Document:

ex10_1.htm

    
      

    

    Exhibit
10.1

    

    TERMINATION
OF

    REGISTRATION
RIGHTS AGREEMENT

    

    THIS TERMINATION OF REGISTRATION RIGHTS
AGREEMENT (this “Termination”) is made
effective as of the 8th day of
April, 2008, by and among Gulf
Western Petroleum Corporation (the “Company”), Metage Funds
Limited (“Metage”), and
NCIM Capital Limited (“NCIM”).  Capitalized
terms used herein but not otherwise defined herein shall have the respective
meanings set forth in the Registration Rights Agreement (hereinafter
defined).

    

    W I T N E
S S E T H:

    

    WHEREAS, the Company, Metage and NCIM
are parties to that certain Registration Rights Agreement dated as of September
10, 2007 (the “Registration
Rights Agreement”);

    

    WHEREAS, under the Registration Rights
Agreement, the Company was required to file a registration statement covering
Initial Registrable Securities with the Securities and Exchange Commission (the
“SEC”) on or before the Initial Filing Deadline (i.e., November 10, 2007) and
cause such registration statement to be declared effective by the SEC on or
before the Initial Effectiveness Deadline (i.e., February 10,
2008);

    

    WHEREAS, the Company filed a
Registration Statement on Form SB-2, File No. 333-147842 (the “Registration Statement”) on
December 5, 2007 (and refiled an amended Registration Statement on February 1,
2008) pursuant to the Registration Rights Agreement, but the Registration
Statement is still being reviewed by the SEC;

    

    WHEREAS, effective February 15, 2008,
the SEC enacted amendments to Rule 144 (as amended, “Rule 144”) under the
Securities Act of 1933, as amended, whereby the holding period for restricted
securities for non-affiliates has been shortened from one year to six months;
and

    

    WHEREAS,  in accordance with
Rule 144, the six-month holding period for the resale of the Closing Shares
expired on March 10, 2008, and, as such, the Company desires that the Investors
(i) terminate the Registration Rights Agreement, as the Registration Period ends
when the shares become eligible for resale without restriction pursuant to Rule
144 and (ii) waive, release and discharge any further obligations under the
Registration Rights Agreement, including the obligation on the part of the
Company to pay any Registration Delay Payments (as defined in Section 2(f)(ii)
of the Registration Rights Agreement) accrued or incurred
thereunder.

    

    NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged:

    

    1.           The
Company, Metage and NCIM hereby agree to (i) terminate the Registration Rights
Agreement, and (ii) waive, release and discharge any of their respective
agreements, obligations or covenants contained in such Registration Rights
Agreement (except those that expressly survive termination thereof), including,
but not limited to, any obligation on the part of the Company to pay any
Registration Delay Payments accrued or incurred thereunder.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.           The
Company hereby agrees to waive the delivery of an opinion of counsel of the
holder in connection with a sale transaction required pursuant to Section 2.8 of
the Securities Purchase Agreement.

    

    3.           This
Termination shall be governed by, and construed in accordance with, the laws of
the State of New York, without regard to the conflicts of laws and rules of such
state.

    

    4.           This
Termination may be executed in counterparts, by means of original, facsimile or
portable document format (pdf) signatures, each of which shall be deemed to be
an original, and both of which together shall constitute one and the same
instrument.

    

    

    [Signature
Page Follows]

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the undersigned
have caused this Termination to be executed and delivered by their duly
authorized representatives as of the day and year first above
written.

    

    

    
      	 
      	
              GULF
      WESTERN PETROLEUM CORPORATION

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By: 
      

            	
              / s / Donald L. Sytsma

            
	 
      	 
      	
              Donald
      L. Sytsma

            
	 
      	 
      	
              Chief
      Financial Officer,

            
	 
      	 
      	
              Corporate
      Secretary and Treasurer

            
	 
      	 
      	 
      
	 
      	
              METAGE
      FUNDS LIMITED

            
	 
      	 
      	 
      
	 
      	
              By:  Metage
      Capital Limited, as fund manager

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By: 
      

            	
              / s / Tom Sharp

            
	 
      	 
      	
              Tom
      Sharp

            
	 
      	 
      	
              Investment
      Manager

            
	 
      	 
      	 
      
	 
      	NCIM
      LIMITED
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By: 
      

            	
              /s / David Coatrs

            
	 
      	 
      	
              David
      Coatrs

            
	 
      	 
      	
              Manager

            
	 
      	 
      	 
      

    

    

     

    3ex10_1.htm

    
      

    

    
      EXHIBIT
10.1

       

       

      SETTLEMENT
AGREEMENT

       

      This
settlement agreement (which, together with the Exhibits hereto, is referred to
as the “Settlement
Agreement”), dated March 28, 2008, is between Ford Motor Company (“Ford”), by and
through its attorneys, and the International Union, United Automobile, Aerospace
and Agricultural Implement Workers of America (“UAW”), by and through
its attorneys, and the Class Representatives, on behalf of the Class, by and
through Class Counsel, in (1) the class action of Int’l Union, UAW, et al. v. Ford
Motor Company, Civil Action No. 07-14845 (E.D. Mich. filed Nov. 9, 2007)
(“Hardwick
II”), and/or (2) the class action of Int’l Union, UAW, et al. v. Ford
Motor Company, Civil Action No. 05-74730, (E.D. Mich. July 13, 2006),
aff’d, 497 F.3d 615
(6th Cir. 2007) (“Hardwick
I”).  This Settlement Agreement shall cover and has application
to:

       

       

      
        	
                 
      

              	
                (i)

              	
                the
      Class;

              

      

      
        	
                 
      

              	
                (ii)

              	
                the
      Covered Group;

              

      

      
        	
                 
      

              	
                (iii)

              	
                the
      Existing External VEBA;

              

      

      
        	
                 
      

              	
                (iv)

              	
                the
      trustee and committee that administer the Existing External
      VEBA;

              

      

      
        	
                 
      

              	
                (v)

              	
                the
      UAW;

              

      

      
        	
                 
      

              	
                (vi)

              	
                the
      Ford Retiree Health Plan; and

              

      

      
        	
                 
      

              	
                (vii)

              	
                Ford.

              

      

       

      With
regard to Ford, the UAW and the Class, this Settlement Agreement: (i) resolves
and settles all claims that arise in connection with Hardwick II; (ii) resolves
and settles all claims, motions and other issues pertaining to or remaining in
Hardwick I; (iii) amends, supersedes or otherwise supplants the settlement
agreement, dated February 13, 2006, approved in Hardwick I (“Hardwick I
Settlement Agreement”); and (iv) provides the basis upon which the judgment
entered July 13, 2006 in Hardwick I shall be satisfied, superseded or amended as
necessary to give full force and effect to the terms of this Settlement
Agreement.  This Settlement Agreement also resolves and settles any
and all claims for Ford contributions to the Existing External VEBA, and
provides for the termination of the Existing External VEBA and the transfer of
all assets and liabilities of the Existing External VEBA to the New
VEBA.  However, except as otherwise specifically set forth herein,
nothing in this Settlement Agreement is intended to alter the eligibility
provisions of the Ford Retiree Health Plan or to provide Ford contributions or
benefits to individuals who are not otherwise entitled to such under the Ford
Retiree Health Plan.

       

      This
Settlement Agreement is subject to approval by the Court and the parties shall
request that the Court incorporate the entirety of this Settlement Agreement in
the Approval Order.  In the event of an inconsistency between this
Settlement Agreement and any prior agreements or documents, including the
Memorandum of Understanding Post-Retirement Medical Care dated November 3, 2007
(“MOU”), this
Settlement Agreement shall control.  In the event of an inconsistency
between the body of this Settlement Agreement and the Exhibits hereto, this
Settlement Agreement shall control, unless explicitly stated otherwise in this
Settlement Agreement.

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

      This
Settlement Agreement recognizes and approves on the basis set forth herein: (i)
the amendment of the Ford Retiree Health Plan to terminate coverage for and
exclude from coverage the Class and the Covered Group; (ii) the transfer of the
assets of the Existing Internal VEBA to the New VEBA; (iii) the termination of
participation by the Class and the Covered Group under the Existing Internal
VEBA; (iv) the termination of the Existing External VEBA in conjunction with the
establishment of the New Plan, and the transfer to the New VEBA of all assets
and liabilities of the Existing External VEBA; (v) that all claims for Retiree
Medical Benefits incurred after the Implementation Date by the Class and the
Covered Group, including but not limited to COBRA continuation coverage where
such election is or had been made on or after retirement and any coverage
provided on a self-paid basis in retirement, shall be solely the responsibility
and liability of the New Plan and the New VEBA; (vi) the Committee’s designation
under the New Plan and New VEBA as named fiduciary and administrator of the New
Plan; (vii) that the New Plan shall replace the Ford Retiree Health Plan
regarding the provision of Retiree Medical Benefits to the Class and the Covered
Group; (viii) that the New VEBA shall receive certain payments as described
herein from the Existing Internal VEBA, the Existing External VEBA and Ford;
(ix) that Ford’s obligation to pay into the New VEBA is fixed and capped as
described herein; and (x) that the New VEBA shall serve as the exclusive funding
mechanism for the New Plan.

       

      
        	
                1.

              	
                Definitions

              

      

       

      Adjustment
Event.  The term “Adjustment Event” is defined in Section 13.A
of this Settlement Agreement.

       

      Admissions.  The
term “Admissions” shall mean any statement, whether written or oral, any act or
conduct, or any failure to act, that could be used (whether pursuant to Rules
801(d)(2) or 804(b)(3) of the Federal Rules of Evidence, a similar rule or
standard under other applicable law, the doctrines of waiver or estoppel, other
rule, law, doctrine or practice, or otherwise) as evidence in a proceeding of
proof of agreement with another party’s position or proof of adoption of, or
acquiescence to, a position that is contrary to the interest of the party making
such statement, taking such action, or failing to act.

       

      Affiliate.  The
term “Affiliate” shall mean, with respect to any specified person, any other
person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
person.

       

      Alternative
Note.  The term “Alternative Note” is defined in Section 12.E
of this Settlement Agreement.

       

      Appeal Completion
Date.  The term “Appeal Completion Date” shall mean the date on
which any appeals from, or other challenges to, the Approval Order have been
exhausted or the time periods for filing such appeal(s) or challenge(s) have
expired; provided, that the Appeal Completion Date shall be deemed to have
occurred only if, at such time, the Approval Order has not been disapproved or
modified as a result of any appeal(s) from or other challenge(s) to the Approval
Order.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      Approval Order or
Judgment.  The terms “Approval Order” or “Judgment” shall mean
an order obtained from the Court approving and incorporating this Settlement
Agreement in all respects as set forth in Section 28 of this Settlement
Agreement.  In the event that the Court enters separate orders
certifying the Class and approving this Settlement Agreement, the terms
“Approval Order” or “Judgment” shall apply to both orders
collectively.

       

      Base
Amount.  The term “Base Amount” shall mean the payment(s) to be
made by Ford that are specified in Sections 7.D(iv) and 8.C of this Settlement
Agreement.

       

      Benefits.  The
term “Benefits” shall have the meaning given to such term in the Trust
Agreement.

       

      Board of
Directors.  The term “Board of Directors” shall mean the Board
of Directors of Ford or any committee established by the Board of
Directors.

       

      Class or Class
Members.  The term “Class” or “Class Members” shall mean all
persons who are:

       

      (i)          Ford-UAW
Represented Employees who, as of November 19, 2007, were retired from Ford with
eligibility for Retiree Medical Benefits under the Ford Retiree Health Plan, and
their eligible spouses, surviving spouses and dependents;

       

      (ii)         surviving
spouses and dependents of any Ford-UAW Represented Employees who attained
seniority and died on or prior to November 19, 2007 under circumstances where
such employee’s surviving spouse and/or dependents are eligible to receive
Retiree Medical Benefits from Ford and/or under the Ford Retiree Health
Plan;

       

      (iii)        former
Ford-UAW Represented Employees or UAW-represented employees who, as of November
19, 2007, were retired from any previously sold, closed, divested or spun-off
Ford business unit with eligibility to receive Retiree Medical Benefits from
Ford and/or the Ford Retiree Health Plan by virtue of any agreement(s) between
Ford and the UAW, and their eligible spouses, surviving spouses, and dependents;
and

       

      (iv)        surviving
spouses and dependents of any former Ford-UAW Represented Employee or
UAW-represented employee of a previously sold, closed, divested or spun-off Ford
business unit, who attained seniority and died on or prior to November 19, 2007
under circumstances where such employee’s surviving spouse and/or dependents are
eligible to receive Retiree Medical Benefits from Ford and/or the Ford Retiree
Health Plan.

       

      Class Certification
Order.  The term “Class Certification Order” shall mean the
final order entered by the Court as described in Section 28.A of this Settlement
Agreement.

       

      Class
Counsel.  The term “Class Counsel” shall mean the law firm of
Stember, Feinstein, Doyle & Payne, LLC, or its successor.

       

      Class
Representatives.  The term “Class Representatives” shall mean
Bobby Hardwick, Walter Berry, Arlen Banks, Fay Barkley, Yvonne Hicks, Raymond J.
Mitchell, and Bruce Carrier.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      Code.  The
term “Code” shall mean the Internal Revenue Code of 1986, as
amended.

       

      COLA.  The
term “COLA” shall mean Cost of Living Allowance.

       

      Committee.  The
term “Committee” shall mean the governing body set forth in Section 4.A of this
Settlement Agreement that acts on behalf of the EBA and serves as the named
fiduciary and administrator of the New Plan, as those terms are defined in ERISA
and that is so described in the Trust Agreement.

       

      Consolidated Net Tangible
Automotive Assets.  The term “Consolidated Net Tangible
Automotive Assets” shall mean the sum of (i) the aggregate amount of Ford’s
automotive assets (less applicable reserves and other properly deductible items)
after deducting therefrom (x) all current liabilities and (y) all goodwill,
trade names, trademarks, patents, unamortized debt discount and expense and
other like intangibles, plus (ii) Ford’s equity in the net assets of its
financial services Subsidiaries after deducting therefrom all goodwill, trade
names, trademarks, patents, unamortized debt discount and expense and other like
intangibles, in each case as set forth in the most recent financial statements
of Ford and its consolidated Subsidiaries which have been prepared in conformity
with generally accepted accounting principles.

       

      Convertible
Note.  The term “Convertible Note” shall mean the $3.334
billion aggregate principal amount of 5.75% Convertible Notes Due January 1,
2013 issued under that Indenture dated as of January 30, 2002 between Ford and
The Bank of New York, as Trustee, and the Second Supplemental Indenture, dated
as of January 1, 2008, between Ford and The Bank of New York, as Trustee,
including all supplemental indentures thereto, substantially in the form
attached as Exhibit
B to this Settlement Agreement.

       

      Court.  The
term “Court” shall mean the United States District Court for the Eastern
District of Michigan.

