ex10a.htm


    
      
        

      

    

    Exhibit
10-A

    Ford
Motor Company

    


    VEBA TERM
SHEET

    Proposed
Terms

    


    
      
        
          	
                   

                  VEBA
      Payments

                   

                	
                   

                  All
      payments occurring on or after December 31, 2009, shall be made as set
      forth under “Payment Dates” below.  All payments occurring prior
      to December 31, 2009, including payments to the TAA, shall occur as
      scheduled under the 2007 VEBA Settlement.

                  Internal
      VEBA, TAA (other than the Short Term Note), and mitigation VEBA assets to
      be transferred consistent with 2007 VEBA Settlement.

                
	
                   

                  Payment
      Dates

                	
                   

                  All
      payments of principal, interest, and base payments occurring prior to
      December 31, 2009, to remain as scheduled per the 2007 VEBA
      settlement.  On the effective date of this settlement (the
      “Effective Date”), the existing payment obligations occurring on or after
      December 31, 2009, and the Notes created by the 2007 VEBA agreement (“the
      Notes”) shall be exchanged for two new notes (New Note A and New Note B),
      each having the payment schedules set out below with the payments
      allocated between New Note A  (having a principal amount of
      $6,630.47 million) and New Note B (having a principal amount of $6,511.85
      million) as indicated for each payment (the “New Notes”), the terms of
      which are further set forth herein.  For the avoidance of doubt,
      the Notes shall include the TAA Note.  The New Notes shall
      provide for the following payments from Ford to the VEBA:

                   

                
	 
      	
                  ■

                	
                  December
      31, 2009:  New Note A - $1,243.47 million, plus the True Up
      Amount, if any, as defined in the TAA Note; New Note B - $609.95
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2010:  New Note A - $265 million; New Note B - $609.95
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2011:  New Note A - $265 million; New Note B - $609.95
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2012:  New Note A - $679 million; New Note B - $654
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2013:  New Note A - $679 million; New Note B - $654
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2014:  New Note A - $679 million; New Note B - $654
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2015:  New Note A - $679 million; New Note B - $654
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2016:  New Note A - $679 million; New Note B - $654
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2017:  New Note A - $679 million; New Note B - $654
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2018:  New Note A - $679 million; New Note B - $654
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2019:  New Note A - $26 million; New Note B - $26
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2020:  New Note A - $26 million; New Note B - $26
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2021:  New Note A - $26 million; New Note B - $26
      million

                
	 
      	 
      	 
      
	 
      	
                  ■

                	
                  June
      30, 2022:  New Note A - $26 million; New Note B - $26
      million

                
	 
      	 
      	 
      
	 
      	
                  Ford
      may prepay either or both of the New Notes, in whole or in
      part.  For prepayments in whole, the payment on each Payment
      Date shall be equal to the corresponding amounts (each, a “Prepayment
      Amount”) set forth on Schedule A hereto for the applicable New
      Note.  In the event of any partial prepayment, future payments
      shall be determined, subject to the VEBA’s review and confirmation, on a
      basis that provides the economically equivalent present value and duration
      to the UAW VEBA using a discount rate of 9% per annum. Notwithstanding
      anything to the contrary herein, any prepayment of either of the New Notes
      shall be made in cash.

                


        

      

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    
      
        	 
      	 
      
	
                 

                New
      Note A

              	
                 

                On
      each payment date occurring under the New Notes, the Company shall settle
      the amount due with respect to New Note A in cash.

              
	
                 

                Stock
      Payment Option of New Note B

              	
                 

                On
      each payment date occurring under the New Notes, subject to satisfaction
      of the Stock Contribution Conditions (see below), the Company shall have
      the option to settle all or any portion of the amount due with respect to
      New Note B set forth above under “Payment Dates” with shares of Ford
      common stock of equal value based on the then-current Stock Price as
      described below, but subject to the fixed price referred to below for the
      Fixed Price Fundings.

              
	
                 

                Stock
      Contribution Conditions

              	
                 

                The
      Company’s option to settle all or any portion of the amounts due with
      respect to New Note B shall be subject in each instance to the
      satisfaction of the following conditions on the applicable Payment
      Date:

                 

              
	 
      	 
      	
                A.

              	
                No
      event of default under Company’s outstanding public debt securities, bank
      credit facilities, New Notes, or other securities issued to the VEBA, and
      Company shall have paid in full all amounts due on or prior to such date
      on the New Notes (it being
      understood that the exercise of the Stock Payment Option with respect to
      any payment or the deferral of any payment as permitted below shall
      not constitute a breach of this condition)

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                B.

