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EXHIBIT 10.8
TAX SHARING AGREEMENT
between
FORD MOTOR COMPANY,
on behalf of itself
and the FORD AFFILIATES
and
VISTEON CORPORATION
on behalf of itself
and the VISTEON AFFILIATES
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TABLE OF CONTENTS
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1. Definitions............................................................................2
2. Administrative and Compliance Matters..................................................6
(a) Designation of Agent..........................................................6
(b) Pre-Distribution Tax Period Ford Consolidated Returns.........................7
(c) Allocation....................................................................7
(d) Other Visteon Returns.........................................................7
(e) Post-Distribution Conduct of Visteon..........................................7
(f) Deductions and Certain Taxes Related to Options...............................7
(g) Employee Assignment Agreement.................................................8
3. Tax Sharing............................................................................8
(a) General.......................................................................8
(b) Estimated Payments............................................................8
(c) Payment of Taxes at Year-End..................................................8
(d) Tax Adjustments...............................................................9
(e) Allocation of Tax Assets.....................................................10
(f) R&E Credit Base Period.......................................................10
(g) Visteon Carrybacks...........................................................10
(h) Use of Visteon Tax Assets....................................................10
(i) Restructuring Taxes..........................................................11
4. Certain Representations and Covenants.................................................11
(a) Representations..............................................................11
(i) Visteon Representations.............................................11
(ii) Ford Representations................................................11
(iii) Visteon and Ford Representations....................................11
(iv) Visteon and Ford Covenants..........................................11
(b) Visteon Covenants............................................................12
(c) Exceptions...................................................................13
(d) Supplemental Rulings.........................................................13
5. Indemnities...........................................................................14
(a) Visteon Indemnity............................................................14
(b) Ford Indemnity...............................................................15
(c) Discharge of Indemnity.......................................................16
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6. Subsidiaries..........................................................................16
(a) Performance..................................................................16
(b) Application to Present and Future Subsidiaries...............................16
(c) Disposition of a Ford Affiliate..............................................17
7. Communication and Cooperation.........................................................17
(a) Consult and Cooperate........................................................17
(b) Provision of Tax Return Information..........................................18
(c) Failure to Cooperate.........................................................19
(d) Provision of Information Relating to Material
Developments..........................................................................19
8. Tax Proceedings.......................................................................19
(a) In General...................................................................19
(b) Notice.......................................................................20
(c) Participation Rights.........................................................20
9. Payments..............................................................................21
(a) Procedure for Making Payments................................................21
(b) Setoff.......................................................................21
(c) Interest on Late Payments....................................................21
(d) Character of Payments........................................................21
10. Dispute Resolution....................................................................21
(a) Scope of Section.............................................................21
(b) Initial Notice of Disagreement...............................................22
(c) Negotiation..................................................................22
(d) Final Notice of Disagreement.................................................22
(e) Selection of Independent Third Party.........................................23
(f) Determination by Independent Third Party.....................................23
(g) Costs and Expenses Associated with Independent Third
Party.................................................................................24
11. Notices...............................................................................24
12. Costs and Expenses....................................................................25
(a) Additional Services..........................................................25
(b) Other........................................................................25
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13. Termination and Survival..............................................................25
14. Section Headings......................................................................25
15. Entire Agreement; Amendments and Waivers; Severability................................25
(a) Entire Agreement; Amendments.................................................25
(b) Waivers......................................................................26
(c) Severability.................................................................26
16. Governing Law and Interpretation......................................................26
17. Counterparts..........................................................................26
18. Assignments; Third Party Beneficiaries................................................26
19. Further Assurances....................................................................26
20. Authorization, etc....................................................................27
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TAX SHARING AGREEMENT
This Agreement is entered into as of the 1st day of June, 2000 between
Ford Motor Company ("Ford"), a Delaware corporation, on behalf of itself and the
Ford Affiliates, and Visteon Corporation ("Visteon"), a Delaware corporation, on
behalf of itself and the Visteon Affiliates.
W I T N E S S E T H:
WHEREAS, pursuant to the tax laws of various jurisdictions, certain Visteon
Affiliates as defined below, presently file certain tax returns on an
affiliated, consolidated, combined, unitary, fiscal unit or other group basis
(including as permitted by Section 1501 of the Internal Revenue Code of 1986, as
amended (the "Code")) with certain Ford Affiliates, as defined below;
WHEREAS, Ford both directly and indirectly through its subsidiaries
conducts the automaking business and the automotive supply business;
WHEREAS, Ford has concluded that the separation of its automotive supply
business from its automaking business would (i) alleviate competitive barriers
to expanding Visteon's automotive supply business beyond sales to the Ford
Affiliates, (ii) allow Ford to overcome competitive barriers to making purchases
from third-party automotive suppliers, and (iii) enhance Visteon's ability to
attract employees and permit Visteon to offer employee incentives more directly
tied to the performance of its business;
WHEREAS, to effectuate the separation of these two businesses, Ford
considers it appropriate to restructure its assets and liabilities both within
and outside the United States (the "RESTRUCTURING") so as to separate Ford's
automotive supply business from its automaking business, which Restructuring
will include (i) the transfer (the "CONTRIBUTION") of the assets (including
stock of subsidiaries) used in connection with the automotive supply business to
Visteon, and (ii) a distribution (the "DISTRIBUTION") (A) to the holders of
Ford's common stock, par value $1.00 per share (other than the Ford Motor
Company Savings and Stock Investment Plan for Salaried Employees and the Ford
Motor Company Tax-Efficient Savings Plan for Hourly Employees (collectively,
the "PLANS")) and the holders of Ford's Class B stock, par value $1.00 per share
of all shares of the common stock of Visteon held by Ford immediately prior to
the Distribution and (B) to the Plans cash in lieu of shares of common stock of
Visteon, on the basis of an amount of cash per share of common stock of Ford
held by the Plans equal to the fair market value of the number of shares of
common stock of Visteon to be distributed with respect to each share of common
stock or Class B stock of Ford
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in the Distribution, with the cash to be used to make such distribution being
all or a portion of the cash previously received from Visteon as a dividend;
WHEREAS, Ford and Visteon intend that the Contribution and the Distribution
qualify as free of Federal Tax to Ford and those of its stockholders who will
receive common stock of Visteon under Sections 368(a) and 355 of the Code; and
WHEREAS, the parties wish to (i) provide for the payment of tax liabilities
and entitlement to refunds thereof, allocate responsibility for, and cooperation
in, the filing of tax returns and provide for certain other matters relating to
taxes and (ii) set forth certain covenants and indemnities relating to the
preservation of the tax-free status of the Contribution and the Distribution;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:
1. DEFINITIONS.
As used in this Agreement:
"AAA" shall have the meaning ascribed to such term in Section 10(e) of this
Agreement.
"AFTER-TAX AMOUNT" means an additional amount necessary to reflect the
hypothetical Tax consequences of the receipt or accrual of any payment, using
the maximum statutory rate (or rates, in the case of an item that affects more
than one Tax) applicable to the recipient of such payment for the relevant tax
periods, and reflecting for example, the effect of the deductions available for
interest paid or accrued and for Taxes such as state and local income Taxes.
"ASSIGNED EMPLOYEES" means "Ford Employees," as such term is defined in the
letter agreement between Ford and the International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America dated October 9, 1999.