       

      Covered
Group.  The term “Covered Group” shall mean:

       

      (i)          all
Ford Active Employees who had attained seniority as of November 19, 2007, and
who retire after November 19, 2007 under the Ford-UAW National Agreements, or
any other agreement(s) between Ford and the UAW, and who upon retirement are
eligible for Retiree Medical Benefits under the Ford Retiree Health Plan
utilizing the eligibility provisions applicable to UAW represented employees or
the New Plan, as applicable, and their eligible spouses, surviving spouses and
dependents;

       

      (ii)         all
former Ford-UAW Represented Employees and all UAW-represented
hourly  employees who, as of November 19, 2007, remained employed in a
previously sold, closed, divested, or spun-off Ford business unit, and upon
retirement are eligible for Retiree Medical Benefits from Ford and/or the Ford
Retiree Health Plan or the New Plan by virtue of any other agreement(s) between
Ford and the UAW, and their eligible spouses, surviving spouses and dependents;
and

       

      (iii)        all
eligible surviving spouses and dependents of a Ford Active Employee, or of a
former Ford-UAW Represented Employee or UAW-represented employee identified in
(ii) above, who attained seniority on or prior to November 19, 2007 and die
after November 19, 2007 but prior to retirement under circumstances where such
employee’s surviving spouse and/or dependents are eligible for Retiree Medical
Benefits from Ford and/or the Ford Retiree Health Plan or the New
Plan.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      Debt.  The
term “Debt” is defined in Section 19.B of this Settlement
Agreement.

       

      Determination
Materials.  The term “Determination Materials” is defined in
Section 13.B of this Settlement Agreement.

       

      Dispute
Party.  The term “Dispute Party” is defined in Section 26.B of
this Settlement Agreement.

       

      DOL.  The
term “DOL” shall mean the United States Department of Labor.

       

      Employees Beneficiary
Association or EBA.  The term “Employees Beneficiary Association” or
“EBA” shall mean the employee organization within the meaning of section 3(4) of
ERISA that is organized for the purpose of establishing and maintaining the New
Plan, with a membership consisting of the individuals who are members of the
Class and the Covered Group, and on behalf of which the Committee
acts.

       

      ERISA.  The
term “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

       

      Existing External
VEBA.  The term “Existing External VEBA” shall mean the defined
contribution–Voluntary Employees’ Beneficiary Association trust established
pursuant to the Hardwick I Settlement Agreement.

       

      Existing Internal
VEBA.  The term “Existing Internal VEBA” shall mean the
subaccount of the Ford-UAW Benefits Trust that reimburses Ford for retiree
healthcare expenses and that is funded and maintained by Ford.

       

      Fairness
Hearing.  The term “Fairness Hearing” is defined in Section 27
of this Settlement Agreement.

       

      Final Effective
Date.  The term “Final Effective Date” shall mean the later of
the Initial Effective Date or the date on which Ford has completed, on a basis
reasonably satisfactory to Ford, its discussions with the staff of the SEC
regarding the accounting treatment with respect to the New Plan and the New VEBA
as set forth in Section 21 of this Settlement Agreement.

       

      Ford.  The
term “Ford” is defined in the first paragraph of this Settlement
Agreement.

       

      Ford Active
Employees.  The term “Ford Active Employees” shall mean those
hourly employees of Ford who, as of November 19, 2007 or any date thereafter,
are covered by the 2007 Ford-UAW National Agreement or are covered by any
subsequent Ford-UAW National Agreement.  For purposes of this
definition, “active employee” shall include hourly employees on vacation,
layoff, protected status, medical or other leave of absence, and any other
employees who have not broken seniority as of November 19, 2007.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      Ford Retiree Health
Plan.  The term “Ford Retiree Health Plan” shall mean the
Hospital-Surgical-Medical-Drug-Dental-Vision Program (included in Volume II
of the Agreements dated September 15, 2003 between Ford and the UAW), as
amended by the Hardwick I Settlement Agreement.

       

      Ford Separate Retiree
Account.  The term “Ford Separate Retiree Account” shall have
the meaning given to such term in the Trust Agreement.

       

      Ford-UAW National
Agreements.  The term “Ford-UAW National Agreements” shall mean
the agreement(s) negotiated on a multi-facility basis and entered into between
Ford and the UAW covering Ford employees represented by the UAW.  The
current Ford-UAW National Agreement is dated November 14, 2007 and took effect
as of November 19, 2007.

       

      Ford-UAW Represented
Employees.  The term “Ford-UAW Represented Employees” shall
mean those individuals who were represented by the UAW in their hourly
employment with Ford.

       

      Hardwick
I.  The term “Hardwick I” is defined in the first paragraph of
this Settlement Agreement.

       

      Hardwick
II.  The term “Hardwick II” is defined in the first paragraph
of this Settlement Agreement.

       

      Hardwick I Settlement
Agreement.  The term “Hardwick I Settlement Agreement” shall
mean the Settlement Agreement, dated February 13, 2006, between Ford and the
plaintiffs in Hardwick I, as approved by the Court in Hardwick I.

       

      Implementation
Date.  The term “Implementation Date” shall mean the latest of
the Final Effective Date, December 31, 2009 or the Appeal Completion
Date.

       

      Indemnification
Liabilities.  The term “Indemnification Liabilities” is defined
in Section 23 of this Settlement Agreement.

       

      Indemnified
Party.  The term “Indemnified Party” is defined in Section 23
of this Settlement Agreement.

       

      Indemnity
Expenses.  The term “Indemnity Expenses” is defined in Section
23 of this Settlement Agreement.

       

      Independent
Attestation.  The term “Independent Attestation” shall mean an
agreed-upon procedures engagement performed for Ford, the UAW and the Committee
by a nationally recognized independent registered public accounting firm
selected by Ford and conducted in accordance with the attestation standards of
the Public Company Accounting Oversight Board.  The agreed-upon
procedures shall be mutually agreed among the accounting firm, Ford and the
Committee in connection with any such engagement.

       

      Independent
Audit.  The term “Independent Audit” shall mean an audit of the
consolidated financial statements of Ford performed in accordance with the
standards of the Public Company Accounting Oversight Board by the independent
registered public accounting firm that has been designated by Ford.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      Initial Accounting
Period.  The term “Initial Accounting Period” shall mean the
period before the later of the date that (a) Ford determines that its
obligations, if any, with respect to the New Plan made available to the Class
and Covered Group are subject to settlement accounting as contemplated by
paragraphs 90-95 of FASB Statement No. 106, as amended, or its functional
equivalent; or (b) Ford is no longer obligated to make any further payments or
deposits to the New VEBA.

       

      Initial Effective
Date.  The term “Initial Effective Date” shall mean the date on
which the Court enters the Approval Order.

       

      Interest.  The
term “Interest” shall mean an interest rate of 9 percent (9%) per annum
(computed on the basis of a 360-day year consisting of twelve 30-day months and
the number of days elapsed in any partial month), credited and compounded
annually, unless otherwise specified in this Settlement Agreement.

       

      Limited Liability
Company.  The term “Limited Liability Company” or the “LLC”
shall mean Ford-UAW Holdings LLC, a Delaware limited liability company created
by Ford under Section 7.B of this Settlement Agreement for the purpose of
holding the Convertible Note, the Term Note, and, if determined by Ford in its
sole discretion, the TAA.

       

      Manufacturing
Subsidiary.  The term “Manufacturing Subsidiary” shall mean any
Subsidiary of Ford which owns or leases a Principal Domestic Manufacturing
Property.

       

      Mitigation.  The
term “Mitigation” shall have the same meaning as in the Hardwick I Settlement
Agreement.

       

      Mortgage.  The
term “Mortgage” shall mean any mortgage, pledge, lien, security interest,
conditional sale or other title retention agreement or other similar
encumbrance.

       

      National Institute for
Health Care Reform or Institute.  The term “National Institute
for Health Care Reform” or “Institute” is defined in Section 31 of this
Settlement Agreement.

       

      New
Plan.  The term “New Plan” shall mean the new retiree welfare
benefit plan that is the subject of this Settlement Agreement, and that is
funded in part by the Ford Separate Retiree Account, which New Plan shall
provide Retiree Medical Benefits to the Class and Covered Group.

       

      New
VEBA.  The term “New VEBA” shall mean a new trust fund to be
established as described in Section 4 of this Settlement Agreement.

       

      Notice
Order.  The term “Notice Order” is defined in Section 27 of
this Settlement Agreement.

       

      Pension
Plan.  The term “Pension Plan” shall mean the Ford-UAW
Retirement Plan.

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      Principal Domestic
Manufacturing Property.  The term “Principal Domestic
Manufacturing Property” shall mean any plant in the United States owned or
leased by Ford or any of its Subsidiaries, the gross book value (without
deduction of any depreciation reserves) of which on the date as of which the
determination is being made exceeds 0.5% of the Consolidated Net Tangible
Automotive Assets and more than 75% of the total production measured by value
(as determined by any two of the following:  the Chairman of the Board
of Directors, its President, any Executive Vice President of Ford, any Group
Vice President of Ford, any Vice President of Ford, its Treasurer and its
Controller) of which in the last fiscal year prior to said date (or such lesser
period prior thereto as the plant shall have been in operation) consisted of one
or more of the following: cars or trucks or related parts and accessories or
materials for any of the foregoing.  In the case of a plant not yet in
operation or of a plant newly converted to the production of a different item or
items, the total production of such plant and the composition of such production
for purposes of this definition shall be deemed to be Ford’s best estimate
(determined as aforesaid) of what the actual total production of such plant and
the composition of such production will be in the 12 months following the date
as of which the determination is being made.

       

      Retiree Medical
Benefits.  The term “Retiree Medical Benefits” shall mean all
post retirement medical benefits, including but not limited to hospital surgical
medical, prescription drug, vision, dental, hearing aid and the Special Benefit
related to Medicare Part B premium.

       

      SEC.  The
term “SEC” shall mean the Securities and Exchange Commission.

       

      Settlement
Actions.  The term “Settlement Actions” is defined in Section
29.A of this Settlement Agreement.

       

      Special
Benefit.  The term “Special Benefit” shall mean the $76.20
Special Age 65 Benefit related to Medicare Part B premium.

       

      State.  The
term “State” shall mean any state of the United States.

       

      Stock Contribution
Obligation.  The term “Stock Contribution Obligation” shall
mean any and all obligations Ford may have to the Existing External VEBA under
Section 13.C of the Hardwick I Settlement Agreement relating to cash
contributions based on an increase in the value of Ford common
stock.

       

      Subsidiary.  The
term “Subsidiary” shall mean any corporation or other entity of which at least a
majority of the outstanding stock or other beneficial interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or other governing body of such corporation or other entity
(irrespective of whether or not at the time stock or other beneficial interests
of any other class or classes of such corporation or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time owned by Ford, or by one or more Subsidiaries, or by Ford and one or more
Subsidiaries.

       

      Temporary Asset
Account.  The term “Temporary Asset Account” or “TAA” shall
mean the temporary account controlled at all times by Ford that is established
by Ford or a wholly-owned Subsidiary of Ford under Section 7.A of this
Settlement Agreement for the purpose of holding certain assets as described in
this Settlement Agreement.

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      Term
Note.  The term “Term Note” shall mean the $3.0 billion
aggregate principal amount of 9.50% Second Lien Term Notes Due January 1, 2018
issued pursuant to the Note Purchase Agreement, dated April 7, 2008, by and
among Ford and the LLC, substantially in the form attached as Exhibit C to this
Settlement Agreement.

       

      Trust
Agreement.  The term “Trust Agreement” shall mean the New VEBA
trust agreement the form of which is set forth in Exhibit A to this
Settlement Agreement.

       

      UAW
Releasees.  The term “UAW Releasees” shall mean the UAW, the
Class Representatives, the Class, Class Counsel, the Covered Group and anyone
claiming on behalf of, through or under them by way of subrogation or
otherwise.

       

      
        	
                2.

              	
                Purpose
      of New Plan and New VEBA

              

      

       

      The New
Plan and the New VEBA shall, as of the day following the Implementation Date, be
the employee welfare benefit plan and trust that are exclusively responsible for
all Retiree Medical Benefits for which Ford, the Ford Retiree Health Plan and
any other Ford entity or benefit plan formerly would have been responsible with
regard to the Class and the Covered Group.  All assets paid or
transferred by Ford to the New VEBA (including any investment returns thereon)
shall be credited to a Ford Separate Retiree Account and must be used for the
exclusive purpose of providing Retiree Medical Benefits to the participants of
the New Plan and their eligible beneficiaries, and to defray the reasonable
expenses of administering the New Plan, as set forth in the Trust
Agreement.  All obligations of Ford, the Ford Retiree Health Plan and
any other Ford entity or benefit plan for Retiree Medical Benefits for the Class
and the Covered Group arising from any agreement(s) written, oral, or otherwise
between Ford and the UAW shall be forever and irrevocably terminated as of the
end of the Implementation Date.  Ford’s only obligations to the New
Plan and the New VEBA are those set forth in this Settlement
Agreement.   Eligibility rules for the New Plan shall be the same
as those currently included in the Ford Retiree Health Plan, and may not be
expanded.

       

      
        	
                3.

              	
                Factual
      Investigation and Legal Inquiry and Decision to
  Settle

              

      

       

      Throughout
the 2007 negotiations between Ford and the UAW over the terms of a new National
Agreement, the parties engaged in extended discussions concerning the impact of
rising health care costs on Ford’s financial condition and its ability to
compete in the North American marketplace.  Ford provided the UAW with
extensive information as to its financial condition and health care
expenditures.  On behalf of the UAW, a team of investment bankers,
actuaries, and legal experts have reviewed Ford’s information, and provided the
UAW with an assessment as to the state of Ford’s financial condition and
analyzed the benefits of entering into the MOU.  Ford officials also
met with representatives of the UAW and its team of experts and answered
questions and provided further detail, as requested.  The UAW and its
team of experts have now analyzed, inter alia, the funds
necessary to provide ongoing Retiree Medical Benefits through the New Plan and
the New VEBA.

       

      During
these discussions, Ford asserted, as it had in Hardwick I, that it has the right
to unilaterally modify and/or terminate the health care benefits applicable to
its hourly retirees and that, without this Settlement Agreement, Ford would
exercise its right to terminate the Hardwick I Settlement Agreement according to
its terms as well as exercise its right to unilaterally modify retiree health
care benefits.  Although the UAW acknowledges Ford’s right to
terminate the Hardwick I Settlement Agreement, it continues to assert that the
retiree health care benefits are vested and that Ford does not have the right to
unilaterally modify or terminate retiree health care benefits.

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      On behalf
of the Class, Class Counsel has conducted a substantial factual investigation
and legal inquiry prior to entering into this Settlement
Agreement.  Similar to what was done by the UAW, this included, inter alia, review of
Ford’s financial information, review and analysis of  collective
bargaining agreements, relevant health care plan documents, and actuarial
information, and review of material on Ford’s health care
costs.  Class Counsel retained experts to review the financial and
actuarial information and, with the assistance of these experts, conducted an
extensive review of Ford’s projected financial condition, Ford’s ability to
provide Retiree Medical Benefits over the long term, and the proposed New VEBA’s
ability to provide Retiree Medical Benefits over the long term with the funds
available from the proposed Settlement Agreement.  Class Counsel has
also thoroughly investigated the law applicable to the Class Members’ claims and
has done so considering the collective bargaining agreements and health care
plan documents affecting these claims.  Class Counsel examined the
benefits and certainty to be obtained under the proposed Settlement Agreement
for an aging Class, and has considered the costs, risks and delays associated
with the prosecution of complex and time-consuming litigation, and the likely
appeals of any rulings in favor of any party. Class Counsel has considered the
fact that, under the proposed Settlement Agreement, the benefits of Hardwick I
through 2011 are preserved. Class Counsel believes that, in consideration of all
the circumstances, the proposed settlement embodied in this Settlement Agreement
is fair, reasonable, adequate and in the best interest of all members of the
Class.  Class Counsel participated in the negotiation of this
Settlement Agreement.

