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Exhibit 10g
INITIAL PUBLIC OFFERING AND DISTRIBUTION AGREEMENT,
DATED AS OF FEBRUARY 1, 1999,
BY AND BETWEEN
GENERAL MOTORS CORPORATION
AND
DELPHI AUTOMOTIVE SYSTEMS CORPORATION
2
TABLE OF CONTENTS
Page
1. Definitions..............................................................................................2
2. The Initial Public Offering and the Distribution.........................................................9
2.1 The Initial Public Offering.....................................................................9
2.2 The Distribution................................................................................9
2.3 Certain Stockholder Matters.....................................................................9
2.4 Prior Relationship.............................................................................10
2.5 Further Assurances Regarding the Distribution..................................................10
2.6 Abandonment of the Distribution................................................................10
3. Expenses................................................................................................11
3.1 General........................................................................................11
3.2 Certain Expenses Relating to the Initial Public Offering.......................................11
3.3 Certain Expenses Relating to the Distribution..................................................11
4. Covenants To Preserve Tax-Free Status of the Distribution and the Qualification of the
Contribution as a D Reorganization......................................................................11
4.1 Representations and Warranties.................................................................11
4.2 Restrictions on Delphi.........................................................................12
4.3 Cooperation and Other Covenants................................................................15
4.4 Indemnification for Tax Liabilities............................................................17
4.5 Procedure for Indemnification for Tax Liabilities..............................................17
4.6 Arbitration....................................................................................18
4.7 Exclusive Remedies.............................................................................19
5. Certain Other Covenants.................................................................................19
5.1 Financial and Other Information................................................................19
5.2 Other Covenants................................................................................25
5.3 Covenants Regarding the Incurrence of Indebtedness.............................................26
6. Indemnification.........................................................................................28
6.1 Indemnification by Delphi......................................................................28
6.2 Indemnification by GM..........................................................................28
6.3 Other Liabilities..............................................................................29
6.4 Tax Effects of Indemnification.................................................................29
6.5 Effect of Insurance Upon Indemnification.......................................................30
6.6 Procedure for Indemnification Involving Third-Party Claims.....................................30
6.7 Procedure for Indemnification Not Involving Third-Party Claims.................................32
6.8 Exclusive Remedies.............................................................................32
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TABLE OF CONTENTS
Page
7. Miscellaneous...........................................................................................32
7.1 Dispute Resolution.............................................................................32
7.2 Survival.......................................................................................32
7.3 Complete Agreement.............................................................................32
7.4 Authority......................................................................................32
7.5 Governing Law..................................................................................33
7.6 Consent to Exclusive Jurisdiction..............................................................33
7.7 Notices........................................................................................33
7.8 Amendment and Modification.....................................................................35
7.9 Binding Effect; Assignment.....................................................................35
7.10 Third Party Beneficiaries......................................................................35
7.11 Counterparts...................................................................................35
7.12 Waiver.........................................................................................35
7.13 Severability...................................................................................36
7.14 Remedies.......................................................................................36
7.15 Performance....................................................................................36
7.16 References; Construction.......................................................................36
Exhibits
Agreements Subject to Section 5.2(c)......................................................................Exhibit A
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INITIAL PUBLIC OFFERING AND DISTRIBUTION AGREEMENT
This INITIAL PUBLIC OFFERING AND DISTRIBUTION AGREEMENT (the
"Agreement") is made and entered into as of February 1, 1999, by and between
General Motors Corporation, a Delaware corporation ("GM"), and Delphi Automotive
Systems Corporation, a Delaware corporation and a wholly owned subsidiary of GM
("Delphi"). Certain capitalized terms used herein are defined in Section 1 of
this Agreement.