"COMBINED STATE TAX" means, with respect to each United States state or
local taxing jurisdiction, any income, franchise or similar Tax payable to such
state or local taxing jurisdiction in which a Visteon Affiliate files Returns
with a Ford Affiliate, on a consolidated, combined or unitary basis for purposes
of such Tax.
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"DETERMINATION" shall have the meaning ascribed to such term in Section
10(f).
"DISPUTED ITEM" shall have the meaning ascribed to such term in Section
10(b)(i).
"DISTRIBUTION DATE" means the date on which the Distribution is effected.
"EMPLOYEE ASSIGNMENT AGREEMENT" shall have the meaning ascribed to such
term in Section 2(g).
"EXPENSES" shall have the meaning ascribed to such term in Section 12(b).
"FEDERAL TAX" means any Tax imposed under the Code, including any interest,
penalty or other additions to Tax imposed under Subtitle F of the Code.
"FINAL DETERMINATION" means (i) with respect to Federal Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of an
Internal Revenue Service Form 870AD and, with respect to Taxes other than
Federal Taxes, any final determination of liability in respect of a Tax that,
under applicable law, is not subject to further appeal, review or modification
through proceedings or otherwise, (ii) the expiration of a statute of
limitations or (iii) the payment of or liability for Tax or any other amount
where Ford determines that no action should be taken to recoup such payment or
contest such liability.
"FINAL NOTICE OF DISAGREEMENT" shall have the meaning ascribed to such term
in Section 10(d)(i).
"FORD AFFILIATE" means Ford and any corporation or other entity directly or
indirectly controlled by Ford, but excluding any Visteon Affiliate.
"FORD CONSOLIDATED GROUP" means, at any time, Ford and each corporation or
other entity that joins with Ford, with respect to Federal Taxes, in the filing
of a consolidated Federal Tax Return and with respect to Combined State Taxes,
in the filing of a Combined State Tax Return.
"FORD INSTALLMENT PAYMENT" means (i) any estimated Federal Tax installment
that Ford is required to pay or (ii) any payment required to be made on the due
date, without extensions, of a Return that Ford is required to file under the
Code, or in either case, any corresponding provision of state or local law.
"FOREIGN TAX" means any Tax imposed by a Taxing Authority of a jurisdiction
outside the United States.
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"INDEPENDENT THIRD PARTY" means a nationally recognized tax attorney that
is a member of a nationally recognized law firm which firm is independent of
both parties.
"INITIAL NOTICE OF DISAGREEMENT" shall have the meaning ascribed to such
term in Section 10(b)(ii).
"IRS" means the Internal Revenue Service.
"POST-DISTRIBUTION TAX PERIOD" means (i) any tax period beginning and
ending after the Distribution Date and (ii) with respect to a tax period that
begins on or before and ends after the Distribution Date, such portion of the
tax period that commences on the day immediately after the Distribution Date.
"PRE-DISTRIBUTION TAX PERIOD" means (i) any tax period beginning and ending
before or on the Distribution Date and (ii) with respect to a period that begins
on or before and ends after the Distribution Date, such portion of the tax
period ending on and including the Distribution Date.
"PRIVILEGE" means any privilege or similar evidentiary rule that may be
asserted under applicable law including any privilege arising under or relating
to the attorney-client relationship (including the attorney-client and work
product privileges) and any accountant-client privilege.
"PRO FORMA COMBINED STATE RETURN" shall have the meaning ascribed to such
term in Section 3(c)(i).
"PRO FORMA FEDERAL RETURN" shall have the meaning ascribed to such term in
Section 3(c)(i).
"PRO FORMA RETURNS" shall have the meaning ascribed to such term in Section
3(c)(i).
"RECIPIENT" shall have the meaning ascribed to such term in Section
10(b)(i).
"REMITTING PARTY" shall have the meaning ascribed to such term in Section
10(b)(ii).
"RESTRUCTURING TAX" shall mean any Tax imposed in connection with the
Restructuring on a Ford Affiliate or a Visteon Affiliate that would not have
been imposed had the Restructuring not occurred.
"RETURN" means any tax return, statement, report or form (including
estimated tax returns and reports, extension requests and forms, information
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returns and reports, amended returns and requests for refunds) required to be
filed with any Tax Authority.
"RULING DOCUMENTS" means (a) any request for a ruling filed with any Tax
Authority together with any supplemental filings or ruling requests or other
materials subsequently submitted on behalf of Ford, its subsidiaries and/or its
shareholders to such Tax Authority, the appendices and exhibits thereto, and any
rulings issued by a Tax Authority to any Ford Affiliate or Visteon Affiliate, in
connection with the Restructuring or (b) any materials submitted to any outside
counsel in connection with obtaining an opinion relating to the Tax status of
the Restructuring.
"SUPPLEMENTAL RULING" means any ruling issued after the Distribution Date
(a) by the IRS in connection with the Restructuring or (b) by any other Tax
Authority, addressing the application of a provision of the laws of another
jurisdiction to any transaction undertaken in connection with the Restructuring.
"SUPPLEMENTAL RULING DOCUMENTS" shall have the meaning ascribed to such
term in Section 4(d)(i).
"TAX" means any net income, gross income, gross receipts, alternative or
add-on minimum, sales, use, business and occupation, value-added, trade, goods
and services, ad valorem, franchise, profits, license, business royalty,
withholding, payroll, employment, capital, excise, transfer, recording,
severance, stamp, occupation, premium, property, asset, real estate acquisition,
environmental, custom duty, or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest and any
penalty, addition to tax or additional amount imposed by a Tax Authority.
"TAX ASSET" means any Tax Item that may have the effect of reducing any
Tax, including, without limitation, any net operating loss, net capital loss,
investment tax credit, foreign tax credit, or charitable deduction or any
deductions and credits related to alternative minimum taxes.
"TAX AUTHORITY" means any governmental authority or any subdivision,
agency, commission or authority thereof or any quasi-governmental or private
body having jurisdiction pursuant to applicable law over the assessment,
determination, collection or imposition of any Tax (including the IRS).
"TAX ITEM" means any item of income, gain, loss, deduction or credit, or
other attribute that may have the effect of increasing or decreasing any Tax.
"TAX PROCEEDING" means any tax audit, dispute or proceeding (whether
administrative or judicial), including a refund claim or any proceeding arising
therefrom.
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"VISTEON ACQUISITION TAX" means any Tax imposed by reason of the
application of Section 355(d) or (e) of the Code or any similar state or local
Tax that would not have been imposed had the Distribution not occurred other
than such a tax resulting from an acquisition by one or more persons of a "fifty
percent or greater interest" (within the meaning of Section 355(d)(4) of the
Code) in Ford.
"VISTEON AFFILIATE" means Visteon and any corporation or other entity
directly or indirectly controlled by Visteon before, on or after the
Distribution Date.
"VISTEON COMBINED STATE TAX LIABILITY" means, with respect to any tax
period beginning on or after January 1, 2000 and any jurisdiction, an amount of
Combined State Taxes determined in accordance with the principles set forth in
the definition of Visteon Federal Tax Liability.
