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EXHIBIT 10.2
TAX SHARING AGREEMENT
THIS TAX SHARING AGREEMENT dated as of _______________, 1996 is made
and entered into by Ford Motor Company, a Delaware corporation ("FORD") and
Associates First Capital Corporation, a Delaware corporation ("ASSOCIATES") and
the Associates Affiliates.
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 ("FORD GROUP") and Associates and the
Associates Affiliates are members of such groups; and
WHEREAS, the groups of which Ford is the common parent and Associates
and the Associates Affiliates are members file or intend to file Consolidated
Returns and Combined Returns; and
WHEREAS, Ford and Associates desire to provide for the allocation of
liabilities, procedures to be followed, and other matters with respect to
certain taxes for taxable periods beginning after December 31, 1995.
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. "AMT PENALTY" means, with respect to any taxable year, the
amount determined under Section 2.3(d)(1) of this Agreement.
1.2. "ASSOCIATES AFFILIATE" means any corporation or other entity
directly or indirectly controlled by Associates which is includible in the
Associates Group.
1.3. "ASSOCIATES GROUP" means the affiliated group of corporations as
defined in Section 1504(a) of the Code, or similar group of entities as defined
under similar laws of other jurisdictions, of which Associates would be the
common parent if it were not a subsidiary of Ford, and any corporation or other
entity which may be or become a member of such group from time to time.
1.4. "ASSOCIATES GROUP COMBINED TAX LIABILITY" means, with respect to
any taxable year, the Associates Group's liability for Non-Federal Combined
Taxes as determined under Section 2.4 of this Agreement.
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1.5. "ASSOCIATES GROUP FEDERAL INCOME TAX LIABILITY" means, with
respect to any taxable year, the Associates Group's liability for Federal
Income Taxes as determined under Section 2.3 of this Agreement.
1.6. "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.
1.7. "CREDITABLE FOREIGN TAXES" means the foreign taxes paid, accrued
or deemed paid by members of the Associates Group that could be allowable as a
credit under Section 901 of the Code.
1.8. "COMBINED GROUP" means a group of corporations or other entities
that files a Combined Return.
1.9. "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 one or
more members of the Associates Group join in the filing of a Tax Return with
Ford or a Ford subsidiary that is not also a member of the Associates Group.
1.10. "CONSOLIDATED GROUP" means the affiliated group of corporations
within the meaning of Section 1504(a) of the Code of which Ford is the common
parent and which includes the Associates Group.
1.11. "CONSOLIDATED RETURN" means any Tax Return with respect to
Federal Income Taxes filed by Ford and its subsidiaries pursuant to Section
1501 of the Code.
1.12. "DECONSOLIDATION" means any event pursuant to which the
Associates and the Associates Group cease to be includible in the Consolidated
Group or the Combined Group.
1.13. "DECONSOLIDATION DATE" means the close of business on the day
on which a Deconsolidation occurs. Unless otherwise required by the relevant
Tax Authority or a court of competent jurisdiction, Ford and Associates, for
itself and the Associates Group, agree to file all Tax Returns, and to take all
other actions, relating to Federal Income Taxes or Non-Federal Combined Taxes
in a manner consistent with the position that the Associates and the Associates
Group are includible in the Consolidated Group and the Combined Group for all
days from the date hereof through and including a Deconsolidation Date.
1.14. "ESTIMATED TAX INSTALLMENT DATE" means the installments due
dates prescribed in Section 6655(c) of the Code (presently April 15, June 15,
September 15 and December 15).
1.15. "FEDERAL INCOME TAXES" 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), including any interest, additions to tax, or penalties applicable
thereto, and any other income based United States federal taxes which are
hereinafter imposed upon corporations.
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1.16. "FINAL DETERMINATION" means (a) the final resolution of any tax
(or other matter) for a taxable period, including any related interest or
penalties, 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,
amended returns, appeals 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 870 or 870AD, or by a
comparable form under the laws of other jurisdictions (excluding, however, 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), 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 item disallowed or adjusted by a Taxing Authority provided that
Ford determines that no action should be taken to recoup such payment.
1.17. "FOREIGN TAX AMOUNT" means, with respect to any taxable year,
the amount determined under Section 2.5 of this Agreement.
1.18. "NON-FEDERAL COMBINED TAXES" means any Non-Federal Taxes with
respect to which a Combined Return is filed.
