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;
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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
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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.
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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
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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
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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
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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.
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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
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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.
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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
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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
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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
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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
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
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
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.
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.
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
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.
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:
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
which is an amount equal to the SFAS 106
expense with respect to Group I and II
Employees as computed by the Ford Actuary
and verified by the Visteon Actuary and
based on assumptions used by Ford for its
Ford salaried employees, and reduced by the
actual return on the VEBA, amortized over 30
years for the period commencing January 1,
2011 and ending December 31, 2020.
(ii) For years 2021 through 2049. The amount of cash
payable to the Visteon VEBA in each year commencing
January 1, 2021 through December 31, 2049 shall be an
amount equal to the SFAS 106 expense for the year
determined as provided in Section 3.01(b)(i)(B)
above, reduced by the actual return on the VEBA, and
amortized over a period equal to 30 minus n (30-n)
where n is equal to the present year minus 2020.
(iii) For years 2050 and After. The amount of cash payable
to the Visteon VEBA in each year commencing on or
after January 1, 2050 shall be an amount equal to the
SFAS 106 expense for the year determined as provided
in Section 3.01(b)(i)(B) above, reduced by the
actual return on the VEBA, if any.
If, at any annual valuation, the value of assets in the VEBA
equals or exceeds the remaining balance sheet liability in
respect of Group I and II Employees, the Parties will agree on
a revised payment schedule with the intent that, at December
31, 2049, the VEBA assets will be equal to the remaining
liability. No later than December 31, 2030, and at least every
five years thereafter, the Parties will review the funding
progress and adjust the formula as necessary to achieve that
intent.
Notwithstanding the above, Visteon may accelerate payments to
the VEBA in its discretion. In the event the tax law or
Visteon's tax position, subject to concurrence by Ford, would
not provide Visteon a current tax benefit for the level of
funding described above, Visteon may make only such
contributions to the VEBA that would provide a current tax
benefit to
22
Visteon, provided, however that the balance of the funding
obligation is otherwise paid directly to Ford at such time as
the payments are otherwise due to the VEBA. For purposes of
the preceding sentence, the term "would not provide Visteon a
current tax benefit" shall include such instances where making
payments to the VEBA would cause adverse tax consequences to
Visteon, such as an increase in net operating loss or foreign
tax credit carryovers. Ford shall credit Visteon with interest
on any amounts paid directly to Ford under this paragraph at
the pretax rate of return earned annually on Ford's cash
portfolio.
c. Recordkeeping. In connection with administering Section 3.03
(a) above, Ford may decide to retain a third party service to
determine the correct amount of Visteon reimbursements
according to the methodology set forth in this Section 3.03.
If Ford decides to retain a third party service, Ford shall
consult with Visteon prior to appointing a third party
service, but Ford shall retain the right to appoint a third
party service in its sole discretion. Ford shall pay the
expense of such third party service and Visteon shall
reimburse Ford for such expense. The third party service shall
be subject to audits by either Ford or Visteon or their
authorized representatives.
d. Continuation of Arrangements. The terms set forth in this
Section 3.03 shall be in force until the last survivors and
dependents of Group I and Group II Employees in service as of
the Benefit Transition Date who are eligible for GRP
retirement or OPEB benefits are deceased, or upon earlier
termination agreed jointly by Ford and Visteon, including any
VEBA or other arrangements or methods agreed in Section
3.03(b) (unless the Parties' respective auditors advise that
joint agreement to terminate would jeopardize the expected
accounting treatment of such arrangements or methods).
e. Ability to Substitute. If necessary to preserve for each Party
the economic benefits bargained for under this Attachment, the
Parties agree to consider, in good faith, alternate methods of
computing payments under this Section 3.03 as a substitute for
the present provisions. Any method substituted shall have as
its objective to produce a fair estimate of the OPEB expense
and other payments as set forth in this Section 3.03. The
Parties may agree to substitute an alternative method of
computing reimbursement under this Section 3.03.
f. Actuarial Verification. If the Ford Actuary and the Visteon
Actuary are unable to agree on a verification, Ford and
Visteon shall jointly designate a third independent actuary
whose verification shall be final and binding. Ford and
Visteon shall each pay one-half of the cost of such third
actuary.
g. 2001 Visteon Separation Program. For purposes of the 2001
Visteon Separation Programs, it is acknowledged and agreed
that the effect of the
23
Visteon Separation Program on the OPEB related to the Group I
and Group II Employees is $10,558,708 as of May 1, 2001 (phase
1) and $1,359,867 as of September 1, 2001 (phase II).
3.04 U.S DEFINED CONTRIBUTION RETIREMENT PLANS.
a. Participating Subsidiary. Ford sponsors the Ford Motor Company
Savings and Stock Investment Plan ("Ford SSIP") for the
benefit of the employees of Ford and its participating
subsidiaries and certain U.S. Ford Business Employees elect to
participate in the SSIP. Effective on the Transfer Date,
Visteon shall take such corporate action as is necessary to
participate in the SSIP as a "Participating Subsidiary" as
defined in the SSIP with respect to the U.S. Visteon Employees
who participate in the SSIP until the Benefit Transition Date.
Ford hereby consents to such participation by Visteon. Ford
shall amend the SSIP to vest all U.S. Ford Business Employees
who participate in the SSIP in the Ford matching contributions
contained in their SSIP accounts as of the Benefit Transition
Date.
b. Visteon SSIP. Effective on the Benefit Transition Date,
Visteon shall establish its own defined contribution pension
plan for the benefit of U.S. Visteon Employees that had
participated in the SSIP that contains provisions
substantially comparable to the SSIP, except that the number
of investment elections may be reduced and the Ford Stock Fund
election will be replaced with a Visteon Stock Fund
election. The Visteon SSIP shall provide benefits related to
contributions on or after the Benefit Transition Date. On a
date to be agreed by both parties, and in any event, no later
than July 1, 2001, U.S. Visteon Employees who have accounts in
the SSIP will be given a one time opportunity to transfer no
less than the entire balance in such accounts to the Visteon
SSIP. U.S. Visteon Employees who choose to continue to
participate in the SSIP with respect to contributions made
prior to the Benefit Transition Date shall be treated as
terminated employees under the provisions of the SSIP.
However, no distributions will be permitted until the U.S.
Visteon Employee separates from Visteon employment. Plan loans
will be permitted subject to the SSIP rules and U.S. Visteon
Employees who have SSIP loans currently or who take new SSIP
Loans after the Benefit Transition Date shall be issued coupon
books for their loan repayments. Hardship withdrawals will not
be permitted.
3.05 FLEXIBLE BENEFITS PLAN.
Visteon shall establish a Flexible Benefits Plan for the benefit of
U.S. Visteon Employees who participated in the Ford Flexible Benefits Plan
("Ford Flex Plan"), commencing on the Benefit Transition Date ("Visteon Flex
Plan"). The Visteon Flex Plan shall include health care, life and accident
insurance, health care spending
24
account, dependent care spending account, purchased vacation, the legal plan,
vision care and financial planning on terms identical to those provided under
the Ford Flex Plan for plan year 2000, and benefits substantially comparable
thereafter, and shall be designed to comply with the requirements of Code
Section 125 with respect to those benefits that are eligible to be included in a
Section 125 arrangement. For plan year 2000, Visteon shall make available to
U.S. Visteon Employees who participated in the Ford Flex Plan at least the same
amount of FCA dollars and Bonus Flex Dollars as was made available under the
Ford Flex Plan. For plan years commencing 2001 through 2003, Visteon shall make
available to U.S. Visteon Employees who participated in the Ford Flex Plan at
least the same amount of FCA dollars as was available under the Ford Flex Plan
and the amount of Bonus Flex Dollars shall be determined on the basis of the
same formula as was applicable under the Ford Flex Plan, but shall be based on
Visteon's before tax return on sales.
3.06 SALARIED INCOME SECURITY PLAN.
As of the Transfer Date, Visteon shall become a participating
subsidiary under the Ford Salaried Income Security Plan ("SISP"), and Ford
hereby consents to such participation. Effective on the Benefit Transition Date,
Visteon shall adopt its own severance plan with terms substantially comparable
to those under the Ford SISP. Ford's limit on liability under the SISP shall be
reduced prorata by the number of U.S. Global Visteon Employees. Effective as
of the Transfer Date, Visteon shall assume the liability for any U.S. Visteon
Business Employee who is receiving benefits under the Ford SISP. Ford shall
retain the responsibility for paying such benefit payments and continuing any
applicable insurance under the Ford SISP, and Visteon shall reimburse Ford
annually for any such cost.