"VISTEON FEDERAL TAX LIABILITY" means, with respect to any tax period
beginning on or after January 1, 2000, the Federal Tax liability for such
period, computed in accordance with the positions, elections, accounting
methods, conventions, and computational methodology used by Ford in preparing
the Ford Consolidated Group's Return for such period, but taking into account
only the Tax Items of Visteon Affiliates which are included in such Return for
such tax period. Such computation shall be made (i) as though the highest rate
of tax specified in Section 11(b) of the Code (or any other similar rates
applicable to specific types of income) were the only rate set forth in that
subsection, (ii) by taking into account any Tax that would be imposed on the
Visteon Affiliates pursuant to Section 55 of the Code to the extent the Ford
Consolidated Group is subject to such Tax, (iii) by not permitting the Visteon
Affiliates any compensation deductions arising in respect of any options on Ford
stock, or any Ford restricted stock and (iv) excluding 8/23 of any deductions
for commissions paid to Ford Export Services B.V. with respect to export sales
by any Visteon Affiliate.
"VISTEON TAX LIABILITY" means, with respect to any tax period, the sum of
the Visteon Combined State Tax Liability for each jurisdiction and the Visteon
Federal Tax Liability.
2. ADMINISTRATIVE AND COMPLIANCE MATTERS.
(a) Designation of Agent. Each Visteon Affiliate hereby irrevocably
authorizes and designates Ford, as its agent, coordinator, and administrator,
for the purpose of taking any and all actions (including the execution of
waivers of applicable statutes of limitation) necessary or incidental to the
filing of any Return or any other Tax proceedings, and for the purpose of making
payments to, or
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collecting refunds from, any Tax Authority, in each case relating only to
Returns described in Section 2(b).
(b) Pre-Distribution Tax Period Ford Consolidated Returns. Ford will
prepare, with the assistance of the Visteon Affiliates, the consolidated Federal
Tax Returns and Combined State Tax Returns of the Ford Consolidated Group for
all Pre-Distribution Tax Periods. Except as provided in the next sentence with
respect to such Returns, Ford shall determine (i) the manner in which any Tax
Item shall be reported, (ii) whether any extensions should be requested, and
(iii) the elections that will be made by any Ford Affiliate. Subject to Ford's
approval, Visteon may decide (i) the manner in which any Visteon Tax Item of any
Visteon Affiliate shall be reported, and (ii) the elections that will be made by
any Visteon Affiliate. Ford shall have the exclusive right to (i) file,
prosecute, compromise or settle any claim for refund, and (ii) determine whether
any refunds to which the Ford Consolidated Group may be entitled shall be
received by way of refund or credit against the Tax liability of the Ford
Consolidated Group.
(c) Allocation. Ford may, at its option, elect and the Visteon Affiliates
shall, if necessary for a valid election, join Ford in electing to ratably
allocate Tax Items of the Visteon Affiliates in accordance with relevant
provisions of the Treasury Regulations Section 1.1502-76. If Ford exercises its
option to make the election, each Visteon Affiliate will provide a statement
stating its consent to such election as required under the regulations.
(d) Other Visteon Returns. Visteon shall be solely responsible for the
preparation and filing of all other Returns of the Visteon Affiliates other than
Returns described in Section 2(b). Visteon shall be responsible for paying to
the applicable Tax Authorities all Taxes shown as due from Visteon or any
Visteon Affiliates on such Returns.
(e) Post-Distribution Conduct of Visteon. On or after the Distribution
Date, Visteon will not, nor will it permit any Visteon Affiliate to, make or
change any accounting method, change its taxable year, amend any Return or take
any Tax position on any Return, take any other action, omit to take any action
or enter into any transaction that may reasonably be expected to result in and
does result in any increased Tax liability or reduction of any Tax Asset of the
Ford Consolidated Group or any Ford Affiliate.
(f) Deductions and Certain Taxes Related to Options. Ford shall file
Returns claiming (i) the Tax deductions attributable to options to purchase
stock of Ford or other Ford long-term incentive compensation held by employees
and former employees of any Visteon Affiliate, (ii) any deductions for current
or deferred compensation incurred or paid by Ford, and (iii) any other similar
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compensation related Tax deductions. The Returns of the Ford Affiliates and the
Visteon Affiliates shall reflect the entitlement of Ford to such deductions.
Ford shall prepare and file all applicable Returns and pay the related Tax
liability under the Federal Insurance Contributions Act, the Federal
Unemployment Tax Act or any state employment tax law.
(g) Employee Assignment Agreement. Ford shall file Returns which reflect
Ford's receipt of payments under the Hourly Employee Assignment Agreement
between Ford and Visteon dated as of April 1, 2000 (the "EMPLOYEE ASSIGNMENT
AGREEMENT") as income to Ford and payments made by Ford to the Assigned
Employees as a compensation or other expense of Ford. The Visteon Affiliates
shall file Returns which treat payments made to Ford under the Employee
Assignment Agreement in a manner consistent with the preceding sentence.
3. TAX SHARING.
(a) General. For each tax period of the Ford Consolidated Group beginning
on or after January 1, 2000 during which any Tax Item of any Visteon Affiliate
is includible in the consolidated Federal Tax Return of the Ford Consolidated
Group, Visteon shall pay to Ford an amount equal to the Visteon Federal Tax
Liability, and for each tax period beginning on or after January 1, 2000 during
which any Tax Item of any Visteon Affiliate is includible in a Return relating
to a Combined State Tax, Visteon shall pay Ford an amount equal to the Visteon
Combined State Tax Liability for such tax period, each as shown on the Pro Forma
Returns.
(b) Estimated Payments. Ford shall determine the amount of the
corresponding Visteon Federal Tax Liability, or the Visteon Combined State Tax
Liability, as the case may be, in connection with any Ford Installment Payment
made with respect to any Pre-Distribution Tax Period. Ford shall provide Visteon
with notice of such determination no later than 10 days before the date that the
applicable payment by Ford is due. Visteon shall, no later than 1 day prior to
the due date of Ford's payment, pay to Ford the amount so determined.
(c) Payment of Taxes at Year-End.
(i) Not later than 30 days after the due date (including all
extensions) for the Ford Consolidated Group's Federal Tax Return, Ford
shall deliver to Visteon a pro forma Federal Tax Return (a "PRO FORMA
FEDERAL RETURN") reflecting the Visteon Federal Tax Liability. Not later
than 30 days after the due date (including all extensions) for each
Combined State Tax Return, Ford shall deliver to Visteon the relevant pro
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forma Combined State Tax Return (each a "PRO FORMA COMBINED STATE RETURN"
and together with the Pro Forma Federal Return, the "PRO FORMA RETURNS")
reflecting the relevant Visteon Combined State Tax Liability. The Pro Forma
Returns shall be prepared in good faith in a manner generally consistent
with past practice. Each Pro Forma Return shall be delivered together with
a statement showing a calculation of the amount to be paid pursuant to
Section 3(c)(ii).
(ii) Not later than 10 days after the receipt of each Pro Forma
Return, Visteon shall pay to Ford, or Ford shall pay to Visteon, as
appropriate, an amount equal to the difference, if any, between (A) the
Visteon Federal Tax Liability, if any, or (B) the Visteon Combined State
Tax Liability, if any, as the case may be, reflected on such Pro Forma
Return for such period and the aggregate of any payments made by Visteon
pursuant to Section 3(b) in respect of such period.
