Exhibit 10.4
REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT is dated as of October 1, 2005 (this
"AGREEMENT") and is entered into between FORD MOTOR COMPANY ("Ford") and VISTEON
CORPORATION ("VISTEON").
A. Ford and Visteon have entered into a Master Agreement dated as of
September 12, 2005 (the "MASTER AGREEMENT") and a Visteon "A" Transaction
Agreement dated as of September 12 2005 (the "VISTEON "A" TRANSACTION
AGREEMENT"). As part of the consideration, Ford is required to reimburse Visteon
up to One Hundred Fifty Million Dollars ($150,000,000) for certain separation
costs incurred by Visteon in connection with Visteon salaried employees who are
assigned to work at Automotive Components Holdings, LLC (f/k/a VFH Holdings,
LLC) ("NEWCO LLC") pursuant to that certain Visteon Salaried Employee Lease
Agreement between Visteon and Newco LLC dated as of the date hereof (the
"EMPLOYEE LEASE AGREEMENT").
B. Ford and Visteon desire to more fully set forth in this Agreement
the terms and conditions applicable to the reimbursement obligation.
NOW, THEREFORE, in consideration received to their full satisfaction,
Ford and Visteon agree as follows:
1. Separation Costs. Subject to the terms of this Agreement, all
Separation Costs for Eligible Employees shall be subject to reimbursement
hereunder.
As used herein the term "SEPARATION COSTS" means:
(a) the amounts payable to Eligible Employees under the terms of the
Visteon Separation Program ("VSP") as described in Section
2.06(a) of the Employee Lease Agreement, as that Section 2.06(a)
may be amended, modified, waived or supplemented from time to
time, (or similar program applicable to Eligible Employees who
are entitled to benefits under other separation programs of
Visteon because they are based in other countries although
working in the United States); and
(b) the cost of COBRA continuation coverage and life insurance
premiums to cover the obligations to pay medical benefits and
life insurance under the applicable salaried employee separation
program; and
(c) the cost of outplacement services in accordance with the
applicable salaried employee separation plan, and
(d) costs incurred in accordance with FAS No.88 "Employer's
Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits" as determined and
supported by an external actuary; and
(e) reimbursements to Ford pursuant to Section 3.01(c)(ii) of the
Amended and Restated Employee Transition Agreement between Ford
and Visteon dated as of April 1, 2000 and restated as of December
19, 2003 and as amended as of the date hereof.
As used herein the term "ELIGIBLE EMPLOYEE" means an employee of Visteon or a
subsidiary of Visteon who is (a) leased to Newco LLC pursuant to the Employee
Lease Agreement; and (b) whose employment with Visteon has been terminated and
such employee either:
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A. has not been offered employment by a buyer of the Automotive
Components Holdings, Inc. (f/k/a VFH Holdings, Inc.) ("ACH")
businesses, or
B. has been offered employment by Visteon or by a buyer of the Newco
businesses but has not accepted the employment offer because the
position is not a comparable position as agreed by Ford and
Visteon,
provided, however, that an employee who is terminated for an offense that would
justify a "for cause" termination under Visteon's Personnel policies or for
failure to achieve acceptable performance under the Visteon Performance
Improvement Program is not an Eligible Employee.
Notwithstanding the foregoing, Ford shall have no obligation to reimburse
Visteon or any of its subsidiaries pursuant to this Agreement after the earlier
of (x) December 31, 2009; and (y) the date on which there are no employees
leased pursuant to the Employee Lease Agreement. If Ford has not expended One
Hundred Fifty Million Dollars ($150,000,000) for Separation Costs by such date,
then the difference between the amount of Separation Costs actually paid by Ford
to such date and One Hundred Fifty Million Dollars ($150,000,000) shall be paid
by Ford within five (5) Business Days into the Escrow Fund, as that term is
defined in that certain Escrow Agreement dated as of the date hereof among the
parties and Deutsche Bank Trust Company Americas, as Escrow Agent (the "ESCROW
AGREEMENT").