1.19. "NON-FEDERAL SEPARATE TAXES" means any Non-Federal Tax that is
not a Non-Federal Combined Tax.
1.20. "NON-FEDERAL TAXES" includes all state and local charges, fees,
levies, imposts, duties, or other assessments of a similar nature, including
without limitation, income, alternative or add-on minimum, gross receipts,
excise, employment, sales, use, transfer, license, payroll, franchise,
severance, stamp, occupation, windfall profits, withholding, Social Security,
unemployment, disability, ad valorem, estimated, highway use, commercial rent,
capital stock, paid up capital, recording, registration, property, real
property gains, value added, business license, custom duties, or other tax or
governmental fee of any kind whatsoever, imposed or required to be withheld by
any Tax Authority (excluding any governmental agency of the United States)
including any interest, additions to tax, or penalties applicable thereto.
1.21. "PRE-DECONSOLIDATION PERIOD" means a taxable period ending on
or prior to the Deconsolidation Date.
1.22. "PRO FORMA ASSOCIATES GROUP COMBINED RETURN" means a pro forma
non-federal combined tax return or other schedule prepared pursuant to Section
2.4 of this Agreement.
1.23. "PRO FORMA ASSOCIATES GROUP CONSOLIDATED RETURN" means a pro
forma consolidated federal income tax return prepared pursuant to Section 2.3
of this Agreement.
1.24. "POST-DECONSOLIDATION PERIOD" means a taxable period beginning
after the Deconsolidation Date.
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1.25. "REDETERMINATION AMOUNT" means, with respect to any taxable
year, the amount determined under Section 3.8 of this Agreement.
1.26. "STRADDLE PERIOD" means a taxable period beginning on or prior
to and ending after the Deconsolidation Date.
1.27. "TAX ASSET" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or any other
deduction, credit or tax attribute which could reduce taxes (including without
limitation deductions and credits related to alternative minimum taxes).
1.28. "TAX AUTHORITY" includes the Internal Revenue Service and any
state, local, or other governmental authority responsible for the
administration of any Taxes.
1.29. "TAXES" means Federal Income Taxes and Non-Federal Taxes.
1.30. "TAX RETURN" means any return, declaration, statement, report,
schedule, certificate, form, information return or any other document (and any
related or supporting information) including an amended tax return required to
be supplied to, or filed with, a Tax Authority with respect to Taxes.
SECTION 2. TAX SHARING
2.1. ASSOCIATES LIABILITY FOR FEDERAL INCOME TAXES AND NON-FEDERAL
COMBINED TAXES. Each taxable year, Associates shall pay to Ford an amount
equal to the sum of the Associates Group Federal Income Tax Liability and the
Associates Group Combined Tax Liability for such taxable year.
2.2 FORD LIABILITY FOR FOREIGN TAX AMOUNT. With respect to each
taxable year, Ford shall pay to Associates an amount equal to the Foreign Tax
Amount for such taxable year.
2.3. ASSOCIATES GROUP FEDERAL INCOME TAX LIABILITY. (a) IN GENERAL.
With respect to any taxable year, the Associates Group Federal Income Tax
Liability shall be the sum, for such taxable year, of (1) the Associates
Group's liability for Federal Income Taxes as determined on the Pro Forma
Associates Group Consolidated Return, (2) any interest, penalties and other
additions to such taxes, and (3) any AMT Penalty, less any credit for any AMT
Penalty for a prior taxable year.
(b) PRO FORMA FEDERAL RETURN. Each taxable year, Ford shall prepare
or cause to be prepared a pro forma consolidated federal income tax return for
the Associates Group ("Pro Forma Associates Group Consolidated Return") as if
the Associates Group were not and never were part of the Consolidated Group,
but rather were a separate affiliated group of corporations of which the
Associates were the common parent filing a consolidated federal income tax
return pursuant to Section 1501 of the Code.
(c) OPERATING RULES. The Pro Forma Associates Group Consolidated
Return shall be prepared:
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(1) reflecting the elections, methods of accounting, and
positions with respect to specific items made or used in the Consolidated
Return;
(2) taking into account any deduction or credit for Tax
Assets, excluding Creditable Foreign Taxes;
(3) without regard to any graduated rates of tax; and
(4) reflecting transactions with members of the Consolidated
Group that are not also members of the Associates Group according to the
provisions of the consolidated return regulations promulgated under the Code
governing intercompany transactions (no item (including income, gains, losses,
deductions and credits) of any member of the Consolidated Group that is not a
member of the Associates Group shall otherwise be taken into account).
