AMENDED AND RESTATED TAX SHARING AGREEMENT BETWEEN FORD MOTOR COMPANY AND FORD MOTOR CREDIT COMPANY
BETWEEN
FORD MOTOR COMPANY AND
FORD
MOTOR CREDIT COMPANY
THIS
TAX
SHARING AGREEMENT (this “Agreement”) dated December 12, 2006, is made and
entered into by Ford Motor Company (“Ford”), a Delaware corporation, and Ford
Motor Credit Company (“Ford Credit”), a Delaware corporation.
RECITALS
WHEREAS,
Ford is the common parent corporation of an affiliated group of corporations
within the meaning of Section 1504(a) of the Internal Revenue Code of 1986,
as
amended (the “Code”) and of combined groups as defined under similar laws of
other jurisdictions and Ford Credit is a member of such groups; and
WHEREAS,
the groups of which Ford is the common parent and Ford Credit is a member file
or intend to file Consolidated Returns and Combined Returns; and
WHEREAS,
Ford and Ford Credit desire to provide for the allocation of liabilities and
procedures to be followed with respect to certain tax matters arising on and
after January 1, 2006.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
Section
1. Definitions
1.1.
“Adjusted
Tax Asset Balance” means
Ford Credit's aggregate Tax Assets adjusted to reflect only the portion of
such
assets that Ford determines to have resulted in an actual cash tax benefit
to
the Ford Group.
1.2.
“Audit”
includes
any audit, assessment of Taxes, other examination by any Tax Authority,
proceeding, or appeal of such proceeding relating to Taxes, whether
administrative or judicial.
1.3.
“Combined Group”
means,
for each Non-Federal Combined Tax, the group of corporations or other entities
that files the Combined Return.
1.4.
“Combined
Return” means
any
Tax Return with respect to Non-Federal Taxes filed on a consolidated, combined
(including nexus combination, worldwide combination, domestic combination,
line
of business combination or any other form of combination) or unitary basis
wherein Ford Credit joins in the filing of such Tax Return (for any taxable
period or portion thereof) with Ford or one or more Ford
Affiliates.
1.5.
“Consolidated
Group”
means an
affiliated group of corporations within the meaning of Section 1504(a) of the
Code of which Ford is the common parent and that files a consolidated
return.
1.6.
“Consolidated
Return”
means
any Tax Return with respect to Federal Income Taxes filed on a consolidated
basis wherein Ford Credit joins in the filing of such Tax Return (for any
taxable period or portion thereof) with Ford or one or more Ford
Affiliates.
1
1.7.
“Contingent Tax Liability"
means
Ford's estimate of an expected Redetermination Amount.
1.8.
“Estimated
Tax Installment Date”
means
the installment due dates prescribed in Section 6655(c) of the Code (presently
April 15, June 15,
September
15 and December 15).
1.9.
“Federal Income Tax”
means
any tax imposed under Subtitle A of the Code (including the taxes imposed by
Sections 11, 55, 59A, and 1201(a) of the Code) and any other income based United
States Federal Tax which is hereinafter imposed upon corporations.
1.10.
“Federal
Tax”
means
any Tax imposed or required to be withheld by any Tax Authority of the United
States.
1.11.
“Final
Determination”
means
any of (a) the final resolution of any Tax (or other matter) for a taxable
period that, under applicable law, is not subject to further appeal, review
or
modification through proceedings or otherwise, including (1) by the expiration
of a statute of limitations (giving effect to any extension, waiver or
mitigation thereof) or a period for the filing of claims for refunds,
amending Tax Returns, appealing from adverse determinations, or recovering
any
refund (including by offset), (2) by a decision, judgment, decree, or other
order by a court of competent jurisdiction, which has become final and
unappealable, (3) by a closing agreement or an accepted offer in compromise
under Section 7121 or 7122 of the Code, or comparable agreements under laws
of
other jurisdictions, (4) by execution of an Internal Revenue Service Form 870AD,
or by a comparable form under the laws of other jurisdictions (excluding,
however, with respect to a particular Tax Item for a particular taxable period
any such form that reserves (whether by its terms or by operation of law) the
right of the taxpayer to file a claim for refund and/or the right of the Taxing
Authority to assert a further deficiency with respect to such Tax Item for
such
period), or (5) by any allowance of a refund or credit, but only after the
expiration of all periods during which such refund or credit may be recovered
(including by way of offset) or (b) the payment of Tax by any member of the
Consolidated Group or Combined Group with respect to any Tax Item disallowed
or
adjusted by a Taxing Authority provided that Ford determines that no action
should be taken to recoup such payment.
