EXECUTION COPY
EQUITY PURCHASE AND COMMITMENT AGREEMENT
THIS EQUITY PURCHASE AND COMMITMENT AGREEMENT (as from time to time
amended, restated, amended and restated, modified or supplemented in accordance
with the terms hereof, this "Agreement"), dated as of August 3, 2007, is made by
and among A-D Acquisition Holdings, LLC, a limited liability company formed
under the laws of the State of Delaware ("XXXX"), Harbinger Del-Auto Investment
Company, Ltd., an exempted company incorporated in the Cayman Islands
("Harbinger"), Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, a Delaware
corporation ("Merrill"), UBS Securities LLC, a Delaware limited liability
company ("UBS"), Xxxxxxx Xxxxx & Co., a New York limited partnership ("GS"),
Pardus DPH Holding LLC, a Delaware limited liability company ("Pardus"), and
Delphi Corporation, a Delaware corporation (as a debtor-in-possession and a
reorganized debtor, as applicable, the "Company"). XXXX, Harbinger, Merrill,
UBS, GS and Pardus are each individually referred to herein as an "Investor" and
collectively as the "Investors". Capitalized terms used in the agreement have
the meanings assigned thereto in the sections indicated on Schedule 1 hereto.
WHEREAS, the Company and certain of its subsidiaries and affiliates
(the "Debtors") commenced jointly administered cases (the "Chapter 11 Cases")
under United States Bankruptcy Code, 11 U.S.C. Sections 101-1330, as amended and
in effect on October 8, 2005 (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court");
WHEREAS, XXXX, Harbinger, UBS, Merrill, Dolce Investments LLC
("Dolce") (collectively, the "Original Investors") and the Company negotiated
and entered into that certain Equity Purchase and Commitment Agreement, dated as
of January 18, 2007 (the "Original Agreement"). The Original Agreement set forth
the terms on which the Original Investors would provide certain financial
accommodations that would facilitate the implementation of a plan of
reorganization under the Bankruptcy Code for the Debtors having terms consistent
with the Original Agreement and that certain Plan Framework Support Agreement,
dated as of December 18, 2006 by and among the Company, General Motors
Corporation ("GM"), Appaloosa Management L.P. ("Appaloosa"), Cerberus Capital
Management, L.P. ("Cerberus"), Harbinger Capital Partners Master Fund I, Ltd.
("Harbinger Fund"), Merrill and UBS (as previously amended by the Amendment and
Supplement to the Plan Framework Support Agreement, dated as of
January 18,2007, the "Original PSA");
WHEREAS, the Company filed a motion (the "Original Approval Motion") with
the Bankruptcy Court for entry of an order: (i) approving and authorizing the
Company to enter into the Original Agreement and the Original PSA; (ii)
authorizing the Company to make certain payments contemplated by the Original
Agreement; and (iii) granting certain related relief;
WHEREAS, after holding a contested evidentiary hearing on the Original
Approval Motion on January 11 and 12, 2007, and considering the evidentiary
record, the objections to the relief requested, and the argument of counsel, the
Bankruptcy Court over-ruled such objections and entered its order granting the
relief requested by the Company in the Original Approval Motion as it was
modified at the hearing (the "Original Approval Order");
WHEREAS, the Original Agreement and the Original PSA were terminated
by the Company on July 7, 2007;
WHEREAS, the Company has filed its motion (the "Approval Motion")
seeking an order (the "Approval Order") from the Bankruptcy Court that all of
the findings, conclusions and rulings contained in the Original Approval Order
(i) apply to this Agreement (including the Commitment Fees, the Arrangement Fee,
the Alternate Transaction Fees and the Transaction Expenses provided for
herein), the Plan Terms attached hereto as Exhibit B (the "Plan Terms"), the
parties thereto and the transactions contemplated thereby, and (ii) continue in
full force and effect with respect thereto;
WHEREAS, the Company intends to propose and submit to the Bankruptcy
Court for its approval a plan of reorganization for the Debtors that is
consistent with this Agreement and the Plan Terms;
WHEREAS, the Company has requested that the Investors participate in
the plan of reorganization, and the Investors are willing to participate in the
plan of reorganization, on the terms and subject to the conditions contained in
this Agreement; and
WHEREAS, each of Appaloosa, Harbinger Fund and Pardus Special
Opportunities Master Fund L.P. (collectively, the "Commitment Parties") will
provide, on the date hereof, commitment letters addressed to XXXX, Harbinger and
Pardus respectively, and the Company whereby each Commitment Party will confirm
its commitment to provide equity financing to XXXX, Harbinger and Pardus,
respectively, on the terms and subject to the limitations set forth in the
commitment letters.
NOW, THEREFORE, in consideration of the mutual promises, agreements,
representations, warranties and covenants contained herein, each of the parties
hereto hereby agrees as follows:
1. Rights Offering.
(a) The Company proposes to offer and sell shares of its new common stock,
par value $0.01 per share (the "New Common Stock"), pursuant to a
rights offering (the "Rights Offering") whereby the Company will
distribute at no charge to
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each holder (each, an "Eligible Holder") of Common Stock, including,
to the extent applicable, the Investors, that number of rights (each,
a "Right") in respect of shares of Common Stock outstanding and held
of record as of the close of business on a record date (the "Record
Date") to be set by the Board of Directors of the Company that will
enable each Eligible Holder to purchase up to its pro rata portion of
41,026,311 shares in the aggregate of New Common Stock (each, a
"Share") at a purchase price of $38.39 per Share (the "Purchase
Price").
(b) The Company will conduct the Rights Offering pursuant to a plan of
reorganization of the Debtors (such plan of reorganization, the
"Plan"), which shall reflect the Company's proposed restructuring
transactions described in this Agreement, the Summary of Terms of
Preferred Stock attached hereto as Exhibit A (the "Preferred Term
Sheet") and the Plan Terms.
(c) The Rights Offering will be conducted as follows:
(i) On the terms and subject to the conditions of this Agreement
and subject to applicable law, the Company shall offer Shares
for subscription by holders of Rights as set forth in this
Agreement.
(ii) Promptly, and no later than four (4) Business Days,
following the occurrence of both (1) the date that the
Confirmation Order shall have been entered by the Bankruptcy
Court and (2) the effectiveness under the Securities Act of
1933, as amended (the "Securities Act"), of the Rights Offering
Registration Statement filed with the Securities and Exchange
Commission (the "Commission") relating to the Rights Offering,
the Company shall issue to each Eligible Holder, Rights to
purchase up to its pro rata portion of 41,026,311 Shares in the
aggregate (the date of such distribution, the "Rights
Distribution Date"). The Company will be responsible for
effecting the distribution of certificates representing the
Rights, the Rights Offering Prospectus and any related materials
to each Eligible Holder.
(iii) The Rights may be exercised during a period (the "Rights
Exercise Period") commencing on the Rights Distribution Date and
ending at the Expiration Time. The Rights shall be transferable.
"Expiration Time" means the date that is 30 days after the
Rights Distribution Date, or such later date and time as the
Company, subject to the prior written approval of XXXX, may
specify in a notice provided to the Investors before 9:00 a.m.,
New York City time, on the Business Day before the
then-effective Expiration Time. The Company shall use its
reasonable best efforts to cause the effective date of the Plan
(the "Effective Date") to occur as promptly as reasonably
practicable after the Expiration Time. For the
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purpose of this Agreement, "Business Day" means each Monday,
Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in New York City are generally
authorized or obligated by law or executive order to close. Each
Eligible Holder who wishes to exercise all or a portion of its
Rights shall (i) during the Rights Exercise Period return a duly
executed document to a subscription agent reasonably acceptable
to the Company and XXXX (the "Subscription Agent") electing to
exercise all or a portion of the Rights held by such Eligible
Holder and (ii) pay an amount, equal to the full Purchase Price
of the number of Shares that the Eligible Holder elects to
purchase, by wire transfer of immediately available funds by the
Expiration Time to an escrow account established for the Rights
Offering.
(iv) Unless otherwise required by XXXX, there will be no
over-subscription rights provided in connection with the Rights
Offering.
(v) As soon as reasonably practicable following the
Effective Date, the Company will issue to each Eligible Holder
who validly exercised its Rights the number of Shares to which
such Eligible Holder is entitled based on such exercise.
(vi) The Company hereby agrees and undertakes to give each
Investor by electronic facsimile transmission the certification
by an executive officer of the Company of either (i) the number
of Shares elected to be purchased by Eligible Holders pursuant
to validly exercised Rights, the aggregate Purchase Price
therefor, the number of Unsubscribed Shares and the aggregate
Purchase Price therefor (a "Purchase Notice") or (ii) in the
absence of any Unsubscribed Shares, the fact that there are no
Unsubscribed Shares and that the commitment set forth in Section
2(a)(iv) is terminated (a "Satisfaction Notice") as soon as
practicable after the Expiration Time and, in any event,
reasonably in advance of the Closing Date (the date of
transmission of confirmation of a Purchase Notice or a
Satisfaction Notice, the "Determination Date").
(vii) The Rights Offering will provide each Eligible Holder
who validly exercised its Rights with the right to withdraw a
previous exercise of Rights after the withdrawal deadline
established in the Rights Offering Registration Statement if
there are changes to the Plan after the withdrawal deadline that
the Bankruptcy Court determines are materially adverse to the
holders of the Rights and the Bankruptcy Court requires
resolicitation of votes under Section 1126 of the Bankruptcy
Code or an opportunity to change previously cast acceptances or
rejections of the Plan.
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2. The Commitment; Fees and Expenses.
(a) On the terms and subject to the conditions set forth in this
Agreement:
(i) each Investor agrees, severally and not jointly, to subscribe
for and purchase, or cause one or more Related Purchasers
pursuant to the following paragraph and otherwise in accordance
with this Agreement to subscribe for and purchase, and the
Company agrees to sell and issue, on the Closing Date (A) for
the Purchase Price per Share, each Investor's proportionate
share of 4,558,479 Shares as is set forth opposite such
Investor's name on Schedule 2 hereto (the "Direct Subscription
Shares") and (B) for $38.39, that number of shares of Series B
Senior Convertible Preferred Stock, par value $0.01 per share
(the "Series B Preferred Stock"), as is set forth opposite such
Investor's name on Schedule 2 hereto, which shares shall be
created pursuant to a Certificate of Designations (the "Series B
Certificate of Designations") that is consistent with the terms
set forth in the Preferred Term Sheet and, to the extent they
have a material impact on the Investors' proposed investment in
the Company, are reasonably satisfactory to XXXX;
(ii) [Reserved];
(iii) XXXX agrees to subscribe for and purchase, or cause one or
more Related Purchasers pursuant to the following paragraph and
otherwise in accordance with this Agreement to subscribe for and
purchase, and the Company agrees to sell, on the Closing Date,
for the purchase price of $31.28 per Share (the "Series A
Purchase Price"), 12,787,724 shares of Series A-1 Senior
Convertible Preferred Stock, par value $0.01 per share (the
"Series A Preferred Stock") which shares shall be created
pursuant to a Certificate of Designations (the "Series A
Certificate of Designations") that is consistent with the terms
set forth in the Preferred Term Sheet and with such other terms
that, to the extent they have a material impact on the
Investors' proposed investment in the Company, are reasonably
satisfactory to XXXX; and
(iv) each Investor agrees, severally and not jointly, to purchase,
or cause one or more Related Purchasers pursuant to the
following paragraph and otherwise in accordance with this
Agreement to purchase, on the Closing Date, and the Company
agrees to sell for the Purchase Price per Share that number of
Shares issuable pursuant to the aggregate number of Rights that
were not properly exercised by the Eligible Holders thereof
during the Rights Exercise Period, in proportion to the
Investor's share of the Direct Subscription Shares (such Shares
in the aggregate, the "Unsubscribed
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Shares"), rounded among the Investors as they may determine, in
their sole discretion, to avoid fractional shares.
In connection with each of clauses (i) through (iv) above, subject to
delivering prior written notice to each other Investor and the prior
approval of XXXX, prior to the Securities Act Effective Date each
Investor shall have the right to arrange for one or more of its
Affiliates (each a "Related Purchaser") (A) to purchase Investor
Shares, by written notice to the Company, which notice shall be signed
by the Investor and each Related Purchaser, shall contain the Related
Purchaser's agreement to be bound by this Agreement and shall contain
a confirmation by the Related Purchaser of the accuracy with respect
to it of the representations set forth in Section 4 or (B) to
designate that some or all of the Investor Shares be issued in the
name of and delivered to, one or more Related Purchasers which
designation shall be signed by the Investor and each Related
Purchaser, shall contain the Related Purchaser's agreement to be bound
by this Agreement and shall contain a confirmation by the Related
Purchaser of the accuracy with respect to it of the representations
set forth in Section 4; provided, that the total number of Investors,
Related Purchasers and Ultimate Purchasers shall not exceed the
Maximum Number. The "Maximum Number" shall be 35 unless the Company
consents to a higher number, such consent not to be unreasonably
withheld; provided, further, that nothing in this Agreement shall
limit or restrict in any way any Investor's ability to transfer or
otherwise dispose of any Investor's Shares or any interests therein
after the Closing Date pursuant to an effective registration statement
under the Securities Act or an exemption from the registration
requirements thereunder and subject to applicable state securities
laws. The Investors agree that each Related Purchaser will be a
"Qualified Institutional Buyer" under Rule 144A of the Securities Act.
The Series A Preferred Stock and the Series B Preferred Stock are
referred to herein collectively as the "Preferred Shares". The
Unsubscribed Shares, the Direct Subscription Shares and the Preferred
Shares are referred to herein collectively as the "Investor Shares".
The term "Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 under the Securities Exchange Act of 1934 in effect on the
date hereof.
(b) Upon the occurrence of an Investor Default or a Limited Termination,
within five (5) Business Days of the occurrence of such Investor
Default or Limited Termination, the Investors (other than any
non-purchasing Investor) shall have the right to agree to purchase on
the Closing Date, in the case of a Limited Termination, or to
purchase, in the case of an Investor Default (or, in either case,
arrange for the purchase through a Related Purchaser or an Ultimate
Purchaser), all but not less than all, of the Available Investor
Shares on the terms and subject to the conditions set forth in this
Agreement and in such proportions as determined by the Investors in
their sole discretion (an "Alternative Financing");
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provided, that only in the case of a Limited Termination, XXXX will be
required within ten (10) Business Days of the occurrence of such
Limited Termination to agree to purchase on the Closing Date (or
arrange for the purchase through a Related Purchaser or an Ultimate
Purchaser) any Available Investor Shares attributable to the Limited
Termination and not otherwise purchased pursuant to the Alternative
Financing (unless XXXX has otherwise terminated this Agreement in
accordance with its terms); provided, further, that the total number
of Investors, Related Purchasers and Ultimate Purchasers pursuant to
this Agreement shall not exceed the Maximum Number. The term "Investor
Default" shall mean the breach by any Investor of its obligation to
purchase any Investor Shares which it is obligated to purchase under
this Agreement. The term "Available Investor Shares" shall mean any
Investor Shares which any Investor is not purchasing as a result of an
Investor Default or Limited Termination. The exercise by any Investor
of the right to purchase (or arrange a purchase of) any Available
Investor Shares shall not relieve any defaulting Investor of any
obligation to each other Investor or the Company of such defaulting
Investor's breach of this Agreement.
(c) As soon as practicable after the Expiration Time, and in any event
reasonably in advance of the Closing Date, the Company will provide a
Purchase Notice or a Satisfaction Notice to each Investor as provided
above, setting forth a true and accurate determination of the
aggregate number of Unsubscribed Shares, if any; provided, that on the
Closing Date, on the terms and subject to the conditions in this
Agreement, the Investors will purchase, and the Company will sell,
only such number of Unsubscribed Shares as are listed in the Purchase
Notice, without prejudice to the rights of the Investors to seek later
an upward or downward adjustment if the number of Unsubscribed Shares
in such Purchase Notice is inaccurate.
(d) Delivery of the Investor Shares will be made by the Company to the
account of each Investor (or to such other accounts as any Investor
may designate in accordance with this Agreement) at 10:00 a.m., New
York City time, on the Effective Date (the "Closing Date") against
payment of the aggregate Purchase Price for the Investor Shares by
wire transfer of immediately available funds in U.S. dollars to the
account specified by the Company to the Investors at least 24 hours
prior to the Closing Date.
(e) All Investor Shares will be delivered with any and all issue,
stamp, transfer, sales and use, or similar Taxes or duties payable in
connection with such delivery duly paid by the Company.
(f) The documents to be delivered on the Closing Date by or on behalf
of the parties hereto and the Investor Shares will be delivered at the
offices of White & Case
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LLP, 1155 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx 00000 on the
Closing Date.
(g) Subject to the provisions of Sections 2(a), 2(b) and 2(k) hereof,
and subject to prior written notice to each other Investor and the
prior approval of XXXX, any Investor may designate that some or all of
the Unsubscribed Shares, Direct Subscription Shares or shares of
Preferred Stock be issued in the name of, and delivered to, one or
more Ultimate Purchasers.
(h) On the basis of the representations and warranties herein
contained, the Company shall pay the following fees to the Investors
in accordance with Section 2(i) or 12(g), as the case may be:
(i) an aggregate commitment fee of eighteen million dollars
($18,000,000) to be paid to the Investors in proportion to their
undertakings herein relative to Preferred Shares as set forth in
Schedule 2 (the "Preferred Commitment Fee");
(ii) an aggregate commitment fee of thirty nine million, three
hundred seventy five thousand dollars ($39,375,000) to be paid
to the Investors as set forth in Schedule 2 to compensate the
Investors for their undertakings herein relative to Investor
Shares other than Preferred Shares (the "Standby Commitment Fee"
and together with the Preferred Commitment Fee, the "Commitment
Fees");
(iii) a fee of six million, three hundred seventy five thousand
dollars ($6,375,000) to XXXX to compensate XXXX for arranging
the transactions contemplated hereby (the "Arrangement Fee");
and
(iv) an Alternate Transaction Fee, if any, which shall be paid
by the Company as provided in Section 12(g).
(i) Seven million, five hundred twenty-five thousand dollars ($7,525,000)
of the Commitment Fees shall be paid on the first Business Day
following the first date that the Approval Order is issued by the
Bankruptcy Court, and twenty-one million, one hundred sixty-two
thousand, five hundred dollars ($21,162,500), representing the balance
of the first fifty percent (50%) of the Commitment Fees, on the first
Business Day following the Disclosure Statement Filing Date. The
balance of twenty-eight million, six hundred eighty-seven thousand,
five hundred dollars ($28,687,500), representing the remaining fifty
percent (50%) of the Commitment Fees, shall be paid on the first
Business Day following the
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Disclosure Statement Approval Date. The Arrangement Fee shall be paid
to XXXX upon entry of the Approval Order. Payment of the Commitment
Fees, Arrangement Fee and the Alternate Transaction Fee, if any, will
be made by wire transfer of immediately available funds in U.S.
dollars to the account specified by each Investor to the Company at
least 24 hours prior to such payment. The Commitment Fees, Arrangement
Fee and the Alternate Transaction Fee, if any, will be nonrefundable
and non-avoidable when paid. The provision for the payment of the
Commitment Fees and Arrangement Fee is an integral part of the
transactions contemplated by this Agreement and without this provision
the Investors would not have entered into the Agreement and such
Commitment Fees and Arrangement Fee shall constitute an allowed
administrative expense of the Company under Section 503(b)(1) and
507(a)(1) of the Bankruptcy Code.
(j) The Company will reimburse or pay, as the case may be, the
out-of-pocket costs and expenses reasonably incurred by each Investor
or its Affiliates (which, for the avoidance of doubt, shall not
include any Ultimate Purchaser) to the extent incurred on or before
the first to occur of the date on which this Agreement terminates in
accordance with its terms and the Effective Date (and reasonable
post-closing costs and expenses relating to the closing of the
transactions contemplated hereby), including reasonable fees, costs
and expenses of counsel to each of the Investors or its Affiliates,
and reasonable fees, costs and expenses of any other professionals
retained by any of the Investors or its Affiliates in connection with
the transactions contemplated hereby (including investigating,
negotiating and completing such transactions) and the Chapter 11 Cases
and other judicial and regulatory proceedings related to such
transactions and the Chapter 11 Cases other than costs and expenses
relating to any transactions with Ultimate Purchasers and, with
respect to expenses that would not otherwise be incurred by the
related Investor, Related Purchasers (collectively, "Transaction
Expenses"); from and after (i) in the case of XXXX and Harbinger,
December 1, 2006, (ii) in the case of GS, July 3, 2007, in the case of
Pardus, June 18, 2007 and in the case of UBS and Merrill, July 30,
2006, promptly upon submission to the Company of summary statements
therefor by such Investor, in each case, without Bankruptcy Court
review or further Bankruptcy Court order, whether or not the
transactions contemplated hereby are consummated and, in any event,
within 30 days of the submission of such statements. Notwithstanding
the foregoing, (i) Transaction Expenses incurred by XXXX or its
Affiliates on or prior to May 17, 2006 in an amount not to exceed
$5,000,000 shall be paid if and when the effective date of any plan of
reorganization for the Company occurs and only if such plan results in
holders of Common Stock receiving any recovery under such plan, (ii)
Transaction Expenses incurred by Pardus on or prior to June 18, 2007
shall be paid to the extent that they comprise the reasonable fees,
costs and expenses of legal counsel to Pardus related to the
negotiation of this Agreement, the non-disclosure agreement between
Pardus and the Company dated June 18, 2007 and the Transactions
contemplated hereby or thereby, (iii) Transaction Expenses incurred by
GS on or prior to July 3, 2007 shall be paid to the extent that they
comprise the reasonable fees, costs and expenses of legal counsel to
GS related to the negotiation of this Agreement, the non-disclosure
agreement between GS and
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the Company and the Transactions contemplated hereby or thereby and
(iv) the filing fee, if any, required to be paid in connection with
any filings required to be made by any Investor or its Affiliates
under the HSR Act or any other competition laws or regulations shall
be paid by the Company on behalf of the Investors or such Affiliate
when filings under the HSR Act or any other competition laws or
regulations are made, together with all expenses of the Investors or
its Affiliates incurred to comply therewith.
The provision for the payment of the Transaction Expenses is an integral
part of the transactions contemplated by this Agreement and without this
provision the Investors would not have entered into this Agreement and such
Transaction Expenses shall constitute an allowed administrative expense of
the Company under Section 503(b)(1) and 507(a)(1) of the Bankruptcy Code.
In addition, to the extent permitted under any order authorizing the
Debtors to obtain post-petition financing and/or to utilize cash collateral
then or thereafter in effect (each a "Financing Order"), the Transaction
Expenses incurred from and after the date of entry of the Original Approval
Order shall be protected by and entitled to the benefits of the carve-out
for professional fees provided in any such Financing Order.
(k) The Company acknowledges that the Investors and certain persons and
entities (collectively, the "Ultimate Purchasers") have entered into
an agreement and may, prior to the Securities Act Effective Date,
enter into one or more new agreements or amend existing agreements
(collectively, the "Additional Investor Agreement"), pursuant to which
the Investorshave arranged for a number of Ultimate Purchasers to
purchase certain of the Unsubscribed Shares and the Direct
Subscription Shares. The Investors severally and not jointly
acknowledge that they have not agreed and, without the prior written
consent of XXXX, will not prior to the Closing agree, directly or
indirectly, to sell, transfer, assign, pledge, hypothecate, donate or
otherwise encumber or dispose of any Investor Shares or any interest
or participation therein other than pursuant to the Additional
Investor Agreement (as it may be amended from time to time) and other
than an arrangement that was entered into among ADAH, Merrill,
Harbinger and certain of their Affiliates regarding participation
interests in the Series A-2 Senior Convertible Preferred Stock that
was to be issued pursuant to the Original Agreement, which agreement
has been terminated. The total number of Investors, Related Purchasers
and Ultimate Purchasers as of the Closing Date shall not exceed the
Maximum Number. Each Additional Investor Agreement shall contain each
Ultimate Purchaser's agreement to be bound by this Agreement and a
confirmation by each Ultimate Purchaser of the accuracy with respect
to it of the representations set forth in Section 4 and a copy of such
confirmation shall be provided to the Company prior to the Securities
Act Effective Date. Each Investor proposing to enter into an
Additional Investor Agreement with any Ultimate Purchaser or proposing
to transfer Investor Shares to, or to arrange for Investor Shares to
be purchased by or delivered to, any Related Purchaser, in either
case, which would result in the Maximum Number being exceeded agrees
to notify the Company and XXXX prior to entering into such agreement
or
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effecting such transfer and will not undertake such agreement or
effect such transfer without the consent of the Company and XXXX,
which shall not be unreasonably withheld. The Investors severally and
not jointly agree that with respect to any offer or transfer to an
Ultimate Purchaser prior to the Closing Date, they have not offered
and shall not offer any Investor Shares to, and they have not entered
into and shall not enter into the Additional Investor Agreement with,
any person or entity (A) on or after the Securities Act Effective Date
and (B) that is not a "Qualified Institutional Buyer" as defined in
Rule 144A under the Securities Act; provided, that the total number of
Investors, Related Purchasers and the Ultimate Purchasers pursuant to
this Agreement shall not exceed the Maximum Number; provided, further,
that nothing in this Agreement shall limit or restrict in any way any
Investor's ability to transfer or otherwise dispose of any Investor's
Shares or any interest therein after the Closing Date pursuant to an
effective registration statement under the Securities Act or an
exemption from the registration requirements thereunder and pursuant
to applicable state securities laws.
3. Representations and Warranties of the Company. Except as set forth in a
disclosure letter to be delivered pursuant to Section 5(s) (the "Disclosure
Letter"), the Company represents and warrants to, and agrees with, each of
the Investors as set forth below. Any item disclosed in a section of the
Disclosure Letter shall be deemed disclosed in all other sections of the
Disclosure Letter to the extent the relevance of such disclosure or matter
is reasonably apparent and shall qualify the representations and warranties
contained in this Section 3. Except for representations, warranties and
agreements that are expressly limited as to their date, each
representation, warranty and agreement shall be deemed made as of the date
of delivery of the Disclosure Letter (the "Disclosure Letter Delivery
Date") and as of the Closing Date:
(a) Organization and Qualification. The Company and each of its
Significant Subsidiaries has been duly organized and is validly
existing in good standing under the laws of its respective
jurisdiction of incorporation, with the requisite power and authority
to own its properties and conduct its business as currently conducted.
Each of the Company and its Subsidiaries has been duly qualified as a
foreign corporation or organization for the transaction of business
and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so as to
require such qualification, except to the extent that the failure to
be so qualified or be in good standing has not had and would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. For the purpose of this Agreement, "Material
Adverse Effect" means (i) any material adverse effect on the business,
results of operations, liabilities, property or condition (financial
or otherwise) of the Company or its Subsidiaries, taken as a whole, or
(ii) any material adverse effect on the ability of the Company,
subject to the approvals and other authorizations set forth in
Section 3(g) below, to consummate the transactions contemplated by
this Agreement or the Plan other than, in either case, any effect
relating to or resulting from (i) changes in general economic
conditions or securities or
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financial markets in general that do not disproportionately impact the
Company and its Subsidiaries; (ii) general changes in the industry in
which the Company and its Subsidiaries operate and not specifically
relating to, or having a disproportionate effect on, the Companies and
its Subsidiaries taken as a whole (relative to the effect on other
persons operating in such industry); (iii) any changes in law
applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets or interpretations thereof by any
governmental authority which do not have a disproportionate effect on,
the Company and its Subsidiaries; (iv) any outbreak or escalation of
hostilities or war (whether declared or not declared) or any act of
terrorism which do not have a disproportionate effect on, the Company
and its Subsidiaries; (v) the announcement or the existence of, or
compliance with, this Agreement and the transactions contemplated
hereby (including without limitation the impact thereof on
relationships with suppliers, customers or employees); (vi) any
accounting regulations or principles or changes in accounting
practices or policies that the Company or its Subsidiaries are
required to adopt, including in connection with the audit of the
Company's financial statements in accordance with GAAP or any failure
to timely file periodic reports or timely prepare financial statements
and the costs and effects of completing the preparation of the
Company's financial statements and periodic reports; or (vii) any
change in the market price or trading volumes of the Company's
securities (it being understood for the purposes of this subclause
(vii) that any facts underlying such change that are not otherwise
covered by the immediately preceding clauses (i) through (vi) may be
taken into account in determining whether or not there has been a
Material Adverse Effect). For the purposes of this Agreement, (x) a
"Subsidiary" of any person means, with respect to such person, any
corporation, partnership, joint venture or other legal entity of which
such person (either alone or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% of the stock
or other equity interests, has the power to elect a majority of the
board of directors or similar governing body, or has the power to
direct the business and policies, and (y) a "Significant Subsidiary"
is a Subsidiary that satisfies the definition contained in Article 1,
Rule 1-02 of Regulation S-X promulgated pursuant to the Securities Act
of 1933, as amended.