(d) Tax Adjustments.
(i) Except as otherwise provided in this Agreement, Ford shall be
liable for any Tax increase, and shall be entitled to any refund or other
benefit, that results from any Tax Proceeding relating to any Tax Return of
the Ford Consolidated Group. Except as otherwise provided in this
Agreement, Visteon shall be liable for any Tax increase, and shall be
entitled to any Tax refund or other benefit, that results from any Tax
Proceeding relating to any Tax Return of any Visteon Affiliate other than a
Tax Return of the Ford Consolidated Group or a Ford Affiliate.
(ii) If any Tax Proceeding described in Section 3(d)(i) (other than an
adjustment described in Section 3(d)(iv)) results in (A) an increase or
decrease in a Tax Item of either a Ford Affiliate or a Visteon Affiliate,
for a particular tax period, and (B) a corresponding increase or decrease
in a Tax Item of the other party for a different period (other than by way
of Tax carrybacks or carryovers), the party incurring a Tax benefit shall
pay to the party incurring a Tax detriment the lesser of the amount of such
benefit and the amount of such detriment. The amount of any payments made
pursuant to this Section 3(d) shall be determined by employing the highest
rate of Tax specified in Section 11(b) of the Code or the corresponding
provision of any applicable state or local Tax. The amount of any Tax
benefit or detriment shall be determined taking into account interest
received from or paid to the relevant Tax Authority. Payments required
under this Section 3(d)(ii) shall be made at the later of (A) such time or
times that the Tax benefits is realized as a refund, a reduction of Tax
shown on a Return, or a result of a Tax Authority offsetting the amount
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due and (B) such time or times that the Tax detriment is realized as an
additional assessed amount or as an increase of Tax shown on a Return. The
party incurring the Tax detriment shall have the right to review the Tax
benefit utilization by the other party.
(iii) In the event that as a result of a Final Determination or
otherwise, Ford is liable for a Tax relating to the Assigned Employees for
which it is not compensated by Visteon under the Employee Assignment
Agreement, Visteon shall pay Ford an amount equal to such Tax, excluding
any portion of such Tax that relates to penalties.
(iv) In the event that there is a Final Determination that results in
a disallowance of a deduction taken by a Ford Affiliate pursuant to Section
2(f), Visteon shall pay to Ford an amount equal to such disallowance
determined by employing the highest rate of Tax specified in Section 11(b)
of the Code or the corresponding provision of any applicable state or local
law.
(e) Allocation of Tax Assets.
(i) Except as set forth in Section 3(e)(ii), and except to the extent
applicable law or regulations expressly so require, no Tax Assets will be
allocated to a Visteon or any Visteon Affiliate for use in Post-
Distribution Tax Periods. Ford will allocate to a Visteon Affiliate only
that portion, if any, of particular Tax Assets for use in Post-Distribution
Tax Periods as applicable law or regulations expressly require to be so
allocated.
(ii) Ford shall allocate to Visteon a portion of the credit arising as
a result of a payment by Ford under Section 55 of the Code.
(f) R&E Credit Base Period. Ford will make the allocations to Visteon
required under Section 41(f)(3) of the Code. Visteon agrees that it shall not
deviate from the amount of qualified research expenditures allocated to it by
Ford.
(g) Visteon Carrybacks. Whenever permitted to do so by applicable law,
Visteon shall elect to relinquish any carryback period which would include any
Pre-Distribution Tax Period.
(h) Use of Visteon Tax Assets. Ford shall have no obligation to indemnify
Visteon for the use by any Ford Affiliate of any Tax Asset of any Visteon
Affiliate.
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(i) Restructuring Taxes. Notwithstanding any other provision of this
Agreement or of any other agreement between a Ford Affiliate and a Visteon
Affiliate, Visteon shall bear the burden of any Visteon Acquisition Tax. In
addition, Visteon shall bear the burden of: (A) any transfer (including sales
and use, real estate transfer and property taxes), stamp, recording or similar
Tax imposed in connection with the Restructuring on a Ford Affiliate or a
Visteon Affiliate, including any Foreign Taxes that are not "income, war
profits, and excess profits taxes" within the meaning of Part II of Subchapter A
of Chapter 1 of the Code; (B) any Restructuring Taxes that relate to Visteon
Global Technologies, Inc.; (C) any Brasilian Tax imposed on a Visteon Affiliate
in connection with the acquisition of the Visteon business from Ford Brasil
Ltda; and (D) any Restructuring Tax for which a Visteon Affiliate otherwise has
an obligation to indemnify Ford under a provision of this Agreement other than
this Section 3(i). Ford shall bear the burden of all other Restructuring Taxes.
4. CERTAIN REPRESENTATIONS AND COVENANTS.
(a) Representations.
(i) Visteon Representations. Each Visteon Affiliate represents that
the information and representations furnished in any Ruling Document (as
modified, qualified or elaborated in any subsequent Ruling Documents) are
accurate and complete as of the date hereof, to the extent that such
information and representations relate to a Visteon Affiliate or the
business or activities of such entity.
(ii) Ford Representations. Each Ford Affiliate represents that, as of
the date hereof, there is no plan or intention to take any action
inconsistent with the information and representations furnished in any
Ruling Document (as modified, qualified or elaborated in any subsequent
Ruling Documents).
(iii) Visteon and Ford Representations. Each Visteon Affiliate and
each Ford Affiliate, respectively, represents that, as of the date hereof,
it is not aware of any plan or intention by the current shareholders of
Ford to sell, exchange, transfer by gift, or otherwise dispose of any of
their stock in, or securities of, Ford or Visteon subsequent to the
Distribution, except as described in any Ruling Document (as modified,
qualified or elaborated in any subsequent Ruling Documents).
(iv) Visteon and Ford Covenants. Each Visteon Affiliate and each Ford
Affiliate, respectively, covenants (A) to use its best efforts to verify
that the foregoing representations made by it in this Section 4(a) are
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accurate and complete as of the Distribution Date and (B) if, after the
date hereof, it obtains information indicating, or otherwise becomes aware,
that any such representations are or may be inaccurate or incomplete,
promptly to inform Ford or Visteon, as the case may be.
(b) Visteon Covenants. Visteon covenants to Ford that:
(i) No Visteon Affiliate will take any action or fail to take any
action, which action or failure to act would cause the Contribution and
Distribution to fail to qualify under Sections 351(a), 355(a) and
368(a)(1)(D) of the Code or any corresponding provision of state or local
law. Without limiting the foregoing, the Visteon Affiliates covenant to
Ford that:
(A) During the two-year period following the Distribution Date,
Visteon will not liquidate, merge or consolidate with any other
person.
(B) During the two-year period following the Distribution Date,
the Visteon Affiliates will not sell, exchange, distribute or
otherwise dispose of assets with an aggregate gross fair market value
of greater than $500 million except in the ordinary course of
business.
(C) Following the Distribution, Visteon will, for a minimum of
two years, continue the active conduct of the historic business as
transferred to it in the Contribution.
(D) No Visteon Affiliate will take any action inconsistent with
the information and representations in the Ruling Documents.
(E) No Visteon Affiliate will repurchase stock of Visteon in a
manner contrary to the requirements of Revenue Procedure 96-30 or in
a manner contrary to the representations made in Ruling Documents.