(d) AMT PENALTY. (1) IN GENERAL. For any taxable year with respect
to which the Consolidated Group is subject to the alternative minimum tax
imposed under Section 55 of the Code or is allowed any amount as a credit under
Section 53 of the Code, the AMT Penalty shall equal (i) the amount by which
(A) the sum of the Associates Group's adjustments, as defined in Section 56 of
the Code, and preferences, as defined in Section 57 of the Code, exceeds (B)
10% of the Associates Group's taxable income, as defined in Section 63(a) of
the Code, each as determined on the Pro Forma Associates Group Consolidated
Return for such taxable year, multiplied by (ii) the rate specified in Section
55(b)(1)(B)(i) of the Code.
(2) CREDIT FOR PRIOR AMT PENALTY. The AMT Penalty for any
taxable year shall be allowed as a credit in computing the Associates Group
Federal Income Tax Liability for any subsequent taxable year with respect to
which the Consolidated Group no longer has available any amount that could be
allowable as a credit under Section 53 of the Code.
2.4. ASSOCIATES GROUP COMBINED TAX LIABILITY. (a) IN GENERAL. With
respect to any taxable year, the Associates Group Combined Tax Liability shall
be the sum, for such taxable year, of (1) the Associates Group's liability for
Combined Taxes as determined on the Pro Forma Associates Group Combined Return,
(2) any interest, penalties and other additions to such taxes
(b) PRO FORMA COMBINED RETURN. Each taxable year, Ford shall prepare
or cause to be prepared a pro forma combined tax return or other schedule for
the Associates Group ("Pro Forma Associates Group Combined Return") determined
as if the Associates Group were not and never were part of the Combined Group,
but rather were a separate group of which the Associates were the common parent
filing a combined tax return.
(c) OPERATING RULES. The Pro Forma Associates Group Combined Return
shall be prepared by reference to:
(1) the Associates Group's taxable income or loss from Line
28 of the Pro Forma Associates Group Consolidated Return, adjusted to take into
account (i) those members of the Associates Group which are included in the
Combined Return, (ii) net operating loss carryforwards, and (iii) material
adjustments necessary to reflect the laws of the applicable jurisdiction (e.g.,
to exclude "subpart F income" and "gross-up");
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(2) apportionment factors determined by taking into account
only those members of the Associates Group which are included in the Combined
Return; and
(3) the highest applicable tax rate without regard to any graduated rates.
(d) ADDITIONAL OPERATING RULES. The following additional provisions
shall apply in determining the Associates Group Combined Tax Liability:
(1) Ford shall not pay the Associates Group for any Tax Asset
relating to any Non-Federal Combined Tax, including any net operating loss
carrybacks or carryovers, not otherwise taken into account under Section 2.4(b)
of this Agreement;
(2) the Associates Group liability with respect to
unemployment taxes for which a Combined Return is filed shall be the lesser of
(i) the liability for such taxes of the members of the Associates Group which
are included in the Combined Return determined utilizing the tax rate
applicable to the Combined Return and (ii) the liability for such taxes of the
members of the Associates Group which are included in the Combined Return
determined as if such members of the Associates Group were not and never were
part of the Combined Group, but rather were a separate group filing a combined
unemployment tax return.
2.5. FOREIGN TAX CREDIT. (a) IN GENERAL. With respect to each
taxable year, the Foreign Tax Amount shall be the amount of actual tax savings
(adjusted to reflect cumulative savings), if any, realized for such taxable
year by the Consolidated Group (taking into account carrybacks and
carryforwards) with respect to Creditable Foreign Taxes.
(b) AMOUNT. (1) GENERAL RULE. The amount of any such tax savings
for a taxable year shall be determined either (i) by comparing the Consolidated
Group's foreign tax credit computed by taking into account the Associates Group
to the Consolidated Group's foreign tax credit computed without taking into
account the Associates Group, or (ii) if a deduction is claimed for Creditable
Foreign Taxes, by comparing the Consolidated Group's liability for Federal
Income Taxes computed by taking into account such Creditable Foreign Taxes to
the Consolidated Group's liability for Federal Income Taxes computed without
taking into account such Creditable Foreign Taxes.