(b) Corporate Power and Authority.
(i) The Company has or, to the extent executed in the future,
will have when executed, the requisite corporate power and
authority to enter into, execute and deliver this Agreement and
each other agreement to which it will be a party as contemplated
by this Agreement (this Agreement and such other agreements
collectively, the "Transaction Agreements") and, subject to
entry of the Confirmation Order and the expiration, or waiver by
the Bankruptcy Court, of the 10-day period set forth in
Rules 6004(h) and 3020(e) of the Federal Rules of Bankruptcy
Procedure (the "Bankruptcy Rules"), respectively, to perform its
obligations hereunder and thereunder,
-12-
including the issuance of the Rights and Investor Shares. The
Company has taken or will take all necessary corporate action
required for the due authorization, execution, delivery and
performance by it of this Agreement, including the issuance of
the Rights and Investor Shares.
(ii) Prior to the execution by the Company and filing with the
Bankruptcy Court of the Plan, the Company and each Subsidiary
entering into the Plan will have the requisite corporate power
and authority to execute the Plan and to file the Plan with the
Bankruptcy Court and, subject to entry of the Confirmation Order
and the expiration, or waiver by the Bankruptcy Court, of the
10-day period set forth in Bankruptcy Rule 3020(e), to perform
its obligations thereunder, and will have taken by the Effective
Date all necessary corporate actions required for the due
authorization, execution, delivery and performance by it of the
Plan.
(c) Execution and Delivery; Enforceability.
(i) Each Transaction Agreement has been, or prior to its
execution and delivery will be, duly and validly executed and
delivered by the Company, and, upon the expiration, or waiver by
the Bankruptcy Court, of the 10-day period set forth in
Bankruptcy Rule 6004(h), each such document will constitute the
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
(ii) The Plan will be duly and validly filed with the Bankruptcy
Court by the Company and each of its Subsidiaries executing the
Plan and, upon the entry of the Confirmation Order and the
expiration, or waiver by the Bankruptcy Court, of the 10-day
period set forth in Bankruptcy Rule 3020(e), will constitute the
valid and binding obligation of the Company and such Subsidiary,
enforceable against the Company and such Subsidiaries in
accordance with its terms.
(d) Authorized and Issued Capital Stock. The authorized capital stock
of the Company consists of (i) 1,350,000,000 shares of Common Stock
and (ii) 650,000,000 shares of preferred stock, par value $0.10 per
share. At the close of business on June 30, 2007 (the "Capital
Structure Date") (i) 561,781,500 shares of Common Stock were issued
and outstanding, (ii) no shares of the preferred stock were issued and
outstanding, (iii) 3,244,317 shares of Common Stock were held by the
Company in its treasury, (iv) 85,978,864 shares of Common Stock were
reserved for issuance upon exercise of stock options and other rights
to purchase shares of Common Stock and vesting of restricted stock
units (each, an "Option" and, collectively, the "Options") granted
under any stock option or stock-based compensation plan of the Company
or otherwise (the "Stock Plans"),
-13-
and (v) 200,000 shares of Series A participating preferred stock were
reserved for issuance pursuant to that certain Rights Agreement by and
between the Company and BankBoston, N.A., as Rights Agent, dated as of
February 1, 1999, as amended (the "Existing Shareholder Rights Plan").
All issued and outstanding shares of capital stock of the Company and
each of its Subsidiaries have been duly authorized and validly issued
and are fully paid and nonassessable, and the holders thereof do not
have any preemptive rights. Except as set forth in this Section 3(d)
or issuances pursuant to the Stock Plans, at the close of business on
the Capital Structure Date, no shares of capital stock or other equity
securities or voting interest in the Company were issued, reserved for
issuance or outstanding. Since the close of business on the Capital
Structure Date, no shares of capital stock or other equity securities
or voting interest in the Company have been issued or reserved for
issuance or become outstanding, other than shares described in clause
(iv) of the second sentence of this Section 3(d) that have been issued
upon the exercise of outstanding Options granted under the Stock Plans
and other than theshares to be issued hereunder or pursuant to the
Plan Terms. Except as described in this Section 3(d), and except as
will be required by the Plan, neither the Company nor any of its
Subsidiaries is party to or otherwise bound by or subject to any
outstanding option, warrant, call, subscription or other right
(including any preemptive right), agreement or commitment which (w)
obligates the Company or any of its Subsidiaries to issue, deliver,
sell or transfer, or repurchase, redeem or otherwise acquire, or cause
to be issued, delivered, sold or transferred, or repurchased, redeemed
or otherwise acquired, any shares of the capital stock of, or other
equity or voting interests in, the Company or any security convertible
or exercisable for or exchangeable into any capital stock of, or other
equity or voting interest in, the Company, (x) obligates the Company
or any of its Subsidiaries to issue, grant, extend or enter into any
such option, warrant, call, right, security, commitment, contract,
arrangement or undertaking, (y) restricts the transfer of any shares
of capital stock of the Company or (z) relates to the voting of any
shares of capital stock of the Company. On the Effective Date, the
authorized capital stock of the Company and the issued and outstanding
shares of capital stock of the Company shall be consistent with the
description set forth in the Preferred Term Sheet, the Plan Terms and
the Plan. On the Effective Date, the authorized capital stock of the
Company shall consist of such number of shares of New Common Stock as
shall be set forth in the Amended and Restated Constituent Documents
and 23,207,104 shares of new preferred stock. On the Effective Date,
assuming consummation of the transactions contemplated by this
Agreement: (i) 124,400,000 shares of New Common Stock will be
outstanding; (ii) 12,787,724 shares of Series A Preferred Stock will
be issued and outstanding and (iii) 10,419,380 shares of Series B
Preferred Stock will be issued and outstanding.
(e) Issuance. The Investor Shares to be issued and sold by the Company
to the Investors hereunder, when the Investor Shares are issued and
delivered against payment therefor by the Investors hereunder, shall
have been duly and validly authorized, issued and delivered and shall
be fully paid and non-assessable, and
-14-
free and clear of all Taxes, liens, preemptive rights, rights of first
refusal, subscription and similar rights, other than (i) any rights
contained in the terms of the Preferred Shares as set forth in the
Company's Certificate of Incorporation and (ii) any rights contained
in any shareholders agreement to which one or more of the Investors
shall be a party.
(f) No Conflict. Subject to the entry of the Confirmation Order and the
expiration, or waiver by the Bankruptcy Court, of the 10-day period
set forth in Bankruptcy Rules 6004(h) and 3020(e), as applicable, the
distribution of the Rights, the sale, issuance and delivery of the
Shares upon exercise of the Rights, the consummation of the Rights
Offering by the Company and the execution and delivery (or, with
respect to the Plan, the filing) by the Company of the Transaction
Agreements and the Plan and compliance by the Company with all of the
provisions hereof and thereof and the Preferred Term Sheet and the
Plan Terms and the consummation of the transactions contemplated
herein and therein (including compliance by each Investor with its
obligations hereunder and thereunder) (i) will not conflict with, or
result in a breach or violation of, any of the terms or provisions of,
or constitute a default under (with or without notice or lapse of
time, or both), or result, except to the extent to be specified in the
Plan, in the acceleration of, or the creation of any lien under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound or
to which any of the property or assets of the Company or any of its
Subsidiaries is subject, (ii) will not result in any violation of the
provisions of the Certificate of Incorporation or Bylaws of the
Company or any of its Subsidiaries, (iii) will not result in any
material violation of, or any termination or material impairment of
any rights under, any statute or any license, authorization,
injunction, judgment, order, decree, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or
any of its Subsidiaries or any of their properties, and (iv) will not
trigger the distribution under the Existing Shareholders Rights Plan
of Rights Certificates (as defined therein) or otherwise result in any
Investor being or becoming an Acquiring Person, except in any such
case described in subclause (i) for any conflict, breach, violation,
default, acceleration or lien which has not had and would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(g) Consents and Approvals. No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body having jurisdiction over the Company or any of its
Subsidiaries or any of their properties is required for the
distribution of the Rights, the sale, issuance and delivery of Shares
upon exercise of the Rights or the Investor Shares to each Investor
hereunder and the consummation of the Rights Offering by the Company
and the execution and delivery by the Company of the Transaction
Agreements or the Plan and performance of and compliance by the
Company with all of the
-15-
provisions hereof and thereof and the Preferred Term Sheet and the
Plan Terms and the consummation of the transactions contemplated
herein and therein, except (i) the entry of the Confirmation Order and
the expiration, or waiver by the Bankruptcy Court, of the 10-day
period set forth in Bankruptcy Rules 6004(h) and 3020(e), as
applicable, (ii) the registration under the Securities Act of the
issuance of the Rights and the Shares pursuant to the exercise of
Rights, (iii) filings with respect to and the expiration or
termination of the waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and
any other comparable laws or regulations in any foreign jurisdiction
relating to the sale or issuance of Investor Shares to the Investors,
(iv) the filing with the Secretary of State of the State of Delaware
of the Certificate of Incorporation to be applicable to the Company
from and after the Effective Date and (v) such consents, approvals,
authorizations, registrations or qualifications (x) as may be required
under the rules and regulations of the New York Stock Exchange or the
Nasdaq Stock Exchange to consummate the transactions contemplated
herein, (y) as may be required under state securities or Blue Sky laws
in connection with the purchase of the Investor Shares by the
Investors or the distribution of the Rights and the sale of Shares to
Eligible Holders or (z) the absence of which will not have or would
not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
(h) Arm's Length. The Company acknowledges and agrees that the Investors
are acting solely in the capacity of an arm's length contractual
counterparty to the Company with respect to the transactions
contemplated hereby (including in connection with determining the
terms of the Rights Offering) and not as a financial advisor or a
fiduciary to, or an agent of, the Company or any other person or
entity. Additionally, the Investors are not advising the Company or
any other person or entity as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction. The Company
shall consult with its own advisors concerning such matters and shall
be responsible for making its own independent investigation and
appraisal of the transactions contemplated hereby, and the Investors
shall have no responsibility or liability to the Company, its
Affiliates, or their respective shareholders, directors, officers,
employees, advisors or other representatives with respect thereto. Any
review by the Investors of the Company, the transactions contemplated
hereby or other matters relating to such transactions will be
performed solely for the benefit of the Investors and shall not be on
behalf of the Company, its Affiliates, or their respective
shareholders, directors, officers, employees, advisors or other
representatives and shall not affect any of the representations or
warranties contained herein or the remedies of the Investors with
respect thereto.
(i) Financial Statements. The financial statements and the related
notes of the Company and its consolidated Subsidiaries included or
incorporated by reference in the Company SEC Documents and the Rights
Offering Registration Statement, and to be included or incorporated by
reference in the Disclosure Statement and
-16-
the Rights Offering Registration Statement and the Rights Offering
Prospectus, comply or will comply, as the case may be, in all material
respects with the applicable requirements of the Securities Act, the
Securities Exchange Act of 1934, as amended, and the rules and
regulation of the Commission thereunder (the "Exchange Act") and the
Bankruptcy Code, as applicable, and present fairly or will present
fairly in all material respects the financial position, results of
operations and cash flows of the Company and its Subsidiaries as of
the dates indicated and for the periods specified; such financial
statements have been prepared in conformity with U.S. generally
accepting accounting principles ("GAAP") applied on a consistent basis
throughout the periods covered thereby (except as disclosed in the
Company SEC Documents filed prior to the date hereof), and the
supporting schedules included or incorporated by reference in the
Company SEC Documents and the Rights Offering Registration Statement,
and to be included or incorporated by reference in the Disclosure
Statement, the Rights Offering Registration Statement and the Rights
Offering Prospectus, present fairly or will present fairly the
information required to be stated therein; and the other financial
information included or incorporated by reference in the Company SEC
Documents and the Rights Offering Registration Statement, and to be
included or incorporated by reference in the Disclosure Statement,
Rights Offering Registration Statement and the Rights Offering
Prospectus, has been or will be derived from the accounting records of
the Company and its Subsidiaries and presents fairly or will present
fairly the information shown thereby; and the pro forma financial
information and the related notes included or incorporated by
reference in the Company SEC Documents and the Rights Offering
Registration Statement, and to be included or incorporated by
reference in the Disclosure Statement, Rights Offering Registration
Statement and the Rights Offering Prospectus, have been or will be
prepared in accordance with the applicable requirements of the
Securities Act and the Exchange Act, as applicable, and the
assumptions underlying such pro forma financial information are
reasonable and are set forth in the Company SEC Documents and will be
set forth in the Disclosure Statement, Rights Offering Registration
Statement and the Rights Offering Prospectus.
(j) Company SEC Documents and Disclosure Statement. The Company has
filed all required reports, schedules, forms, statements and other
documents (including exhibits and all other information incorporated
therein but not including the Rights Offering Registration Statement
or the other documents referred to in Section 3(k) below) with the
Commission ("Company SEC Documents"). As of their respective dates,
each of the Company SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange
Act and the rules and regulations of the Commission promulgated
thereunder applicable to such Company SEC Documents. The Company has
filed with the Commission all "material contracts" (as such term is
defined in Item 601(b)(10) of Regulation S-K under the Exchange Act)
that are required to be filed as exhibits to the Company SEC
Documents. No Company SEC Document filed after December 31, 2005, when
filed, contained any untrue statement of a material
-17-
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
Disclosure Statement, when submitted to the Bankruptcy Court and upon
confirmation and effectiveness, will conform in all material respects
to the requirements of the Bankruptcy Code. The Disclosure Statement,
when submitted to the Bankruptcy Court and upon confirmation and
effectiveness, and any future Company SEC Documents filed with the
Commission prior to the Closing Date, when filed, will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(k) Rights Offering Registration Statement and Rights Offering
Prospectus. The Rights Offering Registration Statement and any
post-effective amendment thereto, as of the applicable Securities Act
Effective Date and, if applicable, as of the date of such
post-effective amendment, will comply in all material respects with
the Securities Act, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
and as of the applicable filing date of the Rights Offering
Prospectus, the Rights Offering Prospectus, and as of the filing date
of any amendment or supplement thereto and during the Rights Offering
Period, and as of the Closing Date, the Rights Offering Prospectus as
so amended or supplemented, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. On the
Rights Distribution Date, during the Rights Offering Period, and at
the Expiration Time, the Investment Decision Package will not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. Each Issuer Free Writing Prospectus, at the time of
use thereof, when considered together with the Investment Decision
Package, will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Each
Preliminary Rights Offering Prospectus, at the time of filing thereof,
complied (in the case of a Preliminary Rights Offering Prospectus
filed prior to the date hereof) and will comply in all material
respects with the Securities Act and did not (in the case of a
Preliminary Rights Offering Prospectus filed prior to the date hereof)
and will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing,
the Company makes no representation and warranty with respect to any
statements or omissions made in reliance on and in conformity with
information relating to each Investor or the Ultimate Purchasers
furnished to the Company in writing by such Investor or the Ultimate
Purchasers
-18-
expressly for use in the Rights Offering Registration Statement and
the Rights Offering Prospectus and any amendment or supplement
thereto. On March 21, 2007, the Staff of the Commission delivered a
letter to the Company which will be included in Schedule 3(k) of the
Disclosure Letter.
For the purposes of this Agreement, (i) the term "Rights Offering
Registration Statement" means the Registration Statement filed with
the Commission relating to the Rights Offering, including all exhibits
thereto, as amended as of the Securities Act Effective Date, and any
post-effective amendment thereto that becomes effective; (ii) the term
"Rights Offering Prospectus" means the final prospectus contained in
the Rights Offering Registration Statement at the Securities Act
Effective Date (including information, if any, omitted pursuant to
Rule 430A and subsequently provided pursuant to Rule 424(b) under the
Securities Act ), and any amended form of such prospectus provided
under Rule 424(b) under the Securities Act or contained in a
post-effective amendment to the Rights Offering Registration
Statement; (iii) the term "Investment Decision Package" means the
Rights Offering Prospectus, together with any Issuer Free Writing
Prospectus used by the Company to offer the Shares to Eligible Holders
pursuant to the Rights Offering, (iv) the term "Issuer Free Writing
Prospectus" means each "issuer free writing prospectus" (as defined in
Rule 433 of the rules promulgated under the Securities Act) prepared
by or on behalf of the Company or used or referred to by the Company
in connection with the Rights Offering, (v) the term "Preliminary
Rights Offering Prospectus" means each prospectus included in the
Rights Offering Registration Statement (and any amendments thereto)
before it becomes effective, any prospectus filed with the Commission
pursuant to Rule 424(a) under the Securities Act and the prospectus
included in the Rights Offering Registration Statement, at the time of
effectiveness that omits information permitted to be excluded under
Rule 430A under the Securities Act; and (vi) "Securities Act Effective
Date" means the date and time as of which the Rights Offering
Registration Statement, or the most recent post-effective amendment
thereto, was declared effective by the Commission which shall not be
requested by the Company before the Confirmation Order is issued
without the prior consent of XXXX.
(l) Free Writing Prospectuses. Each Issuer Free Writing Prospectus
will conform in all material respects to the requirements of the
Securities Act as of the date of first use or as otherwise provided
for in Rule 433 under the Securities Act, and the Company will comply
with all prospectus delivery and all filing requirements applicable to
such Issuer Free Writing Prospectus under the Securities Act. The
Company has retained in accordance with the Securities Act all Issuer
Free Writing Prospectuses that were not required to be filed pursuant
to the Securities Act.
-19-
(m) Absence of Certain Changes. Since December 31, 2006, other than as
disclosed in the Company SEC Documents filed prior to the date hereof,
and except for actions to be taken pursuant to the Transaction
Agreements and the Plan:
(i) there has not been any change in the capital stock from that set
forth in Section 3(d) or any material change in long-term debt
of the Company or any of its Subsidiaries, or any dividend or
distribution of any kind declared, set aside for payment, paid
or made by the Company on any class of capital stock;
(ii) no event, fact or circumstance has occurred which has had
or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(iii) neither the Company nor any of its Subsidiaries has made
any changes with respect to accounting policies or procedures,
except as required by law or changes in GAAP;
(iv) neither the Company nor any of its Subsidiaries has paid,
discharged, waived, compromised, settled or otherwise satisfied
any material Legal Proceeding, whether now pending or hereafter
brought, (A) at a cost materially in excess of the amount
accrued or reserved for it in the Company SEC Documents filed
prior to the date hereof, (B) pursuant to terms that impose
material adverse restrictions on the business of the Company and
its Subsidiaries as currently conducted or (C) on a basis that
reveals a finding or an admission of a material violation of law
by the Company or its Subsidiaries;
(v) other than in the ordinary course of business, neither the
Company nor any of its Subsidiaries has (A) made, changed or
revoked any material Tax election, (B) entered into any
settlement or compromise of any material Tax liability, (C)
filed any amended Tax Return with respect to any material Tax,
(D) changed any annual Tax accounting period, (E) entered into
any closing agreement relating to any material Tax, (F)
knowingly failed to claim a material Tax refund for which it is
entitled, or (G) made material changes to their Tax accounting
methods or principles;
(vi) there has not been (A) any increase in the base compensation
payable or to become payable to the officers or employees of the
Company or any of its Subsidiaries with annual base compensation
in excess of $500,000 (except for compensation increases in the
ordinary course of business and consistent with past practice)
or (B) except in the ordinary course of
-20-
business and consistent with past practice, any establishment,
adoption, entry into or material amendment of any collective
bargaining, bonus, profit sharing, thrift, compensation,
employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any
director, or for the benefit of a group of employees or for any
individual officer or employee with annual base compensation in
excess of $500,000, in each case;
(vii) except in a manner consistent with (i) the Company's
transformation plan previously disclosed in the Company SEC
Documents prior to the date hereof (the "Transformation Plan")
and (ii) (A) prior to the satisfaction of the condition with
respect to the Business Plan in accordance with Section
9(a)(xxviii) of this Agreement, that certain draft business plan
delivered to the Investors dated February 28, 2007, as amended
by the revisions thereto delivered to the Investors dated April
5, 2007 (collectively the "Draft Business Plan") or (B) after
the satisfaction of the condition with respect to the Business
Plan in accordance with Section 9(a)(xxviii) of this Agreement,
the Business Plan approved by XXXX in accordance with this
Agreement neither the Company nor any of its Subsidiaries have
sold, transferred, leased, licensed or otherwise disposed of any
assets or properties material to the Company and its
Subsidiaries, taken as a whole, except for (A) sales of
inventory in the ordinary course of business consistent with
past practice and (B) leases or licenses entered into in the
ordinary course of business consistent with past practice; and
(viii)except in a manner consistent with (i) the Transformation
Plan and (ii) (A) prior to the satisfaction of the condition
with respect to the Business Plan in accordance with Section
9(a)(xxviii) of this Agreement, the Draft Business Plan or (B)
after the satisfaction of the condition with respect to the
Business Plan in accordance with this Section 9(a)(xxviii) of
Agreement, the Business Plan approved by XXXX in accordance with
this Agreement, neither the Company nor any of its Subsidiaries
have acquired any business or entity material to the Company and
its Subsidiaries, taken as a whole, by merger or consolidation,
purchase of assets or equity interests, or by any other manner,
in a single transaction or a series of related transactions, or
entered into any contract, letter of intent or similar
arrangement (whether or not enforceable) with respect to the
foregoing.
(n) Descriptions of the Transaction Agreement. The statements in the
Rights Offering Registration Statement and the Rights Offering
Prospectus insofar as they purport to constitute summaries of each of
the Transaction Agreements, the Plan, the Original Approval Order or
the Approval Order and the Confirmation Order, or the terms of
statutes, rules or regulations, legal or governmental
-21-
proceedings or contracts, will constitute accurate summaries in all
material respects.
(o) No Violation or Default; Compliance with Laws. Neither the Company nor
any of its Significant Subsidiaries is in violation of its charter or
by-laws or similar organizational documents. Neither the Company nor
any of its Subsidiaries is, except as a result of the Chapter 11
Cases, in default, and no event has occurred that, with notice or
lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which any of the property or assets of the
Company or any of its Subsidiaries is subject, except for any such
default that has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is, or has been at any time
since January 1, 2002, in violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except for any such violation
that has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(p) Legal Proceedings. Except as described in the Company SEC Documents
filed prior to the date hereof, there are no legal, governmental or
regulatory actions, suits, proceedings or, to the knowledge of the
Company, investigations pending to which the Company or any of its
Subsidiaries is or may be a party or to which any property of the
Company or any of its Subsidiaries is or may be the subject that,
individually or in the aggregate, has had or, if determined adversely
to the Company or any of its Subsidiaries, would reasonably be
expected to have a Material Adverse Effect, and no such actions, suits
or proceedings or, to the knowledge of the Company, investigations are
pending, threatened or contemplated, by any governmental or regulatory
authority or by others. There are no current or pending legal,
governmental or regulatory actions, suits or proceedings that are
required under the Exchange Act to be described in the Company SEC
Documents or the Rights Offering Registration Statement or Rights
Offering Prospectus that are not or will not be so described, and
there are no statutes, regulations or contracts or other documents
that are required under the Exchange Act to be filed as exhibits to
the Company SEC Documents or the Rights Offering Registration
Statement or Rights Offering Prospectus or described in the Company
SEC Documents or the Rights Offering Registration Statement or Rights
Offering Prospectus that are not so filed or described.
(q) Independent Accountants. Ernst & Young LLP ("E&Y"), the Company's
public accountants, are independent public accountants with respect to
the Company and its Subsidiaries as required by the Securities Act.
-22-
(r) Labor Relations. Except as set forth in the Company SEC Documents
filed prior to the date hereof:
(i) neither the Company nor any of its Subsidiaries is a party
to, or bound by, any material collective bargaining agreement,
contract or other agreement or understanding with a labor union
or labor organization (other than contracts or other agreements
or understandings with labor unions or labor organizations in
connection with products and services offered and sold to such
unions and organizations by the Company or its Subsidiaries);
(ii) neither the Company nor any of its Subsidiaries is the
subject of any proceeding asserting that it or any Subsidiary
has committed an unfair labor practice or sex, age, race or
other discrimination or seeking to compel it to bargain with any
labor organization as to wages or conditions of employment,
which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect;
(iii) there are no material current or, to the knowledge of the
Company, threatened organizational activities or demands for
recognition by a labor organization seeking to represent
employees of the Company or any Subsidiary and no such
activities have occurred during the past 24 months;
(iv) no grievance, arbitration, litigation or complaint or, to
the knowledge of the Company, investigations relating to labor
or employment matters is pending or, to the knowledge of the
Company, threatened against the Company or any of its
Subsidiaries which, except as has not had, and would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(v) the Company and each of its Subsidiaries has complied and is
in compliance in all respects with all applicable laws (domestic
and foreign), agreements, contracts, and policies relating to
employment, employment practices, wages, hours, and terms and
conditions of employment and is not engaged in any material
unfair labor practice as determined by the National Labor
Relations Board (or any foreign equivalent) except where the
failure to comply has not had or would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect;
(vi) the Company has complied in all respects with its payment
obligations to all employees of the Company and its Subsidiaries
in respect of all wages, salaries, commissions, bonuses,
benefits and other compensation due and payable to such
employees under any Company policy, practice,
-23-
agreement, plan, program or any statute or other law, except to
the extent that any noncompliance, either individually or in the
aggregate, has not had and would not reasonably be expected to
have a Material Adverse Effect; and
(vii) the Company has complied and is in compliance in all
material respects with its obligations pursuant to the Worker
Adjustment and Retraining Notification Act of 1988 (and any
similar state or local law) to the extent applicable, and all
material other employee notification and bargaining obligations
arising under any collective bargaining agreement or statute.
(s) Title to Intellectual Property. The Company and its Subsidiaries own
or possess valid and enforceable rights to use all material patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) (collectively, "Intellectual Property") used in the
conduct of their respective businesses other than Intellectual
Property, the failure to own or possess which has not had and would
not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect. All registrations with and applications to
governmental or regulatory authorities in respect of such Intellectual
Property are valid and in full force and effect, have not, except in
accordance with the ordinary course practices of the Company and its
Subsidiaries, lapsed, expired or been abandoned (subject to the
vulnerability of a registration for trademarks to cancellation for
lack of use), are not the subject of any opposition filed with the
United States Patent and Trademark Office or any other applicable
Intellectual Property registry. The consummation of the transaction
contemplated hereby and by the Plan will not result in the loss or
impairment of any rights to use such Intellectual Property or obligate
any of the Investors to pay any royalties or other amounts to any
third party in excess of the amounts that would have been payable by
Company and its Subsidiaries absent the consummation of this
transactions. The Company and its Subsidiaries have taken reasonable
security measures to protect the confidentiality and value of its and
their trade secrets (or other Intellectual Property for which the
value is dependent upon its confidentiality), and no such information,
has been misappropriated or the subject of an unauthorized disclosure,
except to the extent that such misappropriation or unauthorized
disclosure has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The
Company and its Subsidiaries have not received any notice that it is
or they are, in default (or with the giving of notice or lapse of time
or both, would be in default) under any contract relating to such
Intellectual Property. No Intellectual Property rights of the Company
or its Subsidiaries are being infringed by any other person, except to
the extent that such infringement has not had and would not have,
individually or in the aggregate, a Material Adverse Effect. The
conduct of the businesses of the Company and its Subsidiaries will
-24-
not conflict in any respect with any Intellectual Property rights of
others, and the Company and its Subsidiaries have not received any
notice of any claim of infringement or conflict with any such rights
of others which has had or would in any such case be reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect.