3.07 ANNUAL INCENTIVE COMPENSATION PLAN.
Global Visteon Employees who are otherwise eligible to participate in
the Ford Annual Incentive Compensation Plan ("FAICP") shall continue to be
eligible to participate under the same terms applicable to Ford employees after
the Distribution Date through December 31, 2000, with awards for 2000 payable in
March, 2001, provided that the pro forma award amounts, adjusted for Ford
performance, under the FAICP for such Global Visteon Employees shall equal 50%
of the adjusted target amounts. Adjustments for individual performance may be
made to the extent of 50% of the amount of the Extraordinary Contribution Fund
that would normally be allocated to the Visteon Employees. Visteon shall
reimburse Ford for any amounts paid to Global Visteon Employees for 2000 under
the FAICP. Visteon shall establish an interim bonus program for the remainder of
2000 following the Distribution Date for these Global Visteon Employees. If the
Distribution Date occurs prior to January 1, 2001, Visteon shall adopt a Visteon
Annual Incentive Compensation Plan ("VAICP"), subject to stockholder approval
effective January 1, 2001. The Global Visteon Employees who were otherwise
eligible to participate under the FAICP shall be eligible to participate under
the VAICP. If the Distribution Date occurs on or after January 1, 2001, the
Parties shall agree to alternate arrangements.
25
3.08 STOCK OPTION AND PERFORMANCE STOCK RIGHTS PROGRAMS.
a. Ford Stock Potion and Performance Stock Rights Programs. Ford
Business Employees who are eligible to participate in the Ford
1998 Long-Term Incentive Plan ("FLTIP") shall be eligible for
grants of Ford stock options in March, 2000. In general, any
options granted in March, 2000 or in prior years under the
FLTIP and the Ford 1990 Long-Term Incentive Plan to Ford
Business Employees who become Visteon Employees continue and
shall accrue until five years after the Distribution Date
(provided that the Ford Business Employee had remained an
employee of Ford or its Subsidiaries for at least three months
after the date the option was granted) unless the option
expires earlier or such employee's employment with Visteon
terminates (other than due to disability, death or retirement
with Visteon approval). Outstanding Ford Options designated as
"incentive stock options" held by Visteon Employees will
retain their tax attributes only if exercised within three
months after the Distribution Date. Subject to approval of the
Ford Compensation and Option Committee, Ford Retirees who
received option grants in March, 2000 while employed by Ford
but who retired from Ford prior to the date six months after
the option grant date, shall be treated in accordance with the
immediately preceding sentence with respect to those grants.
Ford Business Employees who are eligible to participate under
the FLTIP shall be eligible for grants of Ford Performance
Stock Rights ("FPSRs") in the first quarter of 2000. Any
grants of FPSRs to an eligible Ford Business Employee shall
continue to be earned out and shall be paid out under the
FLTIP as if such employee were still employed at Ford unless
such employee's employment at Visteon terminates.
b. Visteon Stock Option and Performance Stock Rights Programs.
Visteon shall adopt a Visteon Long-Term Incentive Plan
("VLTIP"), subject to stockholder approval and regulatory
restrictions. The Visteon Employees who were otherwise
eligible to participate under the FLTIP shall be eligible to
participate under the VLTIP in those countries where it is
practicable based on the number of employees and difficulty
and cost to comply with regulatory requirements. Visteon shall
make grants of Visteon stock options under the VLTIP to
eligible Visteon Employees in March 2001, and shall make
grants of Performance Stock Rights to eligible Visteon
Employees in March, 2001.
3.09 U.S. PERFORMANCE BONUS PLAN.
U.S. Global Visteon Employees who are otherwise eligible to participate
in the U.S. Ford Performance Bonus Plan ("FPBP") shall continue to be eligible
to participate under the same terms as applicable to Ford Employees after the
Distribution Date through December 31, 2000, with awards for 2000 payable in
March, 2001. Visteon
26
shall reimburse Ford for any amounts paid to U.S. Global Visteon Employees for
2000 under the FPBP. If the Distribution Date occurs prior to January 1, 2001,
Visteon shall adopt a Visteon Performance Bonus Plan ("VPBP") effective January
1, 2001. The U.S. Global Visteon Employees who were otherwise eligible to
participate under the FPBP shall be eligible to participate under the VPBP. If
the Distribution Date occurs on or after January 1, 2001 or later, the Parties
shall agree to alternate arrangements.
3.10 U.S. DEFERRED COMPENSATION PLAN.
Ford shall request the Ford Compensation and Option Committee to
approve effective as of the Transfer Date the participation of U.S. Visteon
Employees in the Ford Deferred Compensation Plan ("FDCP") and ability to make
new deferral elections under the FDCP until the pay ending immediately prior to
the Distribution Date. Visteon shall adopt a Visteon Deferred Compensation Plan
("VDCP") effective on the Distribution Date, and shall offer as an investment
option a Visteon Stock Fund. Any deferral of compensation on or after the
Distribution Date shall be made under the VDCP, even if the election to defer
was made prior to the Distribution Date, and unless the participant changes
his/her investment options for any such deferral, the VDCP shall honor any
investment elections that were in effect under the FDCP for such class year and
type of compensation to the extent the VDCP has the same investment choices. If
a U.S. Visteon Employee had made deferrals under the FDCP prior to the
Distribution Date, the book entry account balance of such employee's deferred
compensation account in the FDCP, valued as of 5:00 P.M. Eastern Time on June
30, 2000, shall be transferred to the VDCP as of June 30, 2000. The Transferred
Account balances may not be immediately available for further transfer to VDCP
investment options until account balances have been properly verified by the
plan administrators. Visteon shall cause the VDCP to offer a Ford Stock Fund
investment option for those Transferred Accounts that had deferrals based on the
FDCP Ford Stock Fund as of the Distribution Date, but the VDCP Ford Stock Fund
shall be a "sell" only fund, and would not be available for any new deferrals or
redesignations into such fund from other funds or for credits based on dividend
earnings. Visteon shall assume the liability with respect to the Transferred
Accounts and shall be responsible for making any subsequent distributions in the
form specified by the participant while employed by Ford from the Transferred
Accounts. If Visteon is unable to make distributions from the Transferred
Accounts at the end of any applicable deferral period due to insolvency or
otherwise, Ford shall make the appropriate distributions. Ford shall have no
responsibility with respect to any other VDCP accounts.
3.11 NON-U.S. BENEFIT PLANS AND PROGRAMS.
Unless provided otherwise in Schedule 3.11 attached hereto, Global Ford
Business Employees who participate in benefit plans and programs sponsored by
non-U.S. Subsidiaries or Affiliates of Ford, shall transition to the benefit
plans and programs of the non-U.S subsidiaries of Visteon as of the Benefit
Transition Date, except with respect to retirement liabilities as provided in
the next sentence. Ford shall retain liabilities for non-U.S. Ford Retirees as
of the Benefit Transition Date and Visteon shall
27
assume liabilities for non-U.S. Visteon Employees with appropriate asset
transfers from funded plans. To the extent there are any benefit plans or
programs which are unfunded or underfunded, Visteon shall assume the liability
for the benefit payments in respect of the non-U.S. Visteon Employees and Ford
shall retain the liability for non-U.S. Ford Retirees.
3.12 NON-EMBEDDED PLANS.
Notwithstanding anything herein to the contrary, to the extent that
Ford has a Subsidiary or Affiliate that maintains pension, savings and or
welfare benefit plans separate and apart from the Ford plans, and such
Subsidiary or Affiliate becomes a subsidiary or affiliate of Visteon pursuant to
the Master Transfer Agreement, the plans of such Subsidiary or Affiliate shall
remain the responsibility of such Subsidiary or Affiliate, and no division or
allocation of such plans will occur as a result of such transfer on the Transfer
Date. After the Distribution Date, Ford shall have no responsibility
attributable to a parent corporation with respect to such plans, except as
otherwise may be required by law.