(F) No Visteon Affiliate will enter into any negotiations,
agreements or arrangements with respect to any of the foregoing.
(ii) No Visteon Affiliate will take or omit to take any action that
results in any Restructuring Tax being imposed on any Ford Affiliate in
excess of the amount of such Restructuring Tax for which Ford or such Ford
Affiliate would be liable under applicable law, based on:
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(A) any specific agreements between a Ford Affiliate and a
Visteon Affiliate as to the manner in which the Restructuring and any
other relevant transactions are to be treated for tax purposes, and
(B) to the extent not contrary to the agreements described in
Section 4(b)(ii)(A), the form of the Restructuring and any other
relevant transactions as set forth in agreements between the Ford
Affiliates and the Visteon Affiliates.
(iii) Within the two-year period following the Distribution, Visteon
will not take any action (including stock issuances, whether pursuant to
the exercise of options (or similar interests) or otherwise, option grants,
capital contributions, or redemptions) or omit to take any action which
may, either alone or in combination with actions or omissions by Visteon or
any other party, result in the imposition of any Visteon Acquisition Tax.
(c) Exceptions. (i) The Visteon Affiliates may take actions inconsistent
with the covenants contained in Section 4(b), if:
(A) Visteon obtains an opinion of counsel, which counsel and
which opinion are acceptable to Ford in its sole discretion, to the
effect that such actions will not result in the imposition of any
additional Restructuring Tax on a Ford Affiliate and will not affect
the status of the Distribution as tax-free to Ford and its
shareholders, it being understood that Ford agrees to cooperate with
Visteon and use its reasonable best efforts to assist Visteon in
Visteon's attempting to obtain, as expeditiously as possible, any
opinion described in this Section 4(c)(i)(A); or
(B) Ford obtains a Supplemental Ruling in accordance with Section
4(d).
(d) Supplemental Rulings.
(i) Ford agrees that at the reasonable request of Visteon, Ford shall
cooperate with Visteon and use its reasonable best efforts to seek to
obtain, as expeditiously as possible, a Supplemental Ruling or other
guidance from a Tax Authority for the purpose of confirming (A) the
continuing validity of any ruling (including another Supplemental Ruling)
previously issued by the IRS or any other Tax Authority, or (B)
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compliance on the part of a Visteon Affiliate with its obligations under
this Section 4. However, Ford shall not be obligated to seek a Supplemental
Ruling unless it reasonably believes that the relevant Tax Authority would
issue such a ruling. Further, in no event shall Ford file a request for a
Supplemental Ruling unless Visteon represents that (A) it has read the
request for the Supplemental Ruling and any materials, appendices and
exhibits submitted or filed therewith ("SUPPLEMENTAL RULING DOCUMENTS") and
(B) all information (other than information provided by an external expert)
and representations, if any, relating to any Visteon Affiliate contained in
the Supplemental Ruling Documents are true, correct and complete in all
material respects. Visteon shall reimburse Ford for all reasonable costs
and expenses incurred by Ford in obtaining a Supplemental Ruling requested
by Visteon. Visteon hereby agrees that Ford shall have sole and exclusive
control over the process of obtaining a Supplemental Ruling, and that only
Ford shall apply for a Supplemental Ruling. Visteon further agrees that it
shall not seek any guidance from the IRS or any other Tax Authority
concerning the Restructuring except as set forth in this Section 4(d).
(ii) If Ford determines to obtain a Supplemental Ruling or other
guidance after the date of this Agreement: (A) Ford shall keep Visteon
informed in a timely manner of all material actions taken or proposed to be
taken in connection therewith; (B) Ford shall (1) reasonably in advance of
the submission of any such Supplemental Ruling Documents, provide Visteon
with a draft copy hereof, (2) reasonably consider Visteon's comments on
such draft copy, and (3) provide Visteon with a final copy of the
Supplemental Ruling Documents (in each case, omitting only information
concerning Class B stockholders of Ford as Ford shall reasonably
determine); and (C) Ford shall provide Visteon with notice reasonably in
advance of, and Visteon shall have the right to attend, any formally
scheduled meetings with the Tax Authority (subject to the approval of the
Tax Authority) that relate to such Supplemental Ruling.
5. INDEMNITIES.
(a) Visteon Indemnity. Each Visteon Affiliate will jointly and severally
indemnify each Ford Affiliate against and hold them harmless from:
(i) any state and local Tax of any Visteon Affiliate, and any Foreign
Tax of a Visteon Affiliate, excluding any Combined State Tax and excluding
(for purposes of this Section 5(a)(i)) any Restructuring Tax;
(ii) any liability or damage (including Restructuring Taxes) resulting
from a violation by a Visteon Affiliate of (A) any representation
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or covenant in a Ruling Document (as such representation or covenant is
modified, qualified, or elaborated in any subsequent Ruling Documents), (B)
any representation, covenant or other agreement set forth in this
Agreement, or (C) any agreements or covenants between a Ford Affiliate and
a Visteon Affiliate pertaining to the Tax matters;
(iii) any Visteon Acquisition Tax;
(iv) any Restructuring Tax allocated to Visteon under this Agreement;
(v) any Tax increase or Tax detriment allocated to Visteon under
Section 3(d);
(vi) any Tax imposed on a Ford Affiliate as a result of Visteon's
failure to cooperate with Ford under Section 7; and
(vii) any Tax increase to Ford resulting from Visteon's adoption of a
position inconsistent with the allocation set out in Section 3(f);
(viii) all liabilities, costs, expenses (including reasonable expenses
of investigation and attorneys' fees and expenses), losses, damages,
assessments, settlements or judgments arising out of or incident to the
imposition, assessment or assertion of any tax liability or damage
described in Section 5(a)(i), (ii), (iii), (iv), (v), (vi) or (vii)
including those incurred in any contest relating to the imposition,
assessment or assertion of any such tax, liability or damage.
(b) Ford Indemnity. Each Ford Affiliate will jointly and severally
indemnify each Visteon Affiliate against and hold them harmless from:
(i) any Ford Consolidated Group Tax liability;
(ii) any separate state or local Tax and any Foreign Tax of a Ford
Affiliate;
(iii) any liability or damage (including Restructuring Taxes)
resulting from a violation by a Ford Affiliate of any representation or
covenant in a Ruling Document (as such representation or covenant is
modified, qualified, or elaborated in any subsequent Ruling Documents);
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(iv) any Tax liability resulting from an acquisition by one or more
persons of a "fifty percent or greater interest" (within the meaning of
Section 355(d)(4) of the Code) in Ford;
(v) any Restructuring Tax allocated to Ford under this Agreement;
(vi) any Tax increase or Tax detriment allocated to Ford under Section
3(d);
(vii) any Tax imposed on a Visteon Affiliate (other than a
Restructuring Tax) as a result of Ford's failure to cooperate with Visteon
under Section 7; and
(viii) all liabilities, costs, expenses (including, without
limitation, reasonable expenses of investigation and attorneys' fees and
expenses), losses, damages, assessments, settlements or judgments arising
out of or incident to the imposition, assessment or assertion of any tax
liability or damage described in Section 5(b)(i), (ii), (iii), (iv), (v),
(vi) or (vii) including those incurred in any contest to the imposition,
assessment or assertion of any such tax, liability or damage;
provided that, Ford will not be required to indemnify Visteon under this
Section 5(b) to the extent that any liability set forth in this Section
5(b) is described in Section 5(a).
