AMENDED AND RESTATED AGREEMENT
This
Amended and Restated Agreement (the "Agreement") dated as of December 12, 2006
is made and entered into between Ford Motor Company, a Delaware corporation
("Ford"), and Ford Motor Credit Company, a Delaware corporation ("Ford
Credit").
RECITALS
X.
Xxxx Credit supports the sale of Ford's products by providing, among other
things, wholesale, retail and lease financing for the purchase and lease of
those products.
X.
Xxxx Credit is highly dependent on the public debt markets to raise funds for
its business.
X.
Xxxx Credit's ability to raise funds in the public debt markets is highly
dependent on its credit ratings, which, in turn, are dependent on the level
of
Ford Credit's equity capital, the quality of its assets and its
liquidity.
D.
It is important to the success of Ford that Ford Credit remains a viable finance
company that can fund itself in the public debt markets and continue supporting
the sale of Ford's products.
E.
Towards maintaining the viability of Ford Credit, the parties entered into
an
agreement dated October 18, 2001 (the "October 18, 2001 Agreement") that
provides for certain agreements regarding transactions between them and the
creditworthiness of Ford Credit.
F.
The parties desire to amend the October 18, 2001 Agreement to, among other
things, provide for the right to offset their obligations to each
other.
NOW,
THEREFORE, for good and valuable consideration and the mutual agreements herein
provided, the parties agree as follows:
1.
The parties agree that all Affiliate Receivables (as defined below) shall be
on
arm's-length terms. For purposes hereof, "Affiliate Receivables" means any
advance, loan, extension of credit, or other financing to Ford or any affiliate
of Ford whose assets and liabilities are classified on Ford's consolidated
balance sheet as Automotive ("Automotive Affiliate"). Ford Credit shall enforce,
and cause any affiliate of Ford Credit whose assets and liabilities are
consolidated with Ford Credit's on Ford Credit's consolidated balance sheet
("Credit Affiliate") to enforce, all Affiliate Receivables in a commercially
reasonable manner, and Ford shall pay, shall cause its Automotive Affiliates
to
pay and shall guarantee its Automotive Affiliates’ payment of, Affiliate
Receivables in accordance with their terms.
2.
Ford Credit shall not, nor shall it permit any Credit Affiliate to, guarantee
any indebtedness of (other than Permitted Guarantees), or purchase any equity
securities issued by, or make any other investment in, Ford (parent company
only) or any Automotive Affiliate. In addition, Ford Credit shall not, nor
shall
it permit any Credit Affiliate to, purchase or finance any real property (other
than Permitted Mortgages) or manufacturing equipment (including tooling) from
or
of Ford or any Automotive Affiliate that is classified as an Automotive asset
on
Ford's consolidated balance sheet. Ford shall not, nor shall it permit any
Automotive Affiliate to request or require Ford Credit or any Credit Affiliate
to do any of the transactions prohibited by this paragraph 2. For purposes
hereof, "Permitted Guarantees" shall mean guarantees by Ford Credit or Credit
Affiliates of indebtedness of Ford or Automotive Affiliates which at any time
does not exceed $500 million in the aggregate, and "Permitted Mortgages" shall
mean financing by Ford Credit or Credit Affiliates of real property of Ford
or
Automotive Affiliates which at any time does not exceed $500 million in the
aggregate.
3.
Ford and Ford Credit agree that Ford Credit's total stockholder's equity as
stated on or reflected in its consolidated financial statements shall, at the
end of any calendar quarter during which this Agreement is in effect, be
maintained at a commercially reasonable level appropriate to support the amount,
quality and mix (i.e., retail finance receivables, wholesale finance receivables
and lease receivables) of Ford Credit's assets as stated on or reflected in
its
consolidated financial statements for the same calendar quarter, taking into
account general business conditions affecting Ford Credit.
4.
Ford Credit shall, and shall cause each Credit Affiliate to, conduct its
business, including its finance and lease business, in a prudent and
commercially reasonable manner, including maintaining and adhering to credit
risk underwriting standards for finance and lease receivables and residual
assumptions for lease receivables it acquires or originates that are consistent
with industry standards. Ford shall not, nor shall it permit any Automotive
Affiliate to, require Ford Credit or any Credit Affiliate to accept credit
or
residual risk beyond what it would be willing to accept acting in a prudent
and
commercially reasonable manner. For avoidance of doubt, acquisition or
origination of finance or lease receivables having terms that are not
market-based shall be considered to be prudent and commercially reasonable
if
subsidies (in the form of interest rate subvention payments, guarantees,
residual risk sharing arrangements or otherwise) are provided by Ford or an
Automotive Affiliate in an amount sufficient to assure that Ford Credit or
a
Credit Affiliate, as the case may be, will receive the economic benefits of
such
receivables as if they had been acquired or originated on market-based terms.