       

      
        	
                4.

              	
                New
      Plan and New VEBA

              

      

       

      A.           Committee.  The
Approval Order shall provide that the New Plan and New VEBA, both subject to
ERISA, shall be administered by the Committee.  The Committee shall be
in place within 120 days after the Initial Effective Date.  The
Committee shall consist of 11 members, 5 of whom are to be appointed by the UAW,
and 6 of whom are to be independent members.  The Approval Order shall
designate the initial independent members who are set forth in Attachment 1 of
Exhibit A to
this Settlement Agreement.  In the event that any member of the
Committee resigns, dies, becomes incapacitated or otherwise ceases to be a
member, a replacement member shall be appointed as described in the Trust
Agreement.

       

      B.            Establish and
Maintain. The EBA, acting through the Committee, shall establish and
maintain the New Plan for the purpose of providing Retiree Medical Benefits to
the Class and the  Covered Group as set forth in this Settlement
Agreement.  The Committee shall begin administering the New Plan so as
to be able to provide Retiree Medical Benefits for the Class and the Covered
Group with respect to claims incurred after the Implementation
Date.  The Committee shall implement the New VEBA at the earlier of
(i) the expiration of 180 days following the Initial Effective Date or (ii) the
day following the Implementation Date.  The New Plan shall be
ERISA-covered and the New VEBA shall meet the requirements of Section 501(c)(9)
of the Code.  All payments to the New Plan and the New VEBA made or
caused to be made by Ford under the Settlement Agreement are payments pursuant
to section 302(c)(2) of the Labor Management Relations Act, 1947, as amended
("LMRA"), 29 U.S.C. 186(c)(2).

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      C.          
  Limitation
on Ford Role.  No member of the Committee shall be a current or
former officer, director or employee of Ford or any member of the Ford
controlled group; provided however, that a retiree who was represented by the
UAW in his/her employment with Ford or an employee of Ford who is on leave from
Ford and who is represented by the UAW is not precluded by this provision from
serving on the Committee.  No member of the Committee shall be
authorized to act for Ford or shall be an agent or representative of Ford for
any purpose.  Furthermore, Ford shall not be a fiduciary with respect
to the New Plan or New VEBA, and shall have no rights, obligations or
responsibilities with respect to the New Plan or New VEBA other than as
specifically set forth in this Settlement Agreement.

       

      
        	
                5.

              	
                Provision
      and Scope of Retiree Medical
Benefits

              

      

       

      A.       
    On
or Prior to Implementation Date.  With respect to claims
incurred on or prior to the Implementation Date, Retiree Medical Benefits for
the Class and the Covered Group shall continue to be provided by the Ford
Retiree Health Plan and the Existing External VEBA at the same level and scope
as provided for by the Ford Retiree Health Plan and the Existing External VEBA
under the Hardwick I Settlement Agreement, including Mitigation from the
Existing External VEBA (for those entitled to it).  The payment by
Ford and/or the Ford Retiree Health Plan of Retiree Medical Benefits for claims
incurred on or prior to the Implementation Date shall not reduce Ford’s payment
obligations to the New Plan and the New VEBA under this Settlement
Agreement.

       

      B.           
 After
Implementation Date.  With respect to claims incurred after the
Implementation Date, the New Plan and the New VEBA shall have sole
responsibility for and be the exclusive source of funds to provide Retiree
Medical Benefits for the Class and the Covered Group, including but not limited
to COBRA continuation coverage where such election is made after
retirement.  Neither Ford, the Ford Retiree Health Plan, the Existing
Internal VEBA, nor any other Ford person, entity, or benefit plan shall have any
responsibility or liability for Retiree Medical Benefits for individuals in the
Class or in the Covered Group for claims incurred after the Implementation
Date.  Ford’s sole obligations to the New Plan and the New VEBA are
those set forth in this Settlement Agreement.

       

       From
the day following the Implementation Date until December 31, 2011, the Retiree
Medical Benefits under the New Plan and the New VEBA shall continue to be
provided at the levels described in the Hardwick I Settlement Agreement and as
set forth in the Trust Agreement.

       

      On and
after January 1, 2012, the Committee shall have such authority to establish
Benefits as described in the Trust Agreement, including raising or lowering
benefits.  However, in no event may the Committee amend the New Plan
or New VEBA to provide benefits other than Retiree Medical Benefits until the
expiration of the Initial Accounting Period.  The ability of the New
Plan and the New VEBA to pay for Retiree Medical Benefits will depend on
numerous factors, many of which are outside of the control of UAW, the
Committee, the New Plan and the New VEBA, including, without limitation, the
investment returns, actuarial experience and other factors.

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      C.           
 Amendment of
Ford Retiree Health Plan and Reimbursement of Ford.  The
Approval Order shall provide that all obligations of Ford and all provisions of
the Ford Retiree Health Plan in any way related to Retiree Medical Benefits for
the Class and/or the Covered Group, and all provisions of applicable collective
bargaining agreements, contracts, letters and understandings in any way related
to Retiree Medical Benefits for the Class and the Covered Group are forever and
irrevocably terminated as of the end of the Implementation Date, or otherwise
amended so as to be consistent with this Settlement Agreement and the
fundamental understanding that all Ford obligations regarding Retiree Medical
Benefits for the Class and the Covered Group are terminated as set forth in this
Settlement Agreement.  Summary Plan Descriptions of the Ford Retiree
Health Plan are amended to reflect the termination of Ford and Ford Retiree
Health Plan responsibilities for Retiree Medical Benefits for the Class and the
Covered Group for claims incurred after the Implementation Date as set forth
herein.

       

       The
New Plan and New VEBA shall reimburse Ford or the Ford Retiree Health Plan, as
applicable, for any Retiree Medical Benefits advanced or provided by Ford or the
Ford Retiree Health Plan with regard to claims incurred by members of the Class
and the Covered Group after the Implementation Date, including, but not limited
to, situations where a retirement is made retroactive and the medical claims
were incurred after the Implementation Date or where Ford is notified of an
intent by a member of the Class and the Covered Group to retire under
circumstances where there is insufficient time to transfer responsibility for
Retiree Medical Benefits to the New Plan and Ford or the Ford Retiree Health
Plan provides interim coverage for Retiree Medical Benefits.  To the
extent such reimbursement may not be permitted by law, the UAW, the Class, Class
Counsel and the Committee shall fully cooperate with Ford in securing any legal
or regulatory approvals that are necessary to permit such
reimbursement.

       

      
        	
                6.

              	
                Existing
      Internal VEBA

              

      

       

      A.       
    Existing Internal VEBA
Balance. The Existing Internal VEBA balance as of December 31, 2007
shall be determined using the December 31, 2007 valuation from the independent
trustee of the Existing Internal VEBA, which shall be based on
the existing trust agreement for the Existing Internal VEBA.  In
accordance with this methodology, the December 31, 2007 valuation of the
Existing Internal VEBA for purposes of this Section 6.A is
$3,739,851,094.10.  The determination of the Existing Internal VEBA
balance as of December 31, 2007 shall be final and binding on Ford, the UAW, the
Committee, the Class Representatives, the Class, the Covered Group and Class
Counsel for purposes of this Settlement Agreement upon an Independent
Audit.

       

      B.             Investment of
Assets.  Ford shall continue to oversee the investment of the
assets in the Existing Internal VEBA and all such assets shall be invested in a
manner consistent with the long-term nature of the health care liabilities under
the investment policy (as may be amended from time to time by Ford who shall
notify the UAW and the Committee about intended amendments in a timely manner)
applicable to the Existing Internal VEBA.  Ford does not guarantee or
warrant the investment returns on the assets in the Existing Internal
VEBA.

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      C.           
 Disposition of
Assets.  No amounts shall be withdrawn by Ford from the
Existing Internal VEBA, including its investment returns, from January 1, 2008
until transfer to the New VEBA under Section 12 or termination of this
Settlement Agreement under Section 30 of this Settlement
Agreement.  If the Implementation Date occurs, Ford shall cause all
assets in the Existing Internal VEBA, including investment returns thereon, net
of trust expenses (this shall only include expenses to the extent permitted by
ERISA) not previously taken into account in determining investment returns, to
be transferred from the Existing Internal VEBA to the New VEBA as set forth in
Sections 8.A and 12.B of this Settlement Agreement.  Ford and the
Committee shall enter into discussions in advance of such transfer with regard
to the method of allocating, transferring and/or otherwise handling any illiquid
or otherwise non-transferable investments in the Existing Internal VEBA so as to
preserve as much as possible the economic value of such investments and minimize
any losses due to the liquidation of assets.  Such discussions shall
be completed by November 30, 2009.  The determinations made by Ford as
a product of these discussions with the Committee regarding the way to transfer
illiquid or otherwise non-transferable investments in the Existing Internal VEBA
shall be final and binding on Ford, the UAW, the Committee, the Class
Representatives, the Class, the Covered Group and Class Counsel.

       

      
        	
                7.

              	
                Temporary
      Asset Account and Limited Liability
Company

              

      

       

      A.            Creation of
TAA.  Prior to the date of this Settlement Agreement, Ford
established the TAA.  Subject to termination of this Settlement
Agreement, the sole purpose of the TAA is to serve as tangible evidence of the
availability of assets equal to the sum of certain amounts that Ford agrees to
pay to the New VEBA as provided in this Settlement Agreement (for clarification,
the reference to the TAA does not include the amounts in the Existing External
VEBA or the Existing Internal VEBA).  Neither the TAA nor the assets
therein shall be used for any purposes other than as set forth in this
Settlement Agreement.  Ford shall, or shall cause the LLC to, keep
true and correct books and records regarding the assets held in the TAA as well
as all amounts credited to and debited against the TAA, including investment
returns.

       

      B.            
Creation of the
LLC.  Prior to the date of this Settlement Agreement, Ford
created Ford-UAW Holdings LLC, a Delaware limited liability company, to hold the
Convertible Note, the Term Note and, if so determined by Ford in its sole
discretion, the TAA, and to receive interest or other income from such assets to
the extent that the LLC holds the TAA.  Interest on the Convertible
Note and the Term Note shall be deposited in the TAA in accordance with Section
7.D of this Settlement Agreement.  Subject to termination of this
Settlement Agreement, the sole purpose of the LLC is to hold the Convertible
Note, the Term Note and, if so determined by Ford in its sole discretion, the
TAA, thereby serving as tangible evidence of the availability of assets equal to
the Convertible Note, the Term Note and the TAA, to the extent applicable, that
Ford agrees to pay and/or transfer on or after the Implementation Date to the
New VEBA as provided in this Settlement Agreement.  The LLC shall
engage in no activities other than (i) holding the Convertible Note, the Term
Note and, if applicable, the assets in the TAA; (ii) investing the assets in the
TAA, if applicable, as provided in this Settlement Agreement, and (iii) to the
extent Ford does not transfer its interests in the LLC to the New VEBA in
accordance with this Settlement Agreement, transferring the Convertible Note,
the Term Note and, if held by the LLC, the assets in the TAA to the New
VEBA.  The LLC shall not exercise any conversion rights under the
Convertible Note and shall not agree to any amendments to the Convertible Note
or the Term Note.  Promptly after creation of the LLC, Ford shall
cause the LLC to execute and deliver an instrument of accession in which it
agrees to be bound by and to perform the provisions of Sections 7, 8 and 12 of
this Settlement Agreement to the extent applicable to the LLC.

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      C.            Ford Deposits in the
LLC.  Ford shall make the following deposits in the LLC during
the time period from January 1, 2008 to termination of the TAA:

       

      
        	
                (i)

              	
                Convertible
      Note.  Ford shall issue the Convertible Note to the LLC
      on April 1, 2008 or as soon as reasonably practicable
      thereafter.  Ford hereby represents that, since November 3,
      2007, no event has occurred that would have given rise to an adjustment of
      the Conversion Rate (as defined in the Convertible Note) pursuant to
      Article VI of the Convertible Note if such event had occurred after the
      issuance of the Convertible Note and Ford agrees to adjust the initial
      Conversion Rate included in the form attached hereto as Exhibit B to
      this Settlement Agreement accordingly if such an event occurs prior to the
      issuance of the Convertible Note.

              

      

       

      
        	
                (ii)

              	
                Term
      Note.  Ford shall issue the Term Note to the LLC on April
      7, 2008 or as soon as reasonably practicable
  thereafter.

              

      

       

      D.          
 Ford Deposits in
TAA.  Ford shall make the following deposits in the TAA during
the time period from January 1, 2008 to termination of the TAA:

       

      
        	
                (i)

              	
                On
      January 1, 2008, or as soon as reasonably practicable thereafter, Ford
      shall deposit to the TAA $2,733,148,905.90 (representing the difference
      between $6.473 billion and the value of the Existing Internal VEBA as
      described in Section 6.A of this Settlement Agreement), plus Interest on
      such amount from January 1, 2008 to the date of
  deposit.

              

      

       

      
        	
                (ii)

              	
                Interest on
      Convertible Note.  On July 1, 2008, Ford shall cause the
      LLC to deposit $95,852,500 in the TAA.  This amount represents
      the first 5.75% interest payment payable under the terms of the
      Convertible Note (i.e., interest from January 1, 2008 to the Interest
      Payment Date (as defined in the Convertible Note)).  If
      $95,852,500 is not deposited in the TAA on July 1, 2008, Interest shall
      accrue on such amount from and including July 1, 2008 to but excluding the
      date of deposit.  If prior to the transfer of the Convertible
      Note pursuant to Section 8.D of this Settlement Agreement, any additional
      interest payments are payable under the terms of the Convertible Note,
      Ford shall cause the LLC to make such deposits in the
  TAA.

              

      

       

      
        	
                (iii)

              	
                Interest on Term
      Note.  On July 1, 2008, Ford shall cause the LLC to
      deposit $142,500,000 in the TAA.  This amount represents the
      first 9.50% interest payment payable under the terms of the Term Note
      (i.e., interest from January 1, 2008 to the Interest Payment Date (as
      defined in the Term Note)).  If $142,500,000 is not deposited in
      the TAA on July 1, 2008, Interest shall accrue on such amount from and
      including July 1, 2008 to but excluding the date of deposit.  If
      prior to the transfer of the Term Note pursuant to Section 8.E of this
      Settlement Agreement, any additional interest payments are payable under
      the terms of the Term Note, Ford shall cause the LLC to make such deposits
      in the TAA.