(c) Discharge of Indemnity. The Visteon Affiliates and the Ford Affiliates,
respectively, shall discharge their obligations under Sections 5(a) and 5(b),
respectively, by paying the relevant amount to the indemnified party no later
than 30 days after the date of receiving notice from Ford or Visteon of a
payment made, or a liability of a specified amount, based on a Final
Determination.
6. SUBSIDIARIES.
(a) Performance. Ford agrees and acknowledges that Ford shall be
responsible for the performance of the obligations of each Ford Affiliate under
this Agreement. Visteon agrees and acknowledges that Visteon shall be
responsible for the performance of the obligations of each Visteon Affiliate
under this Agreement.
(b) Application to Present and Future Subsidiaries. This Agreement is being
entered into by Ford and Visteon on behalf of themselves and each Ford Affiliate
and each Visteon Affiliate, respectively. This Agreement shall constitute a
direct obligation of each such affiliate and shall be deemed to have been
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readopted and affirmed on behalf of any corporation or other entity which
becomes a Ford Affiliate or a Visteon Affiliate in the future.
(c) Disposition of a Ford Affiliate. If a corporation or other entity
ceases to be a Ford Affiliate as a result of a disposition of equity interests
in such entity, such entity shall be released from its obligations under this
Agreement upon such disposition and no Ford Affiliate shall have any obligation
to indemnify any Visteon Affiliate under Section 5(b) for any liability or
damage attributable to actions taken by such entity after such disposition.
7. COMMUNICATION AND COOPERATION.
(a) Consult and Cooperate. Visteon and Ford shall consult and cooperate
(and shall cause each Visteon Affiliate or each Ford Affiliate, respectively, to
cooperate) fully at such time and to the extent reasonably requested by the
other party in connection with all matters subject to this Agreement. Such
cooperation shall include:
(i) the retention, consistent with Ford's past practice, of all
information pertaining to Tax matters relating to the Ford Affiliates and
the Visteon Affiliates for the Pre-Distribution Tax Periods, until two
years after the expiration of all applicable statutes of limitation (giving
effect to any extension, waiver, or mitigation thereof), including all
books, records, documentation or other information relating thereto, and
including the items specified in Appendix A;
(ii) the provision, upon reasonable request, of the information
described in Section 7(a)(i), including any necessary explanations of such
information, and including access to the necessary personnel to provide
such information or explanations and including the information referenced
in Appendix A;
(iii) the execution of any document that may be necessary or helpful
in connection with any required Return or in connection with any audit,
proceeding, suit or action; and
(iv) the procurement of any documentation from a governmental
authority or a third party that may be necessary or helpful in connection
with the foregoing.
Such cooperation also shall include the matters set forth in Section 7(b).
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(b) Provision of Tax Return Information.
(i) Visteon shall provide Ford all documents and information, and make
available employees and officers of the Visteon Affiliates as Ford
reasonably requests to prepare any Return described in Section 2(b) or to
contest any Tax Proceeding for any such Return. Without limiting the
foregoing, in this regard, Visteon agrees to provide the information set
forth in Appendix B to this Agreement, on or before the dates set forth
therein, with respect to the Ford Consolidated Group Return for Federal
Taxes for 2000, and any Combined State Tax Returns for 2000.
(ii) In the case of any Return for a Pre-Distribution Tax Period that
is in Ford's possession and is filed after the date of this Agreement, Ford
shall provide Visteon access to and allow Visteon to copy that portion of
each such Return to the extent it relates to any Visteon Affiliate,
together with all related Tax accounting work papers, not later than 30
days after the date of filing of such Return.
(iii) In the case of any Return in Ford's possession that was filed
before the date of this Agreement, Ford shall use reasonable efforts to
provide Visteon access to and allow Visteon to copy that portion of each
such Return to the extent that it relates to any Visteon Affiliate together
with all related Tax accounting work papers, beginning as soon as
reasonably practicable after the date of this Agreement, but in no event
beginning later than 15 days after the Distribution Date.
(iv) After the date of this Agreement, Ford shall afford Visteon
access to employees of Ford on a mutually convenient basis during normal
business hours to the extent such access may reasonably be required by
Visteon to prepare any Return including any Post-Distribution Tax Period
Return of Visteon or to contest any Tax Proceeding.
Notwithstanding any other provision of this Agreement, no Ford Affiliate
shall be required to provide any Visteon Affiliate access to or copies of (i)
any information with respect to which any Ford Affiliate is entitled to assert
the protection of any Privilege, or (ii) any information as to which any Ford
Affiliate is subject to an obligation to maintain the confidentiality of such
information. Ford shall use reasonable efforts to separate any such information
from any other information to which Visteon is entitled to access or to which
Visteon is entitled to copy under this Agreement, to the extent consistent with
preserving Ford's rights under this Section 7.
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(c) Failure to Cooperate.
(i) Visteon shall be liable for any Tax imposed on any Ford Affiliate
that results from the failure of any Visteon Affiliate (A) to cooperate
under this Section 7 or (B) to keep and to make available to Ford the
records provided to Visteon by any Ford Affiliate.
(ii) Ford shall be liable for any Tax imposed on any Visteon Affiliate
(other than a Restructuring Tax) as a result of the failure of any Ford
Affiliate to cooperate under this Section 7.
(d) Provision of Information Relating to Material Developments. Ford and
Visteon shall keep each other fully informed with respect to any material
development relating to the matters subject to this Agreement. The obligations
of Ford and Visteon described in the preceding sentence shall include the
obligations of the parties to inform one another as set forth in Section 8.
8. TAX PROCEEDINGS.
(a) In General.
(i) Visteon shall have the exclusive right, in its sole discretion, to
control, contest, and represent the interests of any Visteon Affiliate in
any Tax Proceeding relating to any Return described in Section 2(d) and to
resolve, settle, or agree to any deficiency, claim or adjustment proposed,
asserted or assessed in connection with or as a result of any such Tax
Proceeding. Visteon shall consult with Ford regarding Visteon's conduct of
any such Tax Proceeding the outcome of which may have an impact on the Tax
liability of a Ford Affiliate and shall promptly notify Ford of the
commencement of such Tax Proceeding. After the Distribution Date, Ford and
Visteon shall cooperate in order to transfer to Visteon the exclusive right
described in the preceding sentence.
(ii) Ford shall have the exclusive right, in its sole discretion, to
control, contest, and represent the interests of any Ford Affiliate or any
Visteon Affiliate in any Tax Proceeding not specified in Section 8(a)(i),
and to resolve, settle or agree to any deficiency, claim or adjustment
proposed, asserted or assessed in connection with or as a result of any
such Tax Proceeding. Ford's rights shall extend to any matter pertaining to
the conduct, management and control of a Tax Proceeding, including
execution of waivers, choice of forum, scheduling of conferences and the
resolution of any Tax Item. Visteon agrees that no claim against Ford and
no defense to Visteon's liabilities to Ford under this Agreement shall
arise
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from the resolution by Ford of any deficiency, claim or adjustment relating
to the redetermination of any Tax Item.