1.12.
“Ford
Credit Combined Tax Liability”
means,
with respect to any taxable period, Ford Credit's liability for Non-Federal
Combined Taxes as determined under Section 3.3 of this Agreement.
1.13.
“Ford
Credit Federal Income Tax Liability”
means,
with respect to any taxable period, Ford Credit's liability for Federal Income
Taxes as determined under Section 3.2 of this Agreement.
1.14.
“Ford
Affiliate”
means
any corporation or other entity directly or indirectly controlled by Ford,
but
excluding Ford Credit.
1.15.
“Ford
Group”
means
the affiliated group of corporations as defined in Section
1504(a)
of the Code, or similar group of entities as defined under corresponding
provisions of the laws of other jurisdictions, of which Ford is the common
parent, and any corporation or other entity which may be, may have been or
may
become a member of such group from time to time, but excluding Ford
Credit.
1.16.
“Non-Federal
Combined Tax”
means
any Non-Federal Tax with respect to which a Combined Return is
filed.
1.17.
“Non-Federal Separate Tax” means any Non-Federal Tax other than
a Non-Federal Combined Tax.
1.18.
“Non-Federal
Tax”
means
any Tax other than a Federal Tax.
1.19.
“Pro
Forma Ford Credit Combined Return”
means a
pro forma Non-Federal Combined Tax return or other schedule prepared pursuant
to
Section 3.3 of this Agreement.
2
1.20.
“Pro
Forma Ford Credit Federal Return”
means a
pro forma Federal Income Tax return or other schedule prepared pursuant to
Section 3.2 of this Agreement.
1.21.
“Redetermination
Amount”
means,
with respect to any Tax for any taxable period, the amount determined under
Section 4.7 of this Agreement.
1.22.
“Tax”
means
any charges, fees, levies, imposts, duties, or other assessments of a similar
nature, including income, alternative or add-on minimum, gross receipts,
profits, lease, service, service use, wage, wage withholding, employment,
workers compensation, business occupation, occupation, premiums, environmental,
estimated, excise, employment, sales, use, transfer, license, payroll,
franchise, severance, stamp, collection, windfall profits, withholding, social
security, unemployment, disability, ad valorem, highway use, commercial rent,
capital stock, paid up capital, recording, registration, property, real property
gains, value added, business license, customs duties, or other tax or
governmental fee of any kind whatsoever, imposed or required to be withheld
by
any Tax Authority.
1.23.
“Tax
Asset”
means
any Tax Item that could reduce a Tax, including a net operating loss, net
capital loss, investment tax credit, foreign tax credit, charitable deduction
or
credit related to alternative minimum tax.
1.24.
“Tax
Authority”
means
any governmental authority or any subdivision, agency, commission or authority
thereof or any quasi-governmental or private body having jurisdiction over
the
assessment, determination, collection or Imposition of any Tax (including the
Internal Revenue Service).
1.25.
"Tax
Item”
means
any item of income, gain, loss, deduction or credit, or other attribute than
may
have the effect of increasing or decreasing any Tax.
1.26.
“Tax
Return”
means
any return, report, schedule, certificate, form or similar statement or document
(including any related or supporting information or schedule attached thereto
and any information return, amended tax return, claim for refund or declaration
of estimated tax) required to be supplied to, or flied with, a Tax Authority
in
connection with the determination, assessment or collection of any Tax or the
administration of any laws, regulations or administrative requirements relating
to any Tax.
Section
2. In General
2.1.
Preparation and Filing of Tax Returns.
Ford
shall have the sole and exclusive responsibility for the preparation and filing
of all Consolidated Returns and all Combined Returns. Ford shall have the
exclusive right, in its sole discretion, with respect to any such Tax Return
to
determine (a) the manner in which such Tax Return shall be prepared and filed,
including the elections, methods of accounting, positions, conventions and
principles of taxation to be used and the manner in which any Tax Item shall
be
reported, (b) whether any extensions may be requested, (c) the elections that
will be made by Ford, any Ford Affiliate and Ford Credit in such Tax Return,
(d)
whether any amended Tax Returns shall be flied, (e) whether any claims for
refund shall be made, (f) whether any refunds shall be paid by way of refund
or
credited against any liability for the related Tax, and (g) whether to retain
outside specialists to prepare such Tax Return, whom to retain for such purpose
and the scope of any such retainer; provided, however, that Ford shall consult
with Ford Credit senior management prior to making any determination that would
have a material affect on Ford Credit operations.