(2) LIMITATIONS. In no event shall the amount determined
under Section 2.5(b)(1)(i) of this Agreement for a taxable year exceed the
amount of Creditable Foreign Taxes taken into account during such taxable year.
In addition, the amount of Creditable Foreign Taxes taken into account during a
taxable year shall be reduced, as Ford determines may be appropriate, to the
extent such Creditable Foreign Taxes have been reflected in Ford's consolidated
financial statements for periods prior to the date of this Agreement.
(3) REDUCTION FOR DEFICIT IN OTHER TAXABLE YEARS. If, for
any taxable year, the Consolidated Group's foreign tax credit computed without
taking into account the Associates Group exceeds the Consolidated Group's
foreign tax credit computed by taking into account the Associates Group, the
amount of such excess shall be applied against and reduce the Foreign Tax
Amount for any other taxable year (after taking into account any reduction in
such Foreign Tax Amount by reason of such an excess in a prior taxable year)
covered by this Agreement. If Ford has already paid Associates the Foreign Tax
Amount for a taxable year and such amount is
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subsequently reduced under this Section 2.5(b)(3), Associates shall pay to Ford
the amount of such reduction.
SECTION 3. PAYMENT OF TAXES AND TAX SHARING AMOUNTS
3.1. FEDERAL INCOME TAXES. Ford shall pay to the Internal Revenue
Service all Federal Income Taxes, if any, of the Consolidated Group (including
the Associates Group) due and payable for all Pre-Deconsolidation Periods.
3.2. NON-FEDERAL COMBINED TAXES. Ford shall pay to the appropriate
Tax Authorities all Non-Federal Combined Taxes, if any, of the Combined Group
(including the Associates Group) due and payable for all Pre-Deconsolidation
Periods and Straddle Periods.
3.3. NON-FEDERAL SEPARATE TAXES. Associates shall pay to the
appropriate Tax Authorities all Non-Federal Separate Taxes, if any, of the
Associates Group due and payable for all Pre-Deconsolidation Periods and
Straddle Periods.
3.4. OTHER FEDERAL TAXES. The parties shall each pay to the
appropriate governmental authorities all of their respective Federal Taxes
(excluding Federal Income Taxes for Pre-Deconsolidation Periods, which are
governed by Section 3.1 of this Agreement), if any, due and payable for all
Pre-Deconsolidation Periods, Straddle Periods, and Post- Deconsolidation
Periods.
3.5. TAX SHARING INSTALLMENT PAYMENTS. (a) FEDERAL INCOME TAXES.
Not later than five business days prior to each Estimated Tax Installment Date
with respect to any Pre-Deconsolidation Period or Straddle Period, Ford shall
determine under Section 6655 of the Code the estimated amount of the related
installment of the Associates Group Federal Income Tax Liability. Associates
shall then pay to Ford not later than such Estimated Tax Installment Date the
amount thus determined.
(b) NON-FEDERAL COMBINED TAXES. Not later than November 15 of each
taxable year with respect to any Pre- Deconsolidation Period or Straddle
Period, Ford shall deliver to Associates an estimate of the Associates Group
Combined Tax Liability for the taxable year determined by using the previous
year's apportionment factors. Associates shall then pay to Ford, not later
than 10 business days after receipt of such estimate, the amount thus
determined.
3.6. TAX SHARING TRUE-UP PAYMENTS. (a) FEDERAL INCOME TAXES. Not
later than 30 business days after the Consolidated Return is filed with respect
to any Pre-Deconsolidation Period or Straddle Period, Ford shall deliver to
Associates a Pro Forma Associates Group Consolidated Return or other comparable
schedule reflecting the Associates Group Federal Income Tax Liability. Not
later than 5 business days after the date such pro forma or other schedule is
delivered, Associates shall pay to Ford, or Ford shall pay to Associates, as
appropriate, an amount equal to the difference, if any, between the Associates
Group Federal Income Tax Liability for the taxable year and the aggregate
amount paid by Associates with respect to such taxable year under Section
3.5(a) of this Agreement.