              

      

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      
        	
                (iv)

              	
                Base Amount
      Contributions.  On April 1, 2008 or as soon as reasonably
      practicable thereafter, Ford shall deposit in the TAA $52.3 million
      (“Base
      Amount”) plus Interest on such amount from and including April 1,
      2008 to but excluding the date of deposit.  Ford shall make
      annual payments of the Base Amount, as set forth in the amortization
      schedule in Exhibit D to
      this Settlement Agreement, by April 1 of each year as applicable to the
      time period up to the date of transfer of the TAA to the New VEBA under
      Section 12.D of this Settlement Agreement; provided that, at all times,
      these payments shall be subject to Ford’s right to pre-fund all
      then-remaining Base Amount payments by paying the applicable Buyout Amount
      set forth in the amortization schedule in Exhibit D to
      this Settlement Agreement.

              

      

       

      E.           
 Control of TAA
and the LLC.  Control of the TAA and the LLC and all the assets
therein shall be solely within Ford’s discretion; provided, however, that Ford
shall not, and shall not permit the LLC (or its successors) to, pledge,
mortgage, or grant a lien on any assets held in the TAA or owned by the LLC (or
its successors).  Ford shall oversee the investment of the assets in
the TAA.  To the extent practicable given the differences in time
horizon and other investment parameters, Ford shall invest the assets in the TAA
in a manner that is consistent with the investment policy of the Existing
Internal VEBA.  However, Ford does not guarantee or warrant the
investment returns on the assets in the TAA and/or the LLC.

       

      F.       
     Termination of TAA;
Liquidation of LLC.  If the Implementation Date does not occur
because (i) the Approval Order has not been entered as described in Section
28.B, (ii) the Approval Order has been disapproved or modified, or (iii) Ford
has not completed, on a basis reasonably satisfactory to Ford, its discussions
with the SEC regarding the accounting treatment with respect to the New Plan and
New VEBA as set forth in Section 21 of this Settlement Agreement, or (iv) this
Settlement Agreement has been terminated for any other reason as provided in
Section 30 of this Settlement Agreement, the TAA shall be terminated and the LLC
shall be liquidated in an orderly fashion.  In addition, if the
Implementation Date has not occurred by December 31, 2011, the TAA shall be
terminated and the LLC shall be liquidated in an orderly fashion; provided
however, that this date may be extended by agreement between Ford, the UAW and
Class Counsel.  Upon termination of the TAA for any reason, Ford and
the LLC may use the assets of the TAA and the LLC for any corporate
purpose.

       

      G.         
   Communications Regarding
Investment Results.  Ford agrees to periodically inform and
hold discussions with the UAW, Class Counsel and the Committee about the
investment results of and decisions regarding the assets in the TAA and the
Existing Internal VEBA.  Ford shall, with respect to the performance
of its duties in managing the Existing Internal VEBA and the TAA, participate in
the following meetings and provide the following reports to the UAW and the
Committee: (i) quarterly reports of TAA and Existing Internal VEBA asset class
and benchmark performance for relevant time periods; and (ii) semi-annual or
quarterly meetings with UAW and/or Committee representatives to report on TAA
and Existing Internal VEBA returns and analysis of performance, and to review
significant activities affecting investments.  Any input from the UAW,
Class Counsel and/or the Committee shall not be a basis of Ford’s investment
decisions within the meaning of the DOL regulations set forth at 29 CFR §
2510-3.21(c).

       

      
        	
                8.

              	
                Ford
      Payments to New Plan and New VEBA

              

      

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

       Ford’s
financial obligation and payments to the New Plan and New VEBA are fixed and
capped by the terms of this Settlement Agreement.  The timing of all
payments to the New VEBA shall be as set forth in Section 12 of this Settlement
Agreement; it being agreed and acknowledged that the New Plan, funded by the New
VEBA, shall provide Retiree Medical Benefits for the Class and the Covered Group
after the Implementation Date, and that all obligations of Ford and the Ford
Retiree Health Plan for Retiree Medical Benefits for the Class and the Covered
Group shall be forever and irrevocably terminated as of the end of the
Implementation Date, as set forth in this Settlement Agreement.  All
assets shall be transferred or paid by Ford free and clear of any liens, claims
or other encumbrances.  Pursuant to this Settlement Agreement, Ford
shall have the following, and only the following, obligations to the New VEBA
and the New Plan, and all payments and transfers in this Section 8 and in
Sections 9 through 11 of this Settlement Agreement shall be credited to the Ford
Separate Retiree Account of the New VEBA:

       

      A.          
  Existing
Internal VEBA.  Provide for the transfer to the New VEBA of the
assets (or, with regard to any illiquid or otherwise non-transferable
investments, equivalent alternatives resulting from discussions between Ford and
the Committee pursuant to Section 6.B of this Settlement Agreement) of the
Existing Internal VEBA, net of Existing Internal VEBA trust expenses (this shall
only include expenses to the extent permitted by ERISA), as described in Section
12.B of this Settlement Agreement.

       

      B.        
    TAA
Equivalency.  Transfer to the New VEBA the assets in the TAA
(representing the amounts Ford deposited in the TAA pursuant to Section 7.D of
this Settlement Agreement and the investment returns thereon), net of expenses
(but limited to those expenses that could be charged under ERISA if the TAA were
a plan subject to ERISA) or, at Ford’s option, transfer either (i) cash in lieu
of some or all of these assets in the TAA or (ii) all interests in the LLC as
described in Section 12.E of this Settlement Agreement.

       

      C.         
   Base
Amount.  Subject to Ford’s option to buy out the Base Amount at
any time, pay an annual Base Amount to the New VEBA as set forth in Exhibit D to this
Settlement Agreement, other than any such amount previously deposited in the TAA
pursuant to Section 7.D(iv) of this Settlement Agreement.  In
addition, Ford may at any time request to make a partial pre-payment of a Buyout
Amount of the Base Amount on terms that provide economically equivalent present
value to the New VEBA, provided that such partial pre-payment shall be made only
if mutually agreed between Ford and the Committee.  The Committee
shall be entitled to accept or reject any such request in its sole
discretion.

       

      D.           
 Convertible
Note.  Cause the LLC to transfer to the New VEBA the
Convertible Note issued to the LLC or, at Ford’s option, issue to the New VEBA
an Alternative Note, as described in Section 12.E of this Settlement
Agreement.  In the event that the transfer of the Convertible Note (or
the issuance of an Alternative Note) to the New VEBA occurs subsequent to a
Record Date and on or prior to the Interest Payment Date (as such terms are
defined in the Convertible Note), Ford shall cause the LLC to transfer to the
New VEBA immediately upon receipt the interest payment that the LLC will receive
that corresponds to such Interest Payment Date.  Ford shall pay any
and all documentary, stamp or similar issue or transfer taxes that may be
payable in requesting the issue or transfer of the Convertible Note or an
Alternative Note to the New VEBA.

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      E.          
  Term
Note.  Cause the LLC to transfer to the New VEBA the Term Note
issued to the LLC or, at Ford’s option, issue to the New VEBA an Alternative
Note, as described in Section 12.E of this Settlement Agreement.  In
the event that the transfer of the Term Note to the New VEBA occurs subsequent
to a Record Date and on or prior to the Interest Payment Date (as such terms are
defined in the Term Note), Ford shall cause the LLC to transfer to the New VEBA
immediately upon receipt the interest payment that the LLC will receive that
corresponds to such Interest Payment Date.  Ford shall pay any and all
documentary, stamp or similar issue or transfer taxes that may be payable in
requesting the issue or transfer of the Term Note to the New VEBA.

       

      F.          
  Cash
Contribution Based on Increase in Stock Value.  Within five
days of the Final Effective Date, Ford shall transfer to the Existing External
VEBA $33 million in satisfaction of the Stock Contribution Obligation, as
described in Section 13.C of the Hardwick I Settlement Agreement.  The
Approval Order shall provide that such payment shall be made to the New VEBA,
rather than the Existing External VEBA, if the payment is payable after the
Implementation Date.

       

      The
payments described in this Section 8 are subject to reduction for the amounts
set forth in Section 12.A of this Settlement Agreement.  To the extent
that any assets described in this Section 8 are held by the LLC, Ford may
satisfy the payment and transfer obligations in this Section 8 and in Sections 9
through 11 by transferring all interests in the LLC to the New
VEBA.

       

      
        	
                9.

              	
                Wage
      and COLA Deferrals

              

      

       

      A.            Impact on Hardwick I Wage
and COLA Deferral.  Ford shall continue to deposit into the
Existing External VEBA the wage and COLA deferrals set forth in Section 13.B of
the Hardwick I Settlement Agreement (including the COLA deferrals and
non-payment of the September 18, 2006 general increase to the hourly wage rate)
until the termination of the Existing External VEBA.  As a result of
Ford agreeing to deposit the amount described in Section 7.D(i) into the TAA,
the Approval Order shall provide that as of the day following the Implementation
Date (i) Ford shall no longer be required to make deposits of the wage and COLA
deferrals from the Hardwick I Settlement Agreement into the Existing External
VEBA, (ii) the amounts described in Section 7.D(i) paid by Ford pursuant to this
Settlement Agreement shall be in full satisfaction of any and all of Ford’s
obligations under Section 13.B of the Hardwick I Settlement Agreement and the
provisions of the judgment in Hardwick I regarding wage and COLA deferrals,
(iii) Ford shall have no further obligations as to such payments or
contributions to the Existing External VEBA, and (iv) the Hardwick I wage and
COLA deferrals shall inure thereafter solely to the benefit of Ford and continue
in perpetuity increasing at $0.02 per hour per quarter as described in Section
13.B of the Hardwick I Settlement Agreement.

       

       If
the Implementation Date occurs after January 1, 2010, then the balance in the
TAA as of the Implementation Date (excluding the Convertible Note and the Term
Note) to be deposited in the New VEBA as provided in Section 8.B of this
Settlement Agreement shall be reduced by the value of the wage and COLA deferral
contributions paid or payable to the Existing External VEBA under the Hardwick I
Settlement Agreement (assuming a 9% rate of return on such contributions) from
January 1, 2010 to the Implementation Date.

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

       

      B.             2009 Wage
Deferral.  In negotiating the MOU and 2007 Ford-UAW National
Agreement, Ford and UAW agreed that there shall be no general increase to the
hourly wage rate for Ford Active Employees in 2009 regardless of whether or not
the Implementation Date occurs.  As a result, Ford agreed to pre-fund
this wage increase to the TAA as referred to in Section 7.D(i) of this
Settlement Agreement.  If the Implementation Date does not occur, the
wage increase will not be reinstated.

       

      C.             2007 COLA
Diversion.  In negotiating the MOU and 2007 Ford-UAW National
Agreement, Ford and UAW also agreed that, effective with the December 1, 2007
COLA adjustment and ending September 1, 2011, up to four cents ($0.04) per hour
per quarter shall be diverted from COLA otherwise calculated for Ford Active
Employees.  These deferred amounts shall inure solely to the benefit
of Ford and shall not be reinstated after September 1, 2011 but shall continue
to be deferred in perpetuity.  As a result, Ford agreed to pre-fund
these future COLA adjustments to the TAA referred to in Section 7.D(i) of this
Settlement Agreement.  If the Implementation Date does not occur, the
cumulative effect of four cents ($0.04) per hour per quarter of COLA shall be
reinstated and Ford and the UAW shall agree on the disposition of such COLA
adjustment.  The UAW and Ford acknowledge that these COLA diversions
shall not entitle any member of the Covered Group to any payment from, or create
any interest on their part in, any assets or amounts held in the
TAA.

       

      
        	
                10.

              	
                Other
      Payments to the Existing External
VEBA

              

      

       

      Ford’s
“Third Contribution” of $43 million, as required by Section 13.A of the Hardwick
I Settlement Agreement, shall be payable by Ford to the Existing External VEBA
on January 1, 2009 (or the first business day thereafter).

       

      
        	
                11.

              	
                [RESERVED]

              

      

       

      
        	
                12.

              	
                Sequencing
      of Initial Deposits to the New VEBA and Termination of Existing External
      VEBA, the LLC and TAA

              

      

       

      The
initial deposits to the New VEBA shall be made and credited to the Ford Separate
Retiree Account, and the Existing External VEBA and TAA shall be terminated, as
provided below.

       

      A.       
    Deposit No.
1.  Within 30 days of the Initial Effective Date or the
establishment of the New VEBA, whichever is later, Ford shall cause a transfer
of $1 million from the TAA to the New VEBA.   Thereafter, and
until the Implementation Date, within 30 days of any request by the Committee,
Ford shall cause the transfer of such additional amounts as the Committee shall
request, provided that there shall be no more than five such requests prior to
the Implementation Date and the aggregate of all such transfers, including the
initial payment, shall not exceed $20 million.  Such amounts shall
represent an advance to the New VEBA to cover reasonable and necessary
preparatory expenses incurred by the New Plan or the New VEBA in anticipation of
the transition of responsibility for Retiree Medical Benefits as of the day
following the Implementation Date as set forth in Section 5 of this Settlement
Agreement.  These advance payments shall not increase or add to the
amounts Ford has agreed to pay under this Settlement Agreement.

       

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      B.           
 Deposit No.
2.  Within 10 business days after the Implementation Date, Ford
shall direct the trustee of the Existing Internal VEBA to transfer to the New
VEBA all assets in the Existing Internal VEBA or cash in an amount equal to the
Existing Internal VEBA balance on the date of the transfer.  The
Approval Order shall provide that, upon such transfer, the Existing Internal
VEBA shall be deemed to be amended to terminate participation and coverage
regarding Retiree Medical Benefits for the Class and the Covered Group,
effective as of the day following the Implementation Date.  Accruals
for trust expenses (this shall only include expenses to the extent permitted by
ERISA) through the date of transfer shall be made and retained within the
Existing Internal VEBA to pay such expenses.  After payment of these
trust expenses is completed, a reconciliation of the accruals and the actual
expenses (this shall only include expenses to the extent permitted by ERISA)
shall be performed.  Ford agrees to cause the payment to the New VEBA
by the Existing Internal VEBA of any overaccruals for such
expenses.  Similarly, in the event of an underaccrual the New VEBA
shall return to the Existing Internal VEBA the amount of the underaccrual of
expenses.

       

      C.           
 Deposit No.
3.  The Approval Order shall direct the committee of the
Existing External VEBA and the trustees of the Existing External VEBA to
transfer all assets and liabilities of the Existing External VEBA into the New
VEBA and terminate the Existing External VEBA within 15 days after the
Implementation Date.  This transfer of assets and liabilities shall
include, but not be limited to, the transfer of all rights and obligations
granted to or imposed on the Existing External VEBA under Section 14.C of the
Hardwick I Settlement Agreement and Ford agrees that, on the day following the
Implementation Date, the New VEBA shall be substituted for the Existing External
VEBA for such purposes.  The Approval Order shall provide that the
Existing External VEBA shall be terminated after this payment is
made.