2. Request for Reimbursement. Visteon shall deliver a copy of a
request for reimbursement of Separation Costs (each, a "REQUEST FOR
REIMBURSEMENT") to Ford, provided, however, that Visteon shall not be entitled
to make a Request for Reimbursement seeking reimbursement for a specific
category of Separation Costs if a Final Award (defined herein) previously
rendered in favor of Ford ruled that such category was not eligible for
reimbursement hereunder. A Request for Reimbursement shall be submitted no more
often than once each calendar month on or before the tenth (10th) Business Day
following the end of such month. Each Request for Reimbursement shall contain
the following information:
(a) A certification by an officer of Visteon (or other person
designated by Visteon and reasonably acceptable to Ford)
substantially in the form attached hereto as Exhibit A that the
Request for Reimbursement covers only Separation Costs as defined
herein; and
(b) Supporting documentation showing the Separation Costs that have
been incurred, which will contain a description of the
restructuring action and related cost(s) and which will identify
the number and identity (including their name, global
identification number, organization name, organization code, and
date of termination of employees to be terminated, their
locations, the expected completion date, and a description of the
benefit arrangement that employees will receive upon termination
(including cash payments and special termination benefits) (such
employee information, "EMPLOYEE DATA"). If Separation Costs are
incurred in connection with an involuntary retirement program
where the identity of the participants is not yet known and
Visteon is required to publicly report such costs in its
financial statements covering the period in which the costs are
incurred, then a description of the affected group of employees
may be provided in lieu of the Employee Data, provided, however,
that Visteon shall deliver to Ford the Employee Data as soon as
it is available.
3. Disbursements. All disbursements shall be made by Ford to Visteon
or its designee by wire transfer to an account specified by Visteon initiated
within fifteen (15) Business Days after Ford's receipt of a properly documented
Request for Reimbursement, subject to Ford's rights under Section 5 hereof and
its right to contest a Request for Reimbursement under subsection 6.2 hereof.
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4. Reporting Obligations. Within forty-five (45) days after the end of
each calendar year,
(a) Ford shall provide to Visteon a statement indicating the following:
- Total obligation for Separation Costs ($150,000,000) less
- Amounts disbursed during the preceding calendar year
- Amounts disbursed during prior calendar years
- Total amount remaining eligible for funding Separation Costs
Ford shall provide such statements until its obligation to fund Separation Costs
hereunder has expired.
and
(b) Visteon shall provide to Ford a statement indicating the following which
shall show, in each category, an amount for both the preceding calendar year and
prior calendar years:
- Total amount of Separation Costs actually incurred by
Visteon for which Ford was billed 100% of the expense
- Total amount of Separation Costs actually incurred by
Visteon for which Ford was billed 50% of the expense
Visteon shall provide such statements until the Employee Lease Agreement is
terminated.
5. Reductions in Reimbursement Obligation. If, (i) pursuant to an
arbitration award, court order or written settlement agreement executed by Ford
and Visteon, Ford or its subsidiaries or affiliates becomes entitled to recover
from Visteon or its subsidiaries or affiliates as a result of any
indemnification obligation contained in, or any breach or default arising under,
any of the Transaction Documents ("VISTEON Obligation"), and (ii) Ford or its
subsidiaries or affiliates has not received the full amount of the Visteon
Obligation within the time frame provided in such award, order or settlement
agreement, then Ford shall have a right to deliver to Visteon a notice (each, a
"NOTICE OF SET-OFF") accompanied by a copy of the award, order, settlement
agreement or written instructions and Ford's obligation to reimburse Visteon
hereunder will be immediately reduced by the amount set forth in such award,
order, settlement agreement or written instruction. If, however, the award or
order that served as the basis for a reduction in reimbursement obligation
hereunder is overruled or otherwise vacated by a final, non-appealable order or
upon written settlement agreement executed by Ford and Visteon, then Ford's
obligation to reimburse Visteon hereunder shall be increased by the amount by
which the award or order was overruled or vacated or with respect to which Ford
and Visteon have reached agreement pursuant to such written settlement.
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6. PROCEDURE FOR REIMBURSEMENT.