(b) NON-FEDERAL COMBINED TAXES. Not later than November 15 following
each taxable year with respect to any Pre-Deconsolidation Period or Straddle
Period, Ford shall deliver to Associates a Pro Forma Associates Group Combined
Return or other comparable schedule
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reflecting the Associates Group Combined Tax Liability for the taxable year.
Not later than 10 business days following delivery of such pro forma or other
schedule, Associates shall pay to Ford, or Ford shall pay to Associates, as
appropriate, an amount equal to the difference, if any, between the Associates
Group Combined Tax Liability for the taxable year and the amount paid by
Associates with respect to such taxable year under Section 3.5(b) of this
Agreement.
3.7. FOREIGN TAX AMOUNTS. (a) IN GENERAL. Not later than 30
business days after the Consolidated Return is filed with respect to any
Pre-Deconsolidation Period or Straddle Period, Ford shall deliver to Associates
a schedule reflecting the amounts required to be paid under this Section 3.7.
(b) GENERAL RULE. Ford shall pay to Associates the Foreign Tax
Amount, if any, with respect to a taxable year in two installments.
(1) Not later than 5 business days after the date the
schedule is delivered, Ford shall pay to Associates the first installment. The
first installment shall be an amount equal to the lesser of the amount of tax
savings for such taxable year computed (i) under the principles of Section
2.5(b) of this Agreement without taking into account carrybacks from, or
deficits in, succeeding taxable years, or (ii) under the principles of Section
2.5(b) of this Agreement as if the Associates Group were not and never were
part of the Consolidated Group, but rather were a separate affiliated group of
corporations of which the Associates were the common parent filing a
consolidated federal income tax return pursuant to Section 1501 of the Code,
applying the principles of Section 2.3(c) of this Agreement (other than the
exclusion of Creditable Foreign Taxes under Section 2.3(c)(2) of this
Agreement) and without taking into account carrybacks from, or deficits in,
succeeding taxable years.
(2) Ford shall pay Associates the second installment upon the
earlier of (i) the date at which the ability to claim a credit for such
Creditable Foreign Taxes for such taxable year would expire under Section
904(c) of the Code if unutilized, or (ii) the Deconsolidation Date. The second
installment shall be an amount equal to the difference, if any, between the
Foreign Tax Amount for such taxable year and the amount paid to Associates in
the first installment under Section 3.7(b)(1) of this Agreement for such
taxable year.
(c) TRUE-UP PAYMENTS. If, for any reason (including a carryback
from, or a deficit in, a succeeding taxable year, but excluding a
redetermination taken into account under Section 3.8 of this Agreement), the
Foreign Tax Amount for a taxable year is reduced, Associates shall pay to Ford,
not later than 5 business days after the date the schedule is delivered, an
amount equal to the difference, if any, between the amounts Ford has paid to
Associates for such taxable year under Section 3.7(b) of this Agreement and the
amount Ford would have paid to Associates under Section 3.7(b) of this
Agreement taking into account such reduction.
3.8. REDETERMINATION AMOUNTS. (a) IN GENERAL. In the event of any
redetermination of any item of income, gain, loss, deduction or credit of any
member of the Consolidated Group or Combined Group as a result of a Final
Determination or any settlement or compromise with any Tax Authority (including
any amended tax return or claim for refund filed by Ford), Associates shall pay
Ford or Ford shall pay Associates, as the case may be, the Redetermination
Amount.
(b) COMPUTATION. The Redetermination Amount shall be the difference,
if any, between all amounts previously determined under Section 2 of this
Agreement and all amounts that would
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have been determined under Section 2 of this Agreement taking such
redetermination into account (including any additions to tax or penalties
applicable thereto), together with interest for each day calculated (1) with
respect to redeterminations affecting Federal Income Taxes, at the rate
determined, in the case of payment by Associates, under Section 6621(a)(1) of
the Code and, in the case of payment by Ford, under Section 6621(a)(2) of the
Code, and (2) with respect to redeterminations affecting Non-Federal Combined
Taxes, under similar laws, if any, of other jurisdictions.
(c) PAYMENT. Ford shall deliver to Associates a schedule reflecting
the computation of any Redetermination Amount with respect to any taxable year.
Not later than 5 days after the date such schedule is delivered, Associates
shall pay Ford, or Ford shall pay Associates such Redetermination Amount,
provided however, that in no event shall any Redetermination Amount
attributable to any Foreign Tax Amount be paid earlier than the date provided
in Section 3.7 of this Agreement.