       

      D.          
  Deposit
No. 4.  The balance in the TAA as of the date of transfer,
after giving effect to Deposit No. 1, or at Ford’s discretion, cash in lieu of
some or all of the assets in the TAA as of the date of transfer, shall be paid
to the New VEBA before the 20th
business day after the Implementation Date.  If Ford elects to pay
cash in lieu of some or all of the investments in the TAA, the cash Ford will
pay shall include an amount equal to accrued and unpaid interest and dividends
on such investments net of reasonable liquidation costs.  Accruals for
expenses (but limited to those expenses that could be charged to the TAA under
ERISA if the TAA were a plan subject to ERISA) through the date of transfer
shall be made and an amount equal to the TAA’s share of such accruals shall be
retained within the TAA to pay such expenses.  After payment of these
expenses is completed, a reconciliation of the accruals and the actual expenses
(but limited to those expenses that could be charged to the TAA under ERISA if
the TAA were a plan subject to ERISA) shall be performed.  Ford agrees
to cause the payment to the New VEBA by the TAA of any overaccruals for the
TAA’s share of such expenses.  Similarly, in the event of an
underaccrual the New VEBA will return to the TAA, or to Ford, as applicable, the
amount of the underaccrual for the TAA’s share of the expenses.

       

      E.           
 Transfer of
Convertible Note and Term Note.  Ford shall cause the LLC to
transfer the Convertible Note and Term Note to the New VEBA after Deposit No. 4
has been made, within 25 business days after the Implementation Date if no legal
or regulatory approvals are required, or within 10 business days of securing
final legal or regulatory approval.  In lieu of causing the LLC to
transfer either or both Notes, Ford, in its sole discretion, may elect to
transfer to the New VEBA a note or notes containing economic terms and
conditions identical to those of the Convertible Note or the Term Note (each
such note, an “Alternative Note”),
including accrued interest.  The transfer of the Convertible Note, the
Term Note or any Alternative Note shall only occur as permitted by
law.  Ford and/or the New Plan, as applicable, shall apply for any
necessary legal or regulatory approvals, including but not limited to the
prohibited transaction exemptions described in Section 22 of this Settlement
Agreement and any required federal or state bank regulatory
approvals.  The UAW, the Class and Class Counsel shall support and
cooperate with any such requests for legal or regulatory
approvals.  If Ford and the New VEBA cannot timely obtain necessary
legal or regulatory approvals, the parties shall meet and discuss appropriate
alternatives to the transfer of the Convertible Note or the Term Note that
provide equivalent economic value to the New VEBA.  Notwithstanding
the foregoing, any transfer of the Convertible Note or an Alternative Note shall
be conditioned upon execution and delivery by the New VEBA of a Security Holder
and Registration Rights Agreement substantially in the form of Exhibit F to this
Settlement Agreement.

       

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

       

      The
parties acknowledge that, upon completion of Ford’s transfer of the assets in
the TAA to the New VEBA as contemplated by this Settlement Agreement, no assets
should remain in the TAA and the TAA shall be terminated.  If,
however, assets remain in the TAA as the result of Ford’s exercise of its option
to transfer cash in lieu of TAA assets, or deductions permitted under this
Settlement Agreement, then Ford may thereafter use or dispose of such assets,
including any investment returns thereon, for any corporate
purpose.  After Deposit No. 4 has been made and after transfer of the
Convertible Note and the Term Note, or any Alternative Note, the LLC shall be
terminated.  All assets transferred or contributed to the New VEBA
shall be free and clear of any liens, claims or other encumbrances.

       

      To the
extent that assets to be deposited or transferred to the New VEBA as described
in Section 8 or this Section 12 are held by the LLC, Ford may elect in its sole
discretion, to satisfy its obligation in this Section 12 by transferring all
interests in the LLC to the New VEBA in lieu of causing the LLC to deposit or
transfer any such assets.

       

      If a
deposit or payment or any portion thereof is made by Ford to the TAA or the New
VEBA by mistake under any provision of this Settlement Agreement, including, but
not limited to Sections 7 through 12 of this Settlement Agreement, (i) as to the
TAA, Ford may deduct such amount from the TAA plus earnings thereon from the
date of deposit in the TAA up to but excluding the date of deduction, and (ii)
as to the New VEBA, the Committee shall, upon written direction of Ford, return
such amounts as may be permitted by law to Ford (plus earnings thereon from the
date of payment to but excluding the date of return) within 30 days of
notification by Ford that such payment was made by mistake.  If a
dispute arises with regard to such payment, the dispute will be resolved
pursuant to Section 26 of this Settlement Agreement.

       

      
        	
                13.

              	
                Adjustment
      Events

              

      

       

      A.        
   Adjustment
Event.  “Adjustment Event” shall mean:

       

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

       

      
        	
                (i)

              	
                the
      determination of the value of any assets in lieu of which Ford elects to
      transfer cash to the New VEBA pursuant to Sections 8 and 12 of this
      Settlement Agreement; or

              

      

       

      
        	
                (ii)

              	
                the
      determination of the value of any illiquid or otherwise non-transferable
      investments in the Existing Internal VEBA in case the discussions between
      Ford and the Committee as set forth in Section 6.C of this Settlement
      Agreement result in transferring something other than such
      investment.

              

      

       

      B.        
    Due Diligence and Adjustment
Mechanism.

       

       In
connection with any Adjustment Event, Ford shall deliver, as soon as
practicable, to the Committee (or the UAW prior to establishment of the
Committee) information in reasonable detail about the determinations made by
Ford with regard to such Adjustment Event and the work papers, underlying
calculations and other documents and materials on which such determinations are
based, including non-privileged materials from Ford’s advisors, if any
(collectively, the “Determination
Materials”).

       

       The
Committee shall have 30 days from receipt of the Determination Materials from
Ford to submit to Ford a written request for an Independent Attestation of a
determination(s) by Ford listed in Section 13.A of this Settlement
Agreement.  As a part of this review process, the Committee may ask
for additional information regarding the calculations, and the data and
information provided by Ford.  Ford shall as promptly as practicable,
respond to all reasonable requests from the Committee for such additional
information.  However, a request for additional information shall not
extend the 30-day review period, unless an extension is reasonably necessary to
allow the Committee to review such additional information, but in no event
longer than 45 days from receipt of the Determination Materials.

       

       All
determinations made by Ford with regard to a determination(s) listed in Section
13.A of this Settlement Agreement shall be final and binding on Ford, the UAW,
the Class Representatives, the Class, the Covered Group, Class Counsel, the
Committee and the New Plan and New VEBA, unless the Committee timely submits a
request for an Independent Attestation.   If the Committee timely
submits such a request, Ford shall engage a nationally recognized independent
registered public accounting firm to conduct an Independent Attestation
regarding a determination(s) by Ford listed in Section 13.A of this Settlement
Agreement.  The Independent Attestation shall be final and binding on
Ford, the UAW, the Class Representatives, the Class, the Covered Group, Class
Counsel, the Committee and the New Plan and New VEBA.

       

       Nothing
in the foregoing paragraphs shall prevent the division, deposit, withdrawal or
transfer of any assets the valuation of which is not in dispute pending
resolution of the disputed amounts.

       

      C.        
    Confidentiality.  All
information and data provided by Ford to the UAW and/or the Committee under
Section 7.G of this Settlement Agreement and as a part of this due diligence and
adjustment process shall be considered confidential.  The UAW and the
Committee shall use such information and data solely for the purpose set forth
in this Section 13 of the Settlement Agreement.  The UAW and the
Committee shall not disclose such information or data to any other person
without Ford’s written consent, provided that the UAW and the Committee may
disclose such information and data to their attorneys and professional advisors
subject to the agreement of such attorneys and advisors to the confidentiality
restrictions set forth herein.

       

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

       

      
        	
                14.

              	
                Future
      Contributions

              

      

       

       The
UAW, the Class and the Covered Group may not negotiate any increase of Ford’s
funding or payment obligations set out herein.  The UAW also agrees
not to seek to obligate Ford to:  (i) provide any additional payments
to the New VEBA other than those specifically required by this Settlement
Agreement; (ii) make any other payments for the purpose of providing Retiree
Medical Benefits to the Class or the Covered Group; or (iii) provide or assume
the cost of Retiree Medical Benefits for the Class or the Covered Group through
any other means; provided, that, the UAW may propose that Ford Active Employees
be permitted to make contributions to the New VEBA of amounts otherwise payable
in profit sharing, COLA, wages and/or signing bonuses, if not prohibited by
law.

       

      
        	
                15.

              	
                Pension
      Benefits

              

      

       

       For
purposes of determining a Class or Covered Group member’s status as a Protected
Retiree under the terms of the Hardwick I settlement agreement, any pension
increase negotiated in the 2007 Ford-UAW National Agreement shall not be
included in the determination of pension income.

      

      
        	
                16.

              	
                Administrative
      Costs

              

      

       

       The
New VEBA shall be responsible for all costs to administer the New Plan and the
New VEBA commencing on the day following the Implementation Date and continuing
thereafter. The New Plan and the Trust Agreement shall be drafted consistent
with this requirement.

       

      
        	
                17.

              	
                Trust
      Agreement; Segregated Account;
Indemnification

              

      

       

      Assets
paid or transferred to the New VEBA by or at the direction of Ford, including
all investment returns thereon, shall be used solely to provide Retiree Medical
Benefits to the Class and the Covered Group as defined in this Settlement
Agreement and to defray the reasonable expenses of administering the New Plan to
provide such benefits as permitted under this Settlement Agreement until
expiration of the Initial Accounting Period.  Thereafter, Benefits
shall be provided to the Class and the Covered Group as described in the Trust
Agreement.  The Trust Agreement shall provide: (i) for the Ford
Separate Retiree Account to be credited with the assets deposited or transferred
to the New VEBA by Ford, or at Ford’s direction, under this Settlement
Agreement; (ii) that the assets in the Ford Separate Retiree Account may be used
only to provide Benefits for such Class and such Covered Group; and (iii) that
under no circumstances shall Ford or the Ford Separate Retiree Account be liable
or responsible for the obligations of any other employer or for the provision of
Retiree Medical Benefits or any other benefits for the employees or retirees of
any other employer.

       

      Further,
the Trust Agreement shall provide that the Committee, on behalf of the New VEBA,
shall take all such reasonable action as may be needed to rebut any presumption
of control that would limit the New VEBA’s ability to own Ford common stock or
the Convertible Note or as may be required to comply with all applicable laws
and regulations, including but not limited to federal and state banking laws and
regulations.

       

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

      Except as
prohibited under Section 410(a) of ERISA and to the extent otherwise permitted
by law, the New VEBA shall indemnify and hold the Committee, the UAW, Ford, the
Ford Retiree Health Plan, and the current or former employees, officers and
agents of each of them harmless from and against any liability that they may
incur in connection with the New Plan and New VEBA, unless such liability arises
from their gross negligence or intentional misconduct, or breach of this
Settlement Agreement.  The Committee shall not be required to give any
bond or any other security for the faithful performance of its duties under the
Trust Agreement, except as such may be required by law.

       

      
        	
                18.

              	
                Subsidies

              

      

       

      With
regard to claims incurred after the Implementation Date, the New VEBA shall be
entitled to receive any Medicare Part D subsidies and other health care related
subsidies regarding benefits actually paid by the New VEBA which may result from
future legislative changes, and Ford shall not be entitled to receive any such
subsidies related to prescription drug benefits and other health care related
benefits provided to the Class and the Covered Group by the New Plan and New
VEBA.

       

      
        	
                19.

              	
                Default
      and Cure

              

      

       

      A.           General.

       

      The
Committee shall have the right to accelerate some or all of the payment
obligations of Ford under this Settlement Agreement (other than the Base Amount
payments set forth in Sections 8.C and Exhibit D of this
Settlement Agreement) if Ford defaults on any payment obligations under this
Settlement Agreement and such default is not cured within 15 business days after
the Committee gives Ford notice of such default.  To cure such
default, Ford shall pay the amount then in default plus accrued Interest on such
amount.  Payments due under the Convertible Note and  Term
Note may also be accelerated under this provision only to the extent that the
Convertible Note or the Term Note, as applicable, is then held by the New
VEBA.

       

      B.           Limitation on
Liens.  Effective as of the Implementation Date and until all
payments required of Ford under this Settlement Agreement, other than the Base
Amount payments set forth in Sections 8.C and Exhibit D of this Settlement
Agreement, have been made, Ford shall not, nor shall it permit any Manufacturing
Subsidiary to, incur, issue, assume, guarantee or suffer to exist any notes,
bonds, debentures or other similar evidences of indebtedness for money borrowed
(notes, bonds, debentures or other similar evidences of indebtedness for money
borrowed being hereinafter called “Debt”), secured by a pledge of, or mortgage
or lien on, any Principal Domestic Manufacturing Property of Ford or any
Manufacturing Subsidiary, or any shares of stock of or Debt of any Manufacturing
Subsidiary (mortgages, pledges and liens being hereinafter called “Mortgage” or
“Mortgages”), without effectively providing that payment obligations by Ford
under this Settlement Agreement (together with, if Ford shall so determine, any
other Debt of Ford or such Manufacturing Subsidiary then existing or thereafter
created ranking equally with payment obligations of Ford under this Settlement
Agreement) shall be secured equally and ratably with (or prior to) such secured
Debt, so long as such secured Debt shall be so secured, unless, after giving
effect thereto, the aggregate amount of all such secured Debt so secured plus
all Attributable Debt of Ford and its Manufacturing Subsidiaries in respect of
sale and leaseback transactions (as defined in Section 10.05 of the Indenture
dated as of January 30, 2002 between Ford and The Bank of New York, as Trustee,
would not exceed 5% of Consolidated Net Tangible Automotive Assets; provided,
however, that this Section shall not apply to Debt secured by:

       

      
        
          
             

          

          
            23

            
              

            

          

          
             

          

        

      

       

      
        	
                (i)

              	
                Mortgages
      on property of, or on any shares of stock or of Debt of, any corporation
      existing at the time such corporation becomes a Manufacturing
      Subsidiary;

              

      

       

      
        	
                (ii)

              	
                Mortgages
      in favor of Ford or any Manufacturing
  Subsidiary;

              

      

       

      
        	
                (iii)

              	
                Mortgages
      in favor of any governmental body to secure progress, advance or other
      payments pursuant to any contract or provision of any
    statute;

              

      

       

      
        	
                (iv)

              	
                Mortgages
      on property, shares of stock or Debt existing at the time of acquisition
      thereof (including acquisition through merger or consolidation) or to
      secure the payment of all or any part of the purchase price thereof or to
      secure any Debt incurred prior to, at the time of, or within 60 days
      after, the acquisition of such property or shares of Debt for the purpose
      of financing all or any part of the purchase price thereof;
      and

              

      

       

      
        	
                (v)

              	
                any
      extension, renewal or replacement (or successive extensions renewals or
      replacements), as a whole or in part, of any Mortgage referred to in the
      foregoing clauses (i) to (iv), inclusive; provided that such extension,
      renewal or replacement Mortgage shall be limited to all or a part of the
      same property, shares of stock or Debt that secured the Mortgage extended,
      renewed or replaced (plus improvements on such
  property).

