is
$28,865,296.00 and as of September 1, 2001 (phase II)
the effect is $1,947,437.00, which also includes the
effect
on the PBO related to the BEP and SERP as
provided in Section 3.02(c)(ii), as amended. In
accordance with Exhibit Z, Visteon shall reimburse
Ford $ 30,812,733.00, together with interest, as
provided below. The "2001 Visteon Separation Program"
shall mean involuntary separation programs
established by Visteon for calendar year 2001. Such
reimbursements shall be done annually no later than
the later of (a) March 31 with respect to the
preceding calendar year and (b) thirty days after the
annual
actuarial valuation of the GRP is completed by
the Ford Actuary and verified by the Visteon Actuary.
If the reimbursements for either Party exceed in the
aggregate $10 million per year
(relating to costs
under (A), (B) and (C) under Section 3.02(c) (ii) or
under this Section incurred in that year, but not
including costs under (A), (B) and (C) under Section
3.01c(ii) or this Section for prior years, the Party
with the obligation shall have the option to pay the
obligation according to the Financial Burden Formula.
d. Prorated GRP
Supplements.
(i) Early Retirement Supplement. To
the extent that an
Early Retirement Supplement is payable under the GRP
to a Group I or Group II Employee who has completed
at least 30 years combined GRP and Visteon Mirror GRP
credited service, the amount of the Early Retirement
Supplement shall be computed as described below:
(a) The GRP shall pay an Early
Retirement
Supplement equal to:
("Total 30 and Out Benefit" minus LIB) x FS
(Max.
30) / 30
(b) While the Visteon Mirror GRP has
the same
benefit provisions as the Ford GRP, the
Visteon Mirror GRP shall pay an Early
Retirement Supplement equal to:
("Total 30 and Out Benefit" minus LIB) x [30
minus FS (Max. 30)] / 30
where
<PAGE>
14
"Total 30 and Out Benefit" is the Total 30
and Out Benefit applicable when the total
GRP and Visteon Mirror GRP credited service
exceeds 30 years. For illustration, the
amount of Total 30 and Out Benefit from
October 1, 1999 to September 30, 2000 is
$2,380 per month.
"FS (Max. 30)" is total credited service in
the GRP, not to exceed 30 years.
"LIB" is the monthly Life Income Benefit
(before survivor option) applicable to the
total GRP and Visteon Mirror GRP credited
service.
The
amount of "Total 30 and Out Benefit"
minus LIB cannot be negative.
(c) Exhibit AA illustrates the
methodology.
(i) Interim Supplement or Temporary
Benefit. To the
extent that any Interim Supplement or Temporary
Benefit is payable under the GRP to a Group I or
Group II Employee, the amount of the Interim.
Supplement
or Temporary Benefit as applicable, shall
be determined by multiplying the number of years of
credited service (not to exceed 30), including
fractions of a year, under the GRP as of the Benefit
Transition Date by the monthly Interim Supplement
Rate, or Temporary Benefit Rate, as applicable, in
effect at the time of retirement. To the extent that
any Interim or Temporary Benefit is payable under the
Visteon Mirror GRP to a Group I or Group II Employee,
the amount of the benefit shall be determined by
multiplying the number of years of credited service
(except if the combined Ford and Visteon service
exceeds thirty, then the Visteon benefit shall be
determined
by subtracting from thirty years the years
of Ford credited service), including fractions of a
year, under the Visteon Mirror GRP by the monthly
Interim Supplement Rate, or Temporary Benefit Rate,
as applicable, in effect at the time of retirement.
In the event a Group I or Group II Employee has
credited service under the GRP of thirty or more
years as of the Benefit Transition Date, no Visteon
Mirror Interim Supplement or Temporary Benefit shall
be payable.
e. Group II Employees Who Fail
Grow-in. Except as otherwise
provided by law, for those Group II Employees who do not
continue to be employed by Visteon or a successor to Visteon
until such time as their age and combined service with Ford
through the Benefit Transition Date and with Visteon or its
successor after the Benefit Transition Date would be
sufficient to result in eligibility for retirement under the
GRP, any benefit
<PAGE>
15
payable for years of service prior to the Benefit Transition
Date shall be based on the benefit rate and final average
salary, if applicable, in effect under the GRP on the date
such employee breaks service under the Visteon Mirror GRP. In
such event, such employee shall be treated as a "deferred
vestee" under the GRP, if otherwise eligible based on combined
service. Benefits for service at Visteon after the Benefit
Transition Date shall be payable by Visteon. Notwithstanding
the above, in the event that Visteon implements a Reduction in
Force that prevents a Group II Employee who is at least age 45
with 10 or more years of credited service under the GRP at the
time of separation from Visteon employment from achieving
eligibility
for the grow-in because the employee was separated
from Visteon employment, Ford shall amend the GRP to provide
that such affected Group II Employee shall be permitted to
continue to grow-in to retirement eligibility despite the
employment loss. Such a Group II Employee shall be eligible
for the following types of retirement under the GRP. If the
Group II Employee was between ages 50 and 54 (inclusive) with
at least 10 years of credited service recognized under the GRP
at the time of separation from Visteon employment prior to
April 1, 2002, such employee shall be eligible for a special
early retirement benefit under the GRP commencing at age 55.