(t) Title to Real and Personal Property. The Company and its Subsidiaries
have good and marketable title to all real property owned by the
Company and its Subsidiaries and good title to all other tangible and
intangible properties (other than Intellectual Property covered by
Section 3(s)) owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (i) are described in the
consolidated balance sheets included in the Company SEC Documents
filed prior to the date hereof or (ii) individually and in the
aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect. All of the leases and subleases to which the
Company or its Subsidiaries are a party are in full force and effect
and enforceable by the Company or such Subsidiary in accordance with
their terms, and neither the Company nor any Subsidiary has received
any notice of any claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any Subsidiary under any of
the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such Subsidiary to the continued
possession of the leased or subleased property by under any such lease
or sublease, except where any such claim or failure to be enforceable
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(u) No Undisclosed Relationships. As of the date hereof, no relationship,
direct or indirect, exists between or among the Company or any of its
Subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its
Subsidiaries, on the other, that is required by the Exchange Act to be
described in the Company SEC Documents and that are not so described,
except for the transactions pursuant to this Agreement.
(v) Investment Company Act. As of the date hereof, the Company is not
and, after giving effect to the consummation of the Plan, including
the offering and sale of the Investor Shares and Shares upon exercise
of Rights, and the application of the proceeds thereof, will not be
required to register as an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
(w) Licenses and Permits. The Company and its Subsidiaries possess all
licenses, certificates, permits and other authorizations issued by,
and have made all declarations and filings with, the appropriate
federal, state, local or foreign
-25-
governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of
their respective businesses as described in the Company SEC Documents
except any such licenses, certificates, permits or authorization the
absence of which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as
described in the Company SEC Documents filed prior to the date hereof
and except as, individually and in the aggregate, has not had and
would not reasonably be expected to have a Material Adverse Effect,
neither the Company nor any of its Subsidiaries has received notice of
any revocation or modification of any such license, certificate,
permit or authorization or has any reason to believe that any such
license, certificate, permit or authorization will not be renewed in
the ordinary course.
(x) Compliance with Environmental Laws.
(i) The Company and its Subsidiaries have complied and are in
compliance with any and all applicable federal, state, local
and foreign laws, rules, regulations, decisions and orders,
including all civil and common law, relating to the protection
of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants
(collectively, "Environmental Laws");
(ii) the Company and its Subsidiaries have (a) received and are in
compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct
their respective businesses, (b) are not subject to any action
to revoke, terminate, cancel, limit, amend or appeal any such
permits, licenses or approvals, and (c) have paid all fees,
assessments or expenses due under any such permits, licenses or
approvals;
(iii) the Company and its Subsidiaries have not received notice from
any governmental authority of any actual or potential
liability for the investigation or remediation of any disposal
or release of hazardous or toxic substances or wastes,
pollutants or contaminants, or for any violation of
Environmental Laws;
(iv) there are no facts, circumstances or conditions relating to
the past or present business or operations of the Company, its
Subsidiaries or any of their predecessors (including the
disposal of any hazardous or toxic substances or wastes,
pollutants or contaminants), or to any real property currently
or formerly owned or operated by the Company, its Subsidiaries
or any of their predecessors, that would reasonably be expected
to give rise to any claim, proceeding or action, or to any
liability, under any Environmental Law;
-26-
(v) neither the Company nor any of its Subsidiaries has
agreed to assume or accept responsibility for, by contract or
otherwise, any liability of any other person under Environmental
Laws;
(vi) neither the Company nor any of its Subsidiaries is required
or reasonably expected to incur material capital expenditures
during the current and the subsequent five fiscal years to reach
or maintain compliance with existing or reasonably anticipated
Environmental Laws;
(vii) none of the transactions contemplated under this Agreement will
give rise to any obligations to obtain the consent of or provide
notice to any governmental or regulatory authority under any
Environmental Laws; and
(viii) none of the Company, nor any of its subsidiaries nor their
respective predecessors has manufactured, marketed, distributed,
or sold asbestos or any products containing asbestos.
except, in the case of each of subclauses (i) through (vi) and in subclause
(viii) above, as disclosed in the Company SEC Documents filed prior to the
date hereof, as have been, as of the date of this Agreement, adequately
provided for in accordance with GAAP in the financial statements of the
Company included in the Company SEC Documents filed prior to the date
hereof, or as, individually and in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect.
(y) Tax Matters. Except as described in the Company SEC Documents filed
with the Commission prior to the date hereof:
(i) The Company has timely filed or caused to be timely filed
(taking into account any applicable extension of time within
which to file) with the appropriate taxing authorities all
material tax returns, statements, forms and reports (including
elections, declarations, disclosures, schedules, estimates and
information Tax Returns) for Taxes ("Tax Returns") that are
required to be filed by, or with respect to, the Company and its
Subsidiaries on or prior to the Closing Date. The Tax Returns
accurately reflect all material liability for Taxes of the
Company and its Subsidiaries for the periods covered thereby;
(ii) all material Taxes and Tax liabilities due by or with respect
to the income, assets or operations of the Company and its
Subsidiaries for all taxable years or other taxable periods that
end on or before the Closing Date have been or will, prior to
the Closing, be timely paid in full or accrued and
-27-
fully provided for in accordance with GAAP on the financial
statements of the Company included in the Company SEC Documents;
(iii) neither the Company nor any of its Subsidiaries has received
any written notices from any taxing authority relating
to any material issue that has not been adequately provided for
in accordance with GAAP in the financial statements of the
Company included in the Company SEC Documents filed prior to the
date hereof;
(iv) all material Taxes which the Company and each or any of its
Subsidiaries is (or was) required by law to withhold or collect
in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third
party have been duly withheld or collected, and have been timely
paid to the proper authorities to the extent due and payable;
(v) neither the Company nor any of its subsidiaries has been
included in any "consolidated," "unitary" or "combined" Tax
Return provided for under the law of the United States, any
foreign jurisdiction or any state or locality with respect to
Taxes for any taxable period for which the statute of
limitations has not expired (other than a group of which the
Company and/or its subsidiaries are the only members);
(vi) except for the tax sharing allocations and similar agreements
entered into with GM at the time of the spin-off, there are no
tax sharing, allocation, indemnification or similar agreements
in effect as between the Company or any of its Subsidiaries or
any predecessor or affiliate thereof and any other party
(including any predecessors or affiliates thereof) under which
the Company or any of its Subsidiaries would be liable for any
material Taxes or other claims of any party;
(vii) the Company has not been a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code
at any time during the five-year period ending on the date
hereof; and
(viii) the Company is not a party to any agreement other than certain
Change In Control Agreements in the Company SEC Documents filed
prior to the date hereof that would require the Company or any
affiliate thereof to make any material payment that would
constitute an "excess parachute payment" for purposes of
Sections 280G and 4999 of the Code.
-28-
For purposes of this Agreement, "Taxes" shall mean all taxes, assessments,
charges, duties, fees, levies or other governmental charges, including,
without limitation, all federal, state, local, foreign and other income,
franchise, profits, gross receipts, capital gains, capital stock, transfer,
property, sales, use, value-added, occupation, property, excise, severance,
windfall profits, stamp, license, payroll, social security, withholding and
other taxes, assessments, charges, duties, fees, levies or other
governmental charges of any kind whatsoever (whether payable directly or by
withholding and whether or not requiring the filing of a Tax Return), all
estimated taxes, deficiency assessments, additions to tax, penalties and
interest and shall include any liability for such amounts as a result
either of being a member of a combined, consolidated, unitary or affiliated
group or of a contractual obligation to indemnify any person or other
entity.
(z) Compliance With ERISA.
(i) Correct and complete copies of the following documents, with
respect to all material domestic and foreign benefit and
compensation plans, programs, contracts, commitments, practices,
policies and arrangements, whether written or oral, that have
been established, maintained or contributed to (or with respect
to which an obligation to contribute has been undertaken) or
with respect to which any potential liability is borne by the
Company or any of its Subsidiaries, including, but not limited
to, "employee benefit plans" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and deferred compensation, stock option,
stock purchase, restricted stock, stock appreciation rights,
stock based, incentive and bonus plans (the "Company Plans"),
have been delivered or made available to the Investors by the
Company, to the extent applicable: (i) all material Company Plan
documents, together with all amendments and attachments thereto
(including, in the case of any Company Plan not set forth in
writing, a written description thereof); (ii) all material trust
documents, declarations of trust and other documents
establishing other funding arrangements, and all amendments
thereto and the latest financial statements thereof; (iii) the
most recent annual report on IRS Form 5500 for each of the past
three years and all schedules thereto and the most recent
actuarial report; (iv) the most recent IRS determination letter;
(v) summary plan descriptions and summaries of material
modifications; and (vi) the two most recently prepared actuarial
valuation reports.
(ii) Except as has not had and would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect, or except as described in the Company SEC Documents
filed prior to the date hereof: (A) each Company Plan, other
than any "multiemployer plans" within the meaning of Section
3(37) of ERISA ("Multiemployer Plans"), is in compliance with
ERISA, the Internal Revenue Code of 1986, as amended
-29-
(the "Code") and other applicable laws; (B) each Company Plan
that is intended to be a qualified plan under Section 401(a) of
the Code has received a favorable determination letter from the
IRS covering all Tax law changes prior to the Economic Growth
and Tax Relief Reconciliation Act of 2001 or has applied to the
IRS for such favorable determination within the applicable
remedial amendment period under Section 401(b) of the Code, and
the Company is not aware of any circumstances likely to result
in the loss of the qualification of such Company Plan under
Section 401(a) of the Code; (C) no liability under Subtitle C or
D of Title IV of ERISA has been or is reasonably expected to be
incurred by the Company or any of its Subsidiaries with respect
to any ongoing, frozen or terminated "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA
("Single-Employer Plan") currently maintained or contributed to
(or with respect to which an obligation to contribute has been
undertaken), or the Single-Employer Plan of any entity which is
considered one employer with the Company under Section 4001 of
ERISA or Section 414 of the Code (a "Company ERISA Affiliate");
(D) the Company and its Subsidiaries have not incurred any
withdrawal liability (including any contingent or secondary
withdrawal liability) with respect to a Multiemployer Plan under
Subtitle E of Title IV of ERISA (regardless of whether based on
contributions of a Company ERISA Affiliate) that has not been
satisfied in full and no condition or circumstance has existed
that presents a risk of the occurrence of any withdrawal from or
the partition, termination, reorganization or insolvency of any
such Multiemployer Plan; (E) no notice of a "reportable event,"
within the meaning of Section 4043 of ERISA has occurred or is
expected to occur for any Company Plan or by any Company ERISA
Affiliate; (F) all contributions required to be made under the
terms of any Company Plan have been timely made or have been
reflected in the financial statements of the Company included in
the Company SEC Reports filed prior to the date hereof; and (G)
there has been no amendment to, announcement by the Company or
any of its Subsidiaries relating to, or change in employee
participation or coverage under, any Company Plan which would
increase the expense of maintaining such plan above the level of
the expense incurred therefor for the most recent fiscal year.
(iii) Except as disclosed in the Company SEC Documents filed prior to
the date hereof: (A) neither any Company Plan nor any
Single-Employer Plan of a Company ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA
and neither the Company nor any of its Subsidiaries nor any
Company ERISA Affiliate has applied for or obtained a funding
waiver; (B) the Company expects that required minimum
contributions to any Company Plan under Section 412 of the Code
will not be materially increased by application of Section
412(l) of the Code; (C) neither the Company nor any of its
Subsidiaries has provided, or is required to
-30-
provide, security to any Company Plan or to any Single-Employer
Plan of a Company ERISA Affiliate pursuant to Section 401(a)(29)
of the Code; and (D) neither the execution of this Agreement,
stockholder approval of this Agreement nor the consummation of
the transactions contemplated hereby will limit or restrict the
right of the Company to merge, amend or terminate any of the
Company Plans.
(aa) Internal Control Over Financial Reporting. Except as set forth in the
Company SEC Documents filed prior to the date hereof, the Company and
its Subsidiaries (i) make and keep books and records that accurately
and fairly represent the Company's transactions, and (ii) maintain and
have maintained effective internal control over financial reporting as
defined in Rule 13a-15 under the Exchange Act and a system of internal
accounting controls sufficient to provide reasonable assurance that:
(A) transactions are executed in accordance with management's general
or specific authorizations; (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability; (C) access to assets is permitted only in accordance
with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has disclosed, based on the
most recent evaluation of its chief executive officer and its chief
financial officer prior to the date hereof, to the Company's auditors
and the audit committee of the Company's board of directors (i) any
significant deficiencies in the design or operation of its internal
controls over financial reporting that are reasonably likely to
adversely affect the Company's ability to record, process, summarize
and report financial information and has identified for the Company's
auditors and the audit committee of the Company's board of directors
any material weaknesses in internal control over financial reporting
and (ii) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's
internal control over financial reporting.
(bb) Disclosure Controls and Procedures. Except as disclosed in the Company
SEC Documents filed prior to the date hereof, the Company maintains
disclosure controls and procedures required by Rule 13a-15 or 15d-15
under the Exchange Act. Such disclosure controls and procedures are
effective to ensure that information required to be disclosed by the
Company is recorded and reported on a timely basis to the individuals
responsible for the preparation of the Company's filings with the
Commission and other public disclosure documents.
(cc) Insurance. The Company and its Subsidiaries have insurance covering
their respective properties, operations, personnel and businesses,
including business interruption insurance, which insurance is in
amounts and insures against such losses and risks as are customary for
companies whose businesses are similar to
-31-
the Company and its Subsidiaries. Neither the Company nor any of its
Subsidiaries has (i) received written notice from any insurer or agent
of such insurer that capital improvements or other expenditures are
required or necessary to be made to continue such insurance or (ii)
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage at reasonable cost from similar insurers as may be
necessary to continue its business.
(dd) No Unlawful Payments. Neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any director, officer, agent,
employee or other person associated with or acting on behalf of the
Company or any of its Subsidiaries has: (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977; or (iv) made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment in each case other than clause
(iii) that has been or would reasonably be expected to be,
individually or in the aggregate, material to the Company and its
Subsidiaries, taken as a whole.
(ee) Compliance with Money Laundering Laws. The Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial recordkeeping and reporting requirements of
the Bank Secrecy Act, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the "Money
Laundering Laws") and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any of its Subsidiaries with respect to Money
Laundering Laws is pending or, to the knowledge of the Company,
threatened.
(ff) Compliance with Sanctions Laws. Neither the Company nor any of
its Subsidiaries nor, to the knowledge of the Company, any director,
officer, agent, employee or affiliate of the Company or any of its
Subsidiaries is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury
Department ("OFAC"). The Company will not directly or indirectly use
the proceeds of the Rights Offering or the sale of the Investor
Shares, or lend, contribute or otherwise make available such proceeds
to any Subsidiary, joint venture partner or other person or entity,
for the purpose of financing the activities of any person that, to the
Company's knowledge, is currently subject to any U.S. sanctions
administered by OFAC.
-32-
(gg) No Restrictions on Subsidiaries. Except as described in the Company
SEC Documents filed prior to the date hereof or otherwise set forth in
the record of the Chapter 11 Cases on or prior to the date hereof, and
subject to the Bankruptcy Code, no Subsidiary of the Company is
currently prohibited, directly or indirectly, under any agreement or
other instrument to which it is a party or is subject, from paying any
dividends to the Company, from making any other distribution on such
Subsidiary's capital stock, from repaying to the Company any loans or
advances to such Subsidiary from the Company or from transferring any
of such Subsidiary's properties or assets to the Company or any other
Subsidiary of the Company.
(hh) No Broker's Fees. Neither the Company nor any of its Subsidiaries is a
party to any contract, agreement or understanding with any person
(other than this Agreement) that would give rise to a valid claim
against the Investors for a brokerage commission, finder's fee or like
payment in connection with the Rights Offering or the sale of the
Investor Shares.
(ii) No Registration Rights. Except as provided for pursuant to the
registration rights agreement contemplated by Section 8(c)(iv), no
person has the right to require the Company or any of its Subsidiaries
to register any securities for sale under the Securities Act by reason
of the filing of the Rights Offering Registration Statement with the
Commission or in connection with Rights Offering or the sale of the
Investor Shares.
(jj) No Stabilization. The Company has not taken and will not take,
directly or indirectly, any action designed to or that would
reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Shares.
(kk) Margin Rules. Neither the issuance, sale and delivery of the Rights or
the Shares in connection with Rights Offering or the sale of the
Investor Shares nor the application of the proceeds thereof by the
Company as described and to be described in the Rights Offering
Registration Statement and the Rights Offering Prospectus will violate
Regulation T, U or X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board of Governors.
(ll) Forward-Looking Statements. No forward-looking statement (within
the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act) contained in the Company SEC Documents has been made
or reaffirmed, and in the case of the Rights Offering Registration
Statement and the Rights Offering Prospectus, will be made or
reaffirmed, without a reasonable basis or has been disclosed other
than in good faith.
-33-
(mm) Statistical and Market Data. Nothing has come to the attention of
the Company that has caused the Company to believe that the
statistical and market-related data included and to be included in the
Disclosure Statement, Rights Offering Registration Statement and the
Rights Offering Prospectus is not based on or derived from sources
that are reliable and accurate in all material respects.
(nn) Rights Agreement. The Company and the Board of Directors of the
Company has taken all necessary action to render the Existing
Shareholder Rights Plan inapplicable to the sale and issuance of the
Investor Shares and the other transactions contemplated by the
Original Agreement, this Agreement, the Original PSA, the Plan Terms,
the Plan and the Transaction Agreements (including any transfer of
Investor Shares to any Related Purchaser or Ultimate Purchaser).
(oo) Takeover Statutes; Charter. The Company and the Board of Directors
of the Company has taken all such action necessary to render the
restrictions contained in Section 203 of the General Corporation Law
of the State of Delaware (the "DGCL") and Article IX of the Company's
Certificate of Incorporation inapplicable to the Investors and the
sale and issuance of the Investor Shares and the other transactions
contemplated by the Original Agreement, this Agreement, the Original
PSA, the Plan Terms, the Plan and the Transaction Agreements
(including any transfer of Investor Shares to any Related Purchaser or
Ultimate Purchaser). Except for Section 203 of the DGCL (which has
been rendered inapplicable), no other "fair price," "moratorium,"
"control share acquisition", "business combination" or other similar
anti-takeover statute or regulation (a "Takeover Statute") is
applicable to the Company, the Common Stock, the Shares, the sale and
issuance of the Investor Shares or the other transactions contemplated
by the Original Agreement, this Agreement, the Original PSA, the Plan
Terms, the Plan and the Transaction Agreements. Other than Article IX
of the Company's Certificate of Incorporation, which has been rendered
inapplicable, no anti-takeover provision in the Company's certificate
of incorporation or by-laws is applicable to the Company, the Common
Stock, the Shares, the sale and issuance of the Investor Shares or the
other transactions contemplated by the Preferred Term Sheet, the Plan
or the Transaction Agreements.
(pp) UAW MOU. On June 22, 2007, the Company entered into a Memorandum of
Understanding (the "UAW MOU") with the International Union, United
Automobile, Aerospace and Agricultural Implement Workers of America
("UAW") and GM. The UAW MOU has been ratified by the membership of the
UAW and a true and complete copy thereof has been made available to
XXXX.
4. Representations and Warranties of the Investors. Each Investor represents
and warrants as to itself only, and agrees with the Company, severally and
not jointly, as set forth
-34-
below. Each such representation, warranty and agreement is made as of the
date hereof and as of the Closing Date.
(a) Incorporation. The Investor has been duly organized and, if
applicable, is validly existing as a corporation, limited partnership
or limited liability company, in good standing under the laws of the
jurisdiction of its incorporation or organization.
(b) Corporate Power and Authority. The Investor has the requisite
corporate, limited partnership or limited liability company power and
authority to enter into, execute and deliver this Agreement and to
perform its obligations hereunder and has taken all necessary
corporate, limited partnership or limited liability company action
required for the due authorization, execution, delivery and
performance by it of this Agreement.
(c) Execution and Delivery. This Agreement has been duly and validly
executed and delivered by the Investor and constitutes its valid and
binding obligation, enforceable against it in accordance with its
terms.
(d) No Registration. The Investor understands that the Investor Shares
have not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities
Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such
Investor's representations as expressed herein or otherwise made
pursuant hereto.
(e) Investment Intent. The Investor is acquiring the Investor Shares
for investment for its own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution
thereof not in compliance with applicable securities laws, and such
Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same, except in
compliance with applicable securities laws.
(f) Securities Laws Compliance. The Investor Shares will not be offered
for sale, sold or otherwise transferred by the Investor except
pursuant to a registration statement or in a transaction exempt from,
or not subject to, registration under the Securities Act and any
applicable state securities laws and any sale or placement of Investor
Shares pursuant to Sections 2(a), 2(b) or 2(k) will not affect the
validity of the private placement to the Investors under this
Agreement or result in the private placement being integrated with the
Rights Offering. The Investors have not and will not solicit offers
for, or offer to sell, the Investor Shares by means of any general
solicitation or general advertising within the meaning of Rule 502(c)
under Regulation D under the Securities Act or in any manner
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involving a public offering within the meaning of the Securities Act
(other than pursuant to the Resale Registration Statement).
(g) Sophistication. The Investor has such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of its investment in the Investor Shares being
acquired hereunder. The Investor is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act. The Investor
understands and is able to bear any economic risks associated with
such investment (including, without limitation, the necessity of
holding the Investor Shares for an indefinite period of time).
(h) No Conflict. The execution and delivery by the Investor of each of
the Transaction Agreements to which it is a party and the compliance
by the Investor with all of the provisions hereof and thereof and the
Preferred Term Sheet and the Plan Terms and the consummation of the
transactions contemplated herein and therein (i) will not conflict
with, or result in a breach or violation of, any of the terms or
provisions of, or constitute a default under (with or without notice
or lapse of time, or both), or result, in the acceleration of, or the
creation of any lien under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Investor
is a party or by which the Investor is bound or to which any of the
property or assets of the Investor or any of its Subsidiaries is
subject, (ii) will not result in any violation of the provisions of
the certificate of incorporation or bylaws or similar governance
documents of the Investor, and (iii) will not result in any material
violation of, or any termination or material impairment of any rights
under, any statute or any license, authorization, injunction,
judgment, order, decree, rule or regulation of any court or
governmental agency or body having jurisdiction over the Investor or
any of their properties, except in any such case described in
subclause (i) for any conflict, breach, violation, default,
acceleration or lien which has not and would not reasonably be
expected, individually or in the aggregate, to prohibit, materially
delay or materially and adversely impact the Investor's performance of
its obligations under this Agreement.
(i) Consents and Approvals. No consent, approval, authorization,
order, registration or qualification of or with any court or
governmental agency or body having jurisdiction over the Investor or
any of its properties is required to be obtained or made by the
Investor for the purchase of the Investor Shares hereunder and the
execution and delivery by the Investor of this Agreement or the
Transaction Agreements to which it is a party and performance of and
compliance by the Investor with all of the provisions hereof and
thereof and the Preferred Term Sheet and the Plan Terms and the
consummation of the transactions contemplated herein and therein,
except filings with respect to and the expiration or termination of
the waiting period under the HSR Act or any comparable laws or
regulations in any foreign jurisdiction relating to the purchase of
Investor Shares and except for
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any consent, approval, authorization, order, registration or
qualification which, if not made or obtained, has not and would not
reasonably be expected, individually or in the aggregate, to prohibit,
materially delay or materially and adversely impact the Investor's
performance of its obligations under this Agreement.
(j) Arm's Length. The Investor acknowledges and agrees that the Company
is acting solely in the capacity of an arm's length contractual
counterparty to the Investor with respect to the transactions
contemplated hereby (including in connection with determining the
terms of the Rights Offering). Additionally, the Investor is not
relying on the Company for any legal, tax, investment, accounting or
regulatory advice, except as specifically set forth in this Agreement.
The Investor shall consult with its own advisors concerning such
matters and shall be responsible for making its own independent
investigation and appraisal of the transactions contemplated hereby.
(k) No Violation or Default; Compliance with Laws. The Investor is not in
default, and no event has occurred that, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Investor is a party or by which the
Investor is bound or to which any of the property or assets of the
Investor is subject, individually or in the aggregate, that would
prohibit, materially delay or materially and adversely impact the
Investor's performance of its obligations under this Agreement. The
Investor is not and has not been at any time since January 1, 2002, in
violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory
authority, except for any such violation that has not and would not
reasonably be expected, individually or in the aggregate, to prohibit,
materially delay or materially and adversely impact the Investor's
performance of its obligations under this Agreement.
(l) Legal Proceedings. There are no actions, suits or proceedings to
which the Investor is a party or to which any property of the Investor
is the subject that, individually or in the aggregate, has or, if
determined adversely to the Investor, would reasonably be expected to
prohibit, materially delay or materially and adversely impact the
Investor's performance of its obligations under this Agreement and no
such actions, suits or proceedings are threatened or, to the knowledge
of the Investor, contemplated and, to the knowledge of the Investor,
no investigations are threatened by any governmental or regulatory
authority or threatened by others that has or would reasonably be
expected, individually or in the aggregate, to prohibit, materially
delay or materially and adversely impact the Investor's performance of
its obligations under this Agreement.
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(m) No Broker's Fees. The Investor is not a party to any contract,
agreement or understanding with any person (other than this Agreement)
that would give rise to a valid claim against the Company, other than
pursuant to Section 2(j), for a brokerage commission, finder's fee or
like payment in connection with the Rights Offering or the sale of the
Investor Shares.
(n) No Undisclosed Written Agreements. Other than the (i) Additional
Investor Agreement; (ii) Agreement Among Initial Investors, by and
among XXXX, Harbinger, UBS and Xxxxxxx; and (iii) that certain Letter
Agreement, by and among XXXX, Harbinger, UBS, Xxxxxxx, Pardus and GS
(substantially in the form delivered to the Company on July 17, 2007),
the Investor has not entered into any material written agreements
between or among the Investors directly relating to such Investor's
Investor Shares or the performance of the Transaction Agreements, and
any such written agreement hereafter entered into will be disclosed
promptly to the Company.
(o) Available Funds. To the extent the Investor is XXXX, Harbinger or
Pardus, the Investor has provided the Company with a true and complete
copy of an executed commitment letter from the parties signatory
thereto to provide equity financing to such Investor (the "Equity
Commitment Letter"). Each such Investor represents as to itself that
its Equity Commitment Letter is in full force and effect and is a
valid and binding obligation of the parties thereto enforceable in
accordance with its terms except as the enforcement thereof is subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors rights and to general equitable principles. The
Equity Commitment Letters are not subject to any condition or
contingency with respect to financing that is not set forth in such
letter other than the terms and conditions of this Agreement.
5. Additional Covenants of the Company. The Company agrees with each of the
Investors as set forth below.
(a) Approval Motion and Approval Order. The Company agrees that it
shall use reasonable best efforts to cause the Approval Order to
become a Final Approval Order as soon as practicable following the
filing of the Approval Motion.