              

      

       

      For
purposes of this section, the term “Attributable Debt” shall mean, as to any
particular lease under which any Person (defined for purposes of this Section
19B to include any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity) is at the
time liable, at any date as of which the amount thereof is to be determined, the
total net amount of rent (discounted from the respective due dates thereof at
the rate of 9.5% per annum compounded annually) required to be paid by such
Person under such lease during the remaining term thereof. The net amount of
rent required to be paid under any such lease for any such period shall be the
total amount of the rent payable by the lessee with respect to such period, but
may exclude amounts required to be paid on account of maintenance and repairs,
insurance, taxes, assessments, water rates and similar charges. In the case of
any lease which is terminable by the lessee upon the payment of a penalty, such
net amount shall also include the amount of such penalty, but no rent shall be
considered as required to be paid under such lease subsequent to the first date
upon which it may be so terminated.

       

      C.     
       Dispute
Resolution.The
dispute resolution process set forth in Section 26 of this Settlement Agreement
shall apply in the event of a dispute over whether Ford has defaulted on any
payment obligation under this Settlement Agreement.  In this regard,
the time limit applicable to Ford’s right to cure a default shall be 15 business
days after agreement by the parties that Ford has defaulted, or entry by the
Court of a final ruling determining that Ford has defaulted on its payment
obligations.  Application of the dispute resolution process set forth
in Section 26 of this Settlement Agreement does not relieve Ford of the
obligation to pay accrued Interest for the period of time that the dispute
resolution process is in effect in order to cure a default.

       

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

       

      
        	
                20.

              	
                Cooperation

              

      

       

      A.      
     Cooperation by
Ford.  Ford shall cooperate with the UAW and the Committee and
at the Committee’s request undertake such reasonable actions as will assist the
Committee in the transition of responsibility for administration of the Retiree
Medical Benefits by the Committee for the New Plan and the New
VEBA.  Such cooperation shall include assisting the Committee in
educational efforts and communications with respect to the Class and the Covered
Group so that they understand the terms of the New Plan, the New VEBA and the
transition, and understand the claims submission process and any other initial
administrative changes undertaken by the Committee.  Before and after
the Implementation Date, at the Committee’s request and as permitted by law,
Ford shall furnish to the Committee such information and shall provide such
cooperation as may be reasonably necessary to permit the Committee to
effectively administer the New Plan and the New VEBA, including, without
limitation, the retrieval of data in a form and to the extent maintained by Ford
regarding age, amounts of pension benefits, service, pension and medical benefit
eligibility, marital status, mortality, claims history, births, deaths,
dependent status and enrollment information of the Class and the Covered
Group.  At the request of the Committee, Ford shall continue to
perform the necessary eligibility work for a reasonable period of time, not to
exceed 90 days after the Implementation Date in order to allow the Committee to
establish and test the eligibility database, and for which Ford shall be
entitled to reimbursement for reasonable costs.  Ford shall also
assist the Committee in transitioning benefit provider contracts to the New
VEBA.  Ford shall also cooperate with the UAW and the Committee and
undertake such reasonable actions as will enable the Committee to perform its
administrative functions with respect to the New Plan and the New VEBA,
including ensuring an orderly transition from Ford administration of Retiree
Medical Benefits to the New Plan and the New VEBA.

       

      To the
extent permitted by law, Ford shall also allow retiree participants to
voluntarily have required contributions withheld from pension benefits and to
the extent reasonably practical, credited to the Ford Separate Retiree Account
of the New VEBA on a monthly basis.  A retiree participant may elect
or withdraw consent for pension withholdings at any time by providing 45 days
written notice to the Pension Plan administrator or such shorter period that may
be required by law; provided, however, that Ford will not be required to obtain
new affirmative consents from existing retiree participants who provided consent
pursuant to the Hardwick I Settlement Agreement to the extent that any required
contributions may be withheld in accordance with such prior
consent.

       

      To the
extent permitted by law, Ford shall also cooperate with the Committee to make
provision for the New VEBA payments of the $76.20 Special Benefit to be
incorporated into monthly Ford pension checks for eligible retirees and
surviving spouses.  It shall be the responsibility of the Committee
and the New VEBA to advise Ford’s pension paying agent in a timely manner of
eligibility changes with regard to the Special Benefit payment.  The
timing of the information provided to Ford’s pension paying agent shall
determine the timing for the incorporation into the monthly pension
check.  It will be the responsibility of the Committee and the New
VEBA to establish a bank account for the funding of the Special Benefit
payments, and Ford’s pension paying agent will be provided with the approval to
draw on that account for the payment of the benefit.  The Committee
and the New VEBA shall assure that the bank account is adequately funded for any
and all such payments.  If adequate funds do not exist for the
payments, then Ford’s pension paying agent shall not make such payments until
the required funding is established in the account.  It will be the
responsibility of the Committee and the New VEBA to audit the eligibility for,
and payment of, the Special Benefit. Additionally, the Committee and the New
VEBA shall be responsible for the payment of reasonable costs associated with
Ford’s administration of the payment of this Special Benefit and the pension
withholdings, including development of administrative and recordkeeping
processes, monthly payment processing, audit and reconciliation functions and
the like.

       

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      Ford
shall be financially responsible for reasonable costs associated with the
transition of coverage for the Class and the Covered Group to the New Plan and
New VEBA. This shall include the cost of educational efforts and communications
with respect to retirees, creation of administrative procedures, initial
development of record sharing procedures, the testing of computer systems,
vendor selection and contracting, and other activities incurred on or before the
Implementation Date, including but not limited to costs associated with drafting
the Trust Agreement, seeking from the Internal Revenue Service a determination
of the tax-exempt status of the New VEBA, plan design and actuarial and other
professional work necessary for initiation of the New Plan and New VEBA and the
benefits to be provided thereunder.  Ford payments described in this
Section shall not reduce its payment obligations under this Settlement
Agreement, and if the New VEBA is a multi-employer welfare trust, the costs
described in this Section, to the extent not allocable to a specific employer,
shall be pro-rated among the participating companies based on the ratio of
required funding for each company.  Payment of these costs shall be
set forth explicitly in the Approval Order.  Notwithstanding this
paragraph, the Dental Benefit Eligibility & Enrollment Plan Sponsor
Agreement and the Administrative Services Agreement, each by and between Ford
and the Trust Committee of the Independent Health Care Trust for the UAW
Retirees of Ford Motor Company, shall remain in full force and effect until
otherwise terminated by the parties thereto.

       

      B.         
  Cooperation With
Ford.  The UAW and the Committee shall cooperate and shall
timely furnish Ford with such information related to the New Plan and New VEBA,
in a form and to the extent maintained by the UAW and the Committee, as may be
reasonably necessary to permit Ford to comply with requirements of the SEC,
including, but not limited to, any disclosures contemplated or agreed to with
the staff of the SEC as a result of Ford’s discussions with the staff pursuant
to Section 21 of this Settlement Agreement and any schedules supporting such
information, and Generally Accepted Accounting Principles, including but not
limited to SFAS 87, SFAS 106, SFAS 132R, SFAS 157, and SFAS 158 (as amended),
for disclosure in Ford's financial statements and any filings with the
SEC.

       

      
        	
                21.

              	
                Accounting
      Treatment

              

        
          
             

          

          
            26

            
              

            

          

          
             

          

        

      

       

      Throughout
the negotiations of the MOU and this Settlement Agreement, Ford has maintained
that a necessary element in its decision to enter into the MOU and this
Settlement Agreement is securing accounting treatment that is reasonably
satisfactory to Ford regarding the transactions contemplated by the MOU and this
Settlement Agreement.  In the event that the economic substance of the
transaction does not meet the specific requirements for settlement accounting as
determined by paragraphs 90-95 of FASB Statement No. 106, as amended, it is
expected that the terms of this Settlement Agreement would give rise to
substantive plan amendment accounting as of the Final Effective
Date.  For purposes of this provision, substantive plan amendment
accounting would limit Ford’s OPEB obligation to the revised, fixed and capped
obligations as determined under this Settlement Agreement.  The
parties shall cooperate to provide, prior to the Final Effective Date, the
Covered Group and all other plan participants of the Ford Retiree Health Plan
with reasonably acceptable communications to ensure accounting treatment
consistent with this Section 21 with respect to the changes implemented by this
Settlement Agreement.  The parties agree that this Settlement
Agreement and Final Effective Date are contingent on Ford securing the
appropriate accounting treatment regarding Ford’s obligations to the Class and
the Covered Group for Retiree Medical Benefits.  As soon as
practicable, Ford shall discuss the accounting for the New Plan and the New VEBA
and its obligations to the Class and the Covered Group for Retiree Medical
Benefits with the staff of the SEC.  If, as a result of those
discussions, Ford believes that the accounting for the transaction may not be a
settlement as contemplated by paragraphs 90-95 of FASB Statement No. 106, as
amended, or a substantive negative plan amendment reasonably satisfactory to
Ford, the parties shall meet in an effort to restructure the transaction to
achieve such accounting.  If the parties are unable to reach an
agreement on terms that Ford reasonably believes will provide such accounting,
this Settlement Agreement shall terminate.  If, but for the
restrictions on transfer contained in Sections 2.2(c)(i) and 2.2(c)(ii) of the
Security Holder and Registration Rights Agreement, Ford would be able to secure
settlement accounting treatment as determined by paragraphs 90-95 of FASB
Statement No. 106, as amended, as of the Implementation Date, Ford agrees to
waive the restrictions contained in Sections 2.2(c)(i) and 2.2(c)(ii) of the
Security Holder and Registration Rights Agreement with respect to Transfers (as
defined in the Security Holder and Registration Rights Agreement) of the
Convertible Note and/or shares of common stock of Ford underlying such
Convertible Note by the LLC or the New VEBA.

       

      
        	
                22.

              	
                Prohibited
      Transaction Exemptions

              

      

       

      The
parties agree that the assets of the TAA and the LLC shall not be “plan assets”
of the New Plan and New VEBA unless and until actual transfer or payment to the
New VEBA.  The UAW, Ford, and the Class and Class Counsel acknowledge
that the instrument establishing the TAA and communications to the Class
regarding the TAA, shall be consistent with the principles set forth in DOL
Advisory Opinions 92-02A, 92-24 and 94-31A so as to avoid the assets in the TAA
being deemed “plan assets” within the meaning of ERISA.  If Ford
determines that the assets in the TAA and/or the LLC as described in Section 7
of this Settlement Agreement are likely to be deemed “plan assets,” Ford shall
apply for a prohibited transaction exemption from the DOL to permit the
acquisition and holding of the employer security in the TAA and/or the
LLC.  The UAW, the Class and Class Counsel shall fully cooperate with
Ford in securing any such legal or regulatory approvals.

       

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

      If Ford
elects to transfer the Convertible Note and the Term Note or any Alternative
Note to the New VEBA and such notes are not qualifying employer securities,
Ford and the New
VEBA timely shall apply for a prohibited transaction exemption from the DOL to
permit the New VEBA to acquire and hold such securities.  Similarly,
if qualifying employer securities and employer real property would exceed 10
percent of the total assets in the New VEBA immediately after transfer of the
Convertible Note and the Term Note  or an Alternative Note for such
notes to the New VEBA, then Ford and the New VEBA timely shall apply for a
prohibited transaction exemption to permit the New VEBA to acquire and hold such
securities.  The UAW, the Class and Class Counsel shall fully
cooperate with Ford and the New VEBA in securing any such legal or regulatory
approvals.  If Ford and the New VEBA cannot timely obtain any
necessary exemptions, the parties shall meet and discuss an appropriate
alternative which provides equivalent economic value to the New
VEBA.

       

      
        	
                23.

              	
                Indemnification

              

      

       

      Subject
to approval by the Court as part of the Judgment, Ford hereby agrees to
indemnify and hold harmless the UAW, and its current or former officers,
directors, employees and expert advisors (each, an “Indemnified Party”),
to the extent permitted by law, from and against any and all losses, claims,
damages, obligations, assessments, penalties, judgments, awards, and other
liabilities related to any decision, recommendations or other actions taken
prior to the date of this Settlement Agreement (collectively, “Indemnification
Liabilities”), and shall fully reimburse any Indemnified Party for any and all
reasonable and documented attorney fees and expenses (collectively, “Indemnity Expenses”),
as and when incurred, of investigating, preparing or defending any claim,
action, suit, proceeding or investigation, arising out of or in connection with
any Indemnification Liabilities incurred as a result of an Indemnified Party’s
entering into, or participation in the negotiations for, this Settlement
Agreement and the MOU and the transactions contemplated in connection herewith;
provided, however, that such indemnity shall not apply to any portion of any
such Indemnification Liability or Indemnity Expense that resulted from the gross
negligence, illegal or willful misconduct by an Indemnified Party; provided,
further, that such indemnity shall not apply to any Indemnification Liabilities
to a Ford Active Employee for breach of the duty of fair
representation.

       

      Nothing
in this Section 23 or any provision of this Settlement Agreement shall be
construed to provide an indemnity for any member or any actions of the
Committee; provided however, that an Indemnified Party who becomes a member of
the Committee shall remain entitled to any indemnity to which the Indemnified
Party would otherwise be entitled pursuant to this Section 23 for actions taken,
or for a failure to take actions, in any capacity other than as a member of the
Committee; and provided further, that nothing in this Section 23 or any other
provision of this Settlement Agreement shall be construed to provide an
indemnity for any Indemnification Liabilities or Indemnity Expenses relating to
(i) management of the assets of the New VEBA or (ii) for any action, amendment
or omission of the Committee with respect to the provision and administration of
Retiree Medical Benefits.

       

      If an
Indemnified Party receives notice of any action, proceeding or claim as to which
the Indemnified Party proposes to demand indemnification hereunder, it shall
provide Ford prompt written notice thereof.  Failure by an Indemnified
Party to so notify Ford shall relieve Ford from the obligation to indemnify the
Indemnified Party hereunder only to the extent that Ford suffers actual
prejudice as a result of such failure, but Ford shall not be obligated to
provide reimbursement for any Indemnity Expenses incurred for work performed
prior to its receipt of written notice of the claim.  If an
Indemnified Party is entitled to indemnification hereunder, Ford shall have the
right to participate in such proceeding or elect to assume the defense of such
action or proceeding at its own expense and through counsel chosen by Ford (such
counsel being reasonably satisfactory to the Indemnified Party).  The
Indemnified Party shall cooperate in good faith in such defense.  Upon
the assumption by Ford of the defense of any such action or proceeding, the
Indemnified Party shall have the right to participate in, but not control the
defense of, such action and retain its own counsel but the expenses and fees
shall be at its expense unless (a) Ford has agreed to pay such Indemnity
Expenses, (b) Ford shall have failed to employ counsel reasonably satisfactory
to an Indemnified Party in a timely manner, or (c) the Indemnified Party shall
have been advised by counsel that there are actual or potential conflicting
interests between Ford and the Indemnified Party that require separate
representation, and Ford has agreed that such actual or potential conflict
exists (such agreement not to be unreasonably withheld); provided, however, that
Ford shall not, in connection with any such action or proceeding arising out of
the same general allegations, be liable for the reasonable fees and expenses of
more than one separate law firm at any time for all Indemnified Parties not
having actual or potential conflicts among them, except to the extent that local
counsel, in addition to its regular counsel, is required in order to effectively
defend against such action or proceeding.  All such fees and expenses
shall be invoiced to Ford, with such detail and supporting information as Ford
may reasonably require, in such intervals as Ford shall require under its
standard billing processes.