In the event that a U.S. Global Visteon Employee has a pension benefit
for service prior to the Benefit Transition Date in a pension plan sponsored by
Ford or its Subsidiaries or Affiliates that is otherwise not covered under the
terms of this Agreement, Ford and Visteon shall agree on the proper treatment of
such past service benefit, giving effect to the principles expressed in this
Agreement. For purposes of this Agreement, the following persons at Visteon and
Ford shall be authorized to provide consent to such arrangements:
Visteon Corporation
Vice President and Treasurer
Director-Compensation and Benefits
FORD MOTOR COMPANY
Director-Actuarial Studies Department
Manager-income Security Plans
3.13 TRANSFERS FROM FORD TO VISTEON AFTER THE TRANSFER DATE.
Similar arrangements to those described above in Sections 2.03, 2.04,
and 2.05 of Article II and all of Article III may apply to employees of Ford
non-U.S. locations who transfer from Ford to Visteon employment after the
Transfer Date, provided all of the following conditions are met:
(i) Transfer is with the approval of both Ford and Visteon. In the
case of Ford, such approval shall be certified in writing by
the Director - Employee Affairs or equivalent position for the
employing entity. In giving
28
approval, the Director, based on the recommendation of the
employing activity, shall be satisfied that Ford's interests
are not prejudiced as a result of the transfer;
(ii) The employee will not receive a termination indemnity or any
other separation payment as a direct result of the transfer of
employment from Ford to Visteon; and
(iii) Transfer of employment is completed on or before March 31,
2001.
Ford and Visteon may agree to substitute the date in Section 3.13 (iii)
above (March 31, 2001) for a later date, but no later than December 31, 2002.
For purposes of this Agreement, the following persons at Visteon and Ford shall
be authorized to provide consent to the additional locations and later dates:
Visteon Corporation
Vice President and Treasurer
Director-Compensation and Benefits
Ford Motor Company
Director-Actuarial Studies Department
Manager-Income Security Programs
3.14 TRANSFER OF CERTAIN VISTEON EMPLOYEES TO FORD AFTER THE DISTRIBUTION
DATE.
a. Definitions. For purposes of this Section, the following terms
shall have the following meanings:
(i) "Ford Hourly Employee" shall mean a Visteon Transfer
Rights Employee who is given the option to return to
the Ford hourly employment rolls and elects to return
to Ford prior to employment separation from Visteon
and is enrolled on the Ford hourly employment rolls
upon separation from Visteon.
(ii) "Ford-UAW CBA" shall mean the Ford-UAW Collective
Bargaining Agreement between Ford and the United
Automobile, Aerospace and Agricultural Implement
Workers of America, UAW and its affiliated Locals
228, 400, 600, 723, 737, 848, 849, 892, 898, 1111,
1216 and 1895 (collectively, "UAW") and various local
agreements by and between Ford and the UAW, as in
existence from time to time.
(iii) "Visteon Investment Plan" ("VIP") shall mean the
defined contribution plan sponsored by Visteon for
its salaried employees,
29
in effect from time to time. It is also sometimes
referred to in this Agreement as the Visteon SSIP.
(iv) "Visteon Transfer Rights Employee" shall mean a
Visteon Employee who (A) was enrolled on the Ford
U.S. hourly payroll at any time prior to the Transfer
Date and was covered under the Ford-UAW CBA in
existence immediately prior to the Transfer Date; (B)
transferred from the Ford hourly employment rolls to
the Ford salaried rolls and was a Ford Business
Employee on the Transfer Date, (C) pursuant to this
Agreement became a Visteon Employee as of the
Transfer Date; and (D) was a Visteon Employee
enrolled on the salaried employment rolls on the day
immediately prior to the Ford Return Date, as defined
in Section 3.14 (b) below.
b. Employment Transfer. A Visteon Transfer Rights Employee who is
subject to a Reduction in Force may be given the option, at
Ford and Visteon's discretion, to return to the Ford hourly
rolls at a plant or other location where the employee last had
seniority as a Ford hourly employee. If a Visteon Transfer
Rights Employee becomes a Ford Hourly employee, such employee
shall be treated for all purposes as any other hourly employee
covered by the Ford-UAW CBA on the date such employee is
enrolled on the Ford hourly employment rolls ("Ford Return
Date") and shall be subject to the terms and conditions of the
Ford-UAW CBA in all respects, including the entry date
seniority into the Unit, as defined in the Ford-UAW CBA.
c. Benefits Transition.
(i) Liability and Asset Transfers from Visteon Mirror GRP
to the GRP. Visteon and Ford shall take such steps
that are necessary to transfer to the GRP any
credited service and benefit accrued under the
Visteon Mirror GRP with respect to a Ford Hourly
Employee to the date immediately prior to the Ford
Return Date to the extent permitted by law provided
the GRP and the Visteon Mirror GRP retain their
tax-qualified status after the transfer and the GRP
is not required to be amended to provide for any
additional benefit rights or features not currently
contained in the GRP, except as specifically provided
in this Section. Ford shall amend the GRP to provide
that credited service under the Visteon Mirror GRP
with respect to the Ford Hourly Employee shall be
treated for all purposes as Ford GRP credited
service. Future service shall be accrued under the
Ford-UAW Retirement Plan. A Ford Hourly Employee
shall not be treated as having a separation from
employment for purposes of the Visteon Mirror GRP or
the GRP and shall not be entitled to an immediate
distribution of plan benefits solely because of the
employment transfer.
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(ii) Asset Transfer Valuation. As soon as practicable
after the latest of (A) the date on which the PBO
Value is determined and verified pursuant to (iii)
below, (B) the expiration of thirty days following
the filing, if required, of Form 5310 with the IRS
and PBGC in respect of the GRP and the Visteon Mirror
GRP ("Asset Transfer Date"), Visteon shall cause the
trustee of the Visteon Mirror GRP to transfer assets
to the GRP in an amount equal to the PBO Value as
determined in (iii) below. The assets shall consist
of cash or cash equivalents, or marketable
securities, and shall include interest from the Ford
Return Date until 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.
(iii) PBO Value. As of a date mutually agreed by Visteon
and Ford ("Valuation Date"), in respect of each Ford
Hourly Employee then a participant in the
Visteon-Mirror GRP, the Visteon Actuary shall measure
the projected benefit obligation, as defined in SFAS
No. 87, of the liabilities related to the Ford Hourly
Employee as of the Ford Return Date ("PBO Value") 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 adjusted
to reflect current condition (e.g.
accelerated vesting) not reflected in the
most recent valuation for the Visteon Mirror
GRP prepared by Towers Perrin; and
(B) A discount rate as of the Ford Return Date
equal to the annual effective yield
equivalent to the nominal semi-annual yield
published by Moody's Investors Service at
www.Moodys.com for its AA Corporate Bond
Index, rounded to the nearest 1/4%, provided
such rate is a reasonable proxy for the Ford
SFAS 87 discount rate for the GRP in effect
as of the Valuation Date. If such rate is
not a reasonable proxy as determined solely
by Ford, then the Visteon Actuary and the
Ford Actuary shall determine an acceptable
discount rate no later than thirty days
after the Transition Date.
In no event shall the 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
31
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 or rates
and other assumptions specified by the PBGC
and in effect for plans terminating on the
Valuation Date. The determination of the PBO
Value by the Visteon Actuary shall be
submitted to the Ford Actuary for
verification but such verification shall
relate only to the calculation of the PBO
Value on the basis set forth above. If the
Visteon Actuary and the Ford Actuary are
unable to agree on a verification, Visteon
and Ford 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.
(iv) Asset Transfer-Retiree Health Care and Life Insurance
Obligations. As of the Asset Section 3.14 Valuation
Date in respect of each Ford Hourly Employee who
returns to a Ford location rather than remain at a
Visteon location as a Ford Hourly Assigned Employee,
Visteon shall transfer in cash an amount equal to the
Accumulated Postretirement Benefit Obligation (as
defined in SFAS 106) ("APBO") and computed using
assumptions the same as those provided in subsection
(iii) above and using the health care trend rates
used in Visteon's most recent valuation for SFAS 106
reporting in respect of Group III Employees and
Ford's most recent valuation for SFAS 106 reporting
in respect of Group I and II Employees. The transfer
shall occur no later than the Asset Transfer Date,
and the obligation shall bear interest at the same
rate as provide in (ii) above. The calculations shall
be subject to verification by the Ford Actuary and
the dispute resolution described in (iii) above shall
apply as if set forth in full herein.