              	
                No
      bankruptcy or insolvency proceedings commenced by or against the
      Company

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                C.

              	
                No
      assignment for benefit of creditors or admission by Company of inability
      to pay debts generally

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                D.

              	
                Ford
      common stock shall be listed on the NYSE (or another national securities
      exchange) on the Payment Date, and the NYSE (or such other securities
      exchange) shall not have commenced or provided notice of the commencement
      of any delisting proceedings or inquiries on or prior to the Payment
      Date

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                E.

              	
                No
      judgment in excess of a specified amount that remains unsatisfied and
      unstayed for more than 30 days

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                F.

              	
                No
      “termination event” (under ERISA) under either of the Company's two major
      U.S. defined benefit pension plans

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                G.

              	
                No
      audit opinion containing a going concern explanatory paragraph received
      for fiscal year immediately preceding the applicable Payment
      Date

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                H.

              	
                Stock
      Price is greater than $1.00 (subject to adjustment for future reverse
      share splits or other similar transactions consistent with the Conversion
      Adjustment Provisions of the existing $3.334 billion Convertible Note
      provided for in the Settlement Agreement)

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                I.

              	
                No
      corporate action in furtherance of A, B, C, or F above

              
	 
      	 
      	 
      
	 
      	 
      	
                If,
      on any Payment Date, Ford shall (a) be in compliance with all of the
      conditions set forth above other than condition D, G and/or H and (b) have
      been in compliance with each of the Stock Contribution Conditions on each
      previous Payment Date (provided, however, that the foregoing clause (b)
      shall not apply in the event that (i) Ford has failed to comply solely
      with condition D, G and/or H above on at most two previous Payment Dates,
      (ii) Ford has otherwise complied with each of the Stock Contribution
      Conditions on each previous Payment Date, and (iii) not more than two of
      the Payment Dates covered by this proviso shall have occurred in
      consecutive years),  then Ford shall make the payment arising
      under New Note B on such Payment Date to the VEBA in cash, but, at Ford’s
      option:

                 

              
	 
      	 
      	 
      
	 
      	
                ■

              	
                Ford
      may elect to settle its obligations for such payment (the “Deferred
      Payment”) in up to five equal installments, accruing interest at a 9%
      annual rate, payable on the first through fifth anniversaries of the
      originally scheduled date of the Deferred Payment (each, an “Installment
      Payment Date”),

              
	 
      	 
      	 
      
	 
      	
                ■

              	
                On
      each Installment Payment Date, subject to satisfaction of the Stock
      Contribution Conditions on such date, the Company shall have the option to
      settle all or any portion of the applicable installment of the Deferred
      Payment (including the interest, if any, accrued thereon) with shares of
      Ford common stock,

              


      

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    
      
        
          
            	 
      	
                    ■

                  	
                    For
      each installment payment made in shares of Ford common stock, the amount
      of shares payable in such installment shall be calculated by reference to
      the Stock Price for the applicable Installment Payment Date,
      notwithstanding any provision to the contrary in the Fixed Price Funding
      paragraph herein, and

                  
	 
      	 
      	 
      
	 
      	
                    ■

                  	
                    Each
      installment of the Deferred Payment paid in shares of Ford common stock
      shall receive a pro rata share of the applicable Ford Backstop, if the
      Deferred Payment is a Backstopped Payment.

                  
	 
      	 
      	 
      
	 
      	
                    In
      the event Ford shall have exhausted its deferral rights provided herein
      and a Stock Contribution Condition in D, G and/or H subsequently occurs,
      the UAW VEBA will consider in good faith Ford's request for an additional
      deferral right, but shall be under no obligation to do
  so.

                  
	 
      	 
      
	
                    Ford
      Backstop

                  	
                    Ford
      agrees to pay in cash (and on a pro rata basis in the event less than 100%
      of such shares are sold), subject to the limitations described below, the
      shortfall between the cash realized from sale of the share component, if
      any, of each payment under New Note B due on December 31, 2009 and June
      30, 2010 and 2011 (each, a “Backstopped Payment”) and the product of the
      Stock Price for each Backstopped Payment multiplied by the number of
      shares issued in such Backstopped Payment (the “Ford
      Backstop”).  Any gains or losses realized by the UAW VEBA from
      hedging activities in Ford common stock in respect any Backstopped Payment
      shall not affect the shortfall calculation.  The amount payable
      under the Ford Backstop for each of the Backstopped Payments shall be
      limited to $50 million; provided, however, that any portion of such $50
      million not paid shall be carried forward and shall increase the limit
      applicable to the subsequent Backstopped Payment.  Such
      payments, if any, shall be calculated and paid three months after the
      minimum period required under the Registration Rights Agreement to sell
      such shares.