       

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

      If the
Indemnified Party receives notice from Ford that Ford has elected to assume the
defense of the action or proceeding, Ford will not be liable for any attorney
fees or other legal expenses subsequently incurred by the Indemnified Party in
connection with the matter.

       

      Ford
shall not be liable for any settlement of any claim against an Indemnified Party
made without Ford’s written consent, which consent shall not be unreasonably
withheld.  Ford shall not, without the prior written consent of an
Indemnified Party, which consent shall not be unreasonably withheld or delayed,
settle or compromise any claim, or permit a default or consent to the entry of
any judgment, that would create any financial obligation on the part of the
Indemnified Party not otherwise within the scope of the indemnified
liabilities.

       

      The
termination of this Settlement Agreement shall not affect the indemnity provided
hereunder, which shall remain operative and in full force and
effect.   Notwithstanding anything in this Section 23 to the
contrary, this Section 23 of the Settlement Agreement shall not be applicable
with respect to any of the matters covered by Article VI of the Securityholder
and Registration Rights Agreement.

       

      
        	
                24.

              	
                Costs
      and Attorneys Fees

              

      

       

      A.           Fees and
Expenses.  Ford agrees to support the application by the UAW
and Class Counsel to the Court for reimbursement by Ford of reasonable attorney
and professional fees and expenses based on hours worked and determined in
accordance with the current market rates (not to include any upward adjustments
such as any lodestar multipliers, risk enhancements, success fee, completion
bonus or rate premiums) incurred in connection with the court proceedings to
obtain the Approval Order and any appeals therefrom.  Approval of
these fee requests shall be included in the Judgment.

       

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

      B.           
 Fees After The
Final Effective Date.  Each party to this Settlement Agreement
agrees not to seek any other future fees or expenses from any other party in
connection with either Hardwick II or Hardwick I, except that the Class
Representatives or any other party prevailing in any action to enforce the terms
of this Settlement Agreement may seek such fees and costs as may be allowed by
law.

       

      
        	
                25.

              	
                Releases
      and Certain Related Matters

              

      

       

      A.       
    Consent to Entry of the
Judgment. In consideration of Ford’s entry into this Settlement
Agreement, and the other obligations of Ford contained herein, the Class
Representatives, the Class Counsel and the UAW hereby consent to the entry of
the Judgment, which shall be binding upon all Class Members pursuant to Rule
23(b)(2) of the Federal Rules of Civil Procedure.

       

      B.          
  UAW
Releasees.  As of the Final Effective Date, each UAW Releasee
releases and forever discharges each other UAW Releasee and each other
Indemnified Party and shall be forever released and discharged with respect to
any and all rights, claims or causes of action that such UAW Releasee had, has
or hereafter may have, whether known or unknown, suspected or unsuspected,
concealed or hidden, arising out of or based upon or otherwise related to (a)
any of the claims arising, or which could have been raised, in connection with
either Hardwick I or Hardwick II concerning the provision of Retiree Medical
Benefits and the terms of this Settlement Agreement, (b) any claims that this
Settlement Agreement, or any document referred to or contemplated herein, is not
in compliance with applicable laws and regulations, and (c) any action taken to
carry out this Settlement Agreement in accordance with this Settlement Agreement
and applicable law.

       

      C.       
    Ford.  As
of the Final Effective Date, the UAW Releasees release and forever discharge
Ford, and its officers, directors, employees, agents, subsidiaries, Affiliates,
and the Ford Retiree Health Plan and its fiduciaries, with respect to any and
all rights, claims or causes of action that any UAW Releasee had, has or
hereafter may have, whether known or unknown, suspected or unsuspected,
concealed or hidden, arising out of, based upon or otherwise related to (a) any
of the claims arising, or which could have been raised, in connection with
Hardwick I or Hardwick II concerning the provision of Retiree Medical Benefits
and the terms of this Settlement Agreement, (b) any claims that this Settlement
Agreement, or any document referred to or contemplated herein, is not in
compliance with applicable laws and regulations, and (c) any action taken to
carry out this Settlement Agreement  in accordance with this
Settlement Agreement and  applicable law.

       

      D.         
  Existing
Internal VEBA and Existing External VEBA.   As of the
Final Effective Date, the UAW Releasees release and forever discharge the
Existing External VEBA and the fiduciaries, trustees, and committee that
administer the Existing External VEBA, and the Existing Internal VEBA and the
fiduciaries, trustees, and committee that administer the Existing Internal VEBA
with respect to any and all rights, claims or causes of action that any UAW
Releasee had, has or hereafter may have, whether known or unknown, suspected or
unsuspected, concealed or hidden, arising out of, based upon or otherwise
related to (a) any of the claims arising, or which could have been raised, in
connection with Hardwick I or Hardwick II concerning the provision of Retiree
Medical Benefits and the terms of this Settlement Agreement, (b) any claims that
this Settlement Agreement, of any document referred to or contemplated herein,
is not in compliance with applicable laws and regulations, and (c) any action
taken by such fiduciaries,  trustee and/or committees to carry out
this Settlement Agreement and to transfer assets of the Existing External VEBA
and Existing Internal VEBA to the New VEBA in accordance with this Settlement
Agreement and applicable law.

       

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

       

      E.          
  Representatives and Class
Counsel.  As of the Final Effective Date, Ford releases and
forever discharges the Class Representatives and Class Counsel from any and all
claims, demands, liabilities, causes of action or other obligations of whatever
nature, including attorney fees, whether known or unknown, that arise from their
participation or involvement with respect to the filing of the Hardwick II
lawsuit or in the negotiations leading to this Settlement
Agreement.  This release does not extend to obligations arising from
the terms of the Settlement Agreement itself.

       

      F.          
  No
Admission.  Neither the entry into this Settlement Agreement
nor the consent to the Judgment is, may be construed as, or may be used as, an
Admission by or against Ford or any UAW Releasee of any fault, wrongdoing or
liability whatsoever.

       

      
        	
                26.

              	
                Dispute
      Resolution

              

      

       

      A.       
    Coverage.  Any
controversy or dispute arising out of or relating to, or involving the
enforcement, implementation, application or interpretation of this Settlement
Agreement shall be enforceable only by Ford, the Committee, the UAW, and if
prior to the Implementation Date, Class Counsel, and the Approval Order will
provide that the Court will retain exclusive jurisdiction to resolve any such
disputes.  Notwithstanding the foregoing, any disputes relating solely
to eligibility for participation or entitlement to benefits under the New Plan
shall be resolved in accordance with the applicable procedures such Plan shall
establish, and nothing in this Settlement Agreement precludes Class Members from
pursuing appropriate judicial review regarding such disputes; provided however,
that no claims incurred after the Implementation Date related to Retiree Medical
Benefits may be brought against Ford, any of its affiliates, or the Ford Retiree
Health Plan.

       

      B.          
  Attempt at
Resolution.  Although the Court retains exclusive jurisdiction
to resolve disputes arising out of or relating to the enforcement,
implementation, application or interpretation of this Settlement Agreement, the
parties agree that prior to seeking recourse to the Court, the parties shall
attempt to resolve the dispute through the following process:

       

      
        	
                (i)

              	
                The
      aggrieved party shall provide the party alleged to have violated this
      Settlement Agreement (“Dispute Party”)
      with written notice of such dispute, which shall include a description of
      the alleged violation and identification of the Section(s) of the
      Settlement Agreement allegedly violated.  Such notice shall be
      provided so that it is received by the Dispute Party no later than 180
      calendar days from the date of the alleged violation or the date on which
      the aggrieved party knew or should have known of the facts that give rise
      to the alleged violation, whichever is later, but in no event longer than
      3 years from the date of the alleged
violation.

              

      

       

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

      
        	
                (ii)

              	
                If
      the Dispute Party fails to respond within 21 calendar days from its
      receipt of the notice, the aggrieved party may seek recourse to the Court;
      provided however, that the aggrieved party waives all claims related to a
      particular dispute against the Dispute Party if the aggrieved party fails
      to bring the dispute before the Court within 180 calendar days from the
      date of sending the notice.

              

      

       

       All
the time periods in this Section 26 of this Settlement Agreement may be extended
by agreement of the parties to the particular dispute.

       

      C.         
   Alternate Means of
Resolution. Nothing
in this Section shall preclude Ford, the UAW, the Committee, or Class Counsel
from agreeing on any other form of alternative dispute resolution or from
agreeing to any extensions of the time periods specified in this Section
26.

       

      
        	
                27.

              	
                Submission
      of the Settlement Agreement and Class Action Notice
  Order

              

      

       

      The
parties shall submit this Settlement Agreement to the Court and jointly work
diligently to have this Settlement Agreement approved by the Court as soon as
possible either through Hardwick II or Hardwick I as deemed
appropriate.  In either event, the parties shall seek the Court’s
approval of this Settlement Agreement as superseding or satisfying the Hardwick
I Settlement Agreement.  The parties shall seek from the Court an
order (the “Notice
Order”) providing that notice of the hearing on the proposed settlement
(the “Fairness
Hearing”) shall be given at Ford’s expense to the Class, as defined
herein, by mailing a copy of the notice contemplated in the Notice Order to the
Class, and by publishing a notice approved by the Court in the Detroit News/Free
Press weekend edition, and a national newspaper such as USA
Today.  Until entry of Judgment, copies of this Settlement Agreement
shall also be made available for inspection by Class Members at the Court, at
the UAW offices in Detroit, Michigan, and at the offices of Class
Counsel.

       

      
        	
                28.

              	
                Conditions

              

      

       

      This
Settlement Agreement is conditioned upon the occurrence or resolution of the
conditions described in subparagraphs A, B, and C of this
Section.  The failure of subparagraphs A and B shall render this
Settlement Agreement voidable at the discretion of any party.  The
failure of subparagraph C shall render this Settlement Agreement voidable at the
sole discretion of Ford.

       

      A.           
Class Certification
Order.  A final Class Certification Order must be entered by
the Court certifying Hardwick II as a non-opt out class action, or amending and
re-certifying the Hardwick I class, such that the Class is defined as stated in
Section 1 of this Settlement Agreement.  This condition shall be
deemed to have failed upon the Court’s issuance of an order denying
certification of Hardwick II as a class action or denial of the motion to amend
and re-certify the class in Hardwick I to include the Class as defined in this
Settlement Agreement, if applicable, or upon issuance of an order certifying
Hardwick II as a class action or amending and re-certifying a new class in
Hardwick I but whose membership is less inclusive than as described in this
Settlement Agreement unless Ford, the UAW and Class Counsel agree in writing to
such alternative class description.

       

      
        
           

        

        
          32

          
            

          

        

        
           

        

      

      B.           
 Judgment/Approval
Order.  A Judgment must be entered by the Court in either
Hardwick I or Hardwick II approving this Settlement Agreement in all respects
and as to all parties, including Ford, the UAW, and the Class.  The
Judgment shall be acceptable in form and substance to Ford, the UAW and Class
Counsel.  This condition shall be deemed to have failed upon issuance
of an order disapproving this Settlement Agreement, or upon the issuance of an
order approving only a portion of this Settlement Agreement but disapproving
other portions, unless Ford, the UAW and Class Counsel agree otherwise in
writing.  Such Approval Order shall, inter alia, contain
the conditions set forth in this Settlement Agreement and direct the transfer of
all the assets and liabilities of the Existing External VEBA into the New VEBA
and the termination of the Existing External VEBA.

       

      C.           
 Accounting
Treatment Satisfactory to Ford.  The discussions between Ford
and the SEC regarding accounting treatment shall have been completed in a manner
reasonably satisfactory to Ford as set forth in Section 21 of this Settlement
Agreement.

       

      
        	
                29.

              	
                No
      Admission; No Prejudice

              

      

       

      A.         
  Notwithstanding anything to the contrary, whether set forth in this
Settlement Agreement, the MOU, the Judgment, the Notice Order, any documents
filed with the Court in either Hardwick I or Hardwick II, any documents, whether
provided in the course of or in any manner whatsoever relating to the 2007
discussions between Ford and UAW with respect to health care benefits or
relating to this Settlement Agreement or the MOU, whether distributed, otherwise
made available to or obtained by any person or organization, including without
limitation, Ford Active Employees, Class Members, or their spouses, surviving
spouses or dependents, or to the UAW or Ford in the course of the negotiations
that led to entry into this Settlement Agreement, or otherwise:

       

      
        	
                (i)

              	
                Ford.  Ford
      denies and continues to deny any wrongdoing or legal liability arising out
      of any of the allegations, claims and contentions made against Ford in
      Hardwick I or Hardwick II and in the course of the negotiation of the MOU
      or this Settlement Agreement.  Neither the MOU, nor any disputes
      or discussions between Ford and the UAW with respect to health care
      benefits or entry into this Settlement Agreement occurring on or after
      January 1, 2007, nor this Settlement Agreement, nor any document referred
      to or contemplated herein, nor any action taken to carry out this
      Settlement Agreement, nor any retiree health care benefits provided
      hereunder or any action related in any way to the ongoing administration
      of such retiree health care benefits (collectively, the “Settlement
      Actions”) may be construed as, or may be viewed or used as, an
      Admission by or against Ford of any fault, wrongdoing or liability
      whatsoever, or as an Admission by Ford of the validity of any claim or
      argument made by or on behalf of the UAW, Active Employees, the Class or
      the Covered Group, that retiree health benefits are
      vested.  Without limiting in any manner whatsoever the
      generality of the foregoing, the performance of any Settlement Actions by
      Ford may not be construed, viewed or used as an Admission by or against
      Ford that, following the termination of the Hardwick I Settlement
      Agreement, it does not have the unilateral right to modify or terminate
      retiree health care benefits.

              

      

       

      
        
           

        

        
          33

          
            

          

        

        
           

        

      

      
        	
                (ii)

              	
                UAW, Representatives,
      Class Members.  Each of the UAW, the Class
      Representatives and the Class Members claim and continue to claim that the
      allegations, claims and contentions made against Ford in Hardwick II have
      merit.  Neither this Settlement Agreement nor any document
      referred to or contemplated herein nor any Settlement Actions may be
      construed as, or may be viewed or used as, an Admission by or against any
      of the UAW, the Class Representatives or the Class Members of any fault,
      wrongdoing or liability whatsoever or of the validity of any claim or
      argument made by or on behalf of Ford that Ford has a unilateral right to
      modify or terminate retiree health care benefits or that retiree health
      care benefits are not vested.  Without limiting in any manner
      whatsoever the generality of the foregoing, the performance of any
      Settlement Actions by any of the UAW, the Class Representatives or the
      Class Members, including without limitation, the acceptance of any retiree
      health care benefits under any of the Ford health care plans set forth in
      this Settlement Agreement, may not be construed, viewed or used as an
      Admission by or against any of the UAW, the Class Representatives or the
      Class that, following the termination of the Hardwick I Settlement
      Agreement, Ford has the unilateral right to modify or terminate retiree
      health care benefits.