RECITALS
WHEREAS, the Board of Directors of GM has determined that it would be
appropriate and desirable to completely separate the Delphi Automotive Systems
Business from GM;
WHEREAS, GM has caused Delphi to be incorporated in order to effect
such separation;
WHEREAS, GM and Delphi have previously entered into the Separation
Agreement and the Ancillary Agreements (other than this Agreement and the
Registration Rights Agreement), each effective as of January 1, 1999, pursuant
to which GM has contributed and transferred to Delphi, and Delphi has received
and assumed, the assets and liabilities then associated with the Delphi Business
as described therein;
WHEREAS, GM and Delphi intend that the Contribution qualify as a
tax-free reorganization under Section 368(a)(1)(D) of the Code;
WHEREAS, GM currently owns all of the issued and outstanding Delphi
Common Stock;
WHEREAS, Delphi has previously filed the IPO Registration Statement
with the SEC but it has not yet become effective;
WHEREAS, the parties currently contemplate that, reasonably promptly
following the execution of this Agreement, Delphi shall consummate the Initial
Public Offering;
WHEREAS, immediately following the consummation of the Initial Public
Offering, GM shall own approximately 82.3% of the outstanding shares of Delphi
Common Stock (or approximately 80.2% if the underwriters exercise their
over-allotment option in full in accordance with the Underwriting Agreement);
WHEREAS, concurrently with the execution of this Agreement, GM and
Delphi are entering into the Registration Rights Agreement;
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WHEREAS, GM currently intends to divest itself of its entire ownership
of Delphi during 1999 by distributing in the Distribution all of its shares of
Delphi Common Stock to the holders of GM $1 2/3 Common Stock;
WHEREAS, GM currently expects to accomplish the Distribution by means
of a split-off, a spin-off or some combination of both transactions;
WHEREAS, GM and Delphi intend that the Distribution will be tax-free to
GM and its stockholders under Section 355 of the Code;
WHEREAS, the parties intend in this Agreement to set forth the
principal arrangements between them regarding the Initial Public Offering and
the Distribution; and
WHEREAS, the parties hereto have determined that in order to accomplish
the objectives of the Initial Public Offering and the Distribution and to
facilitate the consummation thereof, it is necessary and desirable to
restructure certain intercompany relationships, allocate certain liabilities and
provide for certain indemnification, all as set forth herein;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. DEFINITIONS.
"Abandonment Notice" has the meaning set forth in Section 2.6.
"Acquisition Target" has the meaning set forth in Section 5.3(a)(i).
"Active Trade or Business" means the active conduct of the trade or
business (as defined in Section 355(b)(2) of the Code) conducted by Delphi
immediately prior to the applicable Distribution Date.
"Adjusted Delphi Indebtedness" has the meaning set forth in
Section 5.3.
"Affiliate" means a Delphi Affiliate or a GM Affiliate, as the case may
be.
"Agreement" has the meaning set forth in the Preamble.
"Ancillary Agreements" has the meaning ascribed to such term in the
Separation Agreement.
"Annual Financial Statements" has the meaning set forth in Section 5.1
(a)(vi).
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"Business" means the Delphi Business or the GM Business, as the case
may be.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions located in the State of New York or Michigan are
authorized or obligated by law or executive order to close.
"Claim" has the meaning set forth in Section 6.7.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, together with the rules and regulations promulgated thereunder.
"Contribution" means the transfer of certain assets by GM to Delphi
(and the assumption by Delphi of certain liabilities) as contemplated by the
Separation Agreement.
"Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"CPR Rules" means the Rules for Non-Administered Arbitration of
Business Disputes promulgated by the Center for Public Resources, as in effect
on the date hereof.
"D Reorganization" means a transaction qualifying as a reorganization
under Section 368(a)(1)(D) of the Code.
"Delphi" has the meaning set forth in the Preamble.
"Delphi Affiliate" means a Person that, after giving effect to the
Distribution, directly or indirectly through one or more intermediaries, is
Controlled by, or is under common Control with Delphi.
"Delphi Automotive Systems Business" has the meaning ascribed to such
term in the Separation Agreement.
"Delphi Business" means any business or operations of Delphi or any
Delphi Affiliates, including, in all cases, any predecessor entities (including,
without limitation, the Delphi Automotive Systems Business).
"Delphi Capital Stock" means all classes or series of capital stock of
Delphi.
"Delphi Common Stock" means the Common Stock, par value $0.01 per
share, of Delphi.
"Delphi Indebtedness" has the meaning set forth in Section 5.3.
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"Delphi Public Documents" has the meaning set forth in Section
5.1(a)(ix).
"Delphi Transfer Agent" means BankBoston, N.A., in its capacity as the
transfer agent and registrar for the Delphi Common Stock.
"Delphi's Auditors" has the meaning set forth in Section 5.1(b)(i).
"Dispute Notice" means written notice of any dispute between GM and
Delphi arising out of or relating to this Agreement, which shall set forth, in
reasonable detail, the nature of the dispute.
"Distribution" means the distribution of Delphi Common Stock by GM in
one or more transactions occurring after the Initial Public Offering that
collectively have the effect that all shares of Delphi Common Stock held by GM
are distributed to GM stockholders, whenever such transaction(s) shall occur.