(b) Plan and Disclosure Statement. The Company shall authorize, execute,
file with the Bankruptcy Court and seek confirmation of, a Plan (and a
related disclosure statement (the "Disclosure Statement")) (i) the
terms of which are consistent with this Agreement, the Preferred Term
Sheet, the Plan Terms and the GM Settlement, (ii) that provides for
the release and exculpation of each Investor, its Affiliates,
shareholders, partners, directors, officers, employees and advisors
from liability for participation in the transactions contemplated by
the Original Agreement, this Agreement, the Preferred Term Sheet, the
Original PSA, the Plan
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Terms and the Plan to the fullest extent permitted under applicable
law (provided, that such release and exculpation shall not prohibit or
impede the Company's ability to assert defenses or counterclaims in
connection with or relating to the Original Agreement or the Original
PSA) and (iii) that has conditions to confirmation and the Effective
Date of the Plan (and to what extent any such conditions can be waived
and by whom) that are consistent with this Agreement, the Preferred
Term Sheet, the Plan Terms and the GM Settlement. The Company will (i)
provide to XXXX and its counsel a copy of the Plan and the Disclosure
Statement, and any amendments thereto, and a reasonable opportunity to
review and comment on such documents prior to such documents being
filed with the Bankruptcy Court, and (ii) duly consider in good faith
any comments consistent with this Agreement, the Preferred Term Sheet
and the Plan Terms, and any other reasonable comments of XXXX and its
counsel, and shall not reject such comments without first discussing
the reasons therefor with XXXX or its counsel and giving due
consideration to the views of XXXX and its counsel. In addition, the
Company will (i) provide to XXXX and its counsel a copy of the
Confirmation Order and a reasonable opportunity to review and comment
on such order prior to such order being filed with the Bankruptcy
Court and (ii) duly consider in good faith any comments consistent
with this Agreement, the Preferred Term Sheet and the Plan Terms and
any other reasonable comments of each of XXXX and its counsel, into
such Confirmation Order, and shall not reject such comments without
first discussing the reasons therefor with XXXX or its counsel and
giving due consideration to the views of XXXX and its counsel. As soon
as practicable following the entry of an order by the Bankruptcy Court
approving the Disclosure Statement (the "Disclosure Statement Approval
Date") and the effectiveness under the Securities Act of the Rights
Offering Registration Statement, the Company shall distribute ballot
form(s) in connection with the solicitation of acceptance of the Plan.
(c) Rights Offering. The Company shall use its reasonable best efforts
to effectuate the Rights Offering as provided herein.
(d) Securities Laws; Rights Offering Registration Statement. The Company
shall take all action as may be necessary or advisable so that the
Rights Offering and the issuance and sale of the Investor Shares and
the other transactions contemplated by this Agreement will be effected
in accordance with the Securities Act and the Exchange Act and any
state or foreign securities or Blue Sky laws. The Rights Offering
Registration Statement was filed with the Commission on March 7, 2007.
As promptly as practicable following the date the GM Settlement is
agreed, the Company shall file an amended Rights Offering Registration
Statement with the Commission. The Company shall: (i) provide XXXX
with a reasonable opportunity to review the Rights Offering
Registration Statement, and any amendment or supplement thereto,
before any filing with the Commission and shall duly consider in good
faith any comments consistent with this Agreement, the Preferred Term
Sheet and the Plan Terms, and any other reasonable comments
-39-
of XXXX and its counsel, and shall not reject such comments without
first discussing the reasons therefor with XXXX or its counsel and
giving due consideration to the views of XXXX and its counsel; (ii)
advise XXXX, promptly after it receives notice thereof, of the time
when the Rights Offering Registration Statement has been filed or has
become effective or any Rights Offering Prospectus or Rights Offering
Prospectus supplement has been filed and shall xxxxxxx XXXX with
copies thereof; (iii) advise XXXX promptly after it receives notice of
any comments or inquiries by the Commission (and furnish the Investors
with copies of any correspondence related thereto), of the issuance by
the Commission of any stop order or of any order preventing or
suspending the use of the Rights Offering Prospectus or Issuer Free
Writing Prospectus, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the
amending or supplementing of the Rights Offering Registration
Statement or a Rights Offering Prospectus or for additional
information, and in each such case, provide XXXX with a reasonable
opportunity to review any such comments, inquiries, request or other
communication from the Commission and to review any amendment or
supplement to the Rights Offering Registration Statement or the Rights
Offering Prospectus before any filing with the Commission, and to duly
consider in good faith any comments consistent with this Agreement,
the Preferred Term Sheet and the Plan Terms, and any other reasonable
comments of XXXX and its counsel, and not reject such comments without
first discussing the reasons therefor with XXXX or its counsel and
giving due consideration to the views of XXXX and its counsel; and
(iv) in the event of the issuance of any stop order or of any order
preventing or suspending the use of a Rights Offering Prospectus or
any Issuer Free Writing Prospectus or suspending any such
qualification, use promptly its reasonable best efforts to obtain its
withdrawal.
(e) Listing. The Company shall use its commercially reasonable efforts
to list and maintain the listing of the New Common Stock on the New
York Stock Exchange or, if approved by XXXX, the Nasdaq Global Select
Market.
(f) Rule 158. The Company will generally make available to the
Company's security holders as soon as practicable an earnings
statement of the Company covering a twelve-month period beginning
after the date of this Agreement, which shall satisfy the provisions
of Section 11(a) of the Securities Act.
(g) Notification. The Company shall notify, or cause the Subscription
Agent to notify the Investors, on each Friday during the Rights
Exercise Period and on each Business Day during the five Business Days
prior to the Expiration Time (and any extensions thereto), or more
frequently if reasonably requested by any of the Investors, of the
aggregate number of Rights known by the Company or the Subscription
Agent to have been exercised pursuant to the Rights Offering as of
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the close of business on the preceding Business Day or the most recent
practicable time before such request, as the case may be.
(h) Unsubscribed Shares. The Company shall determine the number of
Unsubscribed Shares, if any, in good faith, shall provide a Purchase
Notice or a Satisfaction Notice that accurately reflects the number of
Unsubscribed Shares as so determined and shall provide to XXXX a
certification by the Subscription Agent of the Unsubscribed Shares or,
if such certification is not available, such written backup to the
determination of the Unsubscribed Shares as XXXX may reasonably
request.
(i) HSR. The Company shall use its reasonable best efforts to promptly
prepare and file all necessary documentation and to effect all
applications and seek all approvals or consents that are necessary or
advisable under the HSR Act and any comparable laws or regulations in
any foreign jurisdiction so that any applicable waiting period shall
have expired or been terminated thereunder with respect to the
purchase of Investor Shares hereunder, and shall not take any action
that is intended or reasonably likely to materially impede or delay
the ability of the parties to obtain any necessary approvals required
for the transactions contemplated by this Agreement. The Company shall
file, to the extent that it is required to file, the Notification and
Report Form required under the HSR Act with respect to the
transactions contemplated by this Agreement with the Antitrust
Division of the United States Department of Justice and the United
States Federal Trade Commission no later than the fifteenth day
following the Disclosure Statement Approval Date.
(j) Clear Market. For a period of 180 days after the Closing Date (the
"Restricted Period"), the Company will not (i) offer, pledge, announce
the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of capital stock of the
Company or any securities convertible into or exercisable or
exchangeable for capital stock of the Company or (ii) enter into any
swap or other agreement that transfers, in whole or in part, any of
the economic consequences of ownership of the capital stock of the
Company, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of capital stock of the Company or
such other securities, in cash or otherwise, without the prior written
consent of XXXX, except for (A) Rights and New Common Stock issuable
upon exercise of Rights, (B) shares of New Common Stock issued upon
the exercise of any stock options outstanding as of the Effective Date
and (C) the issuance of New Common Stock and other equity interests as
set forth in the Preferred Term Sheet, the Plan Terms and pursuant to
the Plan. Notwithstanding the foregoing, if (i) during the last 17
days of the Restricted Period, the Company issues an earnings release
or material news or a material event relating to the Company occurs or
(ii)
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prior to the expiration of the Restricted Period, the Company
announces that it will release earnings results during the 16-day
period beginning on the last day of the Restricted Period, the
restrictions imposed by this Agreement shall continue to apply until
the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material
event.
(k) Use of Proceeds. The Company will apply the net proceeds from the sale
of the Rights and the Investor Shares as provided in the Rights
Offering Prospectus.
(l) No Stabilization. The Company will not take, directly or indirectly,
any action designed to or that would reasonably be expected to cause
or result in any stabilization or manipulation of the price of the
Shares.
(m) Reports. So long as any Investor holds Shares, the Company will
furnish to such Investor, as soon as they are available, copies of all
reports or other communications (financial or other) furnished to
holders of the Rights or the Shares, as the case may be, and copies of
any reports and financial statements furnished to or filed with the
Commission or any national securities exchange or automatic quotation
system.
(n) Conduct of Business. During the period from the date of this Agreement
to the Closing Date (except as otherwise expressly provided by the
terms of this Agreement (including the Disclosure Letter accepted by
XXXX in accordance with Section 5(s) of this Agreement), the Plan
Terms, the Plan or any other order of the Bankruptcy Court entered on
or prior to the date hereof in the Chapter 11 Cases), the Company and
its Subsidiaries shall carry on their businesses in the ordinary
course (subject to any actions which are consistent with the Draft
Business Plan or the Business Plan approved by XXXX in accordance with
Section 9(a)(xxviii) of this Agreement) and, to the extent consistent
therewith, use their commercially reasonable efforts to preserve
intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with the Company or
its Subsidiaries. Without limiting the generality of the foregoing,
except as set forth in the Disclosure Letter approved by XXXX in
accordance with Section 5(s) of this Agreement, the Company and its
Subsidiaries shall carry on their businesses in all material respects
in accordance with the Draft Business Plan (and, if amended in a
manner that satisfies the condition with respect to amendments to the
Draft Business Plan set forth in Section 9(a)(xxviii), as so amended)
prior to the satisfaction of the condition with respect to the
Business Plan in accordance with Section 9(a)(xxviii) of this
Agreement and at all times after the satisfaction of the condition
with respect to the Business Plan set forth in Section 9(a)(xxviii),
the Business Plan (and, if amended in a manner that satisfies the
condition with respect to the Business Plan set forth in Section
9(a)(xxviii), as so amended) and
-42
shall not enter into any transaction that, at all times prior to the
satisfaction of the condition with respect to the Business Plan set
forth in Section 9(a)(xxviii), would be inconsistent with the Draft
Business Plan (and, if amended in a manner that satisfies the
condition with respect to amendments to the Draft Business Plan set
forth in Section 9(a)(xxviii), as so amended) or at all times after
the satisfaction of the condition with respect to the Business Plan
set forth in Section 9(a)(xxviii), the Business Plan (and, if amended
in a manner that satisfies the condition with respect to the Business
Plan set forth in Section 9(a)(xxviii), as so amended) and shall use
its commercially reasonable efforts to effect such Draft Business Plan
and the Business Plan. Without limiting the generality of the
foregoing, and except as otherwise expressly provided or permitted by
this Agreement (including the Disclosure Letter accepted by XXXX in
accordance with Section 5(s) of this Agreement), the Plan Terms, the
Plan or any other order of the Bankruptcy Court entered as of the date
of the Original Agreement in these Chapter 11 Cases, prior to the
Closing Date, the Company shall not, and shall cause its Subsidiaries
not to, take any of the following actions without the prior written
consent of XXXX, which consent shall not be unreasonably withheld,
conditioned or delayed:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (B) split,
combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock or (C)
purchase, redeem or otherwise acquire, except in connection with
the Plan, any shares of capital stock of the Company or any other
securities thereof or any rights, warrants or options to acquire
any such shares or other securities;
(ii) except for intercompany transactions and any financing activities
which are consistent with the Company's existing financing,
issue, deliver, grant, sell, pledge, dispose of or otherwise
encumber any of its capital stock or any securities convertible
into, or any rights, warrants or options to acquire, any such
capital stock at less than fair market value;
(iii) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the stock, or other
ownership interests in, or substantial portion of assets of, or
by any other manner, any business or any corporation,
partnership, association, joint venture, limited liability
company or other entity or division thereof except in the
ordinary course of business;
(iv) sell, lease, mortgage, pledge, xxxxx x xxxx, mortgage, pledge,
security interest, charge, claim or other encumbrance of any kind
or nature on or otherwise encumber or dispose of any of its
properties or assets, except (A) in the ordinary course of
business consistent with past practice and (B)
-43-
other transactions involving not in excess of $100 million in any
12 month period;
(v) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another individual or entity, issue or sell
any debt securities or warrants or other rights to acquire any
debt securities of the Company, guarantee any debt securities of
another individual or entity, enter into any "keep well" or other
agreement to maintain any financial statement condition of
another person (other than a Subsidiary) or enter into any
arrangement having the economic effect of any of the foregoing in
excess of $100 million in any 12 month period, except for (x)
working capital borrowings and increases in letters of credit
necessary in the ordinary course of business under the Company's
existing or any amended or replacement revolving credit
facilities, and (y) indebtedness solely between the Company and
its Subsidiaries or between such Subsidiaries or (B) except for
transactions between the Company and any of its Subsidiaries or
between such Subsidiaries, make any loans, advances or capital
contributions to, or investments in, any other individual or
entity, other than customary advances of business and travel
expenses to employees of the Company in the ordinary course of
business consistent with past practice;
(vi) enter into any new, or amend or supplement any existing,
collective bargaining agreement, which is inconsistent with the
Transformation Plan or the Business Plan satisfying the condition
with respect to the Business Plan set forth in Section
9(a)(xxviii) of this Agreement , this Agreement, the Plan Terms,
the Plan and the GM Settlement; or
(vii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(o) Actions Regarding Conditions. During the period from the date of this
Agreement to the Closing Date, the Company shall not take any action
or omit to take any action that would reasonably be expected to result
in the conditions to the Agreement set forth in Section 9 not being
satisfied.
(p) GM Settlement. The Company shall use its reasonable best efforts to
agree on, prior to the date of filing by the Company with the
Bankruptcy Court of a Disclosure Statement (the "Disclosure Statement
Filing Date"), a settlement agreement (the "GM Settlement") between
the Company and GM that is consistent with this Agreement, the Plan
Terms, the Plan and the UAW MOU. The Company will (i) provide to XXXX
and its counsel a copy of the GM Settlement and a reasonable
opportunity to review and comment on such documents prior to such
documents being executed or delivered or filed with the
-00-
Xxxxxxxxxx Xxxxx, and (ii) duly consider in good faith any comments of
XXXX and its counsel consistent with this Agreement, the Preferred
Term Sheet and the Plan Terms and any other reasonable comments of
each of XXXX and its counsel, and shall not reject such comments
without first discussing the reasons therefor with XXXX or its counsel
and giving due consideration to the views of XXXX and its counsel. The
Company shall not enter into any other agreement with GM that (i) is
materially inconsistent with this Agreement, the Plan Terms and the
Plan, (ii) is outside the ordinary course of business or (iii) the
terms of which would have a material impact on the Investors' proposed
investment in the Company. The Company has not entered into any
material written agreements between or among the Company or any of its
Subsidiaries and GM or any of its Subsidiaries directly relating to
the Plan or the GM Settlement or the performance of the Transaction
Agreements, and any such written agreements hereafter entered into
will be disclosed promptly to XXXX.
(q) Access to Information. Subject to applicable law and existing
confidentiality agreements between the parties, upon reasonable
notice, the Company shall (and shall cause its Subsidiaries to) afford
the Investors (and any prospective Ultimate Purchaser that executes a
confidentiality agreement reasonably acceptable to the Company, which
agreement will provide that, unless otherwise determined by the
Company, all contact between such Ultimate Purchaser and the Company
shall be through XXXX) and their directors, officers, employees,
investment bankers, attorneys, accountants and other advisors or
representatives, reasonable access, throughout the period prior to the
Closing Date, to its employees, properties, books, contracts and
records and, during such period, the Company shall (and shall cause
its Subsidiaries to) furnish promptly to the Investors all information
concerning its business, properties and personnel as may reasonably be
requested by any Investor; provided, that the foregoing shall not
require the Company (i) to permit any inspection, or to disclose any
information, that in the reasonable judgment of the Company would
cause the Company to violate any of its obligations with respect to
confidentiality to a third party if the Company shall have used
commercially reasonable efforts to obtain the consent of such third
party to such inspection or disclosure, (ii) to disclose any
privileged information of the Company or any of its Subsidiaries or
(iii) to violate any laws; provided, further, that the Company shall
deliver to the Investors a schedule setting in forth in reasonable
detail a description of any information not provided to the Investors
pursuant to subclauses (i) through (iii) above. All requests for
information and access made pursuant to this Section 5(q) shall be
directed to the Chief Restructuring Officer or such other person as
may be designated by such person.
(r) Financial Information. For each month, beginning June 2007 until the
Closing Date, the Company shall provide to each Investor an unaudited
consolidated balance sheet and related unaudited consolidated
statements of operations, consolidated statements of stockholders'
equity and consolidated statements of cash flows for the month then
ended within 30 days of the end of such month (the
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"Monthly Financial Statements"). The Monthly Financial Statements,
except as indicated therein, shall be prepared in accordance with the
Company's normal financial reporting practices. The Monthly Financial
Statements shall fairly present in all material respects the financial
position, results of operations and cash flows of the Company and its
Subsidiaries as of the dates indicated and for the periods specified.
(s) Business Plan and Disclosure Letter. The Company shall use its
commercially reasonable efforts to provide to XXXX as soon as
practicable a final five-year business plan approved by the Company's
board of directors and prepared in good faith and based on reasonable
assumptions, which business plan shall provide for the amount of
EBITDA for each of fiscal years 2007 through 2011 (the "Business
Plan"); provided, that (i) the Company shall not be required to
deliver a Business Plan that does not reflect a final and binding GM
Settlement and (ii) XXXX shall not be required to accept the Business
Plan unless it is reasonably satisfied that such Business Plan does
not amend or deviate from the Draft Business Plan in any manner that
would have a material impact on the Investors' proposed investment in
the Company. The Company shall deliver a Disclosure Letter to XXXX in
no event later than ten (10) Business Days prior to the Disclosure
Statement Filing Date which provides for exceptions from the
representations and warranties of the Company in Section 3; provided,
that XXXX shall not be required to accept any Disclosure Letter unless
it is reasonably satisfied that such Disclosure Letter does not
contain any information or exception to a representation that (i) was
not disclosed to XXXX prior to the date of this Agreement and (ii)
which information or exception reflects facts or circumstances that
would have a material impact on the Investor's proposed investment in
the Company.
(t) Financing Assistance. The Company and its Subsidiaries shall obtain
the debt financing from financing sources consistent with those
previously discussed with XXXX and in amounts sufficient to consummate
the transactions contemplated by this Agreement, the Preferred Term
Sheet, the Plan Terms, the GM Settlement and the Plan, such financing
to be on then-prevailing market terms with respect to the applicable
interest rate, redemption provisions and fees, and otherwise to be on
terms that are acceptable to XXXX not to be unreasonably withheld (the
"Debt Financing"); provided, that if the Company delivers to XXXX
definitive term sheets for such proposed debt financing that have been
approved by the Company's board of directors and executed by the banks
or other financing sources providing such debt financing reflecting
then-prevailing market terms with respect to the applicable interest
rate, redemption provisions and fees (a "Company Financing Proposal"),
then XXXX shall inform the Company in writing (a "Financing Notice")
whether or not the Company Financing Proposal is acceptable to it
within five (5) Business Days of its receipt of the definitive term
sheets for such Company Financing Proposal. If, after the Company
delivers to XXXX a Company Financing Proposal, XXXX fails to deliver a
Financing Notice within five (5) Business Days or each of the
following circumstances
-46-
occurs, then the Company may terminate this Agreement and the
transactions contemplated hereby may be abandoned: (x) XXXX delivers a
Financing Notice in which it does not approve the Company Financing
Proposal, (y) XXXX does not present to the Company, within 30 days of
the delivery of the Financing Notice (the "Financing Decision Date"),
an alternative written expression of interest to provide the Debt
Financing with financing sources reasonably acceptable to the Company
on terms more favorable to the Company than the Company Financing
Proposal (a "Preferred Debt Financing") and (z) XXXX does not provide
to the Company commitment letters executed by the banks or other
financing sources providing such Preferred Debt Financing within 60
days of the Financing Decision Date. Delphi shall use its reasonable
best efforts to implement any Preferred Debt Financing and to fulfill
its other obligations pursuant to this Section 5(t). Subject to
applicable regulatory or NASD requirements, Xxxxxxx and UBS (or their
Affiliates) shall be entitled to participate in such Debt Financing on
market terms. The Company and its Subsidiaries shall execute and
deliver any commitment letters, underwriting or placement agreements,
registration statements, pledge and security documents, other
definitive financing documents, or other requested certificates or
documents necessary or desirable to obtain the Debt Financing. The
Company will (i) provide to XXXX and its counsel a copy of all
marketing information, term sheets, commitment letters and agreements
related to the Debt Financing and a reasonable opportunity to review
and comment on such documents prior to such document being
distributed, executed or delivered or filed with the Bankruptcy Court,
(ii) duly consider in good faith any comments of XXXX and its counsel
consistent with the Agreement, the Preferred Term Sheet and the Plan
Terms and any other reasonable comments of XXXX and its counsel and
shall not reject such comments without first discussing the reasons
therefor with XXXX or its counsel and giving due consideration to the
views of XXXX and its counsel, and (iii) keep XXXX reasonably informed
on a timely basis of developments in connection with the Debt
Financing and provide the Investors with an opportunity to attend and
participate in meetings and/or roadshows with potential providers of
the Debt Financing.
(u) Labor Agreements. The Company and its Subsidiaries shall use their
reasonable best efforts to enter into: (A) tentative labor agreements
with each of the International Union of Electrical, Salaried, Machine
and Furniture Workers - Communications Workers of America ("IUE-CWA")
and the United Steel, Paper and Forestry, Rubber, Manufacturing,
Energy, Allied Industrial and Service Workers International Union,
AFL-CIO/CLC (the "USW") which adequately address, among other things,
the following matters: (i) permit achievement of the transactions
contemplated by this Agreement, the Preferred Term Sheet, the Plan
Terms and the Plan (including plant closings, asset dispositions and
resolution of union claims); (ii) permit achievement of the Business
Plan; and (B) an agreement that GM will be responsible for certain
hourly labor costs (compensation, benefits and other labor costs) at
certain of the Company's facilities. The Company will (i) provide to
XXXX and its counsel a copy of the foregoing labor agreements and a
-47-
reasonable opportunity to review and comment on such document prior to
such document being executed or delivered or filed with the Bankruptcy
Court, and (ii) duly consider in good faith any comments of XXXX and
its counsel consistent with this Agreement, the Preferred Term Sheet
and the Plan Terms and any other reasonable comments of XXXX and its
counsel, and shall not reject such comments without first discussing
the reasons therefor with XXXX or its counsel and giving due
consideration to the views of XXXX and its counsel.
(v) Other Actions by the Company.
(i) Existing Shareholder Rights Plan. The Company and the Board of
Directors of the Company (A) has taken all necessary action to
amend the Existing Shareholder Rights Plan to provide that none
of the Investors (including any Related Purchaser or Ultimate
Purchaser) shall be deemed an "Acquiring Person" as defined in
the Existing Shareholder Rights Plan and that the rights will not
separate from the Common Stock pursuant to the Existing
Shareholder Rights Plan as a result of entering into the Original
Agreement, this Agreement, the Original PSA, the Plan and the
Transaction Agreements or consummating the transactions
contemplated hereby (including any transfer of Investor Shares to
any Related Purchaser or Ultimate Purchaser) or thereby and (B)
will take all such action as is necessary to terminate the
Existing Shareholder Rights Plan effective as of the Closing
Date.
(ii) Takeover Statutes and Charter. The Company and the Board of
Directors of the Company has taken all action necessary (A) to
ensure that no Takeover Statute or similar statue or regulation
is or becomes applicable to the Original Agreement, this
Agreement, the Original PSA, the Plan or the Transaction
Agreements or any transaction contemplated hereby or thereby
(including any transfer of Investor Shares to any Related
Purchaser or Ultimate Purchaser), (B) if any Takeover Statute is
or may become applicable to the transactions contemplated by the
Original Agreement, this Agreement, the Original PSA, the Plan or
the Transaction Agreements (including any transfer of Investor
Shares to any Related Purchaser or Ultimate Purchaser), to grant
such approvals and take such actions as are necessary so that
such transactions may be consummated as promptly as practicable
on the terms contemplated hereby and thereby and otherwise act to
eliminate or minimize the effects of such statute or regulation
on such transactions and (C) to ensure that this Agreement or any
transaction contemplated hereby (including any transfer of
Investor Shares to any Related Purchaser or Ultimate Purchaser)
or thereby are approved for purposes of Article IX of the
Company's Amended and Restated Certificate of Incorporation,
dated January 26, 1999, as amended
-48-
to date, and that such provision shall not apply to the
transactions contemplated hereby or thereby.
(w) Agreement on Key Documentation. The Company shall use its commercially
reasonable efforts to agree on or prior to the Disclosure Statement
Filing Date on (a) the terms of the GM Settlement, (b) the agreements
contemplated by Section 5(u), and (c) the terms of the Amended and
Restated Constituent Documents, the Series A Certificate of
Designations and the Series B Certificate of Designations, the
Shareholders Agreement and the Registration Rights Agreement with
XXXX.
(x) Investment Decision Package. If at any time prior to the Expiration
Date, any event occurs as a result of which the Investment Decision
Package, as then amended or supplemented, would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
shall be necessary to amend or supplement the Investment Decision
Package to comply with applicable law, the Company will promptly
notify the Investors of any such event and prepare an amendment or
supplement to the Investment Decision Package that is reasonably
acceptable in form and substance to XXXX that will correct such
statement or omission or effect such compliance.
(y) Termination of Commitment Letters. The Company acknowledges and agrees
that (i) the commitment letter of Appaloosa in favor of XXXX and the
Company and (ii) the commitment letter of Harbinger Fund in favor of
Harbinger and the Company, each dated January 18, 2007 have been
terminated and are of no further force or effect and that each of
Appaloosa and Harbinger Fund shall have no further liability or
obligation under those commitment letters.
(z) Pension Plan Contributions. The Company and its Subsidiaries shall
have made all contributions to any pension plan of the Company and its
Subsidiaries required to be made prior to or contemporaneous with the
Effective Time pursuant to any law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or
regulatory authority or any requirement of the GM Settlement any labor
agreement or any other contract, agreement, arrangement or
understanding.
6. Additional Covenants of the Investors. Each Investor agrees, severally and
not jointly, with the Company:
(a) Information. To provide the Company with such information as the
Company reasonably requests regarding the Investor for inclusion in
the Rights Offering Registration Statement and the Disclosure
Statement.
-49-
(b) HSR Act. To use reasonable best efforts to promptly prepare and file
all necessary documentation and to effect all applications and to
obtain all authorizations, approvals and consents that are necessary
or advisable under the HSR Act and any comparable laws or regulations
in any foreign jurisdiction so that any applicable waiting period
shall have expired or been terminated thereunder and any applicable
notification, authorization, approval or consent shall have been made
or obtained with respect to the purchase of Investor Shares hereunder,
and not to take any action that is intended or reasonably likely to
materially impede or delay the ability of the parties to obtain any
necessary approvals required for the transactions contemplated by this
Agreement. Each Investor shall file, to the extent that it is required
to file, the Notification and Report Form required under the HSR Act
with respect to the transactions contemplated by this Agreement with
the Antitrust Division of the United States Department of Justice and
the United States Federal Trade Commission no later than the fifteenth
day following the Disclosure Statement Filing Date.
(c) Bankruptcy Court Filings. To not file any pleading or take any other
action in the Bankruptcy Court with respect to this Agreement, the
Plan, the Disclosure Statement or the Confirmation Order or the
consummation of the transactions contemplated hereby or thereby that
is inconsistent in any material respect with this Agreement or the
Company's efforts to obtain the entry of the Confirmation Order
consistent with this Agreement.