                  
	
                     

                    Registration
      Rights

                  	
                     

                    Two
      shelf takedown or demand registrations permitted per year with a maximum
      amount of sales thereunder of 250 million shares per quarter and 500
      million shares per year (in each case in combination with Rule 144 and
      Rule 144A sales), provided that, beginning on January 1, 2012, such
      amounts shall be reduced to 200 million shares and 400 million shares,
      respectively.

                     

                    Rule
      144 and 144A sales permitted up to 100 million shares per quarter (no more
      than 250 million shares per quarter and 500 million per year in each case
      in combination with shelf takedowns or demand registrations, provided that
      such amounts shall be reduced to 200 million shares and 400 million
      shares, respectively, beginning on January 1, 2012).

                     

                    For
      any calendar year in which an Installment Payment Date occurs, the
      limitations above shall be increased by one-fifth of the applicable share
      limitations that applied during the calendar year during which the
      Deferred Payment was originally scheduled.

                     

                    The
      above limitations shall be adjusted for share splits.

                     

                    Notwithstanding
      the quarterly and annual limits set forth above, sales of shares pursuant
      to Rule 144 and 144A on any day shall be subject to a daily limit of not
      more than 15% of the Average Daily Trading Volume for the trailing 30-day
      trading period.

                     

                    In
      addition, the UAW VEBA may not sell (i) a block of common stock that would
      amount to more than 2% of the outstanding shares of Ford to a single
      buyer, or (ii) any common stock to a transferee if, after giving effect to
      the sale, the sale would result in the transferee owning more than 5% of
      the outstanding shares of the Company if such transferee has the intention
      to, or reserves the right to, exert control over the Company.

                     

                    Warrants
      (as defined below) and shares issued under Warrants shall be included in
      the foregoing limitations and restrictions.

                     

                    Ford
      and the UAW VEBA agree to establish reasonable reporting provisions or
      other mechanisms consistent with the existing registration rights
      agreement to ensure compliance with foregoing sales
      limitations.

                     

                  


          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        
          	
                   

                  Fixed
      Price Fundings

                	
                   

                  In
      the event that Ford elects the Stock Payment Option for any portion of the
      New Note B payments due on December 31, 2009, June 30, 2010, or June 30,
      2011, the shares of Ford common stock to be delivered by Ford in
      settlement of such payment shall be priced for this purpose at $2.00,
      $2.10, and $2.20, respectively.

                
	
                   

                  Hedging

                	
                   

                  Hedging
      permitted only on (i) shares of Ford common stock received by VEBA prior
      to such hedging as a result of exercise by the Company of its Stock
      Payment Option and (ii) up to 25% of the shares of Ford common stock
      deliverable by the Company, subject to satisfaction of the Stock
      Contribution Conditions, upon exercise of its Stock Payment Option on the
      next succeeding Payment Date (determined based on the then-current Stock
      Price), provided that no new hedging activity shall be permitted under
      clause (ii) hereof during the 30 trading days ending on the second
      business day prior to the Payment Date, and otherwise restricted (as to
      (i) and (ii) taken together) in a manner consistent with existing
      registration rights agreement (including sales limitations), adjusted to
      reflect sales limitations and modifications in the Registration Rights
      section above.

                
	
                   

                  Warrants

                	
                   

                  On
      the Effective Date, Ford shall issue to the VEBA warrants to acquire
      362,391,305 shares of Ford common stock at a strike price equal to the
      conversion price under the existing VEBA convertible note (the “VEBA
      Convert”), with a time to expiration equal to the maturity date under the
      VEBA Convert (the “Warrants”).  The Warrants shall contain
      adjustment provisions consistent with the Conversion Adjustment Provisions
      (as defined therein) in the VEBA Convert.  The Warrants shall
      also contain other terms typical for securities of this type, including
      cashless exercise provisions. The Warrants are intended to preserve the
      economies of the VEBA Convert.