"Distribution Date" means any date or dates, as the case may be,
determined by GM, in its sole and absolute discretion, to be a date on which
shares of Delphi Common Stock held by GM are distributed in connection with the
Distribution.
"Distribution Registration Statement" means any and all registration
statements, information statements or other documents filed by any party with
the SEC in connection with any transaction constituting part of the
Distribution, in each case as supplemented or amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, together with the rules and regulations promulgated
thereunder.
"FFO to Debt Ratio" has the meaning set forth in Section 5.3(c).
"GAAP" means generally accepted accounting principles, consistently
applied.
"GM" has the meaning set forth in the Preamble.
"GM Affiliate" means a Person that, after giving effect to the
Distribution, directly or indirectly through one or more intermediaries, is
Controlled by GM.
"GM Annual Statements" has the meaning set forth in Section 5.1(b)(ii).
"GM Business" means any business or operations of GM or any GM
Affiliates other than the Delphi Business.
"GM Disclosure Portions" means all material set forth in, or
incorporated by reference into, either the IPO Registration Statement or the
Distribution Registration Statement, as applicable, to the extent relating
exclusively to (i) GM and the GM Affiliates (excluding Delphi and the Delphi
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Affiliates), (ii) the GM Business, (iii) GM's intentions with respect to the
Distribution or (iv) the terms of the Distribution, including, without
limitation, the form, structure and terms of any transaction(s) and/or
offering(s) to effect the Distribution and the timing of and conditions to the
consummation of the Distribution.
"GM Public Filings" has the meaning set forth in Section 5.1(a)(xiii).
"GM Transfer Agent" means BankBoston, N.A., in its capacity as the
transfer agent and registrar for the GM $1 2/3 Common Stock.
"GM $1 2/3 Common Stock" means the Common Stock, par value $1 2/3 per
share, of GM.
"GM's Auditors" has the meaning set forth in Section 5.1(b)(ii).
"Indemnifying Party" means a Person that is obligated to provide
indemnification under this Agreement.
"Indemnitee" means a Person that is entitled to seek indemnification
under this Agreement.
"Indemnity Payment" means an amount that an Indemnifying Party is
required to pay to an Indemnitee under this Agreement.
"Initial Public Offering" means the initial public offering by Delphi
of shares of Delphi Common Stock as contemplated by the IPO Registration
Statement.
"Insurance Proceeds" means the payment received by an insured from an
insurance carrier or paid by an insurance carrier on behalf of the insured, net
of any applicable premium adjustment and tax effect.
"IPO Registration Statement" means the Registration Statement on Form
S-1, Registration No. 333-67333, of Delphi, as supplemented and amended from
time to time.
"IRS" means Internal Revenue Service of the U.S. Department of Treasury
or any successor agency.
"Losses" means all losses, liabilities, claims, obligations, demands,
judgments, damages, dues, penalties, assessments, fines (civil or criminal),
costs, liens, expenses, forfeitures, settlements, or fees, reasonable attorneys'
fees and court costs, of any nature or kind, whether or not the same would
properly be reflected on a balance sheet, and "Loss" means any of these.
"Negotiation Period" means the period of 20 Business Days following the
initial meeting of the representatives of GM and Delphi following the receipt of
a Dispute Notice.
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"Notice" means any notice, request, claim, demand, or other
communication under this Agreement.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Pre-Distribution Period" means the period of time from the date hereof
until the completion of the Distribution.
"Proposed Acquisition Transaction" means a transaction or series of
transactions as a result of which any Person or any group of related Persons
would (directly or indirectly) acquire, or have the right to acquire, from
Delphi or one or more holders of outstanding shares of Delphi Capital Stock, a
number of shares of Delphi Capital Stock that would comprise 50% or more of (A)
the value of all outstanding shares of Delphi Capital Stock as of the date of
such transaction, or in the case of a series of transactions, the date of the
last transaction of such series, or (B) the total combined voting power of all
outstanding shares of Voting Stock of Delphi as of the date of such transaction,
or in the case of a series of transactions, the date of the last transaction of
such series.
"Quarterly Financial Statements" has the meaning set forth in Section
5.1(a)(v).
"Registration Rights Agreement" means the Registration Rights Agreement
to be entered into between GM and Delphi concurrently with the execution and
delivery of this Agreement.
"Regulation S-K" means Regulation S-K of the General Rules and
Regulations promulgated by the SEC.
"Regulation S-X" means Regulation S-X of the General Rules and
Regulations promulgated by the SEC.