              

      

       

      
        	
                (iii)

              	
                There
      has been no determination by any court as to the factual allegations made
      against Ford in Hardwick I or Hardwick II.  Entering into this
      Settlement Agreement and performance of any of the Settlement Actions
      shall not be construed as, or deemed to be evidence of, an Admission by
      any of the parties hereto, and shall not be offered or received in
      evidence in any action or proceeding against any party hereto in any
      court, administrative agency or other tribunal or forum for any purpose
      whatsoever other than to enforce the provisions of this Settlement
      Agreement or to obtain or seek approval of this Settlement Agreement in
      accordance with Rule 23 of the Federal Rules of Civil Procedure and the
      Class Action Fairness Act of 2005.

              

      

       

      For the
purposes of this Section 29, Ford and the UAW refer to Ford Motor Company and
the “International Union, United Automobile, Aerospace and Agricultural
Implement Workers of America”, respectively, as organizations, as well as any
and all of their respective current or former directors, officers, employees,
and agents.

       

      This
Settlement Agreement and anything occurring in connection with reaching this
Settlement Agreement are without prejudice to Ford, the UAW and the
Class.  The parties may use this Settlement Agreement to assist in
securing the Judgment approving the settlement.  It is intended that
Ford, the UAW, the Committee, the Class Representatives, the Class, Class
Counsel and the Covered Group shall not use this Settlement Agreement, or
anything occurring in connection with reaching this Agreement, as evidence
against Ford, the UAW, the Class or the Covered Group in any circumstance except
where the parties are operating under or enforcing this Settlement Agreement or
the Judgment approving this Settlement Agreement.

       

      
        	
                30.

              	
                Duration
      and Termination of Settlement
Agreement

              

      

       

      This
Settlement Agreement will remain in effect unless and until terminated in
accordance with this Section 30 and as provided for in Section 28 of this
Settlement Agreement.  If this Settlement Agreement is terminated,
then the Hardwick I Settlement Agreement and judgment shall remain in full force
and effect and the parties shall be restored to their respective positions
immediately before execution of this Settlement Agreement except as specifically
noted herein.

       

      
        
           

        

        
          34

          
            

          

        

        
           

        

      

      Termination
of this Settlement Agreement may occur as follows:

       

      A.           
If Hardwick II is enjoined or stayed, or withdrawn, dismissed, or otherwise
terminated, or if the Judgment is denied in whole or in material part, either
Ford, the UAW, or Class Counsel on behalf of the Class Representatives may
terminate this Settlement Agreement by 30 days’ written notice to the other
party; provided however, that the Settlement Agreement may not be terminated
pursuant to this subparagraph (i) if Hardwick II is stayed, withdrawn, or
dismissed by the parties because this Settlement Agreement is approved as a
superseding settlement through the Hardwick I litigation.

       

      B.       
    If a Class Certification Order satisfactory to the
parties, as described in Section 28.A of this Settlement Agreement, is entered
by the Court and subsequently overturned in whole or in part on appeal or
otherwise, Ford, the UAW, or Class Counsel, acting on behalf of the Class, may
terminate this agreement upon 30 days’ written notice to the other
parties.

       

      C.           
If an Approval Order satisfactory to the parties, as described in Section 28.B
of this Settlement Agreement, is entered by the Court, but overturned in whole
or in part on appeal or otherwise, Ford, the UAW, or Class Counsel, acting on
behalf of the Class, may terminate this Settlement Agreement upon 30 days’
written notice to the other parties.

       

      D.           
If after Ford’s discussions with the SEC, Ford does not believe the accounting
treatment for the New Plan and the New VEBA is reasonably satisfactory to Ford
as set forth in Section 21 of this Settlement Agreement, Ford may immediately
terminate this Settlement Agreement upon written notice to the other
parties.

       

      E.            
If any court, agency or other tribunal of competent jurisdiction issues a
determination that any part of this Settlement Agreement is prohibited or
unenforceable, Ford, the UAW, or Class Counsel, acting on behalf of the Class,
may terminate this Settlement Agreement by 30 days’ written notice to the other
party.

       

      Notwithstanding
the foregoing, Sections 7.F, 8.F, 9.A, 9.B and 9.C to the extent these Sections
create rights and obligations relating to the non-occurrence of the
Implementation Date as well as Sections 22, 23, 26 and 29, shall survive the
termination of this Settlement Agreement.

       

      
        	
                31.

              	
                National
      Institute for Health Care Reform

              

      

       

      In
recognition of the interest of Ford, the UAW, the Class and the Covered Group in
improving the quality, affordability, and accountability of health care in the
United States, the parties agree that as a part of this settlement Ford and the
UAW shall establish a National Institute for Health Care Reform (“Institute”).  The
Institute shall be established and receive its first annual funding payment as
soon as practicable after the Final Effective Date on the basis set forth in the
term sheet attached as Exhibit E to this
Settlement Agreement.  The annual funding payment shall be payable in
four equal quarterly installments.  The funding and operation of the
Institute shall be separate, independent and distinct from the New Plan and the
New VEBA.  Any payments by Ford to the Institute shall be governed
exclusively by the term sheet attached as Exhibit E to this
Settlement Agreement and are not in any way related to Ford’s payment
obligations as described in Sections 8 and 12 of this Settlement
Agreement.  Additionally, Section 19 of this Settlement Agreement
shall not apply to any obligation Ford may have to make payments with regard to
the Institute.

       

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

       

      
        	
                32.

              	
                Other
      Provisions

              

      

       

      A.     
      References in this Settlement Agreement to
“Sections,” “Paragraphs” and “Exhibits” refer to the Sections, Paragraphs, and
Exhibits of this Settlement Agreement unless otherwise specified.

       

      B.         
  The Court shall, subject to Section 26 of this Settlement Agreement,
retain exclusive jurisdiction to resolve any disputes relating to or arising out
of or in connection with the enforcement, interpretation or implementation of
this Settlement Agreement.  Each of the parties hereto expressly and
irrevocably submits to the jurisdiction of the Court and expressly waives any
argument it may have with respect to venue or forum non conveniens.

       

      C.        
   This Settlement Agreement constitutes the entire agreement
between the parties regarding the matters set forth herein, and no
representations, warranties or inducements have been made to any party
concerning this Settlement Agreement, other than representations, warranties and
covenants contained and memorialized in this Settlement
Agreement.  This Settlement Agreement supersedes any prior
understandings, agreements or representations by or between the parties, written
or oral, regarding the matters set forth in this Settlement
Agreement.

       

      D.          
 The captions used in this Settlement Agreement are for convenience of
reference only and do not constitute a part of this Settlement Agreement and
will not be deemed to limit, characterize or in any way affect any provision of
this Settlement Agreement, and all provisions of this Settlement Agreement will
be enforced and construed as if no captions had been used in this Settlement
Agreement.

       

      E.         
  The Class Representatives expressly authorize Class Counsel to take
all appropriate action required or permitted to be taken by the Class
Representatives pursuant to this Settlement Agreement to effectuate its terms
and also expressly authorize Class Counsel to enter into any non-material
modifications or amendments to this Settlement Agreement on behalf of them that
Class Counsel deems appropriate from the date this Settlement Agreement is
signed until the Final Effective Date; provided, however, that the effectiveness
of any such amendment which adversely impacts the level of benefits to any Class
Member as well as any material amendment shall be subject to the approval of the
Court.

       

      F.          
  This Settlement Agreement may be executed in two or more
counterparts.  All executed counterparts and each of them shall be
deemed to be one and the same instrument, provided that counsel for the parties
to this Settlement Agreement shall exchange among themselves original signed
counterparts.

       

      G.          
  No party to this Settlement Agreement may assign any of its rights
hereunder without the prior written consent of the other parties, and any
purported assignment in violation of this sentence shall be void. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.

       

      
        
           

        

        
          36

          
            

          

        

        
           

        

      

      H.       
     Each of Ford, the UAW, the Committee, Class
Representatives, Class Members and the Class Counsel shall do any and all acts
and things, and shall execute and deliver any and all documents, as may be
necessary or appropriate to effect the purposes of this Settlement
Agreement.

       

      I.            
 This Settlement Agreement shall be construed in accordance with applicable
federal laws of the United States of America.

       

      J.       
     Any provision of this Settlement Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent any
provision of this Settlement Agreement is invalid or unenforceable as provided
for in this Section 32.J of this Settlement Agreement, it shall be replaced by a
valid and enforceable provision agreed to by Ford, the UAW and Class Counsel
(which agreement shall not be unreasonably withheld) that preserves the same
economic effect for the parties under this Settlement Agreement; provided
however, that to the extent that such prohibited or unenforceable provision
cannot be replaced as contemplated and the consequences of such prohibited or
unenforceable provision causes this Settlement Agreement to fail of its
essential purpose then this Settlement Agreement may be voided at the sole
discretion of the party seeking the benefit of the prohibited or unenforceable
provision.  Class Counsel is expressly authorized to take all
appropriate action to implement this provision.

       

      K.           
 In the event that any payment referenced in this Settlement Agreement is
due to be made on a weekend or a holiday, the payment shall be made on the first
business day following such weekend or holiday.

       

      L.          
  In the event that any legal or regulatory approvals are required to
effectuate the provisions of this Settlement Agreement, Ford, the UAW, the
Class, Class Counsel, and the Committee shall fully cooperate in securing any
such legal or regulatory approvals.

       

      M.        
   Any notice, request, information or other document to be given
under this Settlement Agreement to any of the parties by any other party shall
be in writing and delivered personally, or sent by Federal Express or other
carrier which guarantees next-day delivery, transmitted by facsimile,
transmitted by email if in an Adobe Acrobat PDF file, or sent by registered or
certified mail, postage prepaid, at the following addresses.  All such
notices and communication shall be effective when delivered by hand, or, in the
case of registered or certified mail, Federal Express or other carrier, upon
receipt, or, in the case of facsimile or email transmission, when transmitted
(provided, however, that any notice or communication transmitted by facsimile or
email shall be immediately confirmed by a telephone call to the
recipient.):

       

      If to the
Class Representatives or Class Counsel, addressed to:

       

      William
T. Payne

      Stember
Feinstein Doyle & Payne, LLC

      Pittsburgh
North Office

      1007 Mt.
Royal Boulevard

      
        
           

        

        
          37

          
            

          

        

        
           

        

      

      Pittsburgh,
PA  15222

      Tel:
(412) 492-8797

      wpayne@stargate.net

      

      In each
case with copies to:

       

      John
Stember

      Edward
Feinstein

      Stember
Feinstein Doyle & Payne, LLC

      1705
Allegheny Building

      429
Forbes Avenue

      Pittsburgh,
PA 15219

      Tel:
(412) 338-1445

      jstember@stemberfeinstein.com

      efeinstein@stemberfeinstein.com

      

      If to
Ford, addressed to:

      

      Stephen
M. Kulp 

      Office of
the General Counsel

      Ford
Motor Company

      1
American Road

      Dearborn,
Michigan 48126

      Tel:  (313)
322-3571 skulp@ford.com

       

      in each
case with copies to:

       

      Peter
Sherry 

      Secretary

      Office of
the General Counsel

      Ford
Motor Company

      1
American Road

      Dearborn,
Michigan 48126

      Tel:  (313)
322-2130

      

      If to
UAW, addressed to:

      

      Daniel W.
Sherrick

      General
Counsel

      International
Union, United Automobile, Aerospace and

      Agricultural
Implement Workers of America

      8000 East
Jefferson Avenue

      Detroit,
MI  48214

      Tel:
(313) 926-5216

       

      
        
           

        

        
          38

          
            

          

        

        
           

        

      

      with a
copy to:

       

      Cleary
Gottlieb Steen & Hamilton LLP

      One
Liberty Plaza

      New York,
New York 10006

      Attention:
A. Richard Susko/Richard S. Lincer/David I. Gottlieb

      Tel:
(212) 225-2000

       

      Each
party may substitute a designated recipient upon written notice to the other
parties.

      
        
           

        

        
          39

          
            

          

        

        
           

        

      

       

      IN
WITNESS THEREOF, the parties hereto have caused this Settlement Agreement to be
executed by themselves or their duly authorized attorneys.

       

      AGREED:

       

       

      
        	
                By:

              	
                /S/ Stephen M. Kulp

              	 	
                Date:
      March 28, 2008

              
	 
      	
                Stephen
      M. Kulp (P51555)

              	 	 
      
	 
      	
                1
      American Road

              	 	 
      
	 
      	
                Dearborn,
      Michigan 48126

              	 	 
      
	 
      	
                Tel:  (313)
      322-3571

              	 	 
      
	 	 	 	 
	 
      	
                COUNSEL
      FOR DEFENDANT

              	 	 
      
	 
      	
                Ford
      Motor Company

              	 	 
      
	 	 	 	 
	 
      	 
      	 	 
      
	
                By:

              	
                /S/ Daniel W. Sherrick

              	 	
                Date:
      March 28, 2008

              
	 
      	 
      	 	 
      
	 
      	
                Daniel
      W. Sherrick  (P37171)

              	 	 
      
	 
      	
                8000
      East Jefferson Avenue

              	 	 
      
	 
      	
                Detroit,
      MI  48214

              	 	 
      
	 
      	
                Tel:
      (313) 926-5216

                 

              	 	 
      
	 
      	
                COUNSEL
      FOR PLAINTIFF 

                INTERNATIONAL
      UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF
      AMERICA

              	 	 
      
	 	 	 	 
	 
      	 
      	 	 
      
	
                By:

              	
                /S/ William T. Payne

              	 	
                Date:
      March 28, 2008

              
	 	 	 	 
	 
      	
                William
      T. Payne

              	 	 
      
	 
      	
                Stember
      Feinstein Doyle & Payne, LLC

              	 	 
      
	 
      	
                Pittsburgh
      North Office

              	 	 
      
	 
      	
                1007
      Mt. Royal Boulevard

              	 	 
      
	 
      	
                Pittsburgh,
      PA  15222

              	 	 
      
	 
      	
                Tel:
      (412) 492-8797

              	 	 
      
	 
      	
                wpayne@stargate.net

              	 	 
      
	 
      	 
      	 	 
      
	 
      	
                COUNSEL
      FOR PLAINTIFFS 

                BOBBY
      HARDWICK, WALTER BERRY, ARLEN BANKS, FAY BARKLEY, YVONNE HICKS, RAYMOND J.
      MITCHELL, BRUCE CARRIER AND THE CLASS

              	 	 
      

      

       

      
        
           

        

        
          40

          
            

          

        

        
           

        

      

      LIST
OF EXHIBITS

       

       

      
        	
                Exhibit
      A:

              	
                Form
      of Trust Agreement

              

      

       

      
        	
                Exhibit
      B:

              	
                Form
      of the Second Supplemental Indenture, dated as of January 1, 2008, between
      Ford and The Bank of New York, as
Trustee

              

      

       

      
        	
                Exhibit
      C:

              	
                Form
      of the Note Purchase Agreement, dated April 7, 2008, by and among Ford and
      the LLC

              

      

       

      
        	
                Exhibit
      D:

              	
                Base
      Amount Contributions

              

      

       

      
        	
                Exhibit
      E:

              	
                Institute
      Term Sheet

              

      

       

      
        	
                Exhibit
      F:

              	
                Form
      of Securityholder and Registration Rights
  Agreement

              

      

       

       

      41

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