(d) Reasonable Best Efforts. Each Investor shall use its reasonable best
efforts to take all actions, and do all things, reasonably necessary,
proper or advisable on its part under this Agreement and applicable
laws to cooperate with the Company and to consummate and make
effective the transactions contemplated by this Agreement, the
Preferred Term Sheet, the Plan Terms, the GM Settlement and the Plan.
7. Additional Joint Covenant of Company And Each Investor. Without limiting
the generality of the undertakings pursuant to Sections 5(i) and 6(b), the
Company and each Investor shall, severally and not jointly, use its
reasonable best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary under the HSR Act and any
comparable laws or regulations in any foreign jurisdiction to consummate
and make effective the transactions contemplated by this Agreement and the
other Transaction Agreements, including furnishing all information required
by applicable law in connection with approvals of or filings with any
governmental authority, and filing, or causing to be filed, as promptly as
practicable, following the Disclosure Statement Filing Date any required
notification and report forms under other applicable competition laws with
the applicable governmental antitrust authority. Any filings under any laws
or regulations in any foreign jurisdiction comparable to the HSR Act that
are necessary to consummate and make effective the transactions
contemplated by this Agreement and the other Transaction Agreements shall
be made, to the extent permitted by law or regulation, after the filings in
the United States described in Section 5(i) and 6(b) hereof have been
-50-
made. The parties shall consult with each other as to the appropriate time
of filing such notifications and shall agree upon the timing of such
filings. Subject to appropriate confidentiality safeguards, each party
shall: (i) respond promptly to any request for additional information made
by the antitrust agency; (ii) promptly notify counsel to the other party
of, and if in writing, furnish counsel to the other party with copies of
(or, in the case of material oral communications, advise the other party
orally of) any communications from or with the antitrust agency in
connection with any of the transactions contemplated by this Agreement;
(iii) not participate in any meeting with the antitrust agency unless it
consults with counsel to the other party in advance and, to the extent
permitted by the agency, give the other party a reasonable opportunity to
attend and participate thereat; (iv) furnish counsel to the other party
with copies of all correspondence, filings and communications between it
and the antitrust agency with respect to any of the transactions
contemplated by this Agreement; and (v) furnish counsel to the other party
with such necessary information and reasonable assistance as may be
reasonably necessary in connection with the preparation of necessary
filings or submission of information to the antitrust agency. The Parties
shall use their reasonable best efforts to cause the waiting periods under
the applicable competitions laws to terminate or expire at the earliest
possible date after the date of filing.
Notwithstanding anything in this Agreement to the contrary, nothing shall
require any Investor or its Affiliates to dispose of any of its or its
Subsidiaries' or its Affiliates' assets or to limit its freedom of action
with respect to any of its or its Subsidiaries' businesses, or to consent
to any disposition of the Company's or the Company Subsidiaries' assets or
limits on the Company's or the Company Subsidiaries' freedom of action with
respect to any of its or the Company Subsidiaries' businesses, or to commit
or agree to any of the foregoing, and nothing in this Agreement shall
authorize the Company or any Company Subsidiary to commit or agree to any
of the foregoing, to obtain any consents, approvals, permits or
authorizations to remove any impediments to the transactions contemplated
hereby or by any Transaction Agreement relating to antitrust or competition
laws or to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any action
relating to antitrust or competition laws.
8. Reasonable Best Efforts. The Company shall use its reasonable best efforts
(and shall cause its Subsidiaries to use their respective 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 or their
part under this Agreement and applicable laws to cooperate with the
Investors and to consummate and make effective the transactions
contemplated by this Agreement, the Preferred Term Sheet, the Plan Terms,
the GM Settlement and the Plan, including:
(a) preparing and filing as promptly as practicable all documentation to
effect all necessary notices, reports and other filings and to obtain
as promptly as practicable all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from
any third party or governmental entity;
-51-
provided, however, that, notwithstanding the foregoing, in connection
with obtaining such consents, the Company shall not, without the prior
written consent of XXXX in its reasonable discretion, pay or commit to
pay any person or entity whose consent is being solicited in cash or
other consideration to the extent such payment could reasonably be
expected to prevent the Company from, at all times prior to the
satisfaction of the condition with respect to the Business Plan in
accordance with Section 9(a)(xxviii), complying in all material
respects with the Draft Business Plan (and, if amended in a manner
that satisfies the condition with respect to amendments to the Draft
Business Plan set forth in Section 9(a)(xxviii), as so amended) and,
at all times after the satisfaction of the condition with respect to
the Business Plan in accordance with Section 9(a)(xxviii), complying
in all material respects with the Business Plan (and, if amended in a
manner that satisfies the condition with respect to the Business Plan
set forth in Section 9(a)(xxviii), as so amended);
(b) defending any lawsuits or other actions or proceedings, whether
judicial or administrative, challenging this Agreement, the Preferred
Term Sheet, the GM Settlement, the Plan or the Transaction Agreements
or any other agreement contemplated by this Agreement, the Preferred
Term Sheet, the PSA, the GM Settlement, the Plan or the Transaction
Agreements or the consummation of the transactions contemplated hereby
and thereby, including seeking to have any stay or temporary
restraining order entered by any court or other governmental entity
vacated or reversed;
(c) executing, delivering and filing, as applicable, any additional
ancillary instruments or agreements necessary to consummate the
transactions contemplated by this Agreement, the Preferred Term Sheet,
the PSA, the GM Settlement, the Plan or the Transaction Agreements and
to fully carry out the purposes of this Agreement, the Preferred Term
Sheet, the PSA, the GM Settlement, the Plan, the Transaction
Agreements and the transactions contemplated hereby and thereby
including, without limitation: (i) employment agreements and other
compensation arrangements with senior management of the Company
relating to compensation, benefits, supplemental retirement benefits,
stock options and restricted stock awards, severance and change in
control provisions and other benefits on market terms (as determined
by the Company's board of directors based on the advice of
Xxxxxx-Xxxxx and reasonably acceptable to XXXX); (ii) 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 the implementation of the Plan; (iii) a shareholders
agreement among the Company, and certain of the Investors reasonably
satisfactory to XXXX (the "Shareholders Agreement"); (iv) a
registration rights agreement (the "Registration Rights Agreement")
among the Company and the Investors, consistent with the Preferred
Term Sheet and reasonably satisfactory to
-52-
XXXX to the extent that the material terms of such Registration Rights
Agreement would have a material impact on the Investors' proposed
investment in the Company, and providing that the Company shall (a) as
soon as practicable after the Closing Date, and in any event no later
than seven (7) days after the Closing Date, prepare and file with the
Commission a registration statement, including all exhibits thereto,
pursuant to Rule 415 under the Securities Act registering offers and
sales by the Investors, any Related Purchasers and the Ultimate
Purchasers of the Unsubscribed Shares, the Direct Subscription Shares
and the Series B Preferred Shares (the "Resale Registration Statement"
and, together with the final prospectus contained in the Resale
Registration Statement as of its effective date (including
information, if any, omitted pursuant to Rule 430A and subsequently
provided pursuant to Rule 424(b) under the Securities Act), and any
amended form of such prospectus provided under Rule 424(b) under the
Securities Act or contained in a post-effective amendment to the
Resale Registration Statement) and any issuer free writing prospectus
as defined in Rule 433 under the Securities Act used in connection
with the resale of such shares, the "Resale Registration Documents");
(b) use its reasonable best efforts to cause the Resale Registration
Statement to be declared effective by the Commission as soon as
practicable after the filing thereof, and in any event no later than
thirty (30) days after the Closing Date; (c) obtain such comfort
letters from the Company's independent certified public accountants
addressed to the Investors covering such matters of the type
customarily covered by comfort letters and as XXXX reasonably
requests; and (d) obtain a customary opinion or opinions and negative
assurance statement, in customary form and scope from counsel to the
Company to be furnished to each Investor; (v) an amended and restated
certificate of incorporation and amended by-laws of the Company, in
each case, that is consistent with this Agreement, the Plan Terms and
the Preferred Term Sheet; provided, that the amended and restated
certificate of incorporation of the Company to be effective
immediately following the Effective Date shall prohibit (A) for so
long as XXXX or its Affiliates, as the case may be, owns any shares of
Series A-1 Preferred Stock, any transactions between the Company or
any of its Subsidiaries, on the one hand, and XXXX or its Affiliates,
as the case may be, on the other hand (including any "going private
transaction" sponsored by XXXX or its Affiliates), unless such
transaction shall have been approved by directors constituting not
less than 75% of the number of Common Directors, and (B) any
transaction between the Company or any of its Subsidiaries, on the one
hand, and a director, other than a director appointed by holders of
Series A Preferred Stock, on the other hand, unless such transaction
shall have been approved by directors having no material interest in
such transaction (a "Disinterested Director") constituting not less
than 75% of the number of Disinterested Directors (such amended and
restated certificate of incorporation and amended bylaws are herein
referred to as the "Amended and Restated Constituent Documents"); and
(vi) the Series A Certificate of Designations and the Series B
Certificate of Designations, in each case, that is consistent with the
terms set forth in the Preferred Term Sheet. Subject to applicable
laws and regulations relating to the exchange of information, the
Investors and the Company shall have the right to
-53-
review in advance, and to the extent practicable each will consult
with the other on all of the information relating to Investors or the
Company, as the case may be, and any of their respective Subsidiaries,
that appears in any filing made with, or written materials submitted
to, any third party and/or any governmental entity in connection with
the transactions contemplated by this Agreement or the Plan. In
exercising the foregoing rights, each of the Company and the Investors
shall act reasonably and as promptly as practicable.
9. Conditions to the Obligations of the Parties.
(a) Subject to Section 9(b), the obligations of each of the Investors
hereunder to consummate the transactions contemplated hereby shall be
subject to the satisfaction prior to the Closing Date of each of the
following conditions:
(i) Approval Order. The Approval Order shall have become a Final
Approval Order. "Final Approval Order" shall mean an Approval
Order of the Bankruptcy Court, which has not been reversed,
stayed, modified or amended, and as to which (a) the time to
appeal, seek certiorari or request reargument or further review
or rehearing has expired and no appeal, petition for certiorari
or request for reargument or further review or rehearing has been
timely filed, or (b) any appeal that has been or may be taken or
any petition for certiorari or request for reargument or further
review or rehearing that has been or may be filed has been
resolved by the highest court to which the order or judgment was
appealed, from which certiorari was sought or to which the
request was made and no further appeal or petition for certiorari
or request for reargument or further review or rehearing has been
or can be taken or granted.
(ii) [Reserved]
(iii) Plan of Reorganization. The Company shall have complied in all
material respects with the terms and conditions of the Plan that
are to be performed by the Company prior to the Closing Date.
(iv) [Reserved]
(v) Alternate Transaction. The Company shall not have entered into
any letter of intent, memorandum of understanding, agreement in
principle or other agreement (other than a confidentiality
agreement with terms that are not materially less favorable to
the Company than the terms of that certain Amended
Confidentiality Information, Standstill and Nondisclosure
-54-
Agreement, dated July 3, 2007, among the Company, Appaloosa and
Harbinger Fund, as it may be amended from time to time) or taken
any action to seek any Bankruptcy Court approval relating to, any
Alternate Transaction (an "Alternate Transaction Agreement"). For
the purpose of this Agreement, an "Alternate Transaction" means
any plan, proposal, offer or transaction that is inconsistent
with this Agreement, the Preferred Term Sheet, the Plan Terms and
the GM Settlement or the Plan, other than a Chapter 7
liquidation.
(vi) Change of Recommendation. There shall not have been a Change of
Recommendation. For purposes of this Agreement, a "Change of
Recommendation" shall mean, (i) the Company or its board of
directors or any committee thereof shall have withheld,
withdrawn, qualified or modified (or resolved or proposed to
withhold, withdraw, qualify or modify), in a manner adverse to
the Investors, its approval or recommendation of this Agreement,
the Preferred Term Sheet, the Plan Terms, the GM Settlement or
the Plan or the transactions contemplated hereby or thereby or
(ii) the Company or its board of directors or any committee
thereof shall have approved or recommended, or proposed to
approve or recommend (including by filing any pleading or
document with the Bankruptcy Court), any Alternate Transaction.
(vii) Confirmation Order. The Confirmation Order approving the Plan
shall have been entered by the Bankruptcy Court and such order
shall be non-appealable, shall not have been appealed within ten
calendar days of entry or, if such order is appealed, shall not
have been stayed pending appeal, and there shall not have been
entered by any court of competent jurisdiction any reversal,
modification or vacation, in whole or in part, of such order (the
"Confirmation Order"); provided, that the absence of a stay
pending appeal shall be considered for purposes of determining
whether the foregoing condition has been satisfied only if XXXX
concludes, in its reasonable discretion, that the appeal would be
rendered moot under the doctrine of "equitable mootness" as a
result of the occurrence of the Effective Date.
(viii) [Reserved]
(ix) Conditions to Effective Date. The conditions to the occurrence of
the Effective Date of the Confirmed Plan shall have been
satisfied or waived by the Company and XXXX in accordance with
the Plan.
(x) Rights Offering Registration Statement. The Rights Offering
Registration Statement shall be effective not later than the
Rights Distribution Date and
-55-
no stop order shall have been entered by the Commission with
respect thereto.
(xi) Rights Offering. The Rights Offering shall have been conducted in
all material respects in accordance with this Agreement and the
Disclosure Statement and the Expiration Time shall have occurred.
(xii) Purchase Notice. Each of the Investors shall have received a
Purchase Notice from the Company, dated as of the Determination
Date, certifying as to the number of Unsubscribed Shares to be
purchased or a Satisfaction Notice.
(xiii) Antitrust Approvals. All terminations or expirations of waiting
periods imposed by any governmental or regulatory authority
necessary for the consummation of the transactions contemplated
by this Agreement, including under the HSR Act and any comparable
regulations in any foreign jurisdiction, shall have occurred and
all other notifications, consents, authorizations and approvals
required to be made or obtained from any competition or antitrust
authority shall have been made or obtained for the transactions
contemplated by this Agreement.
(xiv) Consents. All other governmental and third party notifications,
filings, consents, waivers and approvals required for the
consummation of the transactions contemplated by this Agreement,
the Preferred Term Sheet, the Plan Terms and the Plan shall have
been made or received.
(xv) No Legal Impediment to Issuance. No action shall have been taken
and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority, and no judgment,
injunction, decree or order of any federal, state or foreign
court shall have been issued, that prohibits the implementation
of the Plan or the Rights Offering or the transactions
contemplated by this Agreement, the Preferred Term Sheet, the
Plan Terms and the GM Settlement.
(xvi) Representations and Warranties. The representations and
warranties of Company contained in this Agreement shall be true
and correct (disregarding all qualifications and exceptions
contained therein relating to materiality, Material Adverse
Effect or similar qualifications, other than such qualifications
contained in Sections 3(i) and 3(j)) as of the Disclosure Letter
Delivery Date and as of the Closing Date with the same effect as
if made on and as of the Disclosure Letter Delivery Date and the
Closing Date (except for representations and warranties made as
of a specified date,
-56-
which shall be true and correct only as of the specified date),
except where the failure to be so true and correct, individually
or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect, other than with
respect to the representations in Sections 3(b), 3(c), 3(d), 3(e)
and 3(m)(ii) and 3(oo), which shall be true and correct in all
respects. The representations and warranties of each Investor
(other than the Investor asserting the failure of this condition)
contained in this Agreement and in any other document delivered
pursuant to this Agreement shall be true and correct
(disregarding all qualifications and exceptions contained therein
relating to materiality or material adverse effect on the
Investor's performance of its obligations or similar
qualifications) as of the Disclosure Letter Delivery Date and as
of the Closing Date with the same effect as if made on the
Disclosure Letter Delivery Date and the Closing Date (except for
the representations and warranties made as of a specified date
which shall be true and correct only as of such specified date);
except where the failure to be so true and correct, individually
or in the aggregate, has not and would not reasonably be
expected, to prohibit, materially delay or materially and
adversely impact the Investor's performance of its obligations
under this Agreement.
(xvii) Covenants. The Company and each Investor (other than the
Investor asserting the failure of this condition) shall have
performed and complied with all of its covenants and agreements
contained in this Agreement and in any other document delivered
pursuant to this Agreement (including in any Transaction
Agreement) in all material respects through the Closing Date.
(xviii)[Reserved]
(xix) Financing. The Company shall have received the proceeds of the
Debt Financings and the Rights Offering that, together with the
proceeds of the sale of the Investor Shares, are sufficient to
fund fully the transactions contemplated by this Agreement, the
Preferred Term Sheet, the Plan Terms, the GM Settlement (to the
extent the Company is to fund such transactions) and the Plan.
(xx) [Reserved]
(xxi) Management Compensation. The Company shall have (i) entered into
employment agreements and other compensation arrangements with
senior management of the Company relating to compensation,
benefits, supplemental retirement benefits, stock options and
restricted stock awards, severance and change in control
provisions and other benefits on
-57-
market terms (as determined by the Company's board of directors
based on the advice of Xxxxxx-Xxxxx and reasonably acceptable to
XXXX); and (ii) resolved any 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.
(xxii) [Reserved]
(xxiii) [Reserved]
(xxiv) [Reserved]
(xxv) [Reserved]
(xxvi) No Strike. There shall not have occurred any material strike or
material labor stoppage or slowdown involving the UAW, IUE-CWA or
USW at either GM or the Company or any of their respective
Subsidiaries. There shall not have occurred any strike, labor
stoppage or slowdown involving the UAW, IUE-CWA or USW at either
Ford Motor Company or Chrysler Group (or its successors) or any
of their respective subsidiaries that would have a material
impact on the Investors' proposed investment in the Company.
(xxvii) Capitalization. As of the Closing Date and giving effect to
the transactions contemplated by the Plan, (i) the Company's Net
Amount shall not exceed by more than $250 million the Net Amount
set forth in the final Business Plan satisfying the condition
with respect to the Business Plan set forth in Section
9(a)(xxviii) of this Agreement; (ii) the Company's share capital
shall be consistent with the last three sentences of Section
3(d); (iii) the Company's accounts payable to trade creditors and
accrued expenses shall be in amounts consistent with the final
Business Plan satisfying the condition with respect to the
Business Plan set forth in Section 9(a)(xxviii) of this
Agreement, and shall have been incurred in the ordinary course of
business consistent with past practice; and (iv) XXXX shall have
received from Delphi a certificate of a senior executive officer
with knowledge of the foregoing to the effect set forth in
clauses (i), (ii) and (iii) with reasonably detailed supporting
documentation to support such amount. "Net Amount" shall mean:
(i) the sum of (A) Indebtedness; (B) the actuarially determined
amount of pension plan contributions required, pursuant to ERISA
to be made by the Company to its U.S. Hourly Rate Pension Plan
from and after the Closing Date through December 31, 2008; and
(C) all other accrued or contingent liabilities
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(excluding pension and salaried OPEB liabilities on the Company's
balance sheet and accounts payable and accrued expenses referred
to in the preceding sentence); less (ii) the Company's cash on
hand as of the Closing Date. In addition, as of the Closing Date
and giving effect to the transactions contemplated by the Plan
the sum of (A) and (B), less (ii), shall not exceed $7,159
million by more than $250 million. "Indebtedness" shall mean: (i)
indebtedness for borrowed money or indebtedness issued or
incurred in substitution or exchange for indebtedness for
borrowed money, (ii) indebtedness evidenced by any note, bond,
debenture, mortgage or other debt instrument or debt security,
(iii) commitments or obligations assuring a creditor against loss
(including contingent reimbursement obligations with respect to
letters of credit), (iv) indebtedness described in clauses
(i)-(iii) secured by an encumbrance on any assets or properties
of the Company or any of its Subsidiaries, (v) guarantees or
other contingent liabilities (including so called take-or-pay or
keep-well agreements) with respect to any Indebtedness,
obligation or liability of a type described in clauses (i)
through (iv) above, and (vi) for clauses (i) through (iv) above,
all accrued interest thereon and all penalty payments, premiums,
charges, yield maintenance amounts and other expenses relating to
any prepayment of any obligations related thereto. For the
purpose of this Section 9(a)(xxvii) cash, Indebtedness and
liabilities shall be determined in accordance with GAAP applied
on a basis consistent with the Company's financial statements
included in the Company SEC Documents filed prior to the date
hereof, and shall be determined on the basis that all required
pension plan contributions to be made by the Company or any of
its Subsidiaries pursuant to any law or statute or any judgment,
order, rule or regulation of any court or arbitrator or
governmental or regulatory authority or any requirement of the GM
Settlement any labor agreement or any other contract, agreement,
arrangement or understanding prior to or contemporaneous with the
Effective Time, shall have been made, whether or not they have
actually been made.
(xxviii) Plan and Material Investment Documents.
(A) (i) The Company shall have delivered to XXXX and XXXX shall
have made the determination referred to in Section
9(a)(xxviii)(B) with respect to, at each Relevant Date, (1)
the Plan and any related documents, agreements and
arrangements (A) the terms of which are consistent in all
material respects with this Agreement, the Preferred Term
Sheet, the Plan Terms and GM Settlement, (B) that provide
for the release and exculpation of each Investor, its
Affiliates, shareholders, partners, directors, officers,
employees and advisors from any liability for participation
of the transactions contemplated by the Original Agreement,
this Agreement, the Original PSA, the Plan Terms and the
Plan to the fullest extent
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permitted under applicable law (provided, that such release
and exculpation shall not prohibit or impede the Company's
ability to assert defenses or counterclaims in connection
with or relating to the Original Agreement or the Original
PSA) and (C) that have conditions to confirmation and the
Effective Date of the Plan (and to what extent such
conditions can be waived and by whom) that are consistent
with this Agreement, the Preferred Term Sheet, the Plan
Terms and the GM Settlement and (2) all Material Investment
Documents. The term "Material Investment Documents" shall
mean the Confirmation Order, the Disclosure Statement, the
Rights Offering Registration Statement, the GM Settlement,
any amendments and/or supplements to the Draft Business
Plan, the Business Plan, any amendments and/or supplements
to the UAW MOU, the labor agreements with the IUE-CWA and
the USW, the Amended and Restated Constituent Documents, the
Series A Certificate of Designations, the Series B
Certificate of Designations, the Shareholders Agreement, the
Registration Rights Agreement, the Transaction Agreements
and any amendments and/or supplements to the foregoing. The
term "Relevant Date" shall mean the Disclosure Statement
Filing Date, the Disclosure Statement Approval Date, the
date of issuance of the Confirmation Order and the Closing
Date.
(ii) With respect to any Material Investment Document
entered into in satisfaction of the condition set forth in
Section 9(a)(xxviii), and the UAW MOU, at each Relevant Date
(i) such Material Investment Document, or the UAW MOU, as
the case may be, shall have been ratified by the union
membership (but only with respect to the labor agreements
with IUE-CWA and USW) and shall remain in full force and
effect and shall not have been rescinded, terminated,
challenged or repudiated by any party thereto and (ii) the
parties to such Material Investment Document and the UAW
MOU, as the case may be, shall have performed and complied
with all of their respective covenants and agreements
contained in such agreement in all material respects through
the Closing Date. The Business Plan satisfying the condition
with respect to the Business Plan set forth in this Section
9(a)(xxviii) shall not have been rescinded or repudiated in
any material respect by the Company or its Board of
Directors.
(B) With respect to the documents referred to in Section
9(a)(xxviii)(A)(i) (other than the GM Settlement), XXXX
shall have determined that it is reasonably satisfied with
the terms thereof to the extent such terms would have a
material impact on the Investors' proposed investment in the
Company; provided, that
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with respect to the GM Settlement XXXX shall have determined
that it is satisfied with the GM Settlement in its
reasonable discretion taking into account whether it has a
material impact on the Investors' proposed investment in the
Company and other relevant factors.
(C) The conditions referred to in clause (A) above shall be
deemed to have been conclusively satisfied without further
action by any Party unless:
(1) with respect to the Plan, any related documents,
agreements and arrangements and any Material Investment
Documents, in each case delivered to XXXX by the
Company prior to the Disclosure Statement Filing Date,
XXXX shall have delivered (and have not withdrawn) a
written deficiency notice to the Company reasonably
asserting with reasonable specificity that such
condition was not satisfied prior to the Disclosure
Statement Approval Date, and the Company shall not have
cured such deficiency within twenty (20) days of the
Company's receipt of such notice (the "Cure Period");
(2) with respect to any amendments or supplements to the
Plan, any related documents, agreements and
arrangements, or any Material Investment Documents
delivered to XXXX by the Company occurring after the
Disclosure Statement Filing Date and prior to the
Disclosure Statement Approval Date, XXXX has delivered
(and has not withdrawn), a written deficiency notice to
the Company reasonably asserting with reasonable
specificity that such condition was not satisfied prior
to the Disclosure Statement Approval Date, and the
Company shall not have cured such deficiency during the
Cure Period;
(3) with respect to any amendments or supplements to the
Plan, any related documents, agreements and
arrangements, or any Material Investment Documents
delivered to XXXX by the Company after the Disclosure
Statement Approval Date and prior to the date of
issuance of the Confirmation Order, XXXX has delivered
(and has not withdrawn) a written deficiency notice to
the Company asserting with reasonable specificity that
such condition was not satisfied prior to the date of
issuance of the Confirmation Order, and the
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Company shall not have cured such deficiency during the
Cure Period; and
(4) with respect to any amendments or supplements to the
Plan, any related documents, agreements and
arrangements, or any Material Investment Documents
delivered to XXXX by the Company after the date of
issuance of the Confirmation Order and prior to the
Closing Date, XXXX has delivered (and has not
withdrawn), within five Business Days of delivery by
the Company of the final form of such document
accompanied by a written request for approval of such
documents, a written deficiency notice to the Company
reasonably asserting with reasonable specificity that
such condition is not satisfied and the Company shall
not have cured such deficiency during the Cure Period.
(D) The Company shall have delivered, and XXXX shall have
accepted, a Disclosure Letter in accordance with Section
5(s).
(b) All or any of the conditions set forth in Section 9(a) may be waived
in whole or in part with respect to all Investors by XXXX in its sole
discretion.
(c) The obligation of the Company to issue and sell the Investor Shares
are subject to the following conditions, provided that the failure of
a condition set forth in Sections 9(c)(vii) through (x) to be
satisfied may not be asserted by the Company if such failure results
from the failure of the Company to fulfill an obligation hereunder:
(i) Approval Order. The Approval Order shall have become a Final
Approval Order.
(ii) Antitrust Approvals. All terminations or expirations of waiting
periods imposed by any governmental or regulatory authority
necessary for the consummation of the transactions contemplated
by this Agreement, including under the HSR Act and any comparable
regulations in any foreign jurisdiction, shall have occurred and
all other notifications, consents, authorizations and approvals
required to be made or obtained from any competition or antitrust
authority shall have been made or obtained for the transactions
contemplated by this Agreement.
(iii) No Legal Impediment to Issuance. No action shall have been taken
and no statute, rule, regulation or order shall have been
enacted, adopted or issued
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by any federal, state or foreign governmental or regulatory
authority, and no judgment, injunction, decree or order of any
federal, state or foreign court shall have been issued, that
prohibits the implementation of the Plan or the Rights Offering
or the transactions contemplated by this Agreement, the Preferred
Term Sheet, the Plan Terms and the GM Settlement.
(iv) Representations and Warranties. The representations and
warranties of each Investor, each Related Purchaser and each
Ultimate Purchaser to the Company contained in this Agreement or
pursuant to Sections 2(a), 2(b) or 2(k) shall be true and correct
(disregarding all qualifications and exceptions contained therein
relating to materiality or material adverse effect on the
Investor's performance of its obligations or similar
qualifications) as of the Disclosure Letter Delivery Date and as
of the Closing Date with the same effect as if made on the
Disclosure Letter Delivery Date and the Closing Date (except for
the representations and warranties made as of a specified date,
which shall be true and correct only as of such specified date),
except with respect to the Investors' representations in all
Sections other than Sections 4(b) and 4(c) where the failure to
be so true and correct, individually or in the aggregate, has not
and would not reasonably be expected, to prohibit, materially
delay or materially and adversely impact the Investor's
performance of its obligations under this Agreement.