If the Group II Employee was between ages 50 and 54
(inclusive) with at least 10 years of credited service
recognized under the GRP at the time of separation from
Visteon employment on or after April 1, 2002, such employee
shall be eligible for a regular early retirement benefit
commencing at age 55 but not a special early or disability
retirement benefit. If the Group II Employee was between ages
45 and 49 (inclusive) with at least 10 years of credited
service recognized under the GRP at the time of separation
from Visteon employment, such employee shall be eligible for a
regular early retirement benefit commencing at age 55, but
shall not be eligible for an Early Retirement Supplement or
Interim Supplement under the GRP or a special early
or
disability retirement benefit. Any benefit payable under the
GRP for years of service prior to the Benefit Transition Date
shall be based on the benefit rate in effect on the employee's
retirement date and final average salary, if applicable, in
effect on the date such employee breaks service under the
Visteon Mirror GRP. The cost of providing any post retirement
health and life benefits under the Plans for such a Group II
Employee shall be paid by Visteon, in accordance with Section
3.03 as provided for other Group II Employees.
f.
U.S. Master Trust. After the
Transfer Date, the defined
benefit plans of Ford Electronics arid Refrigeration, LLC.
("FE&R") may continue to participate in the U.S. Ford
Master
Trust until the Benefit Transition Date. Visteon shall
establish a U.S. Visteon Master Trust no later than the
Benefit Transition Date and Ford shall cause the Trustee of
the U.S. Ford Master Trust to transfer the assets in such U.S.
Ford Master Trust allocable to FE&R's defined benefit plans
to
the trustee of the U.S. Visteon
<PAGE>
16
Master Trust. Assets shall be valued at the end of the month
coincident with or following the Distribution Date ("Valuation
Date") and cash or cash equivalents, or marketable securities
acceptable to Visteon, shall be transferred within thirty (30)
days thereafter, together with interest from the Valuation
Date to the asset transfer date at the 90-day Treasury Bill
rate on a bond equivalent yield in effect on the last business
day of the month immediately preceding the asset
transfer date
as quoted in the Wall Street Journal. Assets attributable to
such plans that are held outside the Ford Master Trust also
shall be transferred to Visteon on or before the asset
transfer date, in such form as such assets are presently held.
Nothing herein contained shall be construed as to prohibit
Ford from causing Visteon to transfer assets and liabilities
from FE&R sponsored salaried defined benefit plans to Ford
sponsored defined benefit plans prior to the Benefit
Transition Date for the purpose of aligning appropriate
liabilities with respect to the Business,
provided such
transfers comply with applicable law and result in each such
FE&R salaried defined benefit plan having assets with a
fair
market value as of January 1,2000 equal to the projected
benefit obligation, as defined in SFAS No. 87, of the
liabilities related to non-transferred participants in each
such plan as of January 1, 2000. Visteon shall cooperate with
Ford in effectuating such transfers in the period between the
Transfer Date and the Benefit Transition Date.
g. Avoidance of Duplication.
Both Ford and Visteon recognize
that, while the benefit provisions of the Visteon Mirror GRP
are the same as the GRP, the retirement benefits payable to a
Group I or Group II Employee who retires with credited service
in both plans is to equal the benefit otherwise payable to
such employee as if total credited service were in the GRP.
Both Ford and Visteon agree that application of this Agreement
shall, in all respects, be consistent with this principle.
h. Disability Retirement.
Notwithstanding anything herein to the
contrary, in the event a Group I Employee (other than a Group
I Employee who as of the Benefit Transition Date is eligible
for immediate normal retirement under the provisions of the
GRP as in effect on the Benefit Transition Date) or a Group II
Employee
(i) becomes totally and permanently
disabled as provided
for under the terms of the GRP; and
(ii) such disability is approved by the GRP
Retirement
Committee,
the GRP shall pay Disability Retirement benefits based on the
employee's credited service through the Benefit Transition
Date.
3.02 U.S. NON-QUALIFIED RETIREMENT
PLANS.
<PAGE>
17
a. Participating Subsidiary.
Ford maintains the following U.S.
non-qualified retirement plans in which certain U.S. Ford
Business Employees who are eligible under the terms of the
plans participate: The Benefit Equalization Plan ("BEP"), the
Supplemental Executive Retirement Plan ("SERP") and the
Executive Separation Allowance Plan ("ESAP") and the Select
Retirement Plan ("SRP"). As of the Transfer Date, Visteon
shall take such corporate
action as is necessary to become a
Participating Subsidiary under the SERP, ESAP and SRP and Ford
hereby consents to such participation.
b. Visteon Mirror NQPs.