3.9. INTEREST. Payments under this Section 3 that are not made
within the prescribed period shall thereafter bear interest at the Federal
short-term rate established pursuant to Section 6621 of the Code.
SECTION 4. PROCEDURAL MATTERS
4.1. AGENT; PREPARATION AND FILING OF RETURNS. Ford shall be the
sole and exclusive agent of Associates and any member of the Associates Group
in any and all matters relating to (a) Federal Income Taxes of the Consolidated
Group and (b) any Non-Federal Combined Taxes for all Pre-Deconsolidation
Periods and Straddle Periods. Ford shall have the sole and exclusive
responsibility for the preparation and filing of any (a) Consolidated Return or
(b) Combined Return for all Pre-Deconsolidation Periods and Straddle Periods.
In its sole discretion, Ford shall have the exclusive right with respect to any
such Consolidated Return or Combined Return (a) to determine (1) the manner in
which such Tax Return shall be prepared and filed, including, without
limitation, the manner in which any item of income, gain, loss, deduction or
credit shall be reported, (2) whether any extensions may be requested, (3) the
elections that will be made by any member of the Consolidated Group or Combined
Group, and (4) whether any amended tax returns should be filed, (b) to control,
contest, and represent the interests of the Consolidated Group and Combined
Group in any Audit and to resolve, settle, or agree to any adjustment or
deficiency proposed, asserted or assessed as a result of any Audit, (c) to
file, prosecute, compromise or settle any claim for refund, and (d) to
determine whether any refunds, to which the Consolidated Group or Consolidated
Group may be entitled, shall be paid by way of refund or credited against the
tax liability of the Consolidated Group and Combined Group. Associates, for
itself and its subsidiaries, hereby irrevocably appoints Ford as its agent and
attorney-in-fact to take such action (including the execution of documents) as
Ford may deem appropriate to effect the foregoing.
4.2. FURNISHING INFORMATION. Each member of the Associates Group
shall (a) furnish to Ford in a timely manner such information and documents as
Ford may reasonably request for purposes of (1) preparing any original or
amended Consolidated Return or Combined Return, (2) contesting or defending any
Audit, and (3) making any determination or computation necessary or appropriate
under this Agreement, (b) cooperate in any Audit of any Consolidated Return or
Combined Return, (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
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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
therewith. Ford shall provide the Associates Group any assistance reasonably
required in providing any information requested pursuant to this Section 4.2.
4.3. EXPENSES. Associates shall reimburse Ford for any outside legal
and accounting expenses incurred by Ford in the course of the conduct of any
Audit regarding the tax liability of the Combined Group or Consolidated Group,
and for any other expense incurred by Ford in the course of any litigation
relating thereto, to the extent such costs are reasonably attributable to the
Associates Group and provided Ford has conferred with Associates as to the
portion of the Audit relating to the Associates Group. Notwithstanding the
foregoing, Ford shall have the sole discretion to control, contest, represent,
file, prosecute, challenge or settle any Audit.
SECTION 5. DECONSOLIDATION
5.1. CONTINUING COVENANTS. Associates, for itself and the Associates
Affiliates, covenants that on or after a Deconsolidation it will not, nor will
it cause or permit any member of the Associates Group to make or change any tax
election, change any accounting method, amend any tax return or take any tax
position on any tax return, take any action, omit to take any action or enter
into any transaction that results in any increased tax liability or reduction
of any Tax Asset of the Ford Group in respect of any Pre-Deconsolidation
Period or Straddle Period.
5.2 REATTRIBUTION OF TAX ASSETS. In the event of a Deconsolidation,
Ford may, at its option, elect to reattribute to itself certain Tax Assets of
the Associates Group pursuant to Treasury Regulations Section 1.1501-20(g) or
similar provisions of other jurisdictions. If Ford makes such an election,
Associates shall comply with any applicable requirements, including those of
Treasury Regulations Section 1.1502-20(g)(5).