2.2.
Audits.
Ford
shall have the exclusive right, in its sole discretion, to control,
contest, and
represent the interests of Ford, any Ford Affiliate and Ford Credit in any
Audit
relating to any Tax Return described in Section 2.1 of this Agreement 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 Audit;
provided, however, that Ford shall consult Ford Credit senior management with
respect to any issue that would reasonably be expected to have a material affect
on Ford Credit.
3
2.3.
Agent.
Ford
Credit hereby irrevocably designates Ford as its sole and exclusive agent and
attorney-in-fact to take such action (including execution of documents) as
Ford,
in its sole discretion, may deem appropriate in any and all matters (including
Audits) relating to any Tax Return described in Section 2.1 of this
Agreement.
2.4.
Provision
of Information.
Ford
Credit shall (a) furnish to Ford in a timely manner such information and
documents as Ford may reasonably request for purposes of (1) preparing any
Tax
Return described in Section 2.1 of this Agreement, (2) contesting or defending
any Audit of any Tax Return described in Section 2.1 of this Agreement, and
(3)
making any determination or computation necessary or appropriate under this
Agreement, (b) cooperate in any Audit of any Tax Return described in Section
2.1
of this Agreement, (c) retain and provide on demand books, records,
documentation or other information relating to any Tax Return until the later
of
(1) the expiration of the applicable statute of limitations (giving effect
to
any extension, waiver, or mitigation thereof) and (2) in the event any claim
is
made under this Agreement for which such information is relevant, until a Final
Determination with respect to such claim, and (d) take such action as Ford
may
deem appropriate in connection with any of the foregoing.
Section
3. Tax Sharing
3.1.
Ford
Credit Liability for Federal Income Taxes and Non-Federal Combined
Taxes.
For
each taxable period, Ford Credit shall be liable for an amount equal to the
sum
of the Ford Credit Federal Income Tax Liability and the Ford Credit Combined
Tax
Liability for such taxable period.
3.2.
Ford
Credit Federal Income Tax Liability.
With
respect to each taxable period, the Ford Credit Federal Income Tax Liability
shall be Ford Credit's liability for Federal Income Taxes for such period as
determined on a Pro Forma Ford Credit Federal Return prepared:
(a)
on the basis of the Consolidated Return for such period, determined by including
only Tax Items of Ford Credit and its subsidiaries which are included in the
Consolidated Return, and
(b)
without regard to graduated rates of tax.
3.3.
Ford
Credit Combined Tax Liability. (a)
In General.
With
respect to each taxable period, the Ford Credit Combined Tax Liability shall
be
the sum, for such taxable period, of Ford Credit's liability for each
Non-Federal Combined Tax, as determined on a Pro Forma Ford Credit Combined
Return.
(b)
Pro
Forma Ford Credit Combined Return.
For each
taxable period, Ford shall prepare or cause to be prepared a Pro Forma Ford
Credit Combined Return for each Non-Federal Combined Tax by reference
to:
(1)
the taxable income (or loss) for such taxable period determined from a Pro
Forma
Ford Credit Federal Return including Tax Items only from Ford Credit and
its
subsidiaries which are included in the applicable Combined Return;
(2)
material adjustments necessary, in Ford’s sole discretion, to reflect the laws
of the applicable jurisdiction;
(3)
(i) the apportionment factors of the Combined Group that includes Ford and
Ford
Credit for Non-Federal Combined Taxes calculated as if the Combined Group
were a
single taxpayer, or (ii) for all other Non-Federal Combined Taxes, the
individual apportionment factors of Ford Credit and each of its subsidiaries
that are included in the applicable Combined Group; and
(4)
without regard to graduated rates of tax.
4
3.4.
Ford Credit Unused Tax Assets. (a)
In
General.
With
respect to its Tax Assets not otherwise taken into account under Section 3.2
or
3.3 of this Agreement, Ford shall pay Ford Credit, at expiration of the relevant
statutory carryforward period; provided, however, that for any Tax Asset other
than foreign tax credits, Ford's payment to Ford Credit shall be limited to
an
amount determined by comparing (i) the Consolidated (or Combined) Group's
liability for Federal Income Taxes (or Non-Federal Combined Taxes) computed
by
taking into account such Tax Assets to (ii) the Consolidated (or Combined)
Group's liability for Federal Income Taxes (or Non-Federal Combined Taxes)
computed without taking into account such Tax Assets. Ford shall pay Ford Credit
the full amount of its foreign tax credits.