(v) VIP to SSIP. Visteon shall notify Ford Hourly
Employee who have accounts in the VIP that they may
elect to transfer their VIP account balances to the
SSIP. Visteon shall take such steps that are
necessary to transfer to the SSIP as soon as is
reasonably practicable the account balances of such
Ford Hourly Employees who make the election to
transfer to the SSIP to the extent permitted by law
provided the SSIP and VIP retain their tax-qualified
status after the transfer and the SSIP is not
required to be amended to provide for any additional
benefit rights or features not currently contained in
the SSIP. On the day of such transfer, the account
balances in those investment options that the SSIP
does not provide, including without limitation the
Visteon Stock Fund shall be transferred to the SSIP
Interest Income Fund. Such balance shall be available
for subsequent transfer at the discretion
32
of the Ford Hourly Employee into other SSIP
investment options after the transfer date. The Ford
Hourly Employee shall be eligible to commence
participation in the Ford-UAW Tax-Efficient Savings
Plan as of the date such employee becomes a Ford
Hourly Employee.
3.15 ANNUAL RECONCILIATIONS.
In the event that the Parties discover any material data errors,
omissions or misclassifications of employee status that impacts the valuation of
the pension obligations and the amount of any pension asset transfer or the
valuation of the APBO and the amount of any reimbursement, upon notification and
verification, the Parties shall correct the amount of the affected pension asset
transfers or APBO reimbursement using the same bases and methods described
herein with respect to the original pension asset transfers and APBO
reimbursement. The Parties shall take all necessary actions to transfer the
benefit liabilities associated with the transferred assets and to retroactively
correct the misclassifications of affected employees.
3.16 FUTURE BENEFIT CHANGES.
Nothing contained herein shall be construed to prohibit Ford or its
Subsidiaries or Affiliates from amending, terminating or otherwise modifying the
terms of employee benefit plans or programs applicable to Global Visteon
Employees, Ford Retirees or Visteon Retirees, except as may otherwise be
provided by applicable law. Except as otherwise specifically provided herein or
by applicable law, no Global Visteon Employee, Ford Retiree or Visteon Retiree
shall have any vested right to any employee benefit plan or program sponsored by
Ford or its Subsidiaries or Affiliates. Except as provided in Sec.3.01(b)(vi),
and as may be provided by applicable law, nothing in this Agreement shall
prohibit Visteon or its subsidiaries or affiliates from amending, modifying or
terminating benefit plans or programs applicable to Global Visteon Employees,
Visteon Retirees or any other Visteon retirees or employees.
ARTICLE IV
VEHICLE PROGRAMS
4.01 U.S. LEASE AND EVALUATION PROGRAMS.
Except as specifically provided herein, participation of the U.S.
Global Visteon Employees in Ford's U.S. Lease and Evaluation Vehicle Program
shall be terminated as of the Distribution Date. U.S. Global Visteon Employees
who participate in such programs shall be given a reasonable period of time
after the Benefit Transition Date not to exceed sixty (60) days or such other
time as the Parties mutually agree, to either purchase the vehicles leased or
assigned to them or to return them to Ford, or Ford's
33
agents as provided below ("Vehicle Transition Period'). During the Vehicle
Transition Period, Ford shall offer for sale to each lessee and assignee of such
vehicles as are presently leased to such lessee or assignee under the terms of
Ford's Used vehicle Purchase ("B") Plans, or to continue a lease under the terms
of the Ford Credit's Red Carpet Lease Plan, subject to credit evaluation and
dealer acceptance. In the event a lessee or assignee of a lease or evaluation
vehicle declines to purchase or continue to lease such vehicle within the
Vehicle Transition Period, the lessee or assignee shall return such vehicle to
its original servicing garage. Visteon shall collect, or shall cause its
subsidiaries or affiliates to collect, the applicable lease fee from the Global
U.S. Visteon Employees for such lease vehicles during the Vehicle Transition
Period. Visteon shall reimburse Ford in cash on a monthly basis, within ten days
of the last day of the month, an amount equal to (i) the aggregate amount on the
monthly lease fees for lease vehicles owed by U.S. Global Visteon Employees and
(ii) the aggregate amount of the monthly evaluation vehicle fees, determined on
the same basis as if the evaluation vehicles were lease vehicles, and paid by
Visteon. U.S. Ford Retirees shall continue to be eligible to participate in
Ford's U.S. Lease and Evaluation Vehicle Programs according to the terms of such
programs. Group I and Group II Employees shall be eligible to participate in
Ford's U.S. Lease and Evaluation Vehicle Programs, if otherwise eligible under
the terms of such Programs, on the same terms as a Ford Retiree upon their
retirement from Visteon or its subsidiaries or affiliates.
4.02 NON-U.S. LEASE AND EVALUATION PROGRAMS.
Participation of the Global Visteon Employees in Ford's Non-U.S. Lease
and Evaluation Programs shall terminate as of the Distribution Date, or such
other date as the Parties may agree. Ford shall cooperate with Visteon in
providing appropriate transition services comparable to those described in
Section 4.01 with respect to the U.S. Lease and Evaluation Programs.
34
4.03 VEHICLE PURCHASE PLANS.
U.S. Global Visteon Employees shall be permitted to participate in
Ford's Vehicle Purchase Plan consisting of the "A Plan" indefinitely. After the
Distribution Date, U.S. Global Visteon Employees shall not be eligible to
participate in Ford's "B Plan" (except as provided above in Section 4.01). After
the Distribution Date, U.S. Global Visteon Employees shall not be eligible to
nominate purchasers under the "X-Plan". Ford Retirees shall continue to be
eligible to participate in such plans after the Distribution Date according to
the terms of such plans.
4.04 U.S. SURVIVING SPOUSE CAR PROGRAMS.
Visteon shall not be required to provide a benefit substantially
comparable to the U.S. Surviving Spouse Car Program after the Benefit Transition
Date. Ford shall have no responsibility to provide a benefit under the U.S.
Surviving Spouse Car Program to a spouse of any U.S. Global Visteon Employee who
dies after the Distribution Date.
ARTICLE V
U.S. WORKERS COMPENSATION
Visteon shall assume all liability for workers' compensation claims,
damages, expenses, liabilities or administrative expenses of any kind
whatsoever, related to U.S. Ford Business Employees regardless of when filed or
reported effective as of the Transfer Date. Visteon shall indemnify and hold
Ford harmless in respect of any such claims paid by Ford on Visteon's behalf
under any insured or self insured program operated by Ford. Effective on the
Distribution Date, and at such time as may be required thereafter, Visteon shall
transfer to Ford any reserves established in connection with claims which
applicable state workers' compensation laws require Ford to continue to pay
on behalf of Visteon. Effective on the Distribution Date, Ford shall transfer to
Visteon any reserves established in connection with claims for which Visteon
assumes payment responsibility to the extent allowed by state law and to the
extent such reserves are not reflected on Visteon's balance sheet. Where
transfer of claim liability is prohibited by state law, Ford will continue to
pay such claims on Visteon's behalf and shall be reimbursed by Visteon as
described herein. Effective on 12:01 a.m. on the Distribution Date, Visteon
shall cease to be covered by any of the workers compensation liability insurance
policies sponsored by Ford or any self insurance program of Ford applicable to
the U.S. Ford Business Employees for injuries or occupational disablements
occurring subsequent to the Distribution Date. Visteon shall assume
responsibility for its allocable share of future retrospective premium
adjustments for periods preceding the Distribution Date. Visteon shall take all
steps necessary under applicable law to provide workers compensation coverage on
or after the Distribution Date, either through self-insurance where permissible
under state law or by the purchase of insurance. Visteon shall notify state and
federal regulatory agencies
35
of the above. Visteon shall cooperate with Ford in obtaining the return or
release of all bonds, letters of credit, securities, indemnifications, cash or
other assets give by Ford to any state or federal agency in connection with
workers compensation self-Insurance with respect to U.S. Ford Business
Employees, and to the extent required by any state or federal agency, post its
own bonds, letters of credit, indemnifications, securities, cash or other assets
in substitution therefor.
ARTICLE VI
EMPLOYEE LIABILITIES
Effective as of the Transfer Date, and except as otherwise provided
under the terms of this Agreement, Visteon will assume, and agrees to perform,
the debts, liabilities, guarantees, contingencies and obligations of Ford,
whether asserted or unasserted, fixed or contingent, accrued or unaccrued, known
or unknown, and howsoever arising, relating to the Global Visteon Employees.
