A-D Acquisition Holdings, LLC
00 Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
April 4, 2008
Delphi Corporation
0000 Xxxxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to that certain Equity Purchase and Commitment Agreement,
dated August 3, 2007, as amended on December 10, 2007 (as may be amended or
supplemented, the "Agreement"), by and among A-D Acquisition Holdings, LLC
("XXXX"), Harbinger Del-Auto Investment Company, Ltd., Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated, UBS Securities LLC, Xxxxxxx, Sachs & Co. and Pardus
DPH Holding LLC (together with XXXX, the "Investors"), on the one hand, and
Delphi Corporation (as a debtor-in-possession and a reorganized debtor, as
applicable, the "Company"), on the other hand. Capitalized terms used herein and
not defined, have the meanings set forth in the Agreement.
This letter constitutes a notice of immediate termination of the Agreement
in accordance with Section 12(d)(v), Section 12(d)(vi)(A) and Section
12(d)(vi)(B) of the Agreement. This termination notice is without prejudice to
any Investor's ability to assert any other rights under the Agreement, including
the right to terminate the Agreement pursuant to Section 12(d)(iii) or
otherwise.
The Company has breached provisions of the Agreement which would cause a
failure of conditions in Section 9(a)(xvi) and 9(a)(xvii) to be satisfied, which
failure has not been cured as of the third (3rd) Business Day prior to the
Closing Date Outside Date or as of the date hereof. Consequently, XXXX is
entitled to terminate the Agreement pursuant to Section 12(d)(v). These breaches
include, without limitation, the following:
o Section 3(d), by failing to put in place an equity capitalization that
is consistent with this Section and that instead dilutes the Investors
and other equity holders;
o Section 5(o), by taking actions that are reasonably expected to result
in the conditions to the Agreement not being satisfied, including,
without limitation, the following conditions:
o 9(a)(iii), relating to compliance with the Plan for the reasons
set forth in this letter;
o 9(a)(v), relating to an Alternate Transaction and Alternate
Transaction Agreements;
o 9(a)(vi), relating to a Change of Recommendation;
o 9(a)(ix), relating to the failure of the conditions to the
Effective Date of the Confirmed Plan for the reasons described in
this letter;
A-D Acquisition Holdings, LLC
Delphi Corporation
April 4, 2008
Page 2
o 9(a)(xvi), relating to the truth and correctness of
representations and warranties, including the equity
capitalization representation in Section 3(d);
o 9(a)(xvii), relating to failure to perform and comply with
covenants and agreements in the Agreement and other documents
delivered pursuant to the Agreement in all material respects
(including for the reasons set forth in this letter);
o 9(a)(xix), for failure to obtain proceeds from the Debt
Financings as contemplated by the Agreement and failure to have
the asset backed revolving loan facility described in the
Financing Letter;
o 9(a)(xx), for failing to demonstrate, to the reasonable
satisfaction of XXXX, that the pro forma interest expenses for
the Company (calculated in accordance with GAAP) during 2008 on
the Company's Indebtedness will not exceed $585 million;
o 9(a)(xxi), for entering into employment agreements and other
compensation arrangements with senior management that are not
reasonably acceptable to XXXX and do not comply with the terms of
the Series A Preferred Stock and by failing to resolve all claims
of former executive officers, or executive officers that have
resigned or been terminated, on terms acceptable to XXXX or
otherwise ordered by the Bankruptcy Court;
o 9(a)(xxii), for failing to resolve all asserted or scheduled but
not yet disallowed claims such that they are allowed or estimated
for distribution purposes by the Bankruptcy Court in an amount no
more than $1.45 billion;
o 9(a)(xxvii), relating to capitalization; and
o 9(a)(xxviii), by taking actions to implement Material Investment
Documents (including the Rights Offering Registration Statement,
Series C Certificate of Designations, debt financing documents
(including agreements with GM and/or its Affiliates) and
employment agreements) and/or amendments thereto that are not
reasonably satisfactory to XXXX to the extent that they would
have a material impact on the Investors' proposed investment.