Section
4. Payment of
Taxes and Tax Sharing Amounts
4.1.
Federal
Income Taxes.
Ford
shall pay to the Internal Revenue Service all Federal Income Taxes, if any,
of
the Consolidated Group due and payable for all taxable periods.
4.2.
Non-Federal Combined Taxes.
Ford
shall pay to the appropriate Tax Authorities all Non-Federal Combined Taxes,
if
any, of the
Combined Group due and
payable for all taxable periods.
4.3.
Non-Federal Separate Taxes. Ford
Credit shall
pay
(or cause to be paid) to the appropriate Tax Authorities all Non-Federal
Separate Taxes, if any, of Ford Credit and its subsidiaries due and payable
for
all taxable periods.
4.4.
Other
Federal Taxes. The
parties shall each pay (or cause to be paid) to the appropriate Tax Authorities
all of their respective Federal Taxes (excluding Federal Income Taxes which
are
governed by Section 4.1 of this Agreement), if any, due and payable for all
taxable periods.
4.5.
Tax
Sharing Installment Payments.
(a)
Federal Income Taxes. Ford
may,
in its sole discretion, deliver to Ford Credit a schedule, not later than five
business days prior to any Estimated Tax Installment Date with respect to any
taxable period, setting forth the estimated amount of the related installment
of
the Ford Credit Federal Income Tax Liability determined under the principles
of
Section 6655 of the Code. Ford Credit shall pay Ford in accordance with their
customary intercompany settlement procedure.
(b)
Non-Federal
Combined Taxes.
Not
later than September 30 of each taxable year, Ford shall deliver to Ford Credit
an estimate of the Ford Credit Combined Tax Liability for the taxable year.
Ford
Credit shall then pay to Ford, in accordance with their customary intercompany
settlement procedure, the amount thus determined.
4.6.
Tax
Sharing True-up Payments.
(a)
Federal Income Taxes.
Not
later than 45 business days after the Consolidated Return is filed with respect
to any taxable period, Ford shall deliver to Ford Credit a Pro Forma Ford Credit
Federal Return reflecting the Ford Credit Federal Income Tax Liability. Upon
receipt, Ford Credit shall pay to Ford, or Ford shall pay to Ford Credit, as
appropriate, in accordance with their customary intercompany settlement
procedure, an amount equal to the difference, if any, between the Ford Credit
Federal Income Tax Liability for the taxable period and the aggregate amount,
if
any, paid by Ford Credit with respect to such taxable period under Section
4.5(a) of this Agreement.
(b)
Non-Federal
Taxes.
Not
later than 45 business days after the last Combined Return is filed with respect
to any taxable period, Ford shall deliver to Ford Credit a schedule based upon
the Pro Forma Ford Credit Combined Returns for such period reflecting the Ford
Credit Combined Tax Liability. Upon receipt, Ford Credit shall pay to Ford,
or
Ford shall pay to Ford Credit, as appropriate, in accordance with their
customary intercompany settlement procedure, an amount equal to the difference,
if any, between the Ford Credit Combined Tax Liability for the taxable period
and the amount paid by Ford Credit with respect to such taxable period under
Section 4.5(b) of this Agreement.
5
4.7.
Redetermination
Amounts. (a)
In General.
Ford
shall deliver to Ford Credit a schedule reflecting the computation of a
Redetermination Amount for any affected tax year at such time as Ford and Ford
Credit may agree; provided, however, that in the event of any redetermination
as
a result of a Final Determination Ford shall deliver such schedule to Ford
Credit within 120 days of the date of the Final Determination. Ford Credit
shall
pay Ford or Ford shall pay Ford Credit, as the case may be, in accordance with
their customary intercompany settlement procedure, the Redetermination
Amount.
(b)
Computation.
A
Redetermination Amount for a Tax for a taxable period shall be the difference
between the net amount of all amounts previously determined under Section 3
of
this Agreement for such taxable period and the net amount of all amounts that
would have been determined under Section 3 of this Agreement taking such
redetermination into account.
4.8.
Interest
on Contingent Tax Liabilities/Tax Assets. (a)
Net
Contingent Tax Liability. If
Ford
Credit's Contingent Tax Liabilities exceed its Adjusted Tax Asset Balance,
Ford
Credit shall pay Ford interest on the excess at the rate established under
6621(a)(2) of the Code.