"Representation Date" means any date on which Delphi makes any
representation (i) to the IRS or to counsel selected by GM for the purpose of
obtaining a Subsequent Tax Opinion/Ruling, or (ii) to GM for the purpose of any
determination required to be made by GM pursuant to Section 4.2.
"Representation Letters" means the representation letters and any other
materials (including, without limitation, the ruling request and the related
supplemental submissions to the IRS) delivered or deliverable by GM and others
in connection with the rendering by Tax Counsel and the issuance by the IRS of
the Tax Opinions/Rulings, which to the extent related to Delphi shall be in form
and substance reasonably satisfactory to Delphi.
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"Representative" means, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants or attorneys.
"Request" has the meaning set forth in Section 6.7.
"Rights Plan" means the Agreement by and between Delphi and BankBoston,
N.A., as Rights Agent, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, together with the rules and regulations promulgated thereunder.
"Separate Counsel" has the meaning set forth in Section 6.6(b).
"Separation Agreement" means the Master Separation Agreement by and
among GM, Delphi, Delphi Automotive Systems LLC, a Delaware limited liability
company and a wholly owned subsidiary of GM, Delphi Technologies, Inc., a
Delaware corporation and a wholly owned subsidiary of GM, and Delphi Automotive
Systems (Holding), Inc., a Delaware corporation and a wholly owned subsidiary of
GM, dated as of December 22, 1998, as amended from time to time.
"Service Agent" means (i) for GM, The Corporation Trust Company, with
offices on the date hereof at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and (ii) for Delphi, The Corporation Trust Company, with
offices on the date hereof at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Subsequent Tax Opinion/Ruling" means either (i) an opinion of counsel
selected by GM, in its sole and absolute discretion, confirming, in form and
substance reasonably satisfactory to GM, that, as a consequence of the
consummation of a subsequent transaction, no income, gain or loss for U.S.
federal income tax purposes will be recognized by GM, the stockholders or former
stockholders of GM, or any GM Affiliate with respect to the Distribution, or
(ii) an IRS private letter ruling to the same effect.
"Subsidiary" means with respect to any specified Person, any
corporation or other legal entity of which such Person or any of its
Subsidiaries Controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote with respect to the election of
members to the board of directors or similar governing body; provided, however,
that for the purposes of this Agreement, neither Delphi nor any of the
Subsidiaries of Delphi shall be deemed to be Subsidiaries of GM or of any of the
Subsidiaries of GM.
"Tax" means (i) any income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of
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the Code), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on, minimum, estimated, or other tax, assessment, or governmental charge of
any kind whatsoever imposed by any governmental authority, including any
interest, penalty, or addition thereto, whether disputed or not; (ii) liability
for the payment of any amounts of the type described in clause (i) above arising
as a result of being (or having been) a member of any group or being (or having
been) included or required to be included in any Tax Return related thereto; and
(iii) liability for the payment of any amounts of the type described in clause
(i) above as a result of any express or implied obligation to indemnify or
otherwise assume or succeed to the liability of any other Person.
"Tax Agreements" means, collectively, the (i) Agreement for the
Allocation of United States Federal, State and Local Income Taxes between GM and
Delphi, dated as of December 16, 1998, as amended from time to time; (ii)
Agreement for the Indemnification of United States Federal, State and Local
Non-Income Taxes between GM and Delphi, dated as of December 16, 1998, as
amended from time to time; (iii) Amended and Restated Agreement for the
Allocation of United States Federal, State and Local Income Taxes between GM and
Delphi, dated as of December 16, 1998, as amended from time to time; (iv)
Customs Consulting Agreement between GM and Delphi, dated as of December 16,
1998, as amended from time to time; and (v) Tax Compliance and Planning Services
Agreement by and between GM and Delphi, dated as of December 16, 1998, as
amended from time to time.
"Tax Control" means, with respect to Delphi, ownership of Delphi
Capital Stock which constitutes at least 80% of both (i) the total combined
voting power of all outstanding shares of Voting Stock of Delphi and (ii) each
class and series of Delphi Capital Stock other than Voting Stock of Delphi.
"Tax Counsel" means the law firm of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇.
"Tax-Free Status of the Distribution" means the nonrecognition of
taxable gain or loss for U.S. federal income tax purposes to GM, GM Affiliates
and GM's stockholders in connection with the Distribution.
"Tax Opinions/Rulings" means the opinions of Tax Counsel and the
rulings by the IRS deliverable to GM in connection with the Contribution and the
Distribution.