Notwithstanding the foregoing, in recognition of the fact that Ford uses Ford
Credit as the exclusive provider of financial services for special retail and
lease programs to support the sale of products manufactured by Ford and other
Automotive Affiliates, it is understood that it would be commercially reasonable
and prudent for Ford Credit to accept, to a limited extent, higher levels of
credit risk than it might otherwise accept in order to continue as the exclusive
provider of financial services to Ford and the other Automotive Affiliates
with
respect to such programs. For any given program, Ford Credit may waive its
right
to be the exclusive provider of financial services to Ford and the other
Automotive Affiliates.
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5.
Ford and Ford Credit agree that (a) Ford Credit shall at all times maintain
its
books, records, financial statements and bank accounts separate from those
of
Ford and any Automotive Affiliate; (b) Ford Credit shall maintain its assets
in
such a manner that it will not be costly or difficult to segregate, ascertain
or
identify its assets from those of Ford and any Automotive Affiliate; (c) the
funds and other assets of Ford Credit shall not be commingled with those of
Ford
or any Automotive Affiliate; (d) Ford Credit shall at all times hold itself
out
as a legal entity separate and distinct from Ford and any Automotive Affiliate;
(e) except with respect to the performance of their respective obligations
under
that certain Amended and Restated Profit Maintenance Agreement dated as of
January 1, 2002 between Ford and Ford Credit (as it may be amended from time
to
time), each will act in a manner and conduct its business such that creditors
of
Ford, acting reasonably, will rely primarily on the creditworthiness of, and
look solely to the assets of Ford, for repayment of indebtedness and creditors
of Ford Credit, acting reasonably, will rely primarily on the creditworthiness
of, and look solely to the assets of Ford Credit, for repayment of indebtedness;
and (f) they otherwise will take such reasonable and customary action so that
Ford Credit will not be consolidated with Ford or any Automotive Affiliate
in
any case or other proceeding seeking liquidation, reorganization or other relief
with respect to Ford or any Automotive Affiliate or its debts under any
bankruptcy, insolvency or other similar law.
6.
The sum of (i) the aggregate amount of unused committed credit facilities,
(ii)
the unutilized portion of the aggregate dollar amount of receivables that
bank-sponsored, commercial paper issuers (conduits) are contractually committed
to purchase from Ford Credit and (iii) cash, cash equivalents and marketable
securities (and any other sources of liquidity that may be agreed upon from
time
to time) of Ford Credit and its consolidated subsidiaries shall at all times
be
at least equal to 100% of the outstanding commercial paper of Ford Credit and
its consolidated subsidiaries.
7.
In the event that Ford or any of its subsidiaries engages in a corporate
transaction that causes the Pension Benefit Guaranty Corporation ("PBGC") to
threaten to terminate the pension plans sponsored by Ford or any of its
subsidiaries, Ford shall, or shall cause any of its subsidiaries to, seek to
negotiate a settlement with the PBGC to avoid an involuntary plan termination.
In connection with such negotiated settlement, Ford shall endeavor not to grant
to the PBGC a security interest in the assets of Ford Credit that has priority
over the claims of unsecured creditors of Ford Credit.
8.
All determinations to be made under this Agreement shall be made in accordance
with, or with reference to financial statements prepared in accordance with,
United States generally accepted accounting principles. For purposes of this
Agreement, the term "lease receivables" shall mean "net investment in operating
leases" as stated on or reflected in Ford Credit's consolidated financial
statements.
9.
During the term of this Agreement, Ford Credit shall continue to make inventory
and capital financing generally available to dealers of vehicles manufactured
or
sold by Ford or its Automotive Affiliates and shall continue to make retail
and
lease financing generally available to such dealers' customers to substantially
the same extent that Ford Credit has historically made such services available,
so long as providing such services to such an extent would not result in a
breach of any of the foregoing provisions. Nothing herein precludes Ford Credit
from providing or continuing to provide financial services to automotive
manufacturers other than Ford or its Automotive Affiliates.
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10.