6.1 Uncontested Reimbursements. If, within fifteen (15) Business Days
after a Request for Reimbursement is received by Ford, Ford has not delivered
its objection to such Request for Reimbursement in writing to Visteon, then Ford
shall reimburse to Visteon the amount requested in the Request for
Reimbursement; provided, however, that after the first Fifty Million Dollars
($50,000,000) is reimbursed, Ford shall thereafter reimburse only one-half of
the total amount contained in each such Request for Reimbursement. The total
amount of reimbursements made by Ford hereunder shall not exceed One Hundred
Fifty Million Dollars ($150,000,000) or such lesser amount if Ford's
reimbursement obligation is reduced in accordance with Section 5 hereof. If Ford
has delivered its objection to only a portion of such Request for Reimbursement,
then Ford shall distribute to Visteon the uncontested amount.
6.2 Contested Reimbursements. If Ford gives Visteon written notice
contesting all or any portion of a Request for Reimbursement (a "CONTESTED
REIMBURSEMENT") within the fifteen (15) Business Day period specified in
subsection 6.1, then such Contested Reimbursement shall be resolved by either
(i) a written settlement agreement executed by Ford and Visteon or (ii) in the
absence of such a written settlement agreement, by binding arbitration between
Ford and Visteon in accordance with the terms and provisions of subsection 6.3,
provided, however, that Ford shall not be entitled to contest any portion of a
Request for Reimbursement to the extent that such portion of the request seeks
reimbursement for a specific category of Separation Costs that a Final Award
(defined herein) had ruled was eligible for reimbursement hereunder. Each
Contested Reimbursement shall set forth in reasonable detail the basis for
Ford's contest of a Request for Escrow Reimbursement. In the event of a
Contested Reimbursement, Ford and Visteon shall attempt in good faith to agree
upon the rights of the respective Parties with respect to such claim. If a
Contested Reimbursement is settled by a written settlement agreement executed by
Visteon and Ford, then Visteon and Ford shall abide by the terms of such
settlement agreement.
6.3 Arbitration Disputes. If a dispute arises between the parties
relating to this Agreement, the following shall be the sole and exclusive
procedure for enforcing the terms hereof and seeking relief hereunder.
(i) CPR. Following good faith negotiations between Ford and Visteon in
accordance with subsection 6.2 hereof or otherwise, any Contested
Reimbursement that is not resolved in accordance with subsection
6.2(i) or any other dispute arising between the parties relating to
this Agreement will be submitted to mandatory, final and binding
arbitration before a sole arbitrator in accordance with the CPR Rules,
including discovery rules, for Non-Administered Arbitration, as
follows. Within five (5) Business Days after the selection of the
arbitrator, each party shall submit its requested relief to the other
party and to the arbitrator with a view toward settling the matter
prior to commencement of discovery. If no settlement is reached, then
discovery shall proceed subject to the authority of the arbitrator to
resolve discovery disputes between the parties. Upon the conclusion of
discovery, each party shall again submit to the arbitrator its
requested relief (which may be modified from the initial submission)
and the arbitrator shall select only the entire requested relief
submitted by one party or the other, as the arbitrator deems most
appropriate. The arbitrator shall not select one party's requested
relief as to certain claims or counterclaims and the other party's
requested relief as to other claims or counterclaims; rather, the
arbitrator must only select one or the other party's entire requested
relief on all of the asserted claims and counterclaims, and the
arbitrator will enter a final ruling that adopts in whole such
requested relief, provided, however, that with respect to a Request of
Reimbursement, the arbitrator may act separately upon each portion of
such request that has been contested under subsection 6.2 hereof. The
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arbitrator will limit his/her final ruling to selecting the entire
requested relief he/she considers the most appropriate from those
submitted by the parties.
(ii) Location of Arbitration. Arbitration shall take place in the City of
Dearborn, Michigan unless the parties agree otherwise or the
arbitrator selected by the parties orders otherwise. Punitive or
exemplary damages shall not be awarded. This clause is subject to the
Federal Arbitration Act, 28 U.S.C.A. Section 1, et seq., and judgment
upon the award rendered by the arbitrator may be entered by any court
having jurisdiction as set forth in Section 13.
(iii) Payment of Costs. Ford, on the one hand, and Visteon, on the other
hand, will initially fund such deposits and advances required as may
be required by the arbitrator in equal proportions, but either party
may advance such amounts. The arbitrator will determine in the Final
Award (defined herein) the party who is the prevailing party and the
party who is not the prevailing party (the "NON-PREVAILING PARTY").