                
	
                   

                  Other
      Terms of New Notes

                	
                   

                  Except
      for the Stock Payment Option of New Note B, the New Notes shall have terms
      substantially similar to those of the existing Second Lien Note, including
      a second lien on assets currently securing the existing Credit Agreement
      securing obligations under the New Notes in amounts equal to $3 billion,
      provided that, to the extent permitted under Ford’s December 15, 2006
      Credit Agreement, in no event shall the terms relating to the New Notes be
      less favorable to the VEBA than those contained in any existing Ford
      public debt indenture.  The New Notes will also contain a
      covenant limiting sale/leaseback transactions, and an Event of Default
      triggered by certain change of control events.  Both provisions
      will be modeled on the corresponding provisions in Ford’s December 15,
      2006 Credit Agreement.

                   

                  Each
      payment under the New Notes shall be deemed a payment of
      principal.  Any payment not made, in addition to any default
      implications, shall earn interest at an annual rate of 9% per annum plus a
      default premium of 2% per annum from the due date to date of
      payment.

                   

                  The
      amount of the Second Lien shall be apportioned between New Note A and New
      Note B based on their respective principal amounts and shall be reduced in
      total to $1,500 million on July 1, 2017, and to $0 on July 1, 2018,
      subject to compliance with the Stock Contribution Conditions (other than
      condition D  and/or H) on each date, but in no event shall
      Second Lien exceed amount outstanding under New Notes A and B and shall be
      automatically released to the extent of any such excess.

                   

                  New
      Note A shall be transferable in whole or in part on terms similar to those
      under the existing Second Lien Note. New Note B shall not be transferable
      by UAW VEBA.

                
	
                   

                  Stock
      Price

                	
                   

                  Volume
      weighted average stock price for the 30 trading days ending on the second
      business day prior to the Payment Date.

                
	
                   

                  Amendment
      to Trust Agreement

                	
                   

                  The
      Trust Agreement, as approved by the court as part of the 2007 VEBA
      settlement, shall be amended to eliminate the January 1, 2012 restriction
      on benefit modifications by the Committee.

                
	
                   

                  Additional
      Terms

                	
                   

                  On
      February 16, President Obama created a Presidential Task Force (the “Task
      Force”) to deal with restructuring in the automobile industry and
      administer the Loan Agreements between the Treasury and GM and
      Chrysler.  Ford and the UAW will work actively with the Task
      Force, and will encourage the Task Force to take or recommend actions
      mutually acceptable to the UAW and Ford to support the VEBA and provide
      additional security to the retirees in whatever form
    possible.

                
	
                   

                  Contingencies

                	
                   

                  Subject
      to final documentation, ratification, court approval, Ford Board and
      Shareholder approval, SEC approval of accounting treatment acceptable to
      Ford, DOL prohibited transaction exemption and completion of
      other  restructuring actions with other stakeholders on terms
      acceptable to the UAW.

                


        

      

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
A: New Note Prepayment Amounts(a)

    


    On each
Payment Date set forth below, Ford may redeem either or both of the New Notes in
exchange for a cash payment equal to the applicable amounts for such Payment
Date (in millions), such amounts subject to adjustment for any partial
prepayments.

    


    


    
      
        
          
            
              
                
                  
                    	
                            New
      Note A

                          	 
      	
                            New
      Note B

                          
	
                            Payment

                            
                              Date

                            

                          	 
      	
                            Prepayment

                            
                              Amount

                            

                          	 
      	
                            Payment

                            
                              Date

                            

                          	 	
                            Prepayment

                            
                              Amount

                            

                          
	
                            12/31/2009

                            6/30/2010

                            6/30/2011

                            6/30/2012

                            6/30/2013

                            6/30/2014

                            6/30/2015

                            6/30/2016

                            6/30/2017

                            6/30/2018

                            6/30/2019

                            6/30/2020

                            6/30/2021

                            6/30/2022

                          	
                            (a)

                          	
                            $4,774

                            3,686

                            3,728

                            3,775

                            3,375

                            2,938

                            2,463

                            1,944

                            1,379

                            763

                            92

                            72

                            50

                            26

                          	 
      	
                            12/31/2009

                            6/30/2010

                            6/30/2011

                            6/30/2012

                            6/30/2013

                            6/30/2014

                            6/30/2015

                            6/30/2016

                            6/30/2017

                            6/30/2018

                            6/30/2019

                            6/30/2020

                            6/30/2021

                            6/30/2022

                          	 	
                            $4,663

                            4,232

                            3,948

                            3,638

                            3,253

                            2,832

                            2,375

                            1,875

                            1,331

                            738

                            92

                            72

                            50

                            26

                          


                  

                

              

            

          

        

      

      


    

     

    ______________________________

    (a) The
Prepayment Amount for December 31, 2009, shall be increased by the True Up
Amount, if any, as defined in the TAA Note.