Effective on the Benefit Transition Date,
Visteon shall establish for the benefit of the U.S. Visteon
Employees who are otherwise eligible as of the Benefit
Transition Date for a BEP, SERP or ESAP benefit, its own
non-qualified retirement plans that with respect to eligible
Group III Employees contain provisions that duplicate the
benefit provisions of the BEP, SERP and ESAP as it pertains to
service prior to the Benefit Transition Date and with respect
to eligible Group I and Group II Employees, contains
substantially comparable benefit provisions with respect to
service after the Benefit Transition Date ("Visteon Mirror
NQPs"). For eligible Group I and Group II Employees, Visteon
shall be responsible for paying a benefit for service after
the Benefit Transition Date under the Visteon Mirror NQPs. For
eligible Group III Employees, the liability for any service
prior to the Benefit Transition Date under the BEP, SERP and
ESAP shall be transferred to the respective Visteon Mirror
NQPs,
and Visteon shall be responsible for paying a benefit
based on combined service at Ford and Visteon. Visteon's
Mirror NQPs shall recognize service at Ford for purposes of
determining any minimum years of service to achieve
eligibility for benefits under such plans.
The Group I and Group II Employees' ESAP benefits shall be
computed as follows:
Ford ESAP: FS x TB / TS
where
FS is service with Ford and Visteon, up to the Benefit
Transition Date
VS is service with Visteon after the Benefit Transition Date
TS is the sum of FS and VS
TB is the total ESAP benefit payable in respect of total Ford
and Visteon service based on the Group I or Group II
Employee's Leadership Level on the day prior to the Benefit
Transition Date.
c. Ford Liability.
<PAGE>
18
(i) Ford Retirees. Ford shall retain
the liability for
eligible Ford Retirees. The benefit payable under the
BEP, SERP, ESAP and SRP shall be based on the benefit
provisions applicable under such plans as of the date
of retirement, and as may be subsequently amended. To
the
extent such benefit is based on final average
salary or final salary, the applicable plan will take
into account any base salary paid at Visteon prior to
the Benefit Transition Date. Ford Retirees may be
employed at Visteon after the Distribution Date and
remain eligible to receive benefits under the BEP,
SERP, ESAP and SRP.
(ii)
Group I and Group II Employees for Pre-Benefit
Transition Date Service. Ford shall retain the
liability for benefits for Group I or Group II
Employees who have attained the minimum Leadership
Level required for such benefits as of the Benefit
Transition Date, but only for service through the
Benefit Transition Date. For example, a Group I or
Group II Employee who attains Leadership Level 1 or 2
on or after the Benefit Transition Date shall have no
benefit payable under ESAP. In the event a Group I or
Group II Employee who has attained the minimum
Leadership Level required for such benefits as of the
Benefit Transition Date, is subsequently promoted by
Visteon,
the benefit payable to such an employee
under the SERP with respect to service prior to the
Benefit Transition Date will be calculated on the
basis of the accrual rate applicable to such
employee's Leadership Level or Officer position as of
the Benefit Transition Date. At retirement the
Visteon SERP shall pay any increase to the past
service SERP benefit related to the change in the
benefit accrual rate resulting from such promotion.
As soon as practical after the Benefit Transition
Date,
Visteon shall pay cash to Ford in an amount
equal to the BEP, SERP and ESAP projected benefit
obligation with respect to the eligible Group I or
Group II Employees determined by the Ford Actuary and
verified by the Visteon Actuary as of the Benefit
Transition Date. If the Visteon Actuary and the Ford
Actuary are unable to agree on a verification, they
shall jointly designate a third independent actuary
whose verification shall be final and binding. Ford
and Visteon shall each pay one-half of the costs of
such third actuary. The benefits paid to an eligible
Group I or Group II Employee from the BEP, SERP and
ESAP shall be based on the accrued benefits and
eligibility, at rates in effect
as of the retirement
date using the final average salary, or final salary
as applicable, of the eligible Group I or Group II
Employee at retirement, giving effect to Visteon
salary increases after the Benefit Transition Date,
but not changes in the benefit accrual rate resulting
from promotions after the Benefit Transition Date.