(b) Notice. If after the Distribution Date any Ford Affiliate receives
written notice of, or relating to, a Tax Proceeding from a Tax Authority that
asserts, proposes or recommends a deficiency, claim or adjustment that, if
sustained, would result in any Restructuring Taxes for which Visteon could be
responsible under this Agreement, Ford shall notify Visteon in writing of such
deficiency, claim or adjustment within 30 days of its receipt. If any Visteon
Affiliate receives written notice of or relating to a Tax Proceeding from a Tax
Authority with respect to a Return described in Section 2(b), Visteon shall
provide a copy of such notice to Ford within 30 days of receiving such notice of
such Tax Proceeding, provided that in no case shall such notice be provided
later than 30 days before a response is required to be provided to the relevant
Tax Authority.
(c) Participation Rights. If a Tax Authority asserts, proposes or
recommends a deficiency, claim or adjustment that, if sustained, would result in
Restructuring Taxes for which Visteon could be responsible under this Agreement:
(i) in the case of any material correspondence or filing submitted to
the Tax Authority or any judicial authority that relates to the merits of
such deficiency, claim or adjustment, Ford shall (A) reasonably in advance
of such submission, but subject to applicable time constraints imposed by
such Tax Authority or judicial authority, provide Visteon with a draft copy
of the portion of such correspondence or filing that relates solely to such
deficiency, claim or adjustment, (B) consider, subject to applicable time
constraints imposed by such Tax Authority or judicial authority, Visteon's
comments on such draft copy of such correspondence or filing, and (C)
provide Visteon with a final copy of the portion of such correspondence or
filing that relates solely to such deficiency, claim or adjustment.
(ii) If Visteon acknowledges in writing to Ford that, as between
Visteon and Ford, each Visteon Affiliate shall be jointly and severally
liable for an amount equal to 100% of any such Restructuring Taxes that are
determined pursuant to a Final Determination, then (A) Ford shall take all
actions requested by Visteon to contest such deficiency, claim or
adjustment, including administrative and judicial proceedings; (B) Visteon
shall have the right to fully participate with respect to such deficiency,
claim or adjustment and related proceedings and Ford shall accept all
reasonable suggestions by Visteon in connection with the management and
substance of such proceedings, and (C) in no event shall Ford settle or
compromise any such deficiency, claim or adjustment
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without the written consent of Visteon, which consent shall not be
unreasonably withheld.
9. PAYMENTS.
(a) Procedure for Making Payments. All payments required to be made under
this Agreement shall be made in immediately available funds. Except as otherwise
provided in this Agreement, all payments required to be made pursuant to this
Agreement will be due 30 days after the receipt of notice of such payment being
owed. Payments shall be deemed made when received.
(b) Setoff. No party shall set off any payment due to such party or one of
its affiliates against any payment required to be made under this Agreement by
such party or one of its affiliates to the other party or one of its affiliates.
(c) Interest on Late Payments. Any payment required to be made pursuant to
this Agreement that is not made on or before the due date for such payment shall
bear interest from the date after the due date to and including the date of
payment at a rate determined under Code Section 6621(a)(2). Such interest shall
be paid at the same time as the payment to which it relates. Any interest
payable pursuant to the preceding sentence that is not paid when due shall bear
interest computed in the manner described in the preceding sentence.
(d) Character of Payments. For Tax purposes, the parties agree to treat any
payment (other than payments of interest pursuant to Section 9(c) of this
Agreement and After-Tax Amounts) pursuant to this Agreement as a capital
contribution by Ford to Visteon or a distribution by Visteon to Ford made in the
last tax period beginning before the Distribution and, accordingly, as not
includible in the taxable income of the recipient and not deductible by the
payor. If pursuant to a Final Determination it is determined that the receipt or
accrual of any payment made under this Agreement (other than payments of
interest pursuant to Section 9(c)) is subject to any Tax, the party making such
payment shall be liable for the After-Tax Amount with respect to such payment. A
party may choose not to specify an After-Tax Amount in a demand for payment
pursuant to this Agreement without thereby being deemed to have waived its right
subsequently to demand an After-Tax Amount with respect to such payment.
10. DISPUTE RESOLUTION.
(a) Scope of Section. This Section 10 shall govern all disputes under this
Agreement.
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(b) Initial Notice of Disagreement.
(i) The party (the "REMITTING PARTY") receiving a schedule or other
notice regarding a payment required pursuant to this Agreement shall have
30 days from the date of the delivery of such schedule or other notice to
register its disagreement with all or a portion of such payment (each such
disagreement a "DISPUTED ITEM").
(ii) The Remitting Party shall register its disagreement by delivering
to the other party (the "RECIPIENT") within such 30 day period a written
notice (an "INITIAL NOTICE OF DISAGREEMENT") that (A) specifically
enumerates each Disputed Item, (B) describes the grounds for the Remitting
Party's disagreement with each Disputed Item, and (C) states the amount in
dispute (or a good faith estimate thereof) with respect to each Disputed
Item.
(iii) If, within the 30 day period described in Section 10(b)(i), the
Remitting Party does not deliver an Initial Notice of Disagreement that
satisfies the requirements of Section 10(b)(ii) with respect to all or a
portion of a payment described in Section 10(b)(i), then the Remitting
Party will be deemed to have (A) accepted and acknowledged its liability
for such payment or portion thereof and (B) waived its right to a
Determination by an Independent Third Party pursuant to Section 10(f) with
respect to such payment or portion thereof.
(c) Negotiation. During the 60 day period immediately following delivery of
an Initial Notice of Disagreement that satisfies the requirements of Section
10(b)(ii), the Remitting Party and the Recipient shall in good faith attempt to
resolve their disagreements over each Disputed Item enumerated in the Initial
Notice of Disagreement.
(d) Final Notice of Disagreement.
(i) The Remitting Party shall have 70 days from the delivery of an
Initial Notice of Disagreement to register its continued disagreement with
any Disputed Item and to elect to seek a by an Independent Third Party with
respect to such Disputed Item pursuant to Section 10(f). The Remitting
Party shall do so by delivering to the Recipient within such 70 day period
a written notice (a "FINAL NOTICE OF DISAGREEMENT") that (A) specifically
enumerates each Disputed Item with respect to which it elects to seek a
Determination by an Independent Third Party, (B) describes the grounds for
the Remitting Party's continued disagreement with each such
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Disputed Item, and (C) states the amount in dispute (or a good faith
estimate thereof) with respect to each such Disputed Item.
(ii) The failure of the Remitting Party within the 70 day period
described in Section 10(d)(i) to deliver a Final Notice of Disagreement,
that satisfies the requirements of Section 10(d)(i), with respect to all or
a portion of the payment described in Section 10(b) shall be deemed to
constitute (A) an acceptance and acknowledgment by such party of its
liability for such payment or portion thereof and (B) a waiver by such
party of its right to a Determination by an Independent Third Party
pursuant to Section 10(f) with respect to such Disputed Item.
(iii) Any dispute, controversy, or claim relating to or arising out of
a Disputed Item contained in a Notice of Final Disagreement shall be
finally settled by arbitration before an Independent Third Party pursuant
to the provisions of this Section 10.
