Profit Maintenance Agreement - Ford Motor Co. and Ford Motor Credit Co.
AMENDED AND RESTATED PROFIT
MAINTENANCE AGREEMENT dated as of
July 1, 1993 between Ford Motor
Company, a Delaware corporation
(hereinafter called "Ford"),
and Ford Motor Credit Company, a
Delaware corporation (hereinafter
called "Ford Credit")
WITNESSETH:
WHEREAS, Ford and Ford Credit (i) entered into a profit
maintenance agreement dated as of December 12, 1974, as amended
by amendments dated as of April 14, 1978, January 15, 1980, March
28, 1989 and March 15, 1990; and (ii) desire to further amend and
restate the same to read as set forth below (such amended and
restated profit maintenance agreement being hereinafter called
the "Agreement").
NOW, THEREFORE, the parties hereto agree that the Agreement
shall read as follows:
WHEREAS, Ford Credit is a wholly-owned subsidiary of Ford;
WHEREAS, Ford Credit has agreed, for the remainder of the
calendar year 1993 and for each subsequent calendar year through
1998, to continue to make available financing accommodations to
dealers in vehicles manufactured or sold by Ford to no less an
extent than Ford Credit made such services available during the
calendar year 1992 and the first half of 1993.
WHEREAS, in consideration of the foregoing, Ford has agreed
to make payments to Ford Credit in the events and upon the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual agreements hereinafter provided, the parties hereto hereby
agree as follows:
1. As used herein, "Invested Capital" shall mean an amount
equal to stockholder's equity less net assets of unconsolidated
subsidiaries, as shown on a consolidated balance sheet of Ford
Credit and its consolidated subsidiaries, determined as of the
beginning of the calendar year for which any computation is made
hereunder.
2.(a) Ford shall make a payment, to the extent required, to
Ford Credit, as of the end of each quarterly accounting period
during the years 1993 through 1998 (beginning with the third
quarter of 1993), equal to the greater of (i) an amount
sufficient to cause the income before income taxes of Ford Credit
and its consolidated subsidiaries, for the portion of the
calendar year ended at the end of such quarterly period, as shown
on a consolidated statement of income of Ford Credit and its
consolidated subsidiaries for such portion of the calendar year,
to be not less than 2% on an annualized basis of Invested
Capital, or (ii) an amount sufficient to cause the net income of
Ford Credit and its consolidated subsidiaries (which is, among
other things, after provision for income taxes and after giving
effect to net income or loss of unconsolidated subsidiaries), for
such portion of the calendar year, as shown on such statement of
income, to be not less than 1% on an annualized basis of Invested
Capital. In the event that the amounts computed under clauses
(i) and (ii) above shall be equal, Ford shall make a payment to
Ford Credit equal to such amount.
(b) In the event that Ford shall have made a payment to
Ford Credit under paragraph 2(a) with respect to any portion of a
calendar year, and Ford Credit thereafter shall have, for the
portion of the calendar year ended at the end of any subsequent
quarterly accounting
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period during the same calendar year, both
(i) income before income taxes of Ford Credit and its
consolidated subsidiaries in an amount in excess of 2% on an
annualized basis of Invested Capital, and (ii) net income of Ford
Credit and its consolidated subsidiaries in an amount in excess
of 1% on an annualized basis of Invested Capital, Ford Credit
shall make a repayment to Ford equal to the lesser of (A) an
amount sufficient to reduce income before income taxes of Ford
Credit and its consolidated subsidiaries to 2% on an annualized
basis of Invested Capital, or (B) an amount sufficient to reduce
net income of Ford Credit and its consolidated subsidiaries to 1%
on an annualized basis of Invested Capital (but not to exceed the
aggregate of any payments made to Ford Credit hereunder during
such year less any prior repayments made by Ford Credit during
such year under this paragraph 2(b)). In the event that the
amounts computed under the clauses (A) and (B) above shall be
equal, Ford Credit shall make a repayment to Ford equal to such
amount.
3. Ford Credit shall continue to make wholesale inventory
and retail financing accommodations generally available to
dealers in vehicles manufactured or sold by Ford and to their
customers during the remainder of 1993 and during each subsequent
calendar year through 1998 to no less an extent than Ford Credit
made such services available during 1992 and the first half of
1993.
4. All determinations hereunder shall be made in accordance
with generally accepted accounting principles.
5. This Agreement contains the entire agreement between the
parties hereto with respect to the transactions contemplated
hereby and shall supersede all prior agreements between the
parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
Attest: FORD MOTOR COMPANY
/Thomas DeZure/ /M.S. Macdonald/
FORD MOTOR CREDIT COMPANY
/Hurley D. Smith/ /W. O. Staehlin/
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