Ford shall transfer any funded or unfunded reserves it may maintain with respect
to such liabilities, unless such reserves are reflected on the Visteon Balance
Sheet.
ARTICLE VII
INDEMNIFICATION
7.01 VISTEON INDEMNITY.
Visteon shall indemnify Ford against and agrees to hold it harmless
from any and all damage, loss, claim, liability and expense (including without
limitation, reasonable attorneys' fees and expense in connection with any
action, suit or proceeding brought against Ford) incurred or suffered by Ford
arising out of (i) breach of any agreement made by Visteon hereunder; (ii) any
claim by a Global Visteon Employee (or such employee's dependents or
beneficiaries) arising out of or in connection with the operation,
administration, funding or termination of any of Visteon's employee benefit
plans or programs or the employee benefit plans or programs of a Visteon
subsidiary or affiliate, whenever made, including, without limitation, claims
made to the PBGC, the DOL, or the IRS; or (iii) employment claims of Global
Visteon Employees whenever made based on conditions or actions arising prior to
or after the Transfer Date, except as provided in Section 7.02 below (iii).
7.02 FORD INDEMNITY.
Ford shall indemnify Visteon against and agrees to hold it harmless
from any and all damage, loss, claim, liability and expense (including without
limitation, reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding brought against Visteon) incurred or suffered by
Visteon (i) arising out of breach of any
36
agreement made by Ford hereunder; (ii) any claim made by a Global Visteon
Employee (or such employee's dependents or beneficiaries) arising out of or in
connection with the operation, administration, funding or termination of any of
the benefit plans or programs sponsored by Ford (excluding any programs
sponsored by Ford subsidiaries that have been transferred to Visteon), whenever
made, including, without limitation, claims made to the PBGC, DOL or the IRS; or
(iii) employment claims of Global Visteon Employees that arise prior to or after
the Transfer Date where the liability, if any, is primarily the result of and
arising from conduct of a Ford supervisor or manager not employed by the
Business (as opposed to the actions or inaction of Visteon or its subsidiaries
or affiliates).
7.03 PROCEDURE FOR INDEMNITY.
The procedure for indemnification under this Section 7 shall be the
same procedure as set forth in Section 7(c) through (j) of the Master Transfer
Agreement and shall be incorporated herein by reference.
7.04 ASSUMPTION OF LIABILITY.
As of the Transfer Date, Visteon will assume liability and
responsibility for all pending employment litigation by Global Ford Business
Employees transferred to Visteon pursuant to the terms hereof that relate to the
Business, provided, however that Visteon shall not assume any obligation or
liability and Ford with respect to the following litigation: Michael Jones et al
v. Ford Motor Company filed on June 9, 1993 in U.S. District Court, District of
Minnesota, regarding discrimination allegations. With respect to those cases
assumed, Visteon will have sole responsibility for deciding how to defend the
claims (e.g., whether to settle or litigate).
ARTICLE VIII
MISCELLANEOUS
8.01 DISPUTE RESOLUTION.
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 for seeking relief, including but not limited to damages, hereunder;
provided, however, that a Party may seek injunctive relief from a court where
appropriate solely for the purpose of maintaining the status quo while this
procedure is being followed:
(a) Initial Meeting. The Parties shall hold a meeting of the Governance
Council to attempt in good faith to negotiate a mutually
satisfactory resolution of the dispute; provided, however, that no
Party shall be under any obligation whatsoever to reach, accept or
agree to any such resolution; provided further, that no such
meeting shall be deemed to vitiate or reduce the obligations and
liabilities of the Parties or be deemed a waiver by a Party hereto
of any
37
remedies to which such Party would otherwise be entitled.
(b) Mediation/Arbitration. If the Parties are unable to negotiate a
mutually satisfactory resolution as provided above, any Party may
so notify the other. In that event, the Parties agree to
participate in good faith in mediation of the dispute. Such
mediation shall conclude no later than forty-five (45) days from
the date that the mediator is appointed. If the Parties are not
successful in resolving the dispute through mediation, then the
Parties agree to submit the matter to binding arbitration before a
sole arbitrator in accordance with the CPR Rules for
Non-Administered Arbitration. Within five 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. 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 and 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. The
arbitrator will limit the arbitrator's final ruling to selecting
the entire requested relief the arbitrator considers the most
appropriate from those submitted by the Parties.
(c) Procedure. Mediation and, if necessary, arbitration shall take
place in the City of Dearborn, Michigan unless the Parties agree
otherwise or the mediator 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,
9 U.S.C.A. Section 1 et seq., or comparable legislation in
non-U.S. jurisdictions, and judgment upon the award rendered by
the arbitrator may be entered by any court having jurisdiction.
8.02 ASSIGNMENT.
This Agreement has been executed in consideration of the Parties
involved and therefore may not be assigned or transferred to a third party
without the prior written consent of the other Party. This Agreement will be
binding on the agreed successors to or assignees of either Party. In no event
will a Party be released from their indemnity obligations without the prior
written consent of the other Party.
8.03 ENTIRE AGREEMENT, AMENDMENT, WAIVER.
This Agreement embodies the entire agreement of the Parties and
supersedes any other agreements or understandings between them, whether oral or
written, relating
38
to this subject matter. In the event of a conflict between this Agreement and
any other agreement between or among any of the Parties with respect to the
subject matter hereof, this Agreement shall control. No amendment or
modification or waiver of a breach of any term or condition of this Agreement
shall be valid unless in a writing signed by each of the Parties. The failure of
either Party to enforce, or the delay by either of them in enforcing, any of its
respective rights under this Agreement will not be deemed a continuing waiver or
a modification of any rights hereunder and either Party may, within the time
provided by applicable law and consistent with the provisions of this Agreement,
commence appropriate legal proceedings to enforce any or all of its rights.
8.04 NOTICES.
Any notice or other communication hereunder must be given in writing
and either (a) delivered in person, (b) transmitted by facsimile transmission or
other telecommunications mechanism, (c) sent by a nationally recognized
overnight courier service (delivery charges prepaid) or (d) sent by registered
or certified mail (postage prepaid, return receipt requested) as follows:
If to Ford:
Ford Motor Company
Office of the Secretary
One American Road
11th Floor World Headquarters
Dearborn, Michigan 481262798
Fax:(313)248-7036
If to Visteon:
Visteon Corporation
One Parklane Boulevard, Ste. 728 East
Dearborn, Michigan 48126
Attention: General Counsel
Fax: (313) 755-2342
All notices personally delivered shall be deemed received on the date
of delivery. Any notice sent via facsimile transmission shall be deemed
received on date shown on the confirmation advice. Any notice by
registered or certified mail shall be deemed to have been given on the
date of receipt or refusal thereof. The date of any notice by overnight
courier service shall be the date the airbill is signed by the
recipient. Any Party may change its address for the receipt of notices
by giving Notice thereof to the other.
8.05 PARTIAL INVALIDITY.
39
Any provision of this Agreement which is found to be invalid or
unenforceable by any court in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability, and the
invalidity or unenforceability of such provision will not affect the validity or
enforceability of the remaining provisions hereof.
8.06 TITLE AND HEADINGS.
Titles and headings of Sections and Subsections of this Agreement are
for convenience only and will not affect the construction of any provision of
this agreement.
8.07 NEGOTIATED TERMS.
The Parties agree that the terms and conditions of this Agreement are
the result of negotiations between the Parties and that this Agreement will not
be construed in favor of or against any Party by reason of the extent to which
any Party or its professional advisors participated in the preparation of this
Agreement.
This Agreement may be executed in counterparts, each of which will be
deemed an original, but all of which taken together will constitute one and the
same instrument.
8.09 GOVERNING LAWS.
This Agreement is governed by the internal laws of the State of
Michigan.
8.10 THIRD PARTY BENEFICIARIES.
This Agreement is for the sole benefit of the Parties hereto and no
third party may claim any right, or enforce any obligation of the Parties,
hereunder.