5.3. CARRYBACKS. Ford agrees to pay to Associates the actual tax
benefit received by the Ford Group from the use in any Pre-Deconsolidation
Period of a carryback of any Tax Asset of the Associates Group from a Post-
Deconsolidation Period. Such benefit shall be considered equal to the lesser
of (a) the amount Ford would have paid Associates had such Tax Asset arisen in
a Pre-Deconsolidation Period and (b) the excess of (1) the amount of Federal
Income Taxes imposed on the Consolidated Group or the amount of Combined Taxes
imposed on the Combined Group, as the case may, that would have been payable by
the Consolidated Group or Combined Group in the absence of such carryback over
(2) the amount of Federal Income Taxes or Combined Taxes, as the case may be,
actually paid. Payment of the amount of such benefit shall be made within 90
days of the filing of the applicable tax return for the taxable year in which
the Tax Asset is utilized. If subsequent to the payment by Ford to Associates
of any such amount, there shall be (a) a Final Determination which results in a
disallowance or a reduction of the Tax Asset so carried back or (b) a reduction
in the amount of the benefit realized by the Ford Group as a result of any
other Tax Asset that arises in a Post- Deconsolidation Period, Associates shall
repay to Ford, within 90 days of such event any amount which would not have
been payable to Associates pursuant to this Section 5.3 had the amount of the
benefit been determined in light of these events. Associates shall hold Ford
harmless for any penalty, addition to tax or interest payable by any member of
the Ford Group as a result of any such event. Any such amount shall be paid by
Associates to Ford within 90 days of the payment by Ford or any member of the
Consolidated
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Group or Combined Group of any such penalty, addition to tax, or interest.
Nothing in this Section 5.3 shall require Ford to file a claim for refund of
Federal Income Taxes or Combined Taxes.
5.4. CREDIT FOR REMAINING AMT PENALTY. Ford agrees to pay to
Associates an amount equal to the aggregate AMT Penalties for all
Pre-Deconsolidation Periods that have not been allowed as a credit under
Section 2.3(d)(2) of this Agreement, reduced by the amounts allowable as a
credit under Section 53 of the Code attributable to the Associates Group, at
such time as a credit for such AMT Penalties would be allowed under the
principles of Section 2.3(d)(2) of this Agreement with respect to any
Post-Deconsolidation Period.
SECTION 6. MISCELLANEOUS
6.1. TERM. This Agreement shall expire upon the Deconsolidation
Date; provided, however, that all rights and obligations arising hereunder with
respect to a Pre-Deconsolidation Period or Straddle Period shall survive until
they are fully effectuated or performed and, provided, further, that
notwithstanding anything in this Agreement to the contrary, all rights and
obligations arising hereunder with respect to a Post-Deconsolidation Period
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).
6.2. ALLOCATIONS. All computations with respect to the
Pre-Deconsolidation Period ending on the Deconsolidation Date, the immediately
following taxable period of Associates and the Associates Group and any
Straddle Period shall be made pursuant to the principles of Treasury
Regulations Section 1.1502-76(b), taking into account such elections thereunder
as Ford, in its sole discretion, shall make.
6.3. CHANGES IN LAW. Any reference to a provision of the Code or a
similar law of another jurisdiction shall include a reference to any successor
provision to such provision.
6.4. 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 6.4. 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. 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 (including any
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successor of Ford and Associates succeeding to the tax attributes of such party
under Section 381 of the Code), to the same extent as if such successor had
been an original party.
6.6. 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.
6.7. ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements. Notwithstanding the foregoing, the Tax
Allocation Agreement, dated August 31, 1992, and State Tax Allocation
Agreement, dated February 4, 1993, among Ford Holdings, Inc. and its
subsidiaries, shall continue to apply to taxable periods ending on or before
December 31, 1995.
6.8. SECTION CAPTIONS. Section captions used in this Agreement are
for convenience and reference only and shall not affect the construction of
this Agreement.
6.9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan without giving
effect to laws and principles relating to conflicts of law.
6.10. 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.
6.11. WAIVERS AND AMENDMENTS. This Agreement shall not be waived,
amended or otherwise modified except in writing, duly executed by all of the
parties hereto.
6.12. SEVERABILITY. In case any one or more of the provisions in
this Agreement should be invalid, illegal or unenforceable, the enforceability
of the remaining provisions hereof will not in any way be effected or impaired
thereby.
6.13. NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties to this Agreement and the other members of the
Affiliated Group 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.
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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
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Name:
Title:
ASSOCIATES FIRST CAPITAL CORPORATION
on behalf of itself and its subsidiaries
By
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Name:
Title:
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