(e) Selection of Independent Third Party. If the Remitting Party delivers a
Final Notice of Disagreement that satisfies the requirements of Section 10(d)(i)
to the Recipient, the parties shall, within 10 days after such delivery, jointly
select an Independent Third Party to make a Determination with respect to each
Disputed Item enumerated in the Final Notice of Disagreement. If the parties
cannot jointly agree on an Independent Third Party to make such Determination
within such 10 day period, either party may apply to the American Arbitration
Association ("AAA") for the sole purpose of having the AAA select an Independent
Third Party from a list of no fewer than two (2) and no more than 5 potential
Independent Third Parties which list is acceptable to Davis Polk and Wardwell in
its discretion (on behalf of Ford) and Dickinson Wright LLC in its discretion
(on behalf of Visteon). If the two law firms fail to approve a list within 15
days of the application of either party to the AAA, the Independent Third Party
shall be selected by the AAA.
(f) Determination by Independent Third Party. The Independent Third Party
shall determine the appropriate outcome based upon this Agreement (the
"DETERMINATION") with respect to each Disputed Item. The Independent Third Party
shall have 90 days from the date that he or she is selected in which to make
such Determinations, unless the Remitting Party and the Recipient mutually agree
upon an extension of such period or the Independent Third Party, in its
discretion, determines that an extension of such period is warranted by
exceptional circumstances. The Remitting Party and the Recipient shall provide
the Independent Third Party with such information or documentation as the
Independent Third Party, in its discretion, deems to be necessary for it to make
the Determination requested of it. Any Determination by the Independent Third
Party
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(as well as any allocation of costs and expenses pursuant to Section 10(g) shall
be in writing, shall be delivered to the Remitting Party and the Recipient, and
shall be final and binding upon them and enforced as an arbitration award under
the United States Arbitration Act, 9 U.S.C. ss. ss. 1-16. The parties explicitly
waive any right to seek any judicial review of the substance of the
Determination of the Independent Third Party. In making a Determination, the
Independent Third Party shall be entitled to use, at the sole cost and expense
of the Remitting Party and the Recipient, whatever resources it deems necessary,
including accounting and technical services provided by firms chosen by it in
its discretion. Any proceedings relating to the determination at which the
presence of any personnel or representatives of both parties is required shall
take place in Dearborn, Michigan.
(g) Costs and Expenses Associated with Independent Third Party. The
Remitting Party and the Recipient shall be jointly and severally liable to the
Independent Third Party for all costs and expenses associated with retaining the
Independent Third Party. As between themselves, except as otherwise provided in
this Section 10(g), the Remitting Party and the Recipient shall share equally
the costs and expenses associated with retaining an Independent Third Party.
Where a determination with respect to a Disputed Item is not less than 80% of
the amount claimed to be due from the Remitting Party, the Independent Third
Party may, in its discretion, allocate to the Remitting Party more than 50% of
the costs and expenses associated with such determination. Where a determination
with respect to a Disputed Item is less than 50% of the amount claimed to be due
from the Remitting Party, the Independent Third Party may, in its discretion,
allocate to the Recipient more than 50% of the costs and expenses associated
with such determination.
11. NOTICES.
Any notice, demand, claim, or other communication under this Agreement
shall be in writing and shall be deemed to have been given upon the delivery or
mailing thereof, as the case may be, if delivered personally or sent by
certified mail, return receipt requested, postage prepaid, to the parties at the
following addresses (or at such other address as a party may specify by notice
to the other):
If to Ford, to:
Ford Motor Company
Henry Ford II World Center
The American Road
Dearborn MI 48121
Facsimile: (313) 248-7450
Attention: Dennis Ross
Vice President - Chief Tax Officer
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If to Visteon, to:
Visteon Corporation
5500 Auto Club Drive
Dearborn, MI 48121
Facsimile:
Attention: General Counsel
12. COSTS AND EXPENSES.
(a) Additional Services. Ford may provide tax services to Visteon for
compensation approximately the same as that payable between unrelated parties
dealing at arm's length.
(b) Other. Except as expressly set forth in this Agreement, each party
shall bear its own costs and expenses incurred pursuant to this Agreement. For
purposes of this Agreement, "EXPENSES" shall include, without limitation,
reasonable attorney's fees, accountant's fees and other related professional
fees and disbursements.
13. TERMINATION AND SURVIVAL.
All rights and obligations arising hereunder with respect to a Pre-
Distribution Tax Period shall survive until they are fully effectuated or
performed provided, that notwithstanding anything in this Agreement to the
contrary, this Agreement shall remain in effect and its provisions shall survive
for the full period of all applicable statutes of limitation (giving effect to
any extension, waiver or mitigation thereof).
14. SECTION HEADINGS.
The headings contained in this Agreement are inserted for convenience only
and shall not constitute a part hereof or in any way affect the meaning or
interpretation of this Agreement.
15. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; SEVERABILITY.
(a) Entire Agreement; Amendments. This Agreement, including the exhibits,
appendices and other attachments hereto contains the entire understanding of the
parties hereto with respect to the subject matter contained herein. No
alteration, amendment, modification, or waiver of any of the terms of this
Agreement shall be valid unless made by an instrument signed by an
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authorized officer of each of Ford and Visteon, or in the case of a waiver, by
the party against whom the waiver is to be effective.
(b) Waivers. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver hereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege.
(c) Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid, illegal or unenforceable to any
extent, this Agreement or such provision or the application of such provision to
such party or shall remain in full force and effect to the fullest extent
permitted by law and shall not be affected thereby, unless such a construction
would be unreasonable.
16. GOVERNING LAW AND INTERPRETATION.
This Agreement has been made in and shall be construed and enforced in
accordance with the laws of the state of Michigan without giving effect to laws
and principles relating to conflicts of law.
17. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same Agreement.
18. ASSIGNMENTS; THIRD PARTY BENEFICIARIES.
Subject to Section 6(b), this Agreement shall be binding upon and shall
inure only to the benefit of the parties hereto and their respective successors
and assigns, by merger, acquisition of assets or otherwise (including but not
limited to any successor of a party hereto succeeding to the Tax attributes of
such party under applicable law). This Agreement is not intended to benefit any
person other than the parties hereto and such successors and assigns, and no
such other person shall be a third party beneficiary hereof.
19. FURTHER ASSURANCES.
Ford and Visteon shall execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such instruments and take such other
action as may be necessary or advisable to carry out their obligations under
this Agreement and under any exhibit, document or other instrument delivered
pursuant hereto.
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20. AUTHORIZATION, ETC.
Each of the parties hereto hereby represents and warrants that it has the
power and authority to execute, deliver and perform this Agreement, that this
Agreement has been duly authorized by all necessary corporate action on the part
of such party that this Agreement constitutes a legal, valid and binding
obligation of each such party, and that the execution, delivery and performance
of this Agreement by such party does not contravene or conflict with any
provision of law or of its charter or bylaws or any agreement, instrument or
order binding on such party.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the day and year first written above.
Ford on its own behalf and on behalf of each Ford Affiliate.
By: /s/ Malcolm S. Macdonald
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Title: Vice President and Treasurer
Visteon on its own behalf and on behalf of each
Visteon Affiliate.
By: /s/ Daniel R. Coulson
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Title: Executive Vice President and Chief
Financial Officer