In addition to any rights of set-off Ford and Ford Credit may have against
the
other as a matter of law or otherwise, (a) upon Ford Credit having failed,
or
being reasonably expected by Ford to fail, to make payments in the ordinary
course of business on a Ford Credit Obligation or upon the commencement of
any
bankruptcy, insolvency or similar proceeding of Ford Credit or any Credit
Affiliate, Ford will have the right (but will not be obliged) without prior
notice to Ford Credit or any other person to set-off any Ford Credit Obligations
(whether matured or contingent, regardless of the currency or terms of the
obligation) against Ford Obligations (whether matured or contingent, regardless
of the currency or terms of the obligation) and (b) upon Ford having failed
to,
or being reasonably expected by Ford Credit to fail to, make payments in the
ordinary course of business on a Ford Obligation or upon the commencement of
any
bankruptcy, insolvency or similar proceeding of Ford or an Automotive Affiliate,
Ford Credit will have the right (but will not be obliged) without prior notice
to Ford or any other person to set-off any Ford Obligations (whether matured
or
contingent, regardless of the currency or terms of the obligation) against
Ford
Credit Obligations (whether matured or contingent, regardless of the currency
or
terms of the obligation). If the amount of either a Ford Obligation or a Ford
Credit Obligation is unascertained, Ford or Ford Credit (as the case may be)
may
in good faith estimate that obligation and set-off in respect of the estimate,
subject to Ford or Ford Credit (as the case may be) accounting to the other
when
the amount of such obligation is ascertained. For the avoidance of doubt, it
is
understood that nothing in this paragraph creates a security interest. For
purposes of this Agreement, the Ford Obligations shall consist of the following
obligations (whether or not then due) of Ford or an Automotive Affiliate to
Ford
Credit or a Credit Affiliate: (i) interest rate subvention; (ii) lease residual
subvention; (iii) intercompany payables; (iv) notes payable; (v)
uncollateralized guarantees; (vi) FMC Related Receivables; and (vii) any other
obligation of, or guaranteed by, Ford or an Automotive Affiliate owing to Ford
Credit or a Credit Affiliate whether or not it would appear as an asset on
a
consolidated balance sheet of Ford Credit. For purposes of this Agreement,
the
Ford Credit Obligations shall consist of the following obligations (whether
or
not then due) of Ford Credit or a Credit Affiliate to Ford or an Automotive
Affiliate: (i) notes payable; (ii) intercompany payables; (iii) retiree
healthcare and life insurance payables; (iv) intercompany payables for taxes;
and (v) any other obligation of Ford Credit or a Credit Affiliate owing to
Ford
or an Automotive Affiliate. The parties agree that interest rate and lease
subvention obligations of Ford and Automotive Affiliates may be prepaid at
any
time and from time to time, and if the agreements for such obligations do not
contain prepayment provisions, then the value of such subvention obligations
for
purposes of any prepayment thereof shall be calculated as the present value
thereof obtained by applying the then-current discount rate that has been agreed
to between Ford and Ford Credit. For purposes of this Agreement, the FMC Related
Receivables means the following types of receivables purchased by or assigned
to
Ford Credit or Credit Affiliates from Ford or Automotive Affiliates, or
originated by Ford Credit or Credit Affiliates, each of which may be guaranteed
(in whole or in part) by Ford or an Automotive Affiliate: receivables related
to
the sale of automotive parts and accessories by Ford or an Automotive Affiliate
(US, Canada, Europe and Asia Pacific), receivables related to the Ford Rent
A
Car (FRAC) program, receivables related to the company car program (US, Europe
and Asia), receivables related to the chassis converter program (US) and
receivables related to the used vehicle repurchase program (US, Canada and
Europe); provided, however, that FMC Related Receivables shall not include
any
of the foregoing receivables that have been sold in an on- or off-balance sheet
securitization or other structured financing transaction.
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11.
During the term of this Agreement, Ford shall, and hereby does, guarantee to
Ford Credit the Ford Obligations of Automotive Affiliates, and Ford Credit
shall, and hereby does, guarantee to Ford the Ford Credit Obligations of Credit
Affiliates.
12.
This Agreement shall be construed and interpreted in accordance with, and
governed by, the internal laws of the State of New York, excluding any choice
of
law rules that may direct the application of the laws of another
jurisdiction.
13.
This Agreement shall terminate on the Termination Date, which shall initially
be
December 11, 2011. On December 11, 2007, and on each December 11 thereafter
during the term of this Agreement, the Termination Date shall be extended
automatically for an additional one-year period (ending on the December 11
next
following the then-current Termination Date) unless either party shall have
given the other party written notice during the period beginning on the July
1
and ending on the November 1 immediately preceding such December 11, specifying
its election not to extend the Termination Date beyond the then-current
Termination Date and that the term of this Agreement shall, therefore, expire
on
such then-current Termination Date. Notwithstanding the foregoing, the
provisions of paragraph 10 relating to set-off shall survive the termination
of
this Agreement.
IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be duly executed as of the day
and
year first above written.
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FORD
MOTOR COMPANY
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FORD
MOTOR CREDIT COMPANY
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By:
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/s/
Xxx Xxxxx Xxxxxx
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By:
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/s/
Xxxxxxx X. Xxxx
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Xxx
Xxxxx Xxxxxx
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Xxxxxxx
X. Xxxx
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Vice
President and Treasurer
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Vice
Chairman, Chief Financial Officer and Treasurer
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