(v) Covenants. Each Investor shall have performed and complied with
all of its covenants and agreements contained in this Agreement
and in any other document delivered pursuant to this Agreement
(including in any Transaction Agreement) in all material respects
through the Closing Date.
(vi) Bankruptcy Court Approval. This Agreement shall have been
approved by the Bankruptcy Court and the approval of the
Bankruptcy Court shall not have been modified, amended or
withdrawn in any manner adverse to the Company.
(vii) Confirmation Order. The Confirmation Order approving the Plan
shall have been entered by the Bankruptcy Court and such order
shall be non-appealable, shall not have been appealed within ten
calendar days of entry or, if such order is appealed, shall not
have been stayed pending appeal, and there shall not have been
entered by any court of competent jurisdiction any reversal,
modification or vacation, in whole or in part, of such order;
provided, that the absence of a stay pending appeal shall be
considered for purposes of determining whether the foregoing
condition has been satisfied only if the Company concludes, in
its sole discretion, that the appeal would be rendered moot under
the doctrine of "equitable mootness" as a result of the
occurrence of the Effective Date.
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(viii) Conditions to Effective Date. The conditions to the occurrence
of the Effective Date of the Confirmed Plan shall have been
satisfied or waived by the Company and XXXX in accordance with
the Plan.
(ix) Rights Offering. The Rights Offering shall have been conducted in
all material respects in accordance with this Agreement and the
Disclosure Statement and the Expiration Time shall have occurred.
(x) Financing. The Company shall have received the proceeds of the
Debt Financings and the Rights Offering that, together with the
proceeds of the sale of the Investor Shares, are sufficient to
fund fully the transactions contemplated by this Agreement, the
Preferred Term Sheet, the Plan Terms, the GM Settlement (to the
extent the Company is to fund such transactions) and the Plan.
(d) All of the conditions set forth in Section 9(c) may be waived in whole
or in part by the Company in its sole discretion.
10. Indemnification and Contribution.
(a) Whether or not the Rights Offering is consummated or this Agreement is
terminated or the transactions contemplated hereby or the Plan are
consummated, the Company (in such capacity, the "Indemnifying Party")
shall indemnify and hold harmless each Investor and the Ultimate
Purchasers, their respective Affiliates and their respective officers,
directors, employees, agents and controlling persons (each, an
"Indemnified Person") from and against any and all losses, claims,
damages, liabilities and reasonable expenses, joint or several,
arising out of circumstances existing on or prior to the Closing Date
("Losses") to which any such Indemnified Person may become subject
arising out of or in connection with any claim, challenge, litigation,
investigation or proceeding ("Proceedings") instituted by a third
party with respect to the Rights Offering, this Agreement or the other
Transaction Documents, the Rights Offering Registration Statement, any
Preliminary Rights Offering Prospectus, the Rights Offering
Prospectus, any Issuer Free Writing Prospectus, the Investment
Decision Package, the Resale Registration Documents, any amendment or
supplement thereto or the transactions contemplated by any of the
foregoing and shall reimburse such Indemnified Persons for any
reasonable legal or other reasonable out-of-pocket expenses as they
are incurred in connection with investigating, responding to or
defending any of the foregoing; provided that the foregoing
indemnification will not apply to Losses (i) arising out of or in
connection with any Proceedings between or among any one or more
Indemnified Persons, Related Purchasers and/or Ultimate Purchasers,
any Additional Investor Agreement or the failure of such Indemnified
Person to comply with the
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covenants and agreements contained in this Agreement with respect to
the sale or placement of Investor Shares; or (ii) to the extent that
they resulted from (a) any breach by such Indemnified Person of this
Agreement, (b) gross negligence, bad faith or willful misconduct on
the part of such Indemnified Person or (c) statements or omissions in
the Rights Offering Registration Statement, any Preliminary Rights
Offering Prospectus, the Rights Offering Prospectus, any Issuer Free
Writing Prospectus, the Resale Registration Documents or any amendment
or supplement thereto made in reliance upon or in conformity with
information relating to such Indemnified Person furnished to the
Company in writing by or on behalf of such Indemnified Person
expressly for use in the Rights Offering Registration Statement, any
Rights Offering Preliminary Prospectus, the Rights Offering
Prospectus, any Issuer Free Writing Prospectus, the Resale
Registration Documents or any amendment or supplement thereto. If for
any reason the foregoing indemnification is unavailable to any
Indemnified Person or insufficient to hold it harmless, then the
Indemnifying Party shall contribute to the amount paid or payable by
such Indemnified Person as a result of such Losses in such proportion
as is appropriate to reflect not only the relative benefits received
by the Indemnifying Party on the one hand and such Indemnified Person
on the other hand but also the relative fault of the Indemnifying
Party on the one hand and such Indemnified Person on the other hand as
well as any relevant equitable considerations. It is hereby agreed
that the relative benefits to the Indemnifying Party on the one hand
and all Indemnified Persons on the other hand shall be deemed to be in
the same proportion as (i) the total value received or proposed to be
received by the Company pursuant to the sale of the Shares and the
Investor Shares contemplated by this Agreement bears to (ii) the
Commitment Fees paid or proposed to be paid to the Investors. The
indemnity, reimbursement and contribution obligations of the
Indemnifying Party under this Section 10 shall be in addition to any
liability that the Indemnifying Party may otherwise have to an
Indemnified Person and shall bind and inure to the benefit of any
successors, assigns, heirs and personal representatives of the
Indemnifying Party and any Indemnified Person.
(b) Promptly after receipt by an Indemnified Person of notice of the
commencement of any Proceedings with respect to which the Indemnified
Person may be entitled to indemnification hereunder, such Indemnified
Person will, if a claim is to be made hereunder against the
Indemnifying Party in respect thereof, notify the Indemnifying Party
in writing of the commencement thereof; provided that (i) the omission
so to notify the Indemnifying Party will not relieve the Indemnifying
Party from any liability that it may have hereunder except to the
extent it has been materially prejudiced by such failure and (ii) the
omission so to notify the Indemnifying Party will not relieve it from
any liability that it may have to an Indemnified Person otherwise than
on account of this Section 10. In case any such Proceedings are
brought against any Indemnified Person and it notifies the
Indemnifying Party of the commencement thereof, the Indemnifying Party
will be entitled to participate therein, and, to the extent that it
may elect by written notice delivered to such Indemnified Person, to
assume the defense thereof, with counsel
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reasonably satisfactory to such Indemnified Person; provided that if
the defendants in any such Proceedings include both such Indemnified
Person and the Indemnifying Party and such Indemnified Person shall
have concluded that there may be legal defenses available to it that
are different from or additional to those available to the
Indemnifying Party, such Indemnified Person shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such Proceedings on behalf of such
Indemnified Person. Upon receipt of notice from the Indemnifying Party
to such Indemnified Person of its election so to assume the defense of
such Proceedings and approval by such Indemnified Person of counsel,
the Indemnifying Party shall not be liable to such Indemnified Person
for expenses incurred by such Indemnified Person in connection with
the defense thereof (other than reasonable costs of investigation)
unless (i) such Indemnified Person shall have employed separate
counsel in connection with the assertion of legal defenses in
accordance with the proviso to the next preceding sentence (it being
understood, however, that the Indemnifying Party shall not be liable
for the expenses of more than one separate counsel in any
jurisdiction, approved by the Investors, representing the Indemnified
Persons who are parties to such Proceedings), (ii) the Indemnifying
Party shall not have employed counsel reasonably satisfactory to such
Indemnified Person to represent such Indemnified Person within a
reasonable time after notice of commencement of the Proceedings or
(iii) the Indemnifying Party shall have authorized in writing the
employment of counsel for such Indemnified Person.
(c) The Indemnifying Party shall not be liable for any settlement of any
Proceedings effected without its written consent (which consent shall
not be unreasonably withheld). If any settlement of any Proceeding is
consummated with the written consent of the Indemnifying Party or if
there is a final judgment for the plaintiff in any such Proceedings,
the Indemnifying Party agrees to indemnify and hold harmless each
Indemnified Person from and against any and all Losses by reason of
such settlement or judgment in accordance with, and subject to the
limitations of, the provisions of this Section 10. Notwithstanding
anything in this Section 10 to the contrary, if at any time an
Indemnified Person shall have requested the Indemnifying Party to
reimburse such Indemnified Person for legal or other expenses
aggregating in excess of $250,000 in connection with investigating,
responding to or defending any Proceedings in connection with which it
is entitled to indemnification or contribution pursuant to this
Section 10, the Indemnifying Party shall be liable for any settlement
of any Proceedings effected without its written consent if (i) such
settlement is entered into more than (x) 60 days after receipt by the
Indemnifying Party of such request for reimbursement and (y) 30 days
after receipt by the Indemnified Person of the material terms of such
settlement and (ii) the Indemnifying Party shall not have reimbursed
such Indemnified Person in accordance with such request prior to the
date of such settlement. The Indemnifying Party shall not, without the
prior written consent of an Indemnified Person (which consent shall
not be unreasonably withheld), effect any settlement of any pending or
threatened Proceedings in respect of which indemnity has been sought
hereunder by such Indemnified Person unless (i) such
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settlement includes an unconditional release of such Indemnified
Person in form and substance satisfactory to such Indemnified Person
from all liability on the claims that are the subject matter of such
Proceedings and (ii) such settlement does not include any statement as
to or any admission of fault, culpability or a failure to act by or on
behalf of any Indemnified Person.
(d) All amounts paid by the Company to an Indemnified Person under this
Section 10 shall, to the extent the transactions contemplated hereby
or the Plan are consummated and to the extent permitted by applicable
law, be treated as adjustments to Purchase Price for all Tax purposes.
11. Survival of Representations and Warranties, Etc.
(a) The representations and warranties made in this Agreement shall not
survive the Closing Date. Other than Sections 2(b), 2(c), 2(e), 2(h),
2(i), 2(j), 2(k), 5(d), 5(e), 5(f), 5(j), 5(k), 5(l), 5(m), 10, 11,
13, 14, 15, 16, 18 and 20, which shall survive the Closing Date in
accordance with their terms (except Section 5(l) which shall survive
for 90 days following the Closing Date), the covenants contained in
this Agreement shall not survive the Closing Date.
(b) Other than with respect to Sections 2(h), 2(i) and 2(j) and Sections
10 through 18, which shall continue and survive any termination of
this Agreement, (i) none of the Investors may assert any claim against
the Company (both as Debtors-in-possession or the reorganized
Debtors), and the Company (both as Debtors-in-possession or the
reorganized Debtors), may not assert any claim against any Investor,
in either case, arising from this Agreement other than for willful
breach, and (ii) the Investors hereby release the Company (both as
Debtors-in-possession and the reorganized Debtors) from any such
claims, and the Company (both as Debtors-in-possession or the
reorganized Debtors) hereby releases the Investors from any such
claims. Notwithstanding the foregoing (w) the aggregate liability of
all of the Investors under this Agreement for any reason (under any
legal theory), including for any willful breach, for any act or
omission occurring on or prior to the Disclosure Statement Approval
Date shall not exceed $100 million, (x) the aggregate liability of all
of the Investors under this Agreement for any reason (under any legal
theory), including for any willful breach, for any act or omission
occurring after the Disclosure Statement Approval Date shall not
exceed $250 million, (y) the aggregate liability of all of the Debtors
under this Agreement for any reason (under any legal theory),
including for any willful breach, for any act or omission occurring on
or prior to the Disclosure Statement Approval Date shall not exceed
$100 million, and (z) the aggregate liability of all of the Debtors
under this Agreement for any reason (under any legal theory),
including for any willful breach, for any act or omission occurring
after the Disclosure Statement Approval Date shall not exceed $250
million. Notwithstanding the foregoing, nothing contained in this
Section 11(b) shall limit the liability of the Company for any
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Transaction Expenses pursuant to Section 2(j) or 12(g). The Investors
and the Company acknowledge that such liability under subclauses (w)
and (x) shall be on a several and not joint basis with respect to any
willful breach occurring on or prior to the Disclosure Statement
Filing Date. The Investors and the Company acknowledge and agree that
such liability under subclauses (w) and (x) shall be on a joint and
several basis with respect to any willful breach occurring after the
Disclosure Statement Filing Date; provided, that the aggregate
liability of Harbinger shall not exceed $38,944,000, the aggregate
liability of Merrill shall not exceed $16,358,805, the aggregate
liability of UBS shall not exceed $16,358,805, the aggregate liability
of GS shall not exceed $39,215,500 and the aggregate liability of
Pardus shall not exceed $33,593,000. Subject to the terms, conditions
and limitation set forth in this Section 11(b), (i) the joint and
several obligations referred to in the immediately preceding sentence
mean that each Investor (an "Assuming Investor") assumes liability on
a joint and several basis for any willful breach of this Agreement by
any other Investor (a "Breaching Investor"), whether or not the
Assuming Investor has breached this Agreement or is in any way
responsible for such willful breach by the Breaching Investor and (ii)
the Assuming Investors' obligations shall be a commitment to assure
payment, not collection. Under no circumstances shall any Investor be
liable to the Company (as Debtors-in-possession or reorganized
Debtors) for any punitive damages under this Agreement or any Equity
Commitment Letter. Under no circumstances shall the Company (both as
Debtors-in-possession and reorganized Debtors) be liable to any
Investor for any punitive damages under this Agreement.
12. Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of the Company and XXXX;
(b) by any Investor if any of the Chapter 11 Cases shall have been
dismissed or converted to a case under chapter 7 of the Bankruptcy
Code, or an interim or permanent trustee shall be appointed in any of
the Chapter 11 Cases, or a responsible officer or an examiner with
powers beyond the duty to investigate and report (as set forth in
Sections 1106(a)(3) and (4) of the Bankruptcy Code) shall be appointed
in any of the Chapter 11 Cases;
(c) by any party to this Agreement if any statute, rule, regulation or
order shall have been enacted, adopted or issued by any federal, state
or foreign governmental or regulatory authority or any judgment,
injunction, decree or order of any federal, state or foreign court
shall have become final and non-appealable, that prohibits the
implementation of the Plan or the Rights Offering or the transactions
contemplated by this Agreement, the Preferred Term Sheet, the Plan
Terms or the GM Settlement;
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(d) by XXXX upon written notice to the Company and each other Investor:
(i) if the Approval Order has not become a Final Approval Order on or
prior to the earlier of (A) the tenth (10th) day after the
Bankruptcy Court enters the Approval Order, or, if such day is
not a Business Day, the next Business Day and (B) August 16,
2007; provided, that notice of termination pursuant to this
Section 12(d)(i) must be given on or prior to August 31, 2007;
(ii) at any time prior to the last date established by the Bankruptcy
Court for the filing of objections to the Disclosure Statement,
if the Company shall not have delivered a Disclosure Letter as
contemplated by Section 5(s) on or prior to the tenth (10th)
Business Day preceding the Disclosure Statement Filing Date or
shall have delivered a Disclosure Letter which shall not have
satisfied the condition with respect to the Disclosure Letter in
accordance with Section 9(a)(xxviii).
(iii) on or after March 31, 2008 (such date, being the "Closing Date
Outside Date"); provided that the Closing Date has not occurred
by such date;
(iv) on or after January 31, 2008 (such date, being the "Disclosure
Statement Outside Date"); provided that the Disclosure Statement
has not been filed for approval with the Bankruptcy Court by such
date;
(v) if the Company or any Investor shall have breached any provision
of this Agreement, which breach would cause the failure of any
condition set forth in Section 9(a)(xvi) or (xvii) hereof to be
satisfied, which failure cannot be or has not been cured on the
earliest of (A) the tenth (10th) Business Day after the giving of
written notice thereof to the Company or such Investor by any
Investor and (B) the third (3rd) Business Day prior to the
Closing Date Outside Date; provided, that the right to terminate
this Agreement under this Section 12(d)(v) shall not be available
to any Investor whose breach is the cause of the failure of the
condition in Section 9(a)(xvi) or (xvii) to be satisfied;
provided, further, that the right to terminate under this Section
12(d)(v) shall not be available as a result of a breach of
Section 5(o) to the extent, and only to the extent, that the
circumstances giving rise to the breach of Section 5(o)
previously gave rise to a termination right under Section
12(d)(vii) and XXXX did not exercise such termination right under
Section 12(d)(vii) by the end of the twenty (20) day period
referred to therein;
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(vi) (A) there shall have been a Change of Recommendation or (B) the
Company shall have entered into an Alternate Transaction
Agreement; or
(vii) for a period of twenty (20) days following any Cure Period if
XXXX has delivered a deficiency notice in accordance with Section
9(a)(xxviii)(C) and the condition set forth in Section
9(a)(xxviii) shall not have been satisfied at the end of such
Cure Period;
provided, that notwithstanding anything in the foregoing to the
contrary, any Investor other than XXXX shall be entitled to terminate
this Agreement as to itself (but not as to any other party) at any
time on or after June 30, 2008 (a "Limited Termination");
(e) [Reserved]
(f) by the Company upon written notice to each Investor:
(i) subject to the establishment of Alternative Financing in
accordance with Section 2(b), if any Investor shall have breached
any provision of this Agreement, which breach would cause the
failure of any condition set forth in Section 9(c)(iv) or (v)
hereof to be satisfied, which failure cannot be or has not been
cured on the earliest of (A) the tenth (10th) Business Day after
the giving of written notice thereof to the Investors by the
Company and (B) the third (3rd) Business Day prior to the Closing
Date Outside Date;
(ii) if the Company enters into any Alternate Transaction Agreement;
provided, that the Company may only terminate this Agreement
under the circumstances set forth in this Section 12(f)(ii) if:
(x) the Company's board of directors has determined in good
faith, after having consulted with its outside legal counsel and
its independent financial advisors, that such Alternate
Transaction is a Superior Transaction and the failure to enter
into such an Alternate Transaction Agreement would result in a
breach of the applicable fiduciary duties of the board of
directors, (y) before taking such action the Company has given
the Investors at least ten (10) Business Days' (or, in the event
of any Alternate Transaction that has been materially revised or
modified, at least five (5) Business Days') prior written notice
(the "Consideration Period") of the terms of such Alternate
Transaction and of its intent to take such action, and, during
the Consideration Period, the Company has, if requested by any
Investor, engaged in good faith negotiations regarding any
revisions to this Agreement, the Plan or any other agreement or
document proposed by
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XXXX and again has determined in good faith, after consultation
with its outside legal counsel and its independent financial
advisors, that such Alternate Transaction remains a Superior
Transaction and (z) prior to or contemporaneously with such
termination the Company shall pay to the Investors the Alternate
Transaction Fee;
(iii) on or after March 31, 2008; provided, that the Closing Date has
not occurred by such date; or
(iv) in accordance with Section 5(t)
For the purposes of this Section 12(f), a "Superior Transaction" shall
mean an Alternate Transaction, which the board of directors of the
Company, after consultation with its outside legal counsel and its
independent financial advisors, determines in good faith to be more
favorable to the bankruptcy estate of the Company than the
transactions contemplated by this Agreement, the Preferred Term Sheet,
the Plan Terms and the Plan, taking into account, all legal,
financial, regulatory and other aspects of such Alternate Transaction,
the likelihood of consummating the Alternate Transaction, the likely
consummation date of the Alternate Transaction and the identity of the
parties or proposed parties to such Alternate Transaction and after
taking into account any revisions to the terms of this Agreement, the
Plan and/or any other agreement or document proposed during the
Consideration Period.
(g) In addition to any other rights or remedies any Investor may have
under this Agreement (for breach or otherwise), the Company shall pay
a fee of $82,500,000 (the "Alternate Transaction Fee") to the
Investors in such proportions as are set forth on Schedule 2 hereto,
and, in any case, the Company shall pay to the Investors any
Transaction Expenses and any other amounts certified by the Investors
to be due and payable hereunder that have not been paid theretofore if
this Agreement is terminated pursuant to one of the following:
(i) pursuant to (x) Section 12(d)(vi)(B) or (y) Section 12(f)(ii);
(ii) pursuant to Section 12(d)(vi)(A) and, within the twenty-four (24)
month period following the date of such termination, an Alternate
Transaction Agreement is entered into or an Alternate Transaction
is consummated; or
(iii) pursuant to Section 12(d)(v) based on a willful breach by the
Company and within the twenty-four (24) month period following
the date of such
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termination, an Alternate Transaction Agreement is entered into
or an Alternate Transaction is consummated.
Payment of the amounts due under this Section 12(g) will be made (i)
no later than the close of business on the next Business Day following
the date of such termination in the case of a payment pursuant to
Section 12(g)(i)(x), (ii) prior to or contemporaneously with such
termination by the Company in the case of a payment pursuant to
Section 12(g)(i)(y) and (iii) prior to or contemporaneously with the
entry into an Alternate Transaction Agreement or the consummation of
an Alternate Transaction in the case of a payment pursuant to Sections
12(g)(ii) or (iii). Under no circumstances shall the Company be
required to pay more than one Alternate Transaction Fee plus
Transaction Expenses. The provision for the payment of the Alternate
Transaction Fee is an integral part of the transactions contemplated
by this Agreement and without this provision the Investors would not
have entered into this Agreement and shall constitute an allowed
administrative expense of the Company under Section 503(b)(1) and
507(a)(1) of the Bankruptcy Code.
(h) Upon termination under this Section 12, all rights and obligations of
the parties under this Agreement shall terminate without any liability
of any party to any other party except that (x) nothing contained
herein shall release any party hereto from liability for any willful
breach and (y) the covenants and agreements made by the parties herein
in Sections 2(h), 2(i) and 2(j), and Sections 10 through 18 will
survive indefinitely in accordance with their terms.
13. Notices. All notices and other communications in connection with this
Agreement will be in writing and will be deemed given if delivered
personally, sent via electronic facsimile (with confirmation), mailed by
registered or certified mail (return receipt requested) or delivered by an
express courier (with confirmation) to the parties at the following
addresses (or at such other address for a party as will be specified by
like notice):
(a) If to:
A-D Acquisition Holdings, LLC
c/o Appaloosa Management L.P.
00 Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
White & Case LLP
Wachovia Financial Center
000 Xxxxx Xxxxxxxx Xxxxxxxxx
-00-
Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000/5766
Attention: Xxxxxx X. Xxxxxx
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx
Xxxxxxx Xxxxx
(b) If to:
Harbinger Del-Auto Investment Company, Ltd.
c/o Harbinger Capital Partners Offshore Manager, LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
with a copy to:
Xxxxxxx Management Corp.
Xxx Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
White & Case LLP
Wachovia Financial Center
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000/5766
Attention: Xxxxxx X. Xxxxxx
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx
Xxxxxxx Xxxxx
with a copy to:
-73-
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxx and Xxxx Xxxx Xxxxxx
(c) If to:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx / Xxxx Xxxxxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
(d) If to:
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000 / (000) 000-0000
Attention: Xxxxx Xxxxx / Xxxxx Xxxxxxxx
with a copy to:
Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
(e) If to:
Xxxxxxx Xxxxx & Co
0 Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx / Xxx Xxxxxx
with a copy to:
-74-
Xxxxxxx Sachs & Co.
0 Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx
(f) If to:
Pardus DPH Holding LLC
000 Xxxxxxx Xxxxxx
Xxxxx 00X
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxx
-75-
(g) If to the Company, to:
Delphi Corporation
0000 Xxxxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx - Facsimile: (000) 000-0000
Xxxxx Xxxxxxx / Xxxx Xxxxxxxx - Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000/1
Attention: Xxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xx. Xxxxxx, Jr.
Xxxxxx Xxxxxxxxx
14. Assignment; Third Party Beneficiaries. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement will be assigned
by any of the parties (whether by operation of law or otherwise) without
the prior written consent of the other parties, except to an Ultimate
Purchaser or to a Related Purchaser pursuant to Sections 2(a), 2(b) and
2(k). Notwithstanding the previous sentence, subject to the provisions of
Sections 2(a), 2(b) and 2(k): this Agreement, or the Investors' obligations
hereunder, may be assigned, delegated or transferred, in whole or in part,
by any Investor to any Affiliate of such Investor over which such Investor
or any of its Affiliates exercise investment authority, including, without
limitation, with respect to voting and dispositive rights; provided, that
any such assignee assumes the obligations of such Investor hereunder and
agrees in writing to be bound by the terms of this Agreement in the same
manner as such Investor. Notwithstanding the foregoing or any other
provisions herein, except pursuant to an Additional Investor Agreement
acceptable to the Company and XXXX no such assignment will relieve an
Investor of its obligations hereunder if such assignee fails to perform
such obligations. Except as provided in Section 10 with respect to the
Indemnified Persons, this Agreement (including the documents and
instruments referred to in this Agreement) is not intended to and does not
confer upon any person other than the parties hereto any rights or remedies
under this Agreement.
15. Prior Negotiations; Entire Agreement. This Agreement (including the
agreements attached as exhibits to and the documents and instruments
referred to in this Agreement)
-76-
constitutes the entire agreement of the parties and supersedes all prior
agreements, arrangements or understandings, whether written or oral,
between the parties with respect to the subject matter of this Agreement,
except that the parties hereto acknowledge that any confidentiality
agreements, heretofore executed among the parties will continue in full
force and effect.
16. GOVERNING LAW; VENUE. THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THE INVESTORS
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF, AND VENUE IN, THE UNITED
STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND WAIVE ANY
OBJECTION BASED ON FORUM NON CONVENIENS. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR
VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.
17. Counterparts. This Agreement may be executed in any number of counterparts,
all of which will be considered one and the same agreement and will become
effective when counterparts have been signed by each of the parties and
delivered to the other party (including via facsimile or other electronic
transmission), it being understood that each party need not sign the same
counterpart.
18. Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions of
this Agreement may be waived, only by a written instrument signed by all
the parties or, in the case of a waiver, by the party waiving compliance,
and subject, to the extent required, to the approval of the Bankruptcy
Court. No delay on the part of any party in exercising any right, power or
privilege pursuant to this Agreement will operate as a waiver thereof, nor
will any waiver on the part of any party of any right, power or privilege
pursuant to this Agreement, nor will any single or partial exercise of any
right, power or privilege pursuant to this Agreement, preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege pursuant to this Agreement. The rights and remedies provided
pursuant to this Agreement are cumulative and are not exclusive of any
rights or remedies which any party otherwise may have at law or in equity.
19. Adjustment to Shares. If, in accordance with the terms of this Agreement,
the Company effects a reclassification, stock split (including a reverse
stock split), stock dividend or distribution, recapitalization, merger,
issuer tender or exchange offer, or other similar transaction with respect
to any shares of its capital stock, references to the numbers of such
shares and the prices therefore shall be equitably adjusted to reflect such
change and,
-77-
as adjusted, shall, from and after the date of such event, be subject to
further adjustment in accordance herewith.
20. Headings. The headings in this Agreement are for reference purposes only
and will not in any way affect the meaning or interpretation of this
Agreement.
21. Publicity. The initial press release regarding this Agreement shall be a
joint press release. Thereafter, the Company and Investors each shall
consult with each other prior to issuing any press releases (and provide
each other a reasonable opportunity to review and comment upon such
release) or otherwise making public announcements with respect to the
transactions contemplated by this Agreement and the Plan, and prior to
making any filings with any third party or any governmental entity
(including any national securities exchange or interdealer quotation
service) with respect thereto, except as may be required by law or by the
request of any governmental entity.
22. Knowledge; Sole Discretion. The phrase "knowledge of the Company" and
similar phrases shall mean the actual knowledge of the Chief Restructuring
Officer of the Company and such other officers as the Company and XXXX
shall reasonably agree. Whenever in this Agreement any party is permitted
to take an action or make a decision in its "sole discretion," the parties
hereto acknowledge that such party is entitled to make such decision or
take such action in such party's sole and absolute and unfettered
discretion and shall be entitled to make such decision or take such action
without regard for the interests of any other party and for any reason or
no reason whatsoever. Each party hereto acknowledges, and agrees to accept,
all risks associated with the granting to the other parties of the ability
to act in such unfettered manner.
