Support Compensation Agreement, between Honda Motor Co., Ltd. and American Honda Finance Corporation, dated as of April 1, 2019
EX-10.15 9 ahfc-3312019xex1015.htm EXHIBIT 10.15 Exhibit
SUPPORT COMPENSATION AGREEMENT
This Support Compensation Agreement (“Agreement “) dated as of April 1, 2019, between Honda Motor Co., Ltd. (“HMC”), a Japanese corporation having an address at No. 1-1 Minami-Aoyama, 2-chome, Minato-ku, Tokyo 107-8556, Japan, and American Honda Finance Corporation (“AHFC”), a California corporation having an address at 20800 Madrona Avenue, Torrance, California 90503 (HMC and AHFC together constituting the “Parties” to this Agreement).
WHEREAS, the Parties have executed that certain Keepwell Agreement dated September 9, 2005 (the “Keepwell Agreement”), pursuant to which HMC agrees, inter alia, to assure that AHFC has the liquidity to punctually meet its payment obligations under any Debt, as defined in the Keepwell Agreement, and that AHFC has a positive consolidated tangible net worth; and
WHEREAS, the Parties wish to specify the compensation that HMC will be entitled to receive from AHFC as consideration for undertaking its obligations under the Keepwell Agreement.
NOW, THEREFORE, in consideration of the foregoing the Parties hereby agree that:
1.01. (a) As consideration for HMC’s undertaking its obligations under the Keepwell Agreement, AHFC agrees to pay a fee to HMC (the “Keepwell Fee”) for each calendar quarter beginning on or after the date of this Agreement (“Coverage Period”) equal to the Period Average, as defined in paragraph (b) of this section, of each type of Keepwell Obligation, as defined in paragraph (c) of this section, multiplied by the Quarterly Fee Rate for that type of Keepwell Obligation, as specified in paragraph (d) of this section.
(b) The period Average is the sum divided by three of the amounts outstanding at the end of the last U.S. Business Day (“Business Day”) of each month of the Coverage Period, disregarding any adjustments under FAS 133 and FAS 52.
(c) The types of Keepwell Obligations are:
(i) Debt, as defined in the Keepwell Agreement, with an initial maturity of one year or less (“Short-Term Keepwell Obligations”), and
(ii) Such Debt with an initial maturity of more than one year (“Medium-Term Keepwell Obligations”).
(d) The Quarterly Fee Rates are:
(i) For Short-Term Keepwell Obligations, one-fourth of the Short-Term Rate, as specified in Attachment A to this Agreement, and
(ii) For Medium Term Keepwell Obligations, one-fourth of the Medium-Term Rate as specified in Attachment A to this Agreement.
2. PAYMENT TERMS
2.01. (a) Within two Business Days after the end of a Coverage Period, AHFC shall send to HMC a Support Compensation Report (“Report”) for the Coverage Period substantially in the form of ATTACHMENT B to this Agreement, which contains AHFC’s calculation of the Keepwell Fee owed to HMC for the Coverage Period.
(b) When HMC receives a Report pursuant to paragraph (a) of this section 2.01, HMC shall promptly review the Report and inform AHFC if it disagrees with any part of the Report,
in which case the Parties shall confer to resolve the disagreement, and, if necessary, AHFC shall promptly send HMC a revised Report.
(c) If the HMC accepts a Report (either the initial Report or a revised Report), HMC shall send AHFC an invoice for the amount shown in the Report as owned to HMC, and AHFC shall pay that amount within 15 Business Days from the date of the invoice.
2.02. AHFC may offset against a Keepwell Fee the amount of any expenses that AHFC has incurred on behalf of HMC since the effective date of this Agreement (and not previously used as an offset under this section) in connection with any obligation subject to the Keepwell Agreement, provided that AHFC lists these expenses in the Report covering the Keepwell Fee against which the offset is claimed.
2.03. If any amount payable by AHFC pursuant to this Agreement is subject to withholding tax in the United States, AHFC is authorized to withhold and pay such tax to the United States rather than to HMC, but AHFC shall note the tax to be withheld in the Report that calculates the taxable amount.
2.04. (a) All payments to HMC pursuant to this Agreement shall be determined and made in U.S. dollars.
(b) For purposes of determining Period Average Keepwell Obligations, the amount of such Obligations that are not denominated in U.S. dollars shall be converted to U.S. dollars at prevailing exchange rates on the last Business Day of the Coverage Period over which the Period Average is determined.
3. TERM OF AGREEMENT
3.01. The initial term of this Agreement shall expire on March 31, 2020, but shall automatically be renewed for subsequent 12-month terms unless one Party gives written notice of non-renewal to the other Party more than 30 days prior to the end of a term.
3.02 Notwithstanding section 3.01 of this Agreement, AHFC’s duties under this Agreement shall terminate when the Keepwell Agreement terminates and AHFC has paid HMC the amounts due under the Reports for all Coverage Periods through the one during which the Keepwell Agreement terminates.
4. OTHER PROVISIONS
4.01. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of California.
4.02. The Attachments to this Agreement are part of this Agreement, and capitalized terms in the Attachments shall have the same meaning as they do in the rest of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective officers as of the day and year first above written.
HONDA MOTOR CO., LTD
By: /s/ Masao Kawaguchi
Name: Masao Kawaguchi
Title: General Manager, Finance Division
AMERICAN HONDA FINANCE CORPORATION
By: /s/ Masahiro Nakamura
Name: Masahiro Nakamura
Title: Vice President and Treasurer
1. FEE RATES
1.01. Unless modiଁed pursuant to sections 2.01 through 2.03 of this Attachment A:
(i) The Short-Term Rate is 0.05 percent; and
(ii) The Medium-Term Rate is 0.22 percent.
2. MODIFICATION OF FEE RATES
2.01. If a Triggering Event, as deଁned in section 2.03 of this Attachment, occurs, the Parties shall negotiate whether and to what extent the Short-Term and Medium Term Rates (“Fee Rates”) should be modified and, if they cannot agree, shall hire a third party satisfactory to both Parties to determine Fee Rates that are consistent with arm’s length principles promulgated by the Organization for Economic Cooperation and Development and transfer pricing regulations in Japan and the United States. The determination of the third party shall be binding on the Parties, and the Parties shall share equally the costs of obtaining the determination.
2.02. If new Fee Rates are determined pursuant to section 2.01 of this Attachment, the new Fee Rates shall be recorded in a schedule to this Attachment and shall be effective at the beginning of the ଁrst Coverage Period following the date of the Triggering Event, unless the Parties agree on a different effective date.
2.03. For purposes of this Attachment, a Triggering Event is:
(a) A notice from one Party to the other of a desire to reconsider the Fee Rates,
(b) A payment by HMC required under the Keepwell Agreement, or
(c) A change in the credit rating of HMC by Standard & Poor’s and Moody’s Investor Service, Inc.
FORM OF SUPPORT COMPENSATION REPORT
SUPPORT COMPENSATION REPORT FROM AHFC TO HMC
REGARDING THE KEEPWELL AGREEMENT FOR THE PERIOD [Dates of Coverage Period]
Short-Term Keepwell Obligations
Keepwell Medium-Term Obligations
A. Month-End Obligations
B. 1st Month
C. 2nd Month
D. 3rd Month
E. Period Avg. Obligations
F. Fee Rate
G. Quarterly Fee Rate [(F/4)]
H. Keepwell Fee [E x G]
J. Total Offsets
K. Payment Due [H – J]
L. Withholding Tax
M. Net Payment Due [K - L]