Inter Office                                                         Direct Compensation & Benefits

                                                    Planning  

                                                                     Human Resources

                                                                        September 18, 2001

Human Resource Managers

Subject: Military Service- Operation Noble Eagle

The Company's pay and benefit program continuation provisions have been liberalized for full-time hourly and regular salaried employees who are members of the U.S. Armed Forces Reserves or National Guard and are called up for active duty in support of the recent terrorist attack on the United States.  Generally, these employees may be eligible to receive up to a total of six months' pay differential and benefit continuation.

The pay differential and benefits continuation provisions are effective immediately.

A letter (Attachment I-Hourly, II-Salaried) Pertaining to this should be sent without delay to employees as soon as notification is received that an employee has left or will be leaving for active duty after the September 11,2001 incident.  It is important that you contact them as soon as possible and retroactively make the program available.

Pay 

The special military duty pay will be provided for dthe period of active military service up to a maximum of six months coverage.  A letter from the local Human Resources activity should be sent to Payroll Services in the format of Attachment IA for hourly employees.  A letter from the NESC will be sent to Payroll Services in the Attachment IIA format for salaried employees.  Special military duty pay is as follows:

    * For an hourly employee- Company pay for straight-time hours for each month that employees would have earned pay had they continued working, less military pay for the month including all allowances except for rations, subsistence and travel: See Attachment IB for Administrative Guidelines.  Checks will be sent to the appropriate Human Resources Activity for distribution to servicepersons.

* For a salaried employee- Company base salary for each month, less military pay for the month including all allwoances except for rations, subsistence and travel. 

Documentation must be provided by the employee to support the military pay data.  See attachment IIB.  Checks from payroll will be sent to NESC for distribution to servicepersons.   

Retirement Plans

Retirement plan membership and accrual of creditable service (non-contributory service for salaried employees) continue, if the employee is reinstated upon completion of military service.  Contributions to the General Retirement Plan missed while in military service may be make up upon return to work if the employee was contributing when released to enter military service.

Disability resulting from service in the Armed Forces of any country excludes an individual from being considered as permanently and totally disabled under Ford retirement plans unless the permanent and total disability occurs after the person has accumulated five years of service of seniority following separation from service in the Armed Forces.

Savings Plans 

Assets in savings plan accounts will remain in those accounts.  Employees may elect distribution of assets at any time; however, non-vested assets attributable to Company contributions under the SSIP will be forfeited upon withdrawal of related employee savings.  There will be tax consequences to taking a distribution.  Service for vesting under the salaried savings plans continues if the employee is reinstated upon completion of military service.  Employee contributions to the SSIP and the TESPHE missed while in military service may be made up upon return to work if the employee was contributing when released to enter military service.  Associated Company match in the SSIP would be credited based on those contributions.

Hourly Health Care Plans

All health care coverage's in effect on the last day worked will be continued for the month following the month the leave begins.  Company paid coverage will be continued for up to an additional six month or length of leave of absence whichever is less.  Employees may continue health care coverage's beyond the six months for the duration of the leave up to 18 months, under the cash pay program.

Hourly Life, Accidental Death and Dismemberment and Disability Benefit Plans

Basic Life Benefits, Accindental Death and Dismemberment (AD&D) Benefits and Survivor Income Benefits ( if applicable) in effect on the last day worked will be continued for up to six months following the month in which the employee last worked.  Disability Benefits are not extended and will be continued through the end of the month following the month in which the employee last worked.  Optional Group Life Dependent Life (Spouse Life and Child Life for salaried) and Optional Accident Insurance Benefits will be continued for up to six months following the month in which the employee last worked, provided however, that the carrier intends to invoke the exclusions with respect to certain types of losses related to acts of war.  This means that employees entering military service on an active basis may be subject to the exclusion but any dependents would remain covered for the six month period (unless they also were called to active service) if premiums are paid.

Flex Plan

Generally, participation in Flex Benefits cease when your Ford pay stops.  However, certain benefits ay be continued as provided in Attachment IIC, Ford Flex Benefits.  

FCA and Bonus Flexdollars

A lump-sum payment of any unused FCA and Bonus Flexdollars (allocated to pay for benefits) will be made to participating employees on military leave initiated during 2001 and who are still on leave 12-31-01.

Hourly Profit Sharing

A profit share will be paid based on eligible compensation in 2001.

Salaried Performance Bonus Plan

Participating salaried employees will be eligible for the applicable 2001 target bonus award based upon salary grade.

Vacation

Hourly:     Earned and accrued vacation, minus vacation taken, will be paid.                

Salaried:    Earned vacation, minus vacation taken, will be paid; purchased vacation will be                forfeited if it is not used in 201.     

Hourly and Salaried: Upon return, vacation eligibility for the year of return will be determined as if the employee had not been absent.

Management Lease Car Program

The Management Lease Car Program may be continued for up to 6 months following the month in which the employee last worked, or the length of the leave of absence, whichever is less.

Vehicle Plans

The A and B Plans may be continued for up to 6 months following the month in which the employee last worked, or the length of the leave of absence, whichever is less.

Exclusions

There are exclusions in the health care and life insurance plans with respect to certain types of losses related to acts of war and these exclusions are continued.  The exclusions are described in the Collective Bargaining Agreement on Insurance Programs for hourly employees, and on the Your total Compensation website located in HROnline for salaried employees.

Reinstatement

Reporting back to work has time limits under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).

* Less than 31 days in service- report to work the next scheduled workday after travel time.

* 31 days in service but less than 181 days- apply for reemployment within 14 days after completion of service.

* More than 180 days in service- apply for reemployment within 90 days after completion of service.

Questions relating to this communication should be referred to the appropriate Human Resources Staff person as indicated on Exhibit A.  

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