[Signature Page Follows]
-78-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
DELPHI CORPORATION
By:
/s/ Xxxxx X. Xxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President, General
Counsel and Chief
Compliance Officer
A-D ACQUISITION HOLDINGS, LLC
By:
/s/ Xxxxx X. Xxxxx
-------------------------
Name:
Title:
HARBINGER DEL-AUTO INVESTMENT
COMPANY, LTD.
By:
/s/ Xxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
By:
/s/ Xxxxxx Xxxxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Director
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UBS SECURITIES LLC
By:
/s/ Xxxxxx Xxxxx
-------------------------
Name: Xxxxxx Xxxxx
Title: Managing Director
By:
/s/ Xxxxxx Xxxxxx
-------------------------
Name: Xxxxxx Xxxxxx
Title:Managing Director
XXXXXXX SACHS & CO.
By:
/s/ Xxxxxx Xxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
PARDUS DPH HOLDING LLC
By:
/s/ Xxxxxx Xxxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxxx
Title:
-80-
SCHEDULE 1
DEFINED TERM SECTION
------------------------------------------ -----------------------------------
XXXX Preamble
Additional Investor Agreement Section 2 (k)
Affiliate Section 2 (a)
Agreement Preamble
Alternate Transaction Section 9 (a)(v)
Alternate Transaction Agreement Section 9 (a)(v)
Alternate Transaction Fee Section 12 (g)
Alternative Financing Section 2 (b)
Amended and Restated Constituent Documents Section 8 (c)
Appaloosa Recitals
Approval Motion Recitals
Approval Order Recitals
Arrangement Fee Section 2 (h)(iii)
Assuming Investor Section 11 (b)
Available Investor Shares Section 2 (b)
Bankruptcy Code Recitals
Bankruptcy Court Recitals
Bankruptcy Rules Section 3 (b)(i)
Breaching Investor Section 11 (b)
Business Day Section 1 (c)(iii)
Business Plan Section 5 (s)
Capital Structure Date Section 3 (d)
Cerberus Recitals
Change of Recommendation Section 9 (a)(vi)
Chapter 11 Cases Recitals
Closing Date Section 2 (d)
Closing Date Outside Date Section 12 (d)(iii)
Code Section 3 (z)(ii)
Commission Section 1 (c)(ii)
Commitment Fees Section 2 (h)(ii)
Commitment Parties Recitals
Company Preamble
Company ERISA Affiliate Section 3 (z)(ii)
Company Financing Proposal Section 5 (t)
Company Plans Section 3 (z)(i)
Company SEC Documents Section 3 (j)
Confirmation Order Section 9 (a)(vii)
Confirmed Plan Section 9 (a)(viii)
Consideration Period Section 12 (f)(ii)
Cure Period Section 9(a)(xxviii)(C)(1)
Debt Financing Section 5 (t)
Debtors Recitals
Determination Date Section 1 (c)(vi)
SCHEDULE 1
Page 2
DEFINED TERM SECTION
------------------------------------------ -----------------------------------
DGCL Section 3 (oo)
Direct Subscription Shares Section 2 (a)(i)
Disclosure Letter Section 3
Disclosure Letter Delivery Date Section 3
Disclosure Statement Section 5 (b)
Disclosure Statement Approval Date Section 5 (b)
Disclosure Statement Filing Date Section 5 (p)
Disclosure Statement Outside Date Section 12 (d)(iv)
Disinterested Director Section 8 (c)
Dolce Recitals
Draft Business Plan Section 3 (m)(vii)
Due Diligence Expiration Date Section 12 (d)(ii)
Effective Date Section 1 (c)(iii)
Eligible Holder Section 1 (a)
Environmental Laws Section 3 (x)(i)
Equity Commitment Letter Section 4 (o)
XXXXX Xxxxxxx 0 (x)(x)
Xxxxxxxx Xxx Section 3 (i)(i)
Existing Shareholder Rights Plan Section 3 (d)
Expiration Time Section 1 (c)(iii)
E&Y Section 3 (q)
Final Approval Order Section 9 (a)(i)
Financing Decision Date Section 5 (t)
Financing Notice Section 5 (t)
Financing Order Section 2 (j)
GAAP Section 3 (i)(i)
GM Recitals
GM Settlement Section 5 (p)
GS Preamble
Harbinger Preamble
Harbinger Fund Recitals
HSR Act Section 3 (g)
Indebtedness Section 9 (a)(xxvii)
Indemnified Person Section 10 (a)
Indemnifying Party Section 10 (a)
Intellectual Property Section 3 (s)
Investment Decision Package Section 3 (k)
Investor Preamble
Investor Default Section 2 (b)
Investors Preamble
Investor Shares Section 2 (a)
Issuer Free Writing Prospectus Section 3 (k)
IUE-CWA Section 5 (u)
knowledge of the Company Section 22
SCHEDULE 1
Page 3
DEFINED TERM SECTION
------------------------------------------ -----------------------------------
Limited Termination Section 12 (d)
Losses Section 10 (a)
Material Adverse Effect Section 3 (a)
Material Investment Documents Section 9 (a)(xxviii)
Maximum Number Section 2 (a)
Merrill Preamble
Money Laundering Laws Section 3 (ee)
Monthly Financial Statements Section 5 (r)
Multiemployer Plans Section 3 (z)(ii)
New Common Stock Section 1 (a)
OFAC Section 3 (ff)
Option Section 3 (d)
Options Section 3 (d)
Original Agreement Recitals
Original Approval Motion Recitals
Original Approval Order Recitals
Original Investors Recitals
Original PSA Recitals
Pardus Preamble
Plan Section 1 (b)
Plan Terms Recitals
Preferred Commitment Fee Section 2 (h)(i)
Preferred Debt Financing Section 5 (t)
Preferred Shares Section 2 (a)
Preferred Term Sheet Section 1 (b)
Preliminary Rights Offering Prospectus Section 3 (k)
Proceedings Section 10 (a)
Purchase Notice Section 1 (c)(vi)
Purchase Price Section 1 (a)
Record Date Section 1 (a)
Registration Rights Agreement Section 8 (c)
Related Purchaser Section 2 (a)
Relevant Date Section 9 (a)(xxviii)(A)(i)
Resale Registration Documents Section 8 (c)
Resale Registration Statement Section 8 (c)
Restricted Period Section 5 (j)
Right Section 1 (a)
Rights Distribution Date Section 1 (c)(ii)
Rights Exercise Period Section 1 (c)(iii)
Rights Offering Section 1 (a)
Rights Offering Prospectus Section 3 (k)
Rights Offering Registration Statement Section 3 (k)
Satisfaction Notice Section 1 (c)(vi)
Securities Act Section 1 (c)(ii)
SCHEDULE 1
Page 4
DEFINED TERM SECTION
------------------------------------------ -----------------------------------
Securities Act Effective Date Section 3 (k)
Series A Certificate of Designations Section 2 (a)(iii)
Series A Preferred Stock Section 2 (a)(iii)
Series A Purchase Price Section 2 (a)(iii)
Series B Certificate of Designations Section 2 (a)(i)
Series B Preferred Stock Section 2 (a)(i)
Share Section 1 (a)
Shareholders Agreement Section 8 (c)
Significant Subsidiary Section 3 (a)
Single-Employer Plan Section 3 (z)(ii)
Standby Commitment Fee Section 2 (h)(ii)
Stock Plans Section 3 (d)
Subscription Agent Section 1 (c)(iii)
Subsidiary Section 3 (a)
Superior Transaction Section 12 (f)
Takeover Statute Section 3 (oo)
Taxes Section 3 (y)
Tax Returns Section 3 (y)(i)
Transaction Agreements Section 3 (b)(i)
Transaction Expenses Section 2 (j)
Transformation Plan Section 3 (m)(vi)
UAW Section 3 (pp)
UAW MOU Section 3 (pp)
UBS Preamble
Ultimate Purchasers Section 2 (k)
Unsubscribed Shares Section 2 (a)(iv)
USW Section 5 (u)
SCHEDULE 2
Maximum
Direct Maximum Total
Subscription Backstop Maximum Common
Direct Shares Maximum Shares Total Shares Series A
Subscription Purchase Backstop Purchase Common Purchase Preferred
Investor Shares Price Shares Price Shares Price Stock(1)
-------- -------------- -------------- -------------- -------------- -------------- -------------- ----------------
XXXX 1,761,878 $ 67,638,500 15,856,906 $ 608,746,500 17,618,784 $ 676,385,000 12,787,724
Del-Auto 702,594 $ 26,972,600 6,323,348 $ 242,753,400 7,025,942 $ 269,726,000 -
Merrill 265,347 $ 10,186,650 2,388,118 $ 91,679,850 2,653,465 $ 101,866,500 -
UBS 265,347 $ 10,186,650 2,388,118 $ 91,679,850 2,653,465 $ 101,866,500 -
GS 950,768 $ 36,500,000 8,556,914 $ 328,500,000 9,507,682 $ 365,000,000 -
Pardus 612,545 $ 23,515,600 5,512,907 $ 211,640,400 6,125,452 $ 235,156,000 -
-------------- -------------- -------------- -------------- -------------- -------------- ----------------
Total 4,558,479 $ 175,000,000 41,026,311 $1,575,000,000 45,584,790 $1,750,000,000 12,787,724
Series B Total
Purchase Preferred Purchase Purchase
Investor Price Stock(2) Price Price
-------- -------------- -------------- -------------- --------------
XXXX $ 400,000,000 - $ - $1,076,385,000
Del-Auto - 3,321,178 $ 127,500,000 $ 397,226,000
Merrill - 1,693,149 $ 65,000,000 $ 166,866,500
UBS - 1,693,149 $ 65,000,000 $ 166,866,500
GS - 911,696 $ 35,000,000 $ 400,000,000
Pardus - 2,800,208 $ 107,500,000 $ 342,656,000
-------------- -------------- -------------- --------------
Total $ 400,000,000 10,419,380 $ 400,000,000 $2,550,000,000
Proportionate
Share of
Preferred
Commitment Fee:
----------------
XXXX 50.4861%
Del-Auto 15.9375%
Merrill 8.1250%
UBS 8.1250%
GS 3.8889%
Pardus 13.4375%
----------
Total 100%
Proportionate
Share of
Standby
Commitment Fee:
----------------
XXXX 40.3977%
Del-Auto 15.4712%
Merrill 6.0769%
UBS 6.0769%
GS 18.5397%
Pardus 13.4375%
----------
Total 100%
Proportionate Share of If full If no
Alternate Transaction Commitment Commitment
Fee:(3) Fee received Fee received
---------------------- -------------- -------------
XXXX 54.3750% 46.8555%
Del-Auto 15.9375% 15.7150%
Merrill 8.1250% 7.1475%
UBS 8.1250% 7.1475%
GS 0% 9.6970%
Pardus 13.4375% 13.4375%
-------------- --------------
Total 100% 100%
----------
(1) Common stock equivalent units.
(2) Common stock equivalent units.
(3) Percentages will fluctuate depending on the amount of any Commitment
Fee received.
EXHIBIT A
SUMMARY OF TERMS OF
PREFERRED STOCK
Set forth below is a summary of indicative terms for a potential
investment in Delphi Corporation by entities or funds controlled by Appaloosa
Management, Harbinger Capital Partners, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated., UBS Securities, Xxxxxxx Sachs & Co. and Pardus Special
Opportunities Master Fund L.P. The investment is being made in connection with a
Plan of Reorganization of Delphi Corporation under chapter 11 of the Bankruptcy
Code. The terms set forth below are intended solely to provide a framework for
the parties as they proceed with discussions of the proposed transaction and do
not constitute any agreement with respect to the definitive terms for any
transaction or any agreement to agree or any solicitation of acceptances or
rejections of any plan of reorganization. While the parties expect to negotiate
in good faith with respect to the terms for a transaction, any party shall be
free to discontinue discussions and negotiations at any time for any reason or
no reason. No party shall be bound by the terms hereof and only execution and
delivery of definitive documentation relating to the transaction shall result in
any binding or enforceable obligations of any party relating to the transaction.
Issuer: Delphi Corporation (the "Company"), a corporation organized
under the laws of Delaware and a successor to Delphi
Corporation, as debtor in possession in the chapter 11
reorganization case (the "Bankruptcy Case") pending in the
United States Bankruptcy Court for the Southern District of
New York.
Investors: Entities or funds controlled by Appaloosa Management
("Appaloosa"), Harbinger Capital Partners ("Harbinger"),
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("Merrill"), UBS Securities ("UBS"), Xxxxxxx Xxxxx & Co.
("GS") and Pardus Special Opportunities Master Fund L.P.
("Pardus" and together with Harbinger, Merrill, UBS and GS,
the "Co-Lead Investors"), with the Series B Preferred Stock
to be purchased by the Co-Lead Investors allocated as
follows: (a) Harbinger--31.875%; (b) Merrill--16.25%; (c)
UBS--16.25%; (d) GS--8.75%; and (e) Pardus--26.875%.
Appaloosa or any Permitted Holder (as defined below) shall
be the exclusive purchaser and sole beneficial owner for all
purposes hereunder of the Series A-1 Preferred Stock (as
defined below). Appaloosa, Harbinger, Merrill, UBS, GS and
Pardus are collectively referred to as the "Investors."
Securities to be Series A-1 Senior Convertible Preferred Stock, par value
Issued: $0.01 per share (the "Series A-1 Preferred Stock"). The
Series A-1 Preferred Stock shall convert to Series A-2
Preferred Stock (the "Series A-2 Preferred Stock" and,
together with the Series A-1 Preferred Stock, the "Series A
Preferred Stock") in certain circumstances described in this
term sheet.
Series B Senior Convertible Preferred Stock, par value $0.01
per share (the "Series B Preferred Stock" and, together with
the Series A
Preferred Stock, the "Preferred Stock").
The Series B Preferred Stock shall be identical in all
respect to the Series A-1 Preferred Stock except as
specifically set forth below.
The Series A-2 Preferred Stock shall be identical in all
respect to the Series A-1 Preferred Stock except it shall
not have Voting Rights and Governance Rights (as defined
below).
The (i) Series A-1 Preferred Stock and the shares of Common
Stock underlying such Series A-1 Preferred Stock may not be,
directly or indirectly, sold, transferred, assigned,
pledged, donated, or otherwise encumbered or disposed of by
any Series A Preferred Stock Holder (as defined below),
during the two years following the effective date (the
"Effective Date") of the Company's plan of reorganization in
the Bankruptcy case (the "Plan") other than in whole
pursuant to a sale of the Company (as defined below)
(provided, however, that in any sale of Series A-1 Preferred
Stock in connection with a sale of the Company, the seller
of the Series A-1 Preferred Stock may receive consideration
with a value no greater than the greater of (i) the fair
market value of the Series A-1 Preferred Stock (or a
preferred security of equivalent economic value), such fair
market value not to reflect the value of the Voting Rights
and Governance Rights attributable to the Series A-1
Preferred Stock, and (ii) the Liquidation Value) and (ii)
Series B Preferred Stock and the shares of Common Stock
underlying such Series B Preferred Stock, or any interest or
participation therein may not be, directly or indirectly,
sold, transferred, assigned, pledged or otherwise encumbered
or disposed of (including by exercise of any registration
rights) during the ninety days following the Effective Date
other than in whole pursuant to a sale of the Company (each
of (i) and (ii), the "Transfer Restriction"). A "sale of the
Company" means the sale of the Company to a party or parties
other than, and not including, Appaloosa or any affiliate of
Appaloosa (for this purpose, an "affiliate" of Appaloosa
shall not include any company in which a fund managed by
Appaloosa or its affiliates invests and does not control)
pursuant to which such party or parties acquire (i) the
capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the
Company's Board of Directors (whether by merger,
consolidation or sale or transfer of the Company's capital
stock) or (ii) all or substantially all of the Company's
assets determined on a consolidated basis.
Purchase of At the Effective Date, (i) Appaloosa will purchase all of
Preferred Stock: the 12,787,724 shares of Series A-1 Preferred Stock for
an aggregate purchase price of $400 million and (ii) the
Co-Lead Investors shall purchase all of the 10,419,880
shares of Series B Preferred Stock, for an aggregate
purchase price of $400 million. The aggregate stated value
of the Series A-1 Preferred Stock shall be $400 million and
the aggregate stated value of
2
the Series B Preferred Stock shall be $400 million (in each
case, the "Stated Value").
Mandatory The Company shall convert into Common Stock all, but not
Conversion into less than all, of the (i) Series A Preferred Stock on the
Common Stock: first date the Mandatory Conversion Requirements are
satisfied (but in no event earlier than June 30, 2012(1)) at
the Conversion Price (as defined below) of the Series A
Preferred Stock in effect on such conversion date, and (ii)
Series B Preferred Stock on the first day the Mandatory
Conversion Requirements are satisfied (but in no event
earlier than the third anniversary of the Effective Date) at
the Conversion Price (as defined below) of the Series B
Preferred Stock in effect on such conversion date.
The "Mandatory Conversion Requirements" set forth in this
section are as follows: (i) the closing price for the Common
Stock for at least 35 trading days in the period of 45
consecutive trading days immediately preceding the date of
the notice of conversion shall be equal to or greater than
$55(2) per share and (ii) the Company has at the conversion
date an effective shelf registration covering resales of the
shares of Common Stock received upon such conversion of the
Preferred Stock.
The Company will provide each Preferred Stock Holder (as
defined below) with notice of conversion at least five (5)
business days prior to the date of conversion.
The holders of the Series A Preferred Stock (the "Series A
Preferred Stock Holders" and each, a "Series A Preferred
Stock Holder") will agree not to take any action to delay or
prevent such registration statement from becoming effective.
Liquidation In the event of any liquidation, dissolution or winding up
Rights: of the business of the Company, whether voluntary or
involuntary, the holders of Preferred Stock (the "Preferred
Stock Holders" and each, a "Preferred Stock Holder") shall
receive, in exchange for each share, out of legally
available assets of the Company, (A) a preferential amount
in cash equal to (i) the Stated Value plus (ii) the
aggregate amount of all accrued and unpaid dividends or
distributions with respect to such share (such amount being
referred to as the "Liquidation Value") and (B) a
non-preferential amount (if any) (the "Common Equivalent
Amount") equal to (i) the amount that Preferred Stock Holder
would have received pursuant to the liquidation if it had
converted its Preferred Stock into Common Stock immediately
prior to the liquidation minus (ii) any amounts received
pursuant to (A)(i) and (ii) hereof (the Stated Value and
dividends and distributions). For the avoidance of doubt,
this paragraph
----------
(1) Assuming emergence by January 1, 2008. Conversion date to be adjusted
day-by-day to reflect any later emergence.
(2) Equivalent to a TEV of $15.3 billion at emergence.
3
should operate so that in the event of a liquidation,
dissolution or winding up of the business of the Company, a
Preferred Stock Holder shall receive a total amount equal to
the greater of: (i) the Liquidation Value and (ii) the
amount that a Preferred Stock Holder would have received
pursuant to the liquidation, dissolution or winding up of
the business if it converted its Preferred Stock into Common
Stock immediately prior to the liquidation.
Ranking: The Series A Preferred Stock and the Series B Preferred
Stock shall rank pari passu with respect to any
distributions upon liquidation, dissolution or winding up of
the Company. The Preferred Stock will rank senior to any
other class or series of capital stock of the Company with
respect to any distributions upon liquidation, dissolution
or winding up of the Company.
Conversion of Each share of Preferred Stock shall be convertible at any
Preferred time, without any payment by the Preferred Stock Holder,
Stock into Common into a number of shares of Common Stock equal to (i) the
Stock: Liquidation Value divided by (ii) the Conversion Price.
The Conversion Price shall initially be $[___](3), with
respect to the Series A Preferred Stock, and $[___](4) with
respect to the Series B Preferred Stock, in each case
subject to adjustment from time to time pursuant to the
anti-dilution provisions of the Preferred Stock (as so
adjusted, the "Conversion Price"). The anti-dilution
provisions will contain customary provisions with respect to
stock splits, recombinations and stock dividends and
customary weighted average anti-dilution provisions in the
event of, among other things, the issuance of rights,
options or convertible securities with an exercise or
conversion or exchange price below the Conversion Price, the
issuance of additional shares at a price less than the
Conversion Price and other similar occurrences.
Conversion of If (a) Appaloosa or any Permitted Holder (as defined below)
Series A-1 sells, transfers, assigns, pledges, donates or otherwise
Preferred Stock encumbers to any person other than a Permitted Holder, or
Into Series A-2 converts into Common Stock, shares of Series A-1 Preferred
Preferred Stock with an aggregate Liquidation Value in excess of $100
Stock: million, or (b) Xxxxx Xxxxxx no longer controls
Appaloosa and Xxxxx Xxxxx is no longer an executive officer
of Appaloosa, then all the shares of Series A-1 Preferred
Stock shall automatically convert into Series A-2 Preferred
Stock without any action on the part of the holder thereof;
provided, that with respect to clause (a), no such
conversion shall be effective until the Company has in
effect a registration statement covering resales of the
Common Stock issuable upon conversion of the Preferred
Stock. The Series A Preferred Stock Holders will agree not
to take any action to delay or prevent such
----------
(3) Equivalent to a TEV of $11.75 billion at emergence.
(4) Equivalent to a TEV of $12.8 billion at emergence.
4
registration statement from becoming effective.
If Appaloosa transfers shares of Series A-1 Preferred Stock
to any person other than an affiliate of Appaloosa (such
affiliate being a "Permitted Holder"), then all the shares
of Series A-1 Preferred Stock so transferred shall
automatically convert into Series A-2 Preferred Stock
without any action on the part of the holder thereof.
The direct or indirect transfer of ownership interests in
any Permitted Holder that owns shares of Series A-1
Preferred Stock such that such Permitted Holder ceases to be
an affiliate of Appaloosa shall constitute a transfer of
such Series A-1 Preferred Stock to a person other than a
Permitted Holder for the purpose of this provision.
Each event described above in the previous two paragraphs of
this section "Conversion of Series A Preferred Stock into
Series A-2 Preferred Stock" is referred to as a "Series A-2
Conversion Event."
Subject to compliance with applicable securities laws and
the Transfer Restriction, shares of Preferred Stock will be
freely transferable.
Dividends: Each Preferred Stock Holder shall be entitled to receive
dividends and distributions on the Preferred Stock at an
annual rate of 6.5% of the Liquidation Value thereof, with
respect to the Series A Preferred Stock, and 3.25% of the
Liquidation Value thereof, with respect to the Series B
Preferred Stock, in each case payable quarterly in cash as
declared by the Company's Board. Unpaid dividends shall
accrue. In addition, if any dividends are declared and paid
on the Common Stock, the Series A Preferred Stock shall be
entitled to receive, in addition to the dividend on the
Series A Preferred Stock at the stated rate, the dividends
that would have been payable on the number of shares of
Common Stock that would have been issued on the Series A
Preferred Stock had it been converted immediately prior to
the record date for such dividend.
Preference with Each Preferred Stock Holder shall, prior to the payment of
Respect to any dividend or distribution in respect of the Common Stock
Dividends: or any other class of capital stock of the Company
ranking junior to the Preferred Stock, be entitled to be
paid in full the dividends and distributions payable in
respect of the Preferred Stock.
Restriction on So long as shares of Series A Preferred Stock having a
Redemptions of Liquidation Value of $200 million or more remain
Junior Stock: outstanding, the Company shall not and shall not permit any
of its subsidiaries to, purchase, redeem or otherwise
acquire for value any shares of Common Stock or any shares
of any other class of capital stock of the Company ranking
junior to the Preferred Stock, except customary provisions
with respect to repurchase of employee equity upon
termination of employment and except for
5
purchases, redemptions or other acquisitions for value of
Common Stock not to exceed $50 million in any calendar year.
Governance - A committee (the "Search Committee") shall be appointed
Board of consisting of one (1) representative of Appaloosa, one
Directors: (1) representative of the Company, being the Company's lead
director (currently Xxxx Xxxx), one (1) representative of
the Unsecured Creditors Committee, being Xxxxx Xxxxxx, one
(1) representative of the Co-Lead Investors other than UBS,
GS and Xxxxxxx (who shall be determined by Appaloosa), and
one (1) representative of the Equity Committee reasonably
acceptable to the other members of the Search Committee.
Each member of the Search Committee shall be entitled to
require the Search Committee to interview any person to
serve as a director unless such proposed candidate is
rejected by each of the Appaloosa representative, the
Company representative and the representative of the
Unsecured Creditors' Committee. The entire Search Committee
shall be entitled to participate in such interview and in a
discussion of such potential director following such
interview.
The board of directors of the Company shall consist of nine
(9) directors (which number shall not be expanded at all
times that the Series A-1 Preferred Stock has Series A-1
Board Rights (as defined below)), three (3) of whom (who
shall be Class III Directors) shall initially be nominated
by Appaloosa and elected at the time of emergence from
Chapter 11 by the Series A Preferred Stock Holders (and
thereafter shall be elected directly by the Series A
Preferred Stock Holders) (the "Series A Directors"), one (1)
of whom (who shall be a Class I Director) shall be the
Executive Chairman selected as described below under
"Executive Chairman", one (1) of whom (who shall be a Class
I Director) shall be the Chief Executive Officer, one (1) of
whom (who shall be a Class II Director) shall initially be
selected by the Co-Lead Investor representative on the
Search Committee with the approval of either the Company or
the Unsecured Creditors' Committee (the "Joint Investor
Director"), one (1) of whom (who shall be a Class I
Director) shall initially be selected by the Unsecured
Creditors' Committee and two (2) of whom (who shall be Class
II Directors) shall initially be selected by the Unsecured
Creditors' Committee (such directors selected by the
Unsecured Creditors' Committee and the Joint Investor
Director, being the "Common Directors"). For the avoidance
of doubt, all directors selected in accordance with this
paragraph, shall have been interviewed and/or discussed by
the Search Committee. Each director so selected shall be
appointed to the initial Board of Directors of the Company
unless at least three members of the following four members
of the Search Committee objects to the appointment of such
individual: the Appaloosa representative, the Company
representative; the representative of the Unsecured
Creditors' Committee; and the representative of the Equity
Committee. Initially, the Board shall be
6
comprised of (a) six (6) directors who satisfy all
applicable independence requirements of the relevant stock
exchange on which it is expected the Common Stock would be
traded and (b) six (6) directors who are independent from
the Investors; provided, that the requirements of this
sentence may be waived by the unanimous consent of the
Company, Appaloosa and the Unsecured Creditors Committee.
Additionally, the Joint Investor Director must be
independent from the Investors.
Directors initially will be placed as set forth above in
three (3) classes: directors in the first class will have an
initial term expiring at the annual meeting of stockholders
to be held in 2009 (each a "Class I Director"), directors in
the second class will have an initial term expiring at the
annual meeting of stockholders to be held in 2010 (each a
"Class II Director"), and directors in the final class will
have an initial term expiring at the annual meeting of
stockholders to be held in 2011 (each a "Class III
Director"). After the expiration of each initial term of
each class of directors, the directors will thereafter each
have a one year term elected annually.
Following the initial election of the Executive Chairman and
the Chief Executive Officer, the Executive Chairman and
Chief Executive Officer shall be nominated for election to
the Board by the Nominating and Corporate Governance
Committee of the Board and elected to the board by the
holders of the Common Stock and the Preferred Stock, voting
as a class. The Executive Chairman of the Board shall be
selected as described below under "Executive Chairman." The
initial Chief Executive Officer shall be Xxxxxx X'Xxxx, who
shall become the Chief Executive Officer and President not
later than the effective date of the Plan.