8.11 RELATIONSHIP.
Nothing contained in this Agreement will be construed to make any of
the Parties partners, principals, agents or employees of the other, except as
explicitly provided. None of the Parties will have any right, power or
authority, express or implied, to bind any of the other Parties. For purposes of
this Agreement, Affiliate means any individual, partnership, corporation,
limited liability company, trust, or other entity directly or indirectly,
through one or more intermediaries, controlling, controlled by or, under common
control with a Party.
8.12 GOOD FAITH AND FAIR DEALING.
In entering into this Agreement, the Parties each acknowledge and agree
that all aspects of the relationship among the Parties contemplated by this
Agreement, including the performance of all obligations under this Agreement,
will be governed by the fundamental principle of good faith and fair dealing.
40
8.13 CONSENTS, APPROVALS AND REQUESTS.
Except as specifically set forth in this Agreement, all consents and
approvals to be given by any of the Parties or any of its respective Affiliates
under this Agreement will not be unreasonably withheld or delayed.
8.14 FURTHER ASSURANCES.
The Parties will execute such further assurances and other documents
and instruments and do such further and other things as may be necessary to
Implement and carry out the intent of this Agreement.
8.15. SALE OF VISTEON BUSINESS.
If Visteon sells all or part of the assets comprising the Business
after the Distribution Date, and transfers Global Visteon Employees to a
successor employer in connection with the sale of such Business assets, Visteon
shall attempt to negotiate in good faith with the successor employer provisions
with respect to benefit comparability and pension security no less favorable
than those set forth in Section 2.04 and Section 3.01 b.(vi).
In connection with the sale of Visteon's restraints electronics
business ("Restraints Business") pursuant to an Asset Purchase Agreement dated
April 1, 2002 by and between Visteon and Autoliv, Inc. ("Autoliv"), certain
employees engaged in the Restraints Business became employees of Autoliv as of
April 1, 2002 ("Restraints Business Employees"). Visteon agreed with Autoliv
that Visteon would amend the Visteon Mirror GRP to recognize service with
Autoliv of any Restraint Business Employee who was either a Group I or Group
II Employee under this Agreement for purposes of vesting, eligibility to
participate and eligibility for benefits under the Visteon Mirror GRP (or any
successor plan after June 30, 2004). Visteon also agreed that with respect to
pay related benefits, the Visteon Mirror GRP would recognize for final average
salary purposes any salary paid to a Restraint Business Group I or II Employee
to the same extent as if it were Visteon salary. Ford agrees to amend the GRP to
recognize Autoliv service of Restraint Business Group I and Group II Employees
for purposes of vesting, eligibility to participate and eligibility for benefits
under the GRP (but not for purposes of benefit calculation) to the same extent
such service would be recognized as Visteon service under this Agreement. For
purposes of determining the prorated GRP supplements under Section 3.01(d),
service with Autoliv shall be treated as Visteon service. Ford also agrees to
amend the GRP to recognize base salaries at Autoliv for purposes of any final
average pay calculation under the GRP. Visteon agrees to furnish Ford with the
employee data for the Restraint Business Group I and II Employees so that Ford
may properly administer the GRP benefits. To the extent Visteon fails to deliver
such data within 30 business days of request of Ford, Ford and the GRP shall
have no further obligation with respect to the recognition of the Autoliv
service or base salary for GRP benefits. Visteon agrees to reimburse Ford for
any additional costs resulting from the recognition of Autoliv service and
Autoliv base salary
41
to the extent provided under Section 3.01 (c) as if service with Autoliv was
service with Visteon. Nothing herein shall be construed to require Ford or the
Ford GRP to recognize service or pay with any other successor employer to the
Restraints Business or to any other successor employer of Visteon or any of
Visteon's businesses.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement as of the day and year first above written.
FORD MOTOR COMPANY VISTEON CORPORATION
By: /s/ Don Leclair By: /s/ Daniel R. Coulson
----------------------------- ----------------------------
Title: Group Vice President & CFO Title: Executive Vice President
and Chief Financial Officer
Attachment 3
AGREEMENT GOVERNING THE SEPARATION OF THE FORD VISTEON ORGANISATION
The existing Visteon activities presently owned by Ford in Europe will be
transferred into separate legal entities. The legal entities being created are
depicted on the attached Organisation Chart Ford Motor Company is contemplating
a spin-off of the parent Visteon company and after full spin-off will have no
equity in the new parent company or its subsidiaries, and the new parent Visteon
company will be incorporated in the US and be publicly traded.
In connection with this transaction and on behalf of the respective national
companies. Ford Motor Company and the Ford European Works Council have concluded
the following agreement, which will apply to all Visteon activities listed below
and being established as independent legal entities in Europe (hereafter
collectively referred to as "Newco"). In the event that any of these Newco
activities in Europe are transferred outside Newco, then the successor companies
will be obliged be adopt this agreement.
SCOPE OF THE AGREEMENT
The following agreement applies to hourly and salaried employees on Visteon
payroll below Senior Management (the agreement covers up to and including
LLS/SCR) of the current European plants in Berlin, Dueren, Wuelfrath, Belfast,
[ILLEGIBLE] Enfield, [ILLEGIBLE] and [ILLEGIBLE] and to the existing Visteon
engineering and other staff and hourly support activities in the countries where
the above plants are located.
The Visteon activities in Cadiz and Palmela are not affected by this agreement
as the operating arrangements and contractual terms and conditions of employment
are not altered by the change of ownership to Newco.
EMPLOYMENT CONTRACT
The existing employees of the above-mentioned activities will become employees
of Newco. The employees will be transferred to Newco no later than the end of
the second quarter 2000.
Accrued seniority and all existing terms and conditions, in particular pension
entitlements, will be transferred to the new employment contracts. For the
duration of their employment, terms and conditions of existing Fort employees,
who transfer to Newco, will mirror Ford conditions (incl. discretionary pension
in payment increases) in their respective countries (lifetime protection).
In respect of employee programs, such as car purchase and share purchase plans,
comparable programs will be developed and implemented.
Until the fun spin-off of Newco, present Ford employees working in Visteon
activities will be eligible to volunteer to be reassigned to Ford. The timing of
these flow-backs to Ford will be subject to the availability of suitable
opportunities within Ford facilities, normal selection criteria, and the need to
maintain operations within Newco. If an employee refuses two offers of suitable
vacancies in Ford, the flow-back commitment will cease. Ford will commit to
implement all flow-backs within a 5-year period from the date of full
spin-off.
1
In addition, existing Ford employees working in Visteon who transfer to Newco at
the time of the transfer of assets and liabilities to Newco ("Legal Separation")
will have the opportunity to apply for vacancies within Ford which are to be
filled externally, and they will be considered against normal Ford selection
criteria. Where they are equally suitable, former Ford employees who have
transferred to Newco will be given preference over other external candidates,
and past Ford and Visteon experience will be taken into account.
Future new hires into Newco after the date of Legal Separation will be employed
under terms and conditions decided by Newco, which in the UK will be negotiated
collectively as appropriate- and in Germany will be aligned with the respective
tariff agreements.
For terms and conditions of employment of existing Ford employees who transfer
to Newco at the time of Legal Separation in the U.K. and Germany, Newco will
adopt and honour the outcome of the Ford collective agreements in the respective
countries.
COLLECTIVE AGREEMENTS
All existing Ford collective agreements, in particular Investment and Plant
Security Agreements and the Employment Security and Investment Statements
(thereafter "Investment Agreements") will be fully adopted by Newco.
Existing apprentice training programs will be continued.
EMPLOYEE REPRESENTATION
In Germany, Newco will become a member of the Employers Association of the Metal
Industry. Plant and corporate employee representation arrangements will be
established according to applicable legal and tariff provisions.
In the United Kingdom:
- current Ford employees who transfer to Newco at the time of Legal
Separation will continue to be represented by the existing Ford
Procedure and bargaining arrangements for 6 years after Legal
Separation. Ford National Bargaining Committees will include management
representatives of Newco as appropriate.
- thereafter Newco will establish local and national representation and
bargaining arrangements for all Newco employees in the existing UK Ford
locations which transfer to Newco at the time of Legal Separation.
- separation of Newco representation arrangements from Ford earlier than
provided for in this agreement may take place if it is agreed by all
parties that this is mutually beneficial.
- representation in inspect of new Newco employees hired following the
Legal Separation of Newco from Ford, will be the subject of discussion
between Ford, Newco and the appropriate national unions in the UK.
The existing in-plant representation structures and processes in Charleville
will continue and are not affected by this agreement.
