Ford 2010 Annual Report Download - page 147

Notes to the Financial Statements
Ford Motor Company | 2010 Annual Report 145
NOTE 19. DEBT AND COMMITMENTS (Continued)
The proceeds of advances under the Facility will be used to finance certain costs eligible for financing under the ATVM
Program ("Eligible Project Costs") that are incurred through mid-2012 in the implementation of 13 advanced technology
vehicle programs approved for funding by the DOE (each, a "Project"). The Arrangement Agreement limits the amount of
advances that may be used to fund Eligible Project Costs for each Project, and our ability to finance Eligible Project Costs
with respect to a Project is conditioned on us meeting agreed timing milestones and fuel economy targets for that Project.
Maturity, Interest Rate and Amortization. Advances under the Facility may be requested through June 30, 2012, and
the loans will mature on June 15, 2022 (the "Maturity Date"). Each advance bears interest at a blended rate based on the
Treasury yield curve at the time such advance is borrowed, based on the principal amortization schedule for that advance,
with interest payable quarterly in arrears. The principal amount of the loans is payable in equal quarterly installments
commencing on September 15, 2012 and continuing through the Maturity Date. Per the Arrangement Agreement, we
have the ability to voluntarily prepay all or a portion of any advance under the Facility at a prepayment price based on the
Treasury yield curve at the time the prepayment is made. It is intended to replicate the price for such advance that would,
if it were purchased by a third party and held to maturity, produce a yield to the third-party purchaser for the period from
the date of purchase to the Maturity Date substantially equal to the interest rate that would be set on a loan from the
Secretary of Treasury to the FFB to purchase an obligation having a payment schedule identical to the payment schedule
of such advance for the period from the intended prepayment date to the Maturity Date.
Collateral. The $5.9 billion commitment is comprised of two loans: (i) a $1.5 billion note secured by a first priority lien
on any assets purchased or developed with the proceeds of the loans, and (ii) a $4.4 billion note secured by a junior lien
on all of the collateral pledged under our Credit Agreement subordinated solely to (a) prior perfected security interests
securing certain indebtedness, letters of credit, cash-management obligations and hedging obligations in an aggregate
principal amount not to exceed $19.1 billion as described in the First Amendment to the Arrangement Agreement and
(b) certain other permitted liens described in the Arrangement Agreement.
Guarantees. Certain of our subsidiaries that, together with us, hold a substantial portion of the consolidated domestic
Automotive assets (excluding cash) and that guarantee the Credit Agreement will guarantee our obligations under the
Facility, and future material domestic subsidiaries will become guarantors when formed or acquired.
Affirmative Covenants. The Arrangement Agreement contains affirmative covenants substantially similar to those in
the Credit Agreement (including similar baskets and exceptions), as well as certain other affirmative covenants required in
connection with the ATVM Program, including compliance with ATVM Program requirements, introduction of advanced
technology vehicles to meet or exceed projected overall annual fuel economy improvements and delivery of progress
reports and independent auditor reports with respect to the Projects.
Negative Covenants. The Arrangement Agreement contains negative covenants substantially similar to those in the
Credit Agreement. The Arrangement Agreement also contains a negative covenant substantially similar to the liquidity
covenant in the Credit Agreement requiring that we not permit Available Liquidity (as defined in the Arrangement
Agreement) to be less than $4 billion.
Events of Default. In addition to customary payment, representation, bankruptcy and judgment defaults, the
Arrangement Agreement contains cross-payment and cross-acceleration defaults with respect to other debt for borrowed
money and a change in control default, as well as events of default specific to the facility.
EIB Credit Facility
On July 12, 2010, Ford Motor Company Limited, our operating subsidiary in the United Kingdom ("Ford of Britain"),
entered into a credit facility for an aggregate amount of £450 million with the EIB. Proceeds of loans drawn under the
facility will be used for research and development of fuel-efficient engines and commercial vehicles with lower emissions,
and related upgrades to an engine manufacturing plant. The facility was fully drawn in the third quarter of 2010, and Ford
of Britain had outstanding $699 million of loans at December 31, 2010. The loans are five-year, non-amortizing loans
secured by a guarantee from the U.K. government for 80% of the outstanding principal amount and cash collateral from
Ford of Britain equal to 20% of the outstanding principal amount, and bear interest at a fixed rate of approximately