o Section 5(p), by reaching agreements with GM that are materially
inconsistent with the Agreement and the Plan, that are outside the
ordinary course of business and the terms of which would have a
material impact on the Investors' proposed investment;
o Section 5(p), by entering into material written agreements with GM
and/or its Subsidiaries that are directly related to the Plan, the GM
Settlement and/or the performance of the Transaction Agreements;
o Section 5(t), by not using reasonable best efforts to arrange the Bank
Financing and the GM Debt on the terms and conditions described in the
Financing Letter and in Exhibit E
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A-D Acquisition Holdings, LLC
Delphi Corporation
April 4, 2008
Page 3
of the Agreement and instead pursuing bank financing and GM debt that
does not comply with the Agreement;
o Section 8, by not using reasonable best efforts to take or cause to be
taken all actions, and do or cause to be done all things, reasonably
necessary, proper or advisable on its part to make effective the
transactions contemplated by the Agreement, the Preferred Term Sheet,
the GM Settlement and the Plan for all the reasons described in this
letter;
o Section 8(c)(i), by entering into employment agreements with senior
management that are not reasonably acceptable to XXXX;
o Section 8(c)(ii), by failing to enter into agreements and other
arrangements acceptable to XXXX or otherwise ordered by the Bankruptcy
Court with respect to claims against the Company of former members of
the Company's management, and members of the Company's management, if
any, who are resigning or being terminated in accordance with
implementation of the Plan; and
o Section 8(c)(vi), by implementing a Series C Certificate of
Designations that is not consistent with the Preferred Term Sheet.
The Company has entered into agreements or agreements in principle with GM
and/or its Affiliates for an Alternate Transaction and has sought the Bankruptcy
Court's approval relating to an Alternate Transaction. Moreover, there has been
a Change of Recommendation by the Company. Consequently, under Section 12(g) of
the Agreement, the Investors are entitled to be paid an Alternate Transaction
Fee of $82,500,000 and any Transaction Expenses and other amounts certified by
the Investors to be due and payable that have not previously been paid. Such
amounts are to be paid, in accordance with Section 12(g) no later than the close
of business on the next Business Day following the date of this termination
letter. XXXX intends to provide to the Company its calculation of Transaction
Expenses and other amounts that are due and payable as soon as reasonably
practicable. XXXX, on its own behalf and on behalf of the other Investors,
reserves all rights to such fees and expenses.
As you know, the undersigned has been actively engaging in discussions to
resolve our outstanding issues in a mutually acceptable manner, including
mutually acceptable alternative transactions and will continue to actively
engage in such discussions, including considering transactions in which XXXX
would participate in a capacity different than currently envisioned by the
Agreement.
[Signature page follows]
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A-D Acquisition Holdings, LLC
Delphi Corporation
April 4, 2008
Page 4
A-D ACQUISITION HOLDINGS, LLC
By: /s/ Xxxxx Xxxxxx
--------------------------
Name:
Title:
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A-D Acquisition Holdings, LLC
Delphi Corporation
April 4, 2008
Page 5
Xxxx Xxxxxxx/Xxxx Xxxxxxxx/Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx
Delphi Corporation Xxxx, Weiss, Rifkin,
0000 Xxxxxx Xxxxx Xxxxxxx & Xxxxxxxx XXX
Xxxx, XX 00000 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Xxxx X. Xxxxxxx
Xxxxx X. Xxxxxx Xxxxx Xxxxxxxx
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP Xxxxx Xxxxx
Four Times Square UBS Securities LLC
Xxx Xxxx, XX 00000 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxx Xx. Xxxxxx, Jr.
Xxxxxx Xxxxxxxxx
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP Xxxxxx X. Xxxxxxxxx
000 Xxxx Xxxxxx Xxxxx Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP
Xxxxxxx, XX 00000 Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Xxxxx Xxxxx
A-D Acquisition Holdings, LLC
c/o Appaloosa Management L.P. Xxxxxx Xxxxxx
26 Main Street Xxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxx, Xxxxx & Co.
1 New York Plaza
Xxxxxx X. Xxxxxxx Xxx Xxxx, XX 00000
Harbinger Del-Auto Investment
Company, Ltd.
c/o Harbinger Capital Partners Xxxxxx Xxxxxx
Offshore Manager, LLC Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxxx Xxxxxx, 00xx Floor 000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
General Counsel Xxxxxxx Xxxx
Xxxxxxx Management Corporation Pardus DPH Holding LLC
0 Xxxxxxxxxx Xxxxxxx Xxxxx 000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxx 00X
Xxx Xxxx, XX 00000
Xxxx Xxxx Xxxxxx/Xxxxxxxx Xxxxx
Xxxx Xxxxxxx LLP Xxxxxx X. Xxxxxxxxxx
000 Xxxx Xxxxxx Xxxxxx X. Xxxxx
Xxx Xxxx, XX 00000 Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx Xxxxx / Xxxx Xxxxxx Xxx Xxxx, XX 00000-0000
Xxxxxx Xxxxx, Xxxxxx,
Xxxxxx & Xxxxx Incorporated
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
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