Newco will establish a new independent European works Council.
2
SOURCING
In recognition of the commitment contained within this agreement that Newco
will maintain terms and conditions for existing employees who transfer to Newco
that mirror Ford conditions for the duration of their employment (lifetime
protection), Ford management commits to provide sourcing to Newco in Europe as
described within the following Sourcing Agreement:
The following principles apply in respect of the sourcing of Ford business to
the afore-mentioned Newco plants and the allocation of work to the Newco
engineering, development and other Newco staff and hourly support activities in
these countries.
In order to facilitate the business development of the Newco activities named
above and based on the Company's intention to transfer existing Ford employees
in these facilities to Newco as Newco employees at the date of separation, Ford
and Newco management confirm their on-going commitment to these activities and
will comply in full with the existing investment Agreements which affect these
facilities, and meet the legal responsibilities arising from them.
Specifically, replacement work will be substituted for the B-Car instrument
panel and Transit grill that have not been sourced to Visteon in the next
product cycle. A decision on substitute work will be made by 30 June 2000.
In addition, management commits to take the necessary steps to provide the
opportunity to enhance or develop a viable business situation for these plants
and the Newco engineering and other Visteon staff and hourly support
activities.
To achieve this and, in particular, to address the concerns regarding plant
closures. Ford management commits to provide these facilities with the sourcing
for existing Ford products for the life of the present vehicle sourcing cycle
plus one further vehicle sourcing cycle (to include CD208 and the replacement
for the present Galaxy), and as a minimum for the period committed in the
existing investment Agreements. This commitment also includes all current
components in Newco plants which will have successor part in C1/CD platform
vehicles in the next vehicle sourcing cycle. Minor facelifts will not constitute
a new vehicle sourcing cycle.
The "Program Cycle Plan" and "Current Visteon Sourcing Plan" documents attached
to the two original master copies of this agreement are part of the agreement.
To support this agreement, Newco recognizes its responsibility to ensure that
the Ford products sourced to these facilities must be viable, profitable,
reflect technological advances (e.g. electronics, moulding, transmissions,
machining etc.) and meet competitive price criteria. Where Newco is not able to
immediately match the competitive price on products included in the above, for
the future committed product sourcing cycle, it will commit to bid on a
competitive basis, at a minimum level of breakeven plus the cost of capital and
to make up any remaining competitive price differences in equal increments
across the life of the product sourcing. (But in any event in equal increments
across a maximum 5 year period). The difference between the competitive price
and the Newco price (at a minimum level of breakeven plus the cost of capital)
at the date of Legal Separation will be shared equally between Ford and Newco
over the 5-year period, in line with the following formula:
- Newco commits to reduce the difference in 5 equal steps of 20%, so that
the difference is eliminated at the end of the 5-year period.
- Ford pays for 100% of the difference in the first year, 80% in the
second year, 60% in the third year, 40% in the fourth year and 20% of
the difference in the fifth year.
3
The achievement of employment security will ultimately be governed by the level
of efficiency and competitiveness achieved in each Newco facility. As today,
this will require the on-going cooperation of management, unions, Works Council,
employee representatives and employees.
The product cycle plan upon which these commitments are based is clearly subject
to change. Where these changes negatively impact the sourcing of Ford product to
these Newco facilities, alternative sourcing will be identified by Ford to
replace any shortfalls in sourcing based on existing investment and product
sourcing cycle plan commitments. However, where sourcing is impacted by market
driven changes. Ford will not be required to provide alternative sourcing.
These commitments reflect Ford management's intention in respect of the Newco
business units identified above and serve as an underpin to ensure their
viability. Where future alternative sourcing opportunities can be generated for
these business units, for example from Ford, other OEM's, or other suppliers,
such new work may be substituted for existing Ford work sourced to Newco where
it makes business sense to do so, provided the spirit and intent of this
Agreement is maintained and there is no detriment to the Newco business unit(s)
concerned.
Ford and Newco management commit that this agreement will transfer to any
successor company.
Newco will be included in future Ford market tests for parts within their
product range, and will be considered by Ford. Ford and Newco management and the
Ford Sourcing Council will adhere to agreed sourcing procedures and this
agreement.
FUTURE FORD RESTRUCTURING ACTIONS
This agreement on treatment of employees related to Newco separation from Ford
will not set a precedent for any future restructuring actions in Europe.
In the event that it is necessary, within a 5 year period from the date of this
agreement, to establish a joint venture or initiate a spin-off involving any of
the existing European Ford plants or other facilities the Company commits that
the existing Ford employees in the affected location (s) at the time of the
joint-venture or spin-off will work in the new business but will remain Ford
employees. Normal practices on mobility (transfers and loans) of labour will
continue to apply.
Existing employees at the time of the establishment of the new organization may
elect to voluntarily transfer their employment to the new organization at any
time.
Where both sides agree it is beneficial to make changes to the above
arrangements in a particular case, than changes will be made by mutual
agreement.
4
GENERAL
1. The parties to this agreement commit to implementing this agreement at
the national level.
A joint working group shall be set up with Ford management and the FEWC
Select Committee. This working group shall monitor the implementation of
this agreement and shall take a decision in the case of any dispute
regarding its interpretation.
2. After Legal Separation, Newco management shall be responsible for
adherence to this agreement vis-a-vis the corresponding Newco employee
representatives. In the case of disagreements between Newco management
and the corresponding employee representatives that arise from different
interpretations of this agreement, the procedure described under 1)
above may be applied.
3. Where Newco management and employee representatives agree it is
beneficial to make changes to the agreement, then changes will be made
by mutual consent and after prior concurrence by the working group.
Cologne, 25 January 2000
Signatures:
/s/ JR Walker /s/ RH Marcin
- ---------------------- -----------------
JR Walker RH Marcin
/s/ DW Thursfield
- ---------------------- -----------------
DW Thursfield NV Scheele
- ---------------------- -----------------
PJ Pestillo JA Nasser
FEWC Members: Visteon Employee
Representatives:
5
SCHEDULE 3.11
NON-US PENSION PLANS
GENERAL
In general, pensions in non-US locations will be dealt with in
accordance with the general principles for Ford Business Employees, but
recognizing the need to comply with local agreements and with local
law and regulation. Specific provisions which apply to the major
locations are set out below. In the event of conflict, local agreements
and local law take precedence.
1) BRITAIN
a) As soon as practicable, and in any event no later
than 6 months after Distribution Date, Visteon will
establish pension plans ("Mirror Plans") which have
the same provisions as existing in the Ford pension
plans and are capable of accepting a transfer of
Guaranteed Minimum Pensions and Protected Rights;
b) During a participation period which expires on the
earlier of (i) 6 months after the Distribution Date
or (ii) when the appropriate Mirror Plans were
established, Visteon Employees may remain
contributing members of the Ford pension plan and
will continue to accrue benefits;
c) Shortly before the Mirror Plans are established, both
Ford and Visteon shall, if legally necessary, seek
the consent of active Visteon Employees to a transfer
of the past service benefits from the Ford pension
plans to the Visteon Mirror Plans;
d) The obligations to be assumed by the Mirror Plans
comprise pension accrued under the applicable Ford
pension plan, and, in respect of service completed in
the future, corresponding benefits for future
service;
e) During the period after the Distribution Date if such
employees are accruing benefits in the Ford pension
plans, Visteon shall contribute to those plans such
contributions as Ford's Actuary advises as, together
with employee contributions, meets the cost of
accruing benefits (including death in service
benefits) and administration costs;
f) To the extent permitted by and in accordance with
applicable law, Ford shall cause to be transferred,
from each Ford pension plan, assets that shall equal
the present value of the past service obligations
(including the effect of assumed future pay
increases) assumed by the Mirror Plans, provided that
the present value so calculated shall not exceed the
share
CONFIDENTIAL
2
of plan assets applicable to the transferring group
("Transfer Value");
g) The date for valuing the past service obligation
referred to above ("Valuation Date") shall be the
Distribution Date or a convenient date within 30 days
thereof;
h) The method and assumptions to be used in calculating
the present value in f) above shall be those
recommended by Ford's Actuary for funding valuations
as at March 31, 2000 updated to reflect changes in
market conditions between March 31, 2000 and the
Valuation Date, unless both sides jointly agree to
other assumptions as being at least as fair and
equitable;
i) To recognize the period between the Valuation Date
and the physical date of asset transfer, the asset
transfer computed as at the Valuation Date shall be
increased by any contributions subsequently paid by
Visteon on behalf of transferring employees (except
that part relating to administration expenses and
relating to the cost of death in service benefits)
and paid by the employees themselves. The asset
transfer shall be reduced by any unpaid contributions
referred to in e) above. Interest shall be added on
the Transfer Value and to subsequent adjustments at
the rate equivalent to the Ford pension plan return
up to the start of the calendar month prior to the
final asset transfer, and at 30 Day UK Treasury Bill
rate on that date and published in the Financial
Times for the remaining period;
j) Visteon recognizes that Ford concluded recent union
agreements which included processes potentially
leading to pension plan mergers. Visteon shall
co-operate with Ford in determining how best to
integrate the establishment (including timing) of
Mirror Plans with the agreed Ford process concerning
the proposed pension plan mergers;
k) For the duration of their employment with Visteon,
terms and conditions of existing Ford employees who
transfer to Visteon will mirror Ford conditions
(including post retirement discretionary pension in
payment increases). Visteon will meet the cost of
such discretionary and other changes; and
l) In respect of new hires, Visteon will develop a plan
which shall take due regard to the independence of
Ford and Visteon.