Visteon shall reimburse Ford for the following
additional costs: (A) the cost of benefit increases
under the BEP, SERP and ESAP that occur after the
Benefit
Transition Date including changes in the
benefit accrual
<PAGE>
19
rate but not changes in the benefit accrual rate
resulting
from promotions after the Benefit
Transition Date, when such increases occur; (B) for
the effect on the PBO for any Visteon average merit
salary increase which exceeds the average Ford merit
increase by one-half percent in any given year
provided that Visteon shall receive credit if the
Visteon average merit salary increase is less than
the average Ford merit increase by one-half percent
in any given year; and (C) for the effect on the PBO
related to Group I and Group II Employees as a result
of
Visteon's implementation of any early separation
incentive programs or a Reduction in Force, provided
however, that Visteon shall receive credit if the
effect of such programs reduces the PBO. The method
of computing the reimbursements shall be as described
on Schedules X, Y and Z. The discount rate to be used
in the computation in Appendix Z shall be the rate
that Ford would have used for a SFAS 88 calculation
based on Ford's normal methods of deriving such rate.
For the avoidance of doubt, this discount rate would
generally be the same as the discount rate at the
start of the calendar year unless either (a) the
early separation incentive program or Reduction in
Force
constitutes a material event requiring a
restatement of liabilities or (b) the separation
program generated the majority of terminations in
December. The amount of reimbursement shall be
determined by Ford's Actuary and shall be subject to
verification by Visteon's Actuary. If the Visteon
Actuary and the Ford Actuary are unable to agree on a
verification, they shall jointly designate a third
independent actuary whose verification shall be final
and binding. Ford and Visteon shall each pay one-half
of the costs of such third actuary. Such
reimbursements shall be done annually no later than
the later of (a) March 31 with respect to the
preceding calendar year and (b) thirty days after the
annual actuarial valuation of the BEP, SERP and ESAP
is completed by the Ford Actuary and verified by the
Visteon Actuary. If the reimbursements for either
Party exceed in the aggregate $10 million per year
(relating to costs under (A), (B) and (C) above or
under (A), (B) or (C) under Section 3.01 c(ii)
incurred in that year, but not including costs under
(A), (B) and (C) above or under (A), (B) or (C) under
Section 3.01 c(ii) incurred in prior years), the
Party
with the obligation shall have the option to
pay the obligation according to the Financial Burden
Formula.
(iii) Group III Employees. After the Benefit
Transition
Date, Ford shall have no liability for benefits
payable to eligible Group III Employees with respect
to service prior to the Benefit Transition Date.
<PAGE>
20
3.03 RETIREE HEALTH CARE AND RETIREE LIFE
INSURANCE.
Visteon shall pay
the cost of providing post-retirement health and life
benefits for Group I and Group II Employees under the Ford Health
and Group Life
and Disability Insurance Plan (the "Plans") ("OPEB") beginning as
of the
Benefit Transition Date as provided below.
a. Determination of Annual Cash
OPEB Reimbursement. For the
portion of 2000 that follows the Benefit Transition Date and
for each calendar year thereafter until the OPEB liability for
the Group I and Group II Employees is extinguished, the annual
cash OPEB reimbursement to the Plans for any given year shall
be
an amount equal to the sum of (i) and (ii) where:
(i) is the estimated amount of OPEB
claims paid during
the period to the Group I and Group II Employees who
retire after the Benefit Transition Date, together
with their spouses or dependents, determined on the
basis of average per contract claims costs for Ford
salaried retirees; and
(ii) is an allocable share of
administration expenses
based on ratio of OPEB Liability for Group I and II
Employees to the total Ford salaried OPEB liability
unless Ford and Visteon agree
to another method.
The Annual Cash OPEB Reimbursement shall be determined by the
Ford Actuary; the Visteon Actuary will have the opportunity to
verify the calculation. The cash shall be payable at a time
agreed by the Parties, but in no event shall the payment be
made any less frequently than monthly, in which event the
payment shall be due no later than fifteen days after the end
of the month.
b. Pre-Funding of SFAS 106
Liability. Visteon will establish and
maintain a Voluntary Employees' Beneficiary Association, other
tax-advantaged funded vehicle, such as a 401 (h) medical
account under a qualified pension plan, or a similar
bankruptcy remote trust (collectively "VEBA") whose purpose is
to reimburse the Plans in respect of the claims and
administration
costs described in Section 3.03(a)(ii) above.
Visteon agrees that it will make a series of cash payments to
the VEBA with the intent that by December 31, 2049 the assets
in the VEBA will equal Visteon's balance sheet liability at
the same date for OPEB benefits in respect of Group I and
Group II Employees. The cash payment to the VEBA shall
commence no later than January 1, 2011 and shall be payable in
advance in twelve equal monthly installments as follows:
<PAGE>
21
(i) For years 2011 through 2020. The
amount of cash
payable to the Visteon VEBA in each year
commencing
January 1, 2011 through December 31, 2020 shall be an
amount equal to the sum of (A) and (B) where:
(A) is the OPEB balance sheet
liability in
respect of Group I and II Employees as of
December 31, 2010 (this amounts to be
determined by the Ford Actuary and verified
by the Visteon Actuary), divided by 10; and
(B) is the annual amortized SFAS 106
expense
&nbs