The Non-Prevailing Party will pay all reasonable costs, fees and
expenses related to the arbitration, including reasonable fees and
expenses of attorneys, accountants and other professionals incurred by
the prevailing party, the fees of each arbitrator and the
administrative fee of the arbitration proceedings and any amounts
advanced by the Prevailing Party for such items, provided, however,
that if such an award would result in manifest injustice, the
arbitrator may apportion such costs, fees and expenses between the
parties in such a manner as the arbitrator deems just and equitable
(such costs, fees and expenses as may be apportioned by the arbitrator
pursuant to the preceding clause, the "ARBITRATION EXPENSES"). If
Visteon is the Non-Prevailing Party, then Ford may reduce its
reimbursement obligation hereunder by the amount of the Arbitration
Expenses. If the amount of the Arbitration Expenses exceeds the amount
of Ford's reimbursement obligation hereunder, then Visteon shall pay
such excess as promptly as possible but in no event later than ten
(10) Business Days after the Final Award (defined herein) is rendered
pursuant to subparagraph (v) below. If Ford is the Non-Prevailing
Party, then Ford shall pay to Visteon, by wire transfer, the
Arbitration Expenses as promptly as possible, but in no event later
than ten (10) Business Days after such Final Award is rendered.
(iv) Burden of Proof. Except as may be otherwise expressly provided herein,
for any Contested Reimbursement or any other matter submitted to
arbitration hereunder, the burden of proof will be as it would have
been if the claim were litigated in a judicial proceeding in a
Michigan state court and governed exclusively by the internal laws of
the State of Michigan, without regard to the principles of choice of
law or conflicts of law of any jurisdiction.
(v) Award. Upon the conclusion of any arbitration proceedings hereunder,
the arbitrator will render findings of fact and conclusions of law and
a final written arbitration award setting forth its resolution of the
matters submitted for resolution, the basis and reasons therefor and
the Arbitration Expenses (the "FINAL AWARD") and will deliver such
documents to the parties together with a signed copy of the Final
Award. Subject to the provisions of subparagraph (vii) below, the
Final Award will constitute a conclusive determination of all issues
in question that shall be binding upon the parties hereto and shall
include an affirmative statement to such effect. To the extent that
the Final Award determines that Visteon is entitled to the Contested
Reimbursement, then, subject to any reduction in its reimbursement
obligation in accordance with Section 5 hereof, Ford shall reimburse
Visteon the full amount of the Contested Reimbursement or, if Ford is
obligated pursuant
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to Section 6.1 to reimburse only one-half of the Request for
Reimbursement, then Ford shall reimburse one-half of the Contested
Reimbursement.
(vi) Timing. The parties and the arbitrator will conclude each arbitration
pursuant to subsection 6.3 as promptly as possible.
(vii) Terms of Arbitration. The arbitrator chosen in accordance with these
provisions will not have the power to alter, amend or otherwise affect
the terms of these arbitration provisions or the other provisions of
this Agreement.
7. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission and
electronic mail ("E-MAIL") transmission, so long as a receipt of such e-mail is
requested and received) and shall be given,
If to Ford: Ford Motor Company
11th Floor
One American Road
Dearborn, Michigan 48121
Attn: Secretary
Facsimile: 1-313-248-8713
psherry@ford.com
with a copy to: Ford Motor Company
320 WHQ
One American Road
Dearborn, Michigan 48121
Attn: Marcia Nunn, Managing Counsel
Facsimile: 1-313-337-3209
mnunn@ford.com
If to Visteon Visteon Corporation
One Village Center Drive
Van Buren Twp., MI 48111
Attn: John Donofrio, General Counsel
Facsimile: 1-734-710-7132
jdonofri@visteon.com
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with a copy to: Weil,Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Michael E. Lubowitz
Facsimile: 1-212-310-8007
michael.lubowitz@weil.com
or such other address, facsimile number or e-mail address as such party may
hereafter specify for the purpose by notice to the other parties hereto. All
such notices, requests and other communications shall be deemed received on the
date of receipt by the recipient thereof if received prior to 5:00 p.m. in the
place of receipt and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding Business Day in the place of receipt.
8. GENERAL.
8.1 Governing Law. The internal laws of the State of Michigan,
irrespective of its choice of law principles, shall govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto.