(b)
Net
Adjusted Tax Asset Balance.
If Ford
Credit's Adjusted Tax Asset Balance exceeds its Contingent Tax Liabilities,
Ford
shall pay Ford Credit interest on the excess at a rate equal to Ford Credit's
weighted average after-tax cost of capital.
(c)
Payment.
Ford
shall deliver to Ford Credit a schedule reflecting the interest on the net
Contingent Tax Liabilities or net Adjusted Tax Asset Balance no later than
one
month prior to the end of each calendar year quarter. Ford Credit shall pay
Ford
or Ford shall pay Ford Credit, as the case may be, in accordance with their
customary intercompany settlement procedure, the interest amount.
4.9.
Deferred
Payment.
Ford and
Ford credit may agree that payments under Sections 4.5 through 4.7 of this
Agreement may be made after the period prescribed. Payments that are not made
within the prescribed period shall thereafter bear interest at a rate to be
agreed upon by Ford and Ford Credit.
Section
5. Miscellaneous
5.1.
Effectiveness;
Term.
This
Agreement shall become effective upon execution by both parties hereto. This
Agreement shall apply to tax matters arising on and after January 1, 2006 and
all rights and obligations arising hereunder shall survive until the later
of
(a) when they are fully effectuated or performed or (b) the expiration of all
applicable statutes of limitation (giving effect to any extension, waiver or
mitigation thereof).
5.2.
Changes
in Law. Any
reference to a provision of the Code or a law of another jurisdiction shall
include a reference to any applicable successor provision or law.
5.3.
Confidentiality.
Each
party shall hold and cause its advisors and consultants to hold in strict
confidence, unless compelled to disclose by judicial or administrative process
or, in the opinion of its counsel, by other requirements of law, all information
(other than any such information relating solely to the business or affairs
of
such party) concerning the other parties hereto furnished it by such other
party
or its representatives pursuant to this Agreement (except to the extent that
such information can be shown to have been (a) previously known by the party
to
which it was furnished, (b) in the public domain through no fault of such party,
or (c) later lawfully acquired from other sources not under a duty of
confidentiality by the party to which it was furnished), and each party shall
not release or disclose such information to any other person, except its
auditors, attorneys, financial advisors, bankers and other consultants who
shall
be advised of and agree to be bound by the provisions of this Section 5.3.
Each
party shall be deemed to have satisfied its obligation to hold confidential
information concerning or supplied by the other party if it exercises the same
care as it takes to preserve confidentiality for its own similar
information.
6
5.4.
Successors.
This
Agreement shall be binding on and inure to the benefit of any successor, by
merger, acquisition of assets or otherwise, to any of the parties hereto, to
the
same extent as if such successor had been an original party.
5.6.
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.
5.7.
Section
Captions.
Section
captions used in this Agreement are for convenience and reference only and
shall
not affect the construction of this Agreement.
5.8.
Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York without giving effect to laws and principles relating to
conflicts of law.
5.9.
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.
5.10.
Waivers
and Amendments.
This
Agreement shall not be waived, amended or otherwise modified except in writing,
duly executed by all of the parties hereto.
5.11.
Severability.
If any
provision of this Agreement is held to be invalid, void, illegal or
unenforceable, the remaining provisions hereof shall remain in full force and
effect, and shall in no way be affected, impaired or invalidated. In the event
any provision is held to be invalid, void, illegal or unenforceable, the parties
hereto shall use their best efforts to find and employ an alternate means to
achieve the same or substantially the same result as that contemplated by such
provision.
5.12.
No Third Party Beneficiaries.
This
Agreement is solely for the benefit of Ford, the Ford Affiliates and Ford Credit
and should not be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other rights in excess of those
existing without this Agreement.
IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by a duly authorized officer as of the date first above
written.
|
FORD
MOTOR COMPANY
|
||||
|
By:
|
/s/
Xxxxx X. Xxxxxx
|
|||
|
Xxxxx
X. Xxxxxx
|
||||
|
Assistant Tax
Officer
|
||||
| FORD MOTOR CREDIT COMPANY | ||||
|
By:
|
/s/
Xxxxxxx X. Xxxx
|
|||
|
Xxxxxxx
X. Xxxx
|
||||
|
Vice
Chairman, Chief Financial Officer and Treasurer
|
||||
7