2) GERMANY
a) It is recognized that Ford Business Employees in
Germany participate in three pension plans:
- Foveruka: A Support Fund whose assets
include deferred and
3
immediate annuity contracts with Alte
Leipziger insurance company. Foveruka covers
hourly employees, employees in SG 1-6 and,
with minor exceptions, employees promoted
from SG 6 in 1993 or later, and new hires
after that date;
- Exempt Statut Plan: An unfunded book reserve
plan covering employees in SG 7-11 on
December 31, 1992; and
- Management Statut Plan: An unfunded book
reserve covering employees in SG 12 and
above on December 31, 1992;
b) Ford Business Employees who transfer their employment
from Ford to Visteon and who, as of the Transfer
Date, participate in Foveruka will, with the approval
of its Management Board, continue participation in
Foveruka;
c) Ford Business Employees who transfer their employment
from Ford to Visteon and who, as of the Transfer
Date, participate in the Exempt Statut and Management
Statut Plans will continue to participate in the
applicable Exempt Statut or Management Statut Plan.
Visteon will assume the obligations with respect to
the Ford Business Employees who are transferred to
Visteon as of the Transfer Date under the applicable
Exempt Statut or Management Statut Plan. Visteon will
retain the benefit structure as in effect for the
Ford book reserve plans;
d) The obligations that Visteon assumes in respect of
the Exempt Statut and Management Statut Plans relate
to past service and, to the extent that employees
remain in service, future service;
e) There will be no asset transfer from Ford to Visteon
in respect of the transfer of these book reserve plan
obligations to Visteon;
f) In respect of new hires, Visteon will develop a plan
which shall take due regard to the independence of
Ford and Visteon;
g) Visteon will make application to the Foveruka to
continue participation for both past service and
future service of present plan participants. Ford
will assist in the application process and does not
envision any restriction to participation by Visteon.
Ford will support continued participation by Visteon
in the Foveruka and will also support continued
administration by the Foveruka of the Exempt Statut
and Management Statut Pension Plans.
h) Visteon will meet all costs in respect of their
Foveruka and book reserve obligations as described
above including the cost of any post-retirement
increase to be granted in the future, and potential
cost for administration of Visteon's participants in
Foveruka, and Foveruka's administration of the
4
Exempt Statut Plan and Management Statut Plan with
respect to Visteon participants
3) FLOW BACKS WITHIN 5 YEARS (BRITAIN AND GERMANY)
a) In accordance with the provisions of the European
Works Council agreement, Ford and Visteon jointly
agree that:
i) Visteon Employees who had been Ford Business
Employees who return to Ford without a break
in Visteon service within 5 years of the
Distribution Date shall be reinstated in the
appropriate Ford pension plan;
ii) They shall be credited with pensionable
service equal to the aggregate of their
service with Ford and with Visteon; and
iii) Such credited service shall be conditional
on
- Where legally required, the
employee giving his/her consent to
the appropriate transfer of pension
plan assets and obligations
- Ford receiving the corresponding
transfer of assets as described
below.
b) The assets to be transferred from Visteon to Ford
shall comprise in respect of each individual:
i) Britain (Fund to Fund)
- The pension plan asset relating to
pre-Distribution Date service first
transferred to Visteon's mirror
plans, increased with interest at
the rate described in 1i) of this
Schedule
- The actuarial equivalent of the
pension accrued in the mirror plan
for service after the Distribution
Date as determined by Visteon's
Actuary but based on assumptions
acceptable to Ford as being
reasonably consistent with 1h);
ii) Germany - Foveruka
- In respect of pre-Distribution Date
service, no compensation is
required in excess of the Alte
Leipziger asset
- In respect of post-Distribution
Date service, a cash amount shall
be paid from Visteon to Ford equal
to excess of the liabilities
assumed by Ford (computed on a US
GAAP ie SFAS 87 basis) over the
Foveruka assets; and
iii) Germany - Book Reserve
- In respect of both pre-and post
Distribution Date service, a cash
amount from Visteon to Ford equal
to the liabilities to be assumed by
Ford calculated on a US GAAP ie
SFAS 87 basis.
5
4) BRAZIL
a) It is recognized that Ford Business Employees in
Brazil participate in a single funded pension plan
covering Ford employees and Ford Business Employees;
b) Until an employee retires, the pension plan operates
on a defined contribution basis;
c) Both Ford and Visteon agree to contribute to the
individual accounts of their own employees so there
is no subsidy from Ford to Visteon, or Visteon to
Ford;
d) It is recognized that whereas Ford employees'
accounts are fully funded, there was a shortfall in
the Ford Business Employees' accounts in respect of
pre-1995 contribution credits, of R$12,495,000 as at
December 31, 1999. Visteon agrees that it will meet
the cost of this shortfall before the affected
individuals retire but no later than fifteen years
from the Distribution Date;
e) As soon as practicable, and in any event no later
than 9 months after Distribution Date unless the
Parties agree otherwise, Visteon will establish a
plan which is acceptable to Ford. These proposals
shall be reviewed with the local Ford company and,
before implementation reviewed by HR and Treasury
staff of Ford Motor Company (US). Visteon recognizes
that any plan would be designed so that Ford assumes
no obligations nor any costs in respect of Visteon
participants.
f) In the event of Visteon establishing its own pension
plan, the assets to be transferred to that plan shall
comprise:
i) For active employees, an amount equal to
their account balances to the extent that
these are funded;
ii) For retirees, the actuarial value based on
assumptions acceptable to Ford, of the
pensions being transferred; and
g) While participating in the pension plan, Visteon
agrees to meet its share of the plan's administration
costs.
5) OTHER LOCATIONS (MEXICO, JAPAN, AND FRANCE)
a) As soon as practicable, and in any event no later
than 6 months after Distribution Date, Visteon will
prepare proposals for handling the pension
arrangements of Ford Business Employees who
participate in a Ford pension plan.
6
b) These proposals shall be reviewed with the local Ford
company and, before implementation reviewed by HR and
Treasury staff of Ford Motor Company (US).
c) Visteon recognizes that any plan would be designed so
that Ford assumed no obligations nor any costs in
respect of Visteon participants.
d) Any transfer of assets out of a Ford pension plan
would be limited to the actuarial value of past
service liabilities similarly transferred, where such
liabilities are computed using assumptions consistent
with US GAAP.
6) INCENTIVISED EARLY RETIREMENT PROGRAMS (ALL LOCATIONS)
a) Visteon will meet the cost of such programs in
respect of their employees whether these programs
occur before or after Distribution Date; and
b) The pension expense in these programs will be
computed as the increase in projected benefit
obligation in accordance with the provisions of SFAS
88.
ATTACHMENT A
FORD SALARIED UNIONS APPLICABLE TO FORD BUSINESS EMPLOYEES - UNITED STATES
1. Collective Bargaining Agreement between Ford Motor Company and the UAW
Salaried Bargaining Units dated September 15, 1999
2. Collective Bargaining Agreement between Ford Motor Company and Plant
Protection Association, National (effective January 29, 1999 - April
30, 2001)