8.2 Counterparts. This Agreement may be executed in counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
8.3 Entire Agreement/Amendment. This Agreement and the exhibits hereto
and the Escrow Agreement constitute the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof and supersede all
prior and contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties with
respect hereto. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
This Agreement may be amended only by the written agreement of Ford and Visteon.
8.4 Waivers. No waiver by any party hereto of any condition or of any
breach of any provision of this Agreement shall be effective unless in writing.
No waiver by any party of any such condition or breach, in any one instance,
shall be deemed to be a further or continuing waiver of any such condition or
breach or a waiver of any other condition or breach of any other provision
contained herein.
8.5 Certain Definitions. As used herein, (a) the term "BUSINESS DAY"
means a day, other than a Saturday, Sunday or other day on which commercial
banks in Detroit, Michigan are authorized or required by law to close; and (b)
the term "TRANSACTION DOCUMENTS" shall mean the Master Agreement, the
Contribution Agreement Transaction Documents as defined in that certain
Contribution Agreement dated as of September 12, 2005 between Visteon and ACH,
the Visteon "B" Transaction Documents as defined in that certain Visteon "B"
Purchase Agreement dated as of September 12, 2005 between Ford and Visteon and
the Visteon "A" Transaction Documents as defined in that certain Visteon "A"
Transaction Agreement dated as of September 12, 2005. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation", whether or not they are
in fact followed by those words or words of like import. When a reference is
made in this Agreement to a Section, subsection or Exhibit, such reference shall
be to a Section or subsection of, or an Exhibit to, this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning
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or interpretation of this Agreement. Whenever the singular is used herein, the
same shall include the plural, and whenever the plural is used herein, the same
shall include the singular, where appropriate.
9. FORCE MAJEURE If either party hereto is rendered unable, wholly or
in part, by Force Majeure (as defined herein) to perform its obligations
hereunder (other than the obligation to pay money), such party shall give prompt
notice to the other party with reasonable particulars including the probable
extent of the inability to perform such obligation. Upon the giving of such
notice, the obligation of such party shall be suspended but only to the extent
and for the time period it is affected by such Force Majeure. The affected party
shall use all possible diligence to eliminate the effect of such Force Majeure.
For purposes of this Agreement, the term "FORCE MAJEURE" shall mean acts of God,
strikes, lockouts, riots, acts of war, epidemics, governmental regulations
superimposed after the fact, acts of terror, communication line failures,
computer viruses, power failures, earthquakes or other disasters.
10. REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating thereto, including (a) consents, waivers and modifications which may
hereafter be executed, and (b) certificates and other information previously or
hereafter furnished, may be reproduced by any photographic, photostatic,
microfilm, optical disk, micro-card, miniature photographic or other similar
process. The parties hereto agree that any such reproduction shall be admissible
in evidence as the original itself in any judicial or administrative proceeding,
whether or not the original is in existence and whether or not such reproduction
was made by a party in the regular course of business, and that any enlargement,
facsimile or further reproduction shall likewise be admissible in evidence.
11. SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other
governmental authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such a determination, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
12. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the parties hereto shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement or to
enforce specifically the performance of the terms and provisions hereof in the
courts specified in Section 13 hereof, in addition to any other remedy to which
they are entitled at law or in equity.
13. CONSENT TO JURISDICTION AND SERVICE RELATING TO DISPUTES The
parties hereby absolutely and irrevocably consent and submit to the jurisdiction
of the courts in the State of Michigan (and of any federal court located in said
state) in connection with any actions or proceedings to enter a judgment upon
the Final Award entered by the arbitrator hereunder or to award injunctive
relief as provided in Section 12 hereof. In any such action or proceeding, the
parties hereby absolutely and irrevocably waive personal service of any summons,
complaint, declaration or other process and hereby absolutely and irrevocably
agree that the service thereof may be made by certified or registered
first-class mail directed to the parties hereto at their respective addresses in
accordance with Section 7 hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date set forth above.
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FORD MOTOR COMPANY VISTEON CORPORATION
By: /s/ Donat R. Leclair By: /s/ James F. Palmer
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Title: Executive Vice President and Title: Executive Vice President and
Chief Financial Officer Chief Financial Officer
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