After the initial selection of the Series A Directors, until
the earlier of the expiration of the term of the Class III
Directors and the conversion of all Series A-1 Preferred
Stock to Series A-2 Preferred Stock or Common Stock, (a) the
Series A Preferred Stock shall continue to directly elect
(including removal and replacement) the Series A Directors
subject to the ability of the Nominating and Corporate
Governance Committee to, by majority vote, veto the
selection of up to two proposed Series A Directors for each
Series A director position on the Board and (b) the number
of directors on the board of directors may not be increased.
The rights of Series A-1 Preferred Stock described in this
paragraph are referred to as "Series A-1 Board Rights". Upon
the earlier of such date, the Series A-1 Directors shall
serve out their remaining term and thereafter be treated as
Common Directors.
After the initial selection of the Common Directors, the
nominees for election of the Common Directors shall be
determined by the Nominating and Corporate Governance
Committee of the Company's
7
Board of Directors, with the Series A Directors on such
committee not entitled to vote on such determination at any
time the Series A-1 Preferred Stock retains Series A-1 Board
Rights, and recommended to the Company's Board of Directors
for nomination by the Board. Only holders of Common Stock,
Series B Preferred Stock and Series A Preferred Stock that
is not entitled to Series A Board Rights shall be entitled
to vote on the election of the Common Directors.
The Search Committee shall determine by majority vote the
Committee assignments of the initial Board of Directors;
provided, that for the initial Board and at all times
thereafter that the Series A-1 Preferred Stock retains
Series A-1 Board Rights at least one Series A Director shall
be on all committees of the Board and a Series A Director
shall constitute the Chairman of the Compensation Committee
of the Board; provided, further, that so long as the Series
A-1 Preferred Stock retains Series A-1 Board Rights, the
Series A Directors shall not constitute a majority of the
Nominating and Corporate Governance Committee. Committee
assignments shall be subject to all applicable independence
and qualification requirements for directors including those
of the relevant stock exchange on which the Common Stock is
expected to be traded. Pursuant to a stockholders' agreement
or other arrangements, the Company shall maintain that
composition.
Governance - The Executive Chairman shall initially be selected by
Executive majority vote of the Search Committee, which must include
Chairman: the approval of the representatives of Appaloosa and the
Unsecured Creditors' Committee. Any successor Executive
Chairman shall be selected by the Nominating and Corporate
Governance Committee of the Board, subject (but only for so
long as any of the Series A-1 Preferred Stock remains
outstanding) to the approval of the Series A-1 Preferred
Stock Holders. Upon approval, such candidate shall be
recommended by the Nominating and Corporate Governance
Committee to the Company's Board of Directors for
appointment as the Executive Chairman and nomination to the
Board. The Preferred Stock Holders will vote on the
candidate's election to the Board on an as-converted basis
together with holders of Common Stock. Notwithstanding the
foregoing, if there shall occur any vacancy in the office of
the Executive Chairman during the initial one (1) year term,
the successor Executive Chairman shall be nominated by the
Series A-1 Preferred Stock Holders (but only for so long any
of as the Series A-1 Preferred Stock remains outstanding)
subject to the approval of the Nominating and Corporate
Governance Committee of the Board.
The Executive Chairman shall be a full-time employee of the
Company with his or her principal office in the Company's
world headquarters in Troy, Michigan and shall devote
substantially all of his or her business activity to the
business affairs of the Company.
8
The Executive Chairman shall cause the Company to and the
Company shall be obligated to meaningfully consult with the
representatives of the Series A-1 Preferred Stock Holders
with respect to the annual budget and material modifications
thereto prior to the time it is submitted to the Board for
approval.
The employment agreements entered into by the Company with
the Executive Chairman and the Chief Executive Officer shall
provide that (i) upon any termination of employment, the
Executive Chairman and/or the Chief Executive Officer shall
resign as a director (and the employment agreements shall
require delivery at the time such agreements are entered
into of an executed irrevocable resignation that becomes
effective upon such termination) and (ii) the right to
receive any payments or other benefits upon termination of
employment shall be conditioned upon such resignation. If
for any reason the Executive Chairman or the Chief Executive
Officer does not resign or the irrevocable resignation is
determined to be ineffective, then the Series A-1 Preferred
Stock Holders may remove the Executive Chairman and/or Chief
Executive Officer as a director, subject to applicable law.
The employment agreement of the Chief Executive Officer will
provide that if the Chief Executive Officer is not elected
as a member of the Company's Board, the Chief Executive
Officer may resign for "cause" or "good reason".
The special rights of the Series A-1 Preferred Stock
referred to in "Governance - Board of Directors" and in this
"Executive Chairman" section are referred to as the
"Governance Rights".
Governance - Except with respect to the election of directors, who shall
Voting Rights: be elected as specified above, the Preferred Stock Holders
shall vote, on an "as converted" basis, together with the
holders of the Common Stock, on all matters submitted to
shareholders.
The Series A-1 Preferred Stock Holders shall be entitled to
propose individuals for appointment as Chief Executive
Officer and Chief Financial Officer, subject to a vote of
the Board. The Series A-1 Preferred Stock Holders shall also
have the non-exclusive right to propose the termination of
the Executive Chairman (but only during the initial one (1)
year term of the Executive Chairman and only for so long as
the Series A-1 Preferred Stock remains outstanding), the
Chief Executive Officer and Chief Financial Officer, in each
case, subject to a vote of the Board. If the Series A
Preferred Stock Holders propose the appointment or
termination of the Chief Executive Officer or Chief
Financial Officer, the Board shall convene and vote on such
proposal within ten (10) days of the Board's receipt of
notice from the Series A-1 Preferred Stock Holders;
provided, that the then current Chief Executive Officer
shall not be entitled to vote on either the appointment or
9
termination of the Chief Executive Officer and shall not be
entitled to vote on the termination of the Chief Financial
Officer.
The Company shall not, and shall not permit its subsidiaries
to, take any of the following actions (subject to customary
exceptions as applicable) unless (i) the Company shall
provide the Series A-1 Preferred Stock Holders with at least
20 business days advance notice and (ii) it shall not have
received, prior to the 10th business day after the receipt
of such notice by the Series A-1 Preferred Stock Holders,
written notice from all of the Series A-1 Preferred Stock
Holders that they object to such action:
o any action to liquidate the Company;
o any amendment of the charter or bylaws that adversely
affects the Series A Preferred Stock (any expansion of
the Board of Directors would be deemed adverse); or
o at all times that the Series A Preferred Stock is
subject to the Transfer Restriction:
o a sale, transfer or other disposition of all or
substantially all of the assets of the Company and
its subsidiaries, on a consolidated basis;
o any merger or consolidation involving a change of
control of the Company; or
o any acquisition of or investment in any other
person or entity having a value in excess of $250
million in any twelve-month period after the Issue
Date.
The approval rights set forth above shall be in addition to
the other rights set forth above and any voting rights to
which the Series A Preferred Stock Holders are entitled
above and under Delaware law.
In a merger or consolidation involving a change of control
of the Company (a "Change of Control"), the Series A-1
Preferred Stock will be converted into the greater of (i)
the consideration with a value equal to the fair market
value of the Series A-1 Preferred Stock (or a preferred
security of equivalent economic value), such fair market
value shall not reflect the value of the Voting Rights and
Governance Rights attributable to the Series A-1 Preferred
Stock, and (ii) the Liquidation Value. In a Change of
Control transaction, the Series B Preferred Stock will be
converted into the greater of (i) the consideration with a
value equal to the fair market value of the Series B
Preferred Stock (or a preferred security of equivalent
economic value) and (ii) the Liquidation Value.
The special rights of the Series A-1 Preferred Stock
described above in
10
this section "Governance - Voting Rights" are referred to as
the "Voting Rights". The Series A-1 Preferred Stock Holders
shall have no Voting Rights after no shares of Series A-1
Preferred Stock are outstanding.
Appaloosa and the Permitted Holders shall not receive, in
exchange for the exercise or non-exercise of voting or other
rights in connection with a any transaction subject to
Voting Rights, any compensation or remuneration; provided,
that this restriction shall not prohibit the reimbursement
of expenses incurred by Appaloosa or any Permitted Holders
and shall not prohibit the payment of fees by the Company to
Appaloosa or any Permitted Holder if the Company has engaged
Appaloosa or its affiliates as an advisor or consultant in
connection with any such transaction.
Reservation of The Company shall maintain sufficient authorized but
Unissued Stock: unissued securities of all classes issuable upon the
conversion or exchange of shares of Preferred Stock and
Common Stock.
Transferability: The Series A Preferred Stock Holders may sell or
otherwise transfer such stock as follows:
o to any Permitted Holder; or
o subject to the Transfer Restriction, to any other
person; provided, however, that upon any such transfer,
the shares of Series A-1 Preferred Stock so transferred
shall automatically convert into Series A-2 Preferred
Stock.
Registration The Investors shall be entitled to registration rights as
Rights: set forth below. The registration rights agreement shall
contain customary terms and provisions consistent with such
terms, including customary hold-back, cutback and
indemnification provisions.
Demand Registrations. Subject to the Transfer Restriction,
the Preferred Stock Holders shall be entitled to an
aggregate of five (5) demand registrations, in addition to
any shelf registration statement required by the Equity
Purchase and Commitment Agreement among the Company and the
Investors (which shelf registration shall be renewed or
remain available so long as the Company is not eligible to
use Form S-3); provided, that all but one such demand right
requires the prior written consent of Appaloosa and the one
demand not requiring the consent of Appaloosa shall be at
the request of the holders of a majority of the shares of
Series B Preferred Stock; provided, further, that following
the time that the Company is eligible to use Form S-3, the
Preferred Stock Holders shall be entitled to an unlimited
number of demand registrations (without the need for
Appaloosa's consent). Any demand registration may, at the
option of the Preferred Stock Holders be a "shelf"
11
registration pursuant to Rule 415 under the Securities Act
of 1933. All registrations will be subject to customary
"windows."
Piggyback Registrations. In addition, subject to the
Transfer Restriction, the Preferred Stock Holders shall be
entitled to unlimited piggyback registration rights, subject
to customary cut-back provisions.
Registrable Securities: The Series B Preferred Stock, any
shares of Common Stock issuable upon conversion of the
Preferred Stock, any other shares of Common Stock held by
any Investor (including shares acquired in the rights
offering or upon the exercise of preemptive rights), and any
additional securities issued or distributed by way of a
dividend or other distribution in respect of any securities.
Securities shall cease to be Registrable Securities upon
sale to the public pursuant to a registration statement or
Rule 144, or when all shares held by an Investor may be
transferred without restriction pursuant to Rule 144(k).
Expenses. All registrations shall be at the Company's
expense (except underwriting fees, discounts and commissions
agreed to be paid by the selling holders), including,
without limitation, fees and expenses of one counsel for any
holders selling Registrable Securities in connection with
any such registration.
Preemptive So long as shares of Series A-1 Preferred Stock having a
Rights: Liquidation Value of $250 million or more remain
outstanding, the Preferred Stock Holders shall be entitled
to participate pro rata in any offering of equity securities
of the Company, other than with respect to (i) shares issued
or underlying options issued to management and employees and
(ii) shares issued in connection with business combination
transactions.
Commitment Fee: (a) A commitment fee of 2.25% of total commitment shall be
earned by and payable to the Investors and (b) an additional
arrangement fee of 0.25% of total commitment shall be earned
by and payable to Appaloosa, all as provided for in the
EPCA.
Standstill For a period of five (5) years from the Closing Date,
Appaloosa will not (a) acquire, offer or propose to acquire,
solicit an offer to sell or donate or agree to acquire, or
enter into any arrangement or undertaking to acquire,
directly or indirectly, by purchase, gift or otherwise,
record or direct or indirect beneficial ownership (as such
term is defined in Rule 13d-3 of the Exchange Act) of more
than 25% of the Company's common stock or any direct or
indirect rights, warrants or options to acquire record or
direct or indirect beneficial ownership of more than 25% of
the Company's common stock or (b) sell, transfer, pledge,
dispose, distribute or assign ("Transfer") to any person in
a single transaction, Company Common Stock or any securities
convertible into or exchangeable for or representing the
right to acquire the Company's
12
Common Stock ("Common Stock Equivalents") representing more
than 15% of the Company's then issued and outstanding (on a
fully diluted basis) Common Stock; provided, that Appaloosa
shall be permitted to Transfer the Company's Common Stock or
Common Stock Equivalents (i) to Permitted Holders, (ii) as
part of a broadly distributed public offering effected in
accordance with an effective registration statement, (iii)
in a sale of the Company, (iv) pursuant to any tender or
exchange offer or (v) as otherwise approved by (A) during
the initial three year term of the Series A Directors, a
majority of Directors who are not Series A Directors or (B)
after the initial three year term of the Series A Directors,
a majority of the Directors (customary exceptions shall
apply for Transfers to partners, stockholders, family
members and trusts and Transfers pursuant to the laws of
succession, distribution and descent).
Stockholders Certain of the provisions hereof will be contained
Agreement: in a Stockholders Agreement to be executed and delivered
by XXXX and the Company on the Effective Date.
Governing Law: State of Delaware
13
*****
AMENDED
EXHIBIT B
PLAN FRAMEWORK AND SPECIAL STATUTORY COMMITTEE PROVISIONS
FRAMEWORK PROVISIONS
The Plan shall contain all of the following terms; provided, however, that
nothing herein shall constitute an offer with respect to any securities or a
solicitation of acceptances of a chapter 11 plan. Such offer or solicitation
only will be made in compliance with all applicable securities laws and/or
provisions of the Bankruptcy Code:
1.1 A condition precedent to the effectiveness of the Plan (subject to the
waiver provisions to be negotiated in connection with the Plan) shall be that
the aggregate amount of all trade claims and other unsecured claims (including
any accrued interest) (excluding (i) unsecured funded debt claims, (ii)
Flow-Through Claims (defined below), (ii) GM claims, which shall be treated as
set forth below, and (iii) securities claims, which shall be treated as set
forth below) (collectively, the "Trade and Other Unsecured Claims") that have
been asserted or scheduled but not yet disallowed as of the effective date of
the Plan shall be allowed or estimated for distribution purposes by the
Bankruptcy Court to be no more than $1.7 billion, excluding all allowed accrued
postpetition interest thereon.
1.2 All senior secured debt shall be refinanced and paid in full and all
allowed administrative and priority claims shall be paid in full.
1.3 Trade and Other Unsecured Claims and unsecured funded debt claims shall
be placed in a single class. All such claims that are allowed (including all
allowed accrued interest, which for trade claims shall be at a rate to be agreed
to or determined by the Bankruptcy Court, it being understood that with respect
to trade claims, the Debtors and Plan Investors will not take the position that
there should not be an entitlement to postpetition interest) shall be satisfied
in full with (a) $3.48 billion of common stock (77.3 million out of a total of
147.6 million shares,(1) at a deemed value of $45.00 per share for Plan
distribution purposes) in reorganized Delphi and (b) the balance in cash(2);
provided, however, that the common stock and cash to be distributed pursuant to
the immediately preceding clause shall be reduced proportionately by the amount
that allowed Trade and Other Unsecured Claims are less than $1.7 billion,
excluding allowed accrued postpetition interest thereon.
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(1) Inclusive of distributions to subordinated creditors under Section 1.6
below. References herein to the total number of shares of common stock gives
effect to the conversion of the preferred stock issued pursuant to the
Investment Agreement to common stock. The actual number of shares of common
stock to be issued by Delphi and to be distributed to various classes under
Sections 1.3, 1.6 and 1.8 of this Exhibit B is subject to final adjustment and
reconciliation as well as negotiation of plan distribution mechanics in the
Plan.
(2) Such amounts to be adjusted by proceeds from the par rights offering to be
conducted by Delphi in connection with Section 1.8(iv).
1.4 (i) Customer and environmental obligations, (ii) employee-related
(excluding collective bargaining-related obligations) and other obligations (in
each instance as to be agreed by the Debtors and Appaloosa) and (iii) litigation
exposures and other liabilities that are covered by insurance (as to be agreed
by the Debtors and Appaloosa and scheduled in the Plan) ((i), (ii) and (iii)
together, the "Flow-Through Claims") will be unimpaired and will be satisfied in
the ordinary course of business (subject to the preservation and flow-through of
all estate rights, claims and defenses with respect thereto which shall be fully
reserved).
1.5 GM will receive an allowed general unsecured claim for all claims and
rights of GM and its affiliates (excluding in respect of the 414(l) Assumption,
all Flow Through Claims and all other claims and amounts to be treated in the
normal course or arising or paid pursuant to the Delphi/GM Definitive Documents)
that will be satisfied with $2.70 billion in cash.
1.6 All Delphi subordinated debt claims (including all accrued interest
thereon) will be allowed and, in resolution of the subordination rights of
Delphi senior debt, all cash otherwise distributable to Delphi subordinated debt
claims pursuant to Section 1.3 shall be distributed to Delphi senior debt, and
the allowed Delphi subordinated debt claims will be satisfied with $478 million
of common stock (10.6 million out of a total of 147.6 million shares, at a
deemed value of $45.00 per share for Plan distribution purposes) in reorganized
Delphi; provided, however that the $478 million referred to above shall be
increased by post-petition interest accruing after July 1, 2007 as provided for
in the Plan.
1.7 Any allowed securities claims, including all claims in the MDL
litigation pending in the United States District Court for the Eastern District
of Michigan, will be satisfied solely from available insurance or as otherwise
agreed by Delphi and Appaloosa.
1.8 The equity securities class in the Plan shall receive, in the
aggregate, (i) $66 million of common stock (1.5 million out of a total of 147.6
million shares, at a deemed value of $45.00 per share for Plan distribution
purposes) in reorganized Delphi, (ii) transferable rights to purchase 45.6
million out of a total of 147.6 million shares of common stock (to be reduced by
the guaranteed minimum of 10% of the rights for the Plan Investors) in
reorganized Delphi for $1.75 billion (at an estimated exercise price of
$38.39/share which is based on discounted TEV of $12.8 billion at emergence),
(iii) 5-year warrants to purchase for $45/share an additional 5% of the common
stock of Delphi, and (iv) non-transferable rights to purchase, on a
proportionate basis, $572 million of the common stock that would otherwise be
distributable to unsecured claims pursuant to Section 1.3 for a price of
$45/share consisting of: (x) $522 million of the common stock that would
otherwise be distributable to all general unsecured claims (less the plan value
of the common stock made available for the par rights offering pursuant to
subparagraph (z) hereof), (y) $50 million of the common stock in excess of
subparagraph (x) hereof that would otherwise be distributable to Appaloosa, and
(z) all of the common stock that would otherwise be distributable pursuant to
the claim allowed pursuant to paragraph 8 of the Order Under 11 U.S.C xx.xx.
363, 1113, And 1114 And Fed. R. Bankr. P. 6004 And 9019 Approving Memorandum Of
Understanding Among UAW, Delphi, And General Motors Corporation Including
Modification Of UAW Collective Bargaining Agreements And Retiree Welfare
Benefits For Certain UAW-Represented Retirees (Docket No. 8693, July 19, 2007)
(the "par rights offering"); provided, that Appaloosa (in its capacity as a
stockholder of Delphi) shall agree not to participate in the par rights offering
and shall use commercially reasonable efforts to
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obtain such agreement from the other Plan Investors. The record date for the
rights offering and the par rights offering shall be not earlier than the date
on which the Confirmation Hearing is first scheduled to commence.(3)
1.9 The preferred stock to be issued pursuant to the Plan in connection
with the Investment Agreement and the corporate governance of Reorganized Delphi
shall be subject to the terms listed on the term sheet attached to the
Investment Agreement ("Summary of Terms of Preferred Stock"), which are
incorporated by reference herein.
1.10 Delphi will arrange for funding as of the effective date of the Plan
for all amounts required to meet ERISA funding requirements through 2011 for its
US pension obligations as estimated on the effective date of the Plan. Such
payment will include GM taking up to $2.0 billion of net pension obligations
pursuant to a 414(l) transaction (the "414(l) Assumption"), which amount shall
be reduced to no less than $1.5 billion if (a) Delphi or Appaloosa determine
that any greater amount will have an adverse impact on the Debtors or (b)
Appaloosa determines that any greater amount will have an adverse impact on the
Plan Investors' proposed investment in the Debtors. GM will receive a note from
Delphi in the amount of the 414(l) Assumption transferred in the 414(l)
transaction, subject to agreed market terms to be specified in the Delphi/GM
Definitive Documents; provided, however, that such note will be due, payable and
paid in full at par plus accrued interest in cash within ten (10) days following
the effective date of the Plan.
1.11 A joint claims oversight committee shall be established on the
effective date of the Plan or as soon thereafter as practicable to monitor
claims administration, provide guidance to the Debtors, and address the
Bankruptcy Court if such post-effective date joint claims oversight committee
disagrees with the Debtors' determinations requiring claims resolution. The
composition of the joint claims oversight committee shall be reasonably
satisfactory to Appaloosa, but in any case, shall include at least one
representative appointed by Appaloosa.
1.12 Ongoing management compensation, including the SERP, stock options,
restricted stock, severance, change in control provisions and all other benefits
will be on market terms (as determined by the Board of Directors, based on the
advice of Xxxxxx-Xxxxx, and such management compensation plan design shall be
described in the Disclosure Statement and included in the Plan) and reasonably
acceptable to Appaloosa; claims of former management and terminated/resigning
management will be resolved on terms acceptable to Delphi and Appaloosa or by
court order. Equity awards will dilute all equity interests pro rata.
1.13 The amended and restated certificate of incorporation of Delphi to be
effective immediately following the effective date of the Plan shall prohibit:
(A) for so long as Appaloosa owns any shares of Series A Preferred Stock, any
transactions between Delphi or any of its Subsidiaries (as defined in the
Investment Agreement), on the one hand, and Appaloosa or its respective
Affiliates (as defined in the Investment Agreement), on the other hand
(including any "going private transaction" sponsored by Appaloosa) unless such
transaction shall have been
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(3) Inclusion in the Plan of subsections 1.8 (iii) and (iv) is conditioned upon
the "Equity Committee" (as defined below) supporting entry of the Approval Order
and not subsequently appealing or seeking reconsideration or termination of such
Approval Order (none of which the Equity Committee would be entitled to seek
following its support of entry of such order).
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approved by directors constituting not less than 75% of the number of Common
Directors (as defined in the Investment Agreement), and (B) any transaction
between Delphi or any of its Subsidiaries, on the one hand, and a director, on
the other hand, other than a director appointed by holders of Series A Preferred
Stock (as defined in the Investment Agreement), unless such transaction shall
have been approved by directors having no material interest in such transaction
(a "Disinterested Director") constituting not less than 75% of the number of
Disinterested Directors.
SPECIAL STATUTORY COMMITTEE PROVISIONS
So long as the official committee of unsecured creditors appointed on
October 17, 2005 in the Chapter 11 Cases (the "Creditors' Committee") and the ad
hoc committee of trade creditors (the "Ad Hoc Trade Committee") shall support
entry of the Approval Order and so long as the Creditors' Committee shall
support the implementation of the Investment Agreement, this Exhibit B, and each
of the transactions contemplated by the Investment Agreement and this Exhibit B,
the following provisions shall be in effect, and to the extent such provisions
are inconsistent with any other provisions of this Exhibit B, the following
provisions shall supplant and supersede such; provided, that if the Creditors'
Committee, in the exercise of its fiduciary duties, shall subsequently withdraw,
qualify or modify in a manner adverse to the Plan Investors (or resolve to do
any of the foregoing) its support for the entry of the Approval Order, the
implementation of the Investment Agreement, this Exhibit B, or any of the
transactions contemplated by the Investment Agreement or this Exhibit B, or
shall have approved or recommended any competing or other transaction
inconsistent with the Investment Agreement or this Exhibit B (each such action,
a "Withdrawal of Support"), then Sections 2.1 (as it relates to the Creditors'
Committee) and Sections 2.2 and 2.3 shall terminate and shall be of no further
force or effect; provided further, that if the Creditors' Committee (a) objects
in any pleading to (i) any of the terms of any Plan Document solely on the basis
of comments provided by the Creditors' Committee pursuant to Section 2.1 hereof,
but rejected by the Debtors or Appaloosa, or (ii) the position that the Debtors,
any Plan Investor or any other Party takes as to the appropriate rate of
interest on Trade and Other Unsecured Claims as permitted by Section 1.3 of this
Exhibit B as amended hereby, or (b) unsuccessfully seeks the termination of the
Investment Agreement pursuant to Section 2.3, then in each such case such
objection or action shall not be considered a Withdrawal of Support. So long as
the official committee of equity security holders appointed in the Chapter 11
Cases (the "Equity Committee") shall support entry of the Approval Order and so
long as the Equity Committee shall support the implementation of the Investment
Agreement, this Exhibit B, and each of the transactions contemplated by the
Investment Agreement and this Exhibit B, the following provision shall be in
effect (as it relates to the Equity Committee), and to the extent such provision
is inconsistent with any other provisions of this Exhibit B, the following
provisions shall supplant and supersede such; provided, that if the Equity
Committee takes any action that constitutes a Withdrawal of Support, then
Section 2.1 (as it relates to the Equity Committee) shall terminate and shall be
of no further force or effect; provided further, that if the Equity Committee
objects in any pleading to any of the terms of any Plan Document solely on the
basis of comments provided by the Equity Committee pursuant to Section 2.1
hereof, but rejected by the Debtors or Appaloosa, then such objection or action
shall not be considered a Withdrawal of Support; provided further, that Section
1.8 (iii) and (iv) shall terminate and be of no further force and effect only if
the Equity Committee fails to affirmatively support entry of the Approval Order
at the Bankruptcy Court hearing held with respect to entry
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of such order or, following entry of such order, should the Equity Committee
seek to appeal, reconsider or terminate such order.
2.1 The Debtors will provide Creditors' Committee and the Equity Committee
with periodic working drafts of the Plan, the Disclosure Statement, the
Confirmation Order and any Plan Documents that each such committee reasonably
believes could have a material impact on the recovery of their constituents, and
any amendments thereto, and with a reasonable opportunity to review and comment
on such documents prior to such documents being filed with the Bankruptcy Court.
The Debtors and the Plan Investors will consider in good faith any comments
consistent with the Investment Agreement and this Exhibit B, and any other
reasonable comments of the Creditors' Committee and/or the Equity Committee, and
will not reject such comments without first discussing the reasons therefore
with counsel to the Creditors' Committee and/or the Equity Committee and giving
due consideration to the views of the Creditors' Committee and/or the Equity
Committee. The Debtors will continue to consult with the Creditors' Committee
and the Equity Committee, as they have been doing, with respect to issues
relating to the MDL litigation referenced in Section 1.7 hereof, including,
without limitation, any resolution and/or settlement thereof.
2.2 The Creditors' Committee will have consultation rights through the
Confirmation Date with respect to executive compensation under the Plan and as
described in the Disclosure Statement. The Creditors' Committee shall also have
one representative of the Creditors' committee placed on the joint claims
oversight committee contemplated by Section 1.11 of this Exhibit B, it being
understood that such member shall not have veto rights over any committee
action.
2.3 In the event that the Debtors and the Plan Investors agree to (a)
substantive and material changes in the overall deal as set forth in the
Investment Agreement and this Exhibit B after the date of the Approval Order,
(b) Flow-Through Claims (as defined in Section 1.4 of this Exhibit B) other than
claims arising out of or resulting from customer claims and environmental
claims, or (c) any alternative treatment of securities claims from estate assets
other than available insurance, any of which would have a material adverse
effect on the economics of the recovery of general unsecured creditors under the
plan of reorganization to be funded through the EPCA, the Creditors' Committee
shall have the right to seek termination of the EPCA by the Bankruptcy Court by
establishing by a preponderance of the evidence that there has been a material
adverse effect on the economics of the recovery to general unsecured creditors
under the plan of reorganization to be funded through the EPCA as a result of
such actions.
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