"Tax-Related Losses" means (i) all federal, state and local Taxes
(including interest and penalties thereon) imposed pursuant to any settlement,
final determination, judgment or otherwise; (ii) all accounting, legal and other
professional fees, and court costs incurred in connection with such taxes; and
(iii) all costs and expenses that may result from adverse tax consequences to GM
or GM's stockholders (including all costs, expenses and damages associated with
stockholder litigation or controversies) payable by GM or GM Affiliates.
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"Third-Party Claim" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person other than GM or any GM Affiliate or Delphi or any Delphi
Affiliate which gives rise to a right of indemnification hereunder.
"Underwriting Agreement" means the Underwriting Agreement between
Delphi and the underwriters relating to the Initial Public Offering, as amended
from time to time.
"Value" means with respect to any trade or business (or portion
thereof), the fair market value of the assets constituting such trade or
business, less the current liabilities associated with such trade or business,
in each case determined as of the applicable Distribution Date.
"Voting Stock" means with respect to any Person, all classes and series
of the capital stock of such Person entitled to vote generally in the election
of directors.
2. THE INITIAL PUBLIC OFFERING AND THE DISTRIBUTION.
2.1 THE INITIAL PUBLIC OFFERING. Delphi shall consult with, and
cooperate in all respects with, GM in connection with the pricing of the Delphi
Common Stock to be offered in the Initial Public Offering and shall, at GM's
direction, promptly take any and all actions necessary or desirable to
consummate the Initial Public Offering as contemplated by the IPO Registration
Statement and the Underwriting Agreement.
2.2 THE DISTRIBUTION. GM currently intends, following the consummation
of the Initial Public Offering, to complete the Distribution during 1999 by
means of a split-off, a spin-off or some combination of both transactions. GM
shall, in its sole and absolute discretion, determine whether to proceed with
all or part of the Distribution and all terms of the Distribution, including,
without limitation, the form, structure and terms of any transaction(s) and/or
offering(s) to effect the Distribution and the timing of and conditions to the
consummation of the Distribution. In addition, GM may at any time and from time
to time until the completion of the Distribution modify or change the terms of
the Distribution, including, without limitation, by accelerating or delaying the
timing of the consummation of all or part of the Distribution. Delphi shall
cooperate with GM in all respects to accomplish the Distribution and shall, at
GM's direction, promptly take any and all actions necessary or desirable to
effect the Distribution, including, without limitation, the registration under
the Securities Act of Delphi Common Stock on an appropriate registration form or
forms to be designated by GM. GM shall select any investment banker(s) and
manager(s) in connection with the Distribution, as well as any financial
printer, solicitation and/or exchange agent and outside counsel for GM; provided
that nothing herein shall prohibit Delphi from engaging (at its own expense) its
own financial, legal, accounting and other advisors in connection with the
Distribution.
2.3 CERTAIN STOCKHOLDER MATTERS. From and after the distribution of
Delphi Common Stock in connection with any transaction(s) included as part of
the Distribution and until such Delphi Common Stock is duly transferred in
accordance with applicable law, Delphi shall regard the
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Persons receiving Delphi Common Stock in such transaction(s) as record holders
of Delphi Common Stock in accordance with the terms of such transaction(s)
without requiring any action on the part of such Persons. Delphi agrees that,
subject to any transfers of such stock, (a) each such holder shall be entitled
to receive all dividends payable on, and exercise voting rights and all other
rights and privileges with respect to, the shares of Delphi Common Stock then
held by such holder and (b) each such holder shall be entitled, without any
action on the part of such holder, to receive one or more certificates
representing, or other evidence of ownership of, the shares of Delphi Common
Stock then held by such holder. GM shall cooperate, and shall instruct the GM
Transfer Agent to cooperate, with Delphi and the Delphi Transfer Agent, and
Delphi shall cooperate, and shall instruct the Delphi Transfer Agent to
cooperate, with GM and the GM Transfer Agent, in connection with all aspects of
the Distribution and all other matters relating to the issuance and delivery of
certificates representing, or other evidence of ownership of, the shares of
Delphi Common Stock distributed to the holders of GM $1-2/3 Common Stock in
connection with any transaction(s) included as part of the Distribution.
Following the Distribution, GM shall instruct the GM Transfer Agent to deliver
to the Delphi Transfer Agent true, correct and complete copies of the stock and
transfer records reflecting the holders of GM $1-2/3 Common Stock receiving
shares of Delphi Common Stock in connection with any transaction(s) included as
part of the Distribution.
2.4 PRIOR RELATIONSHIP. Delphi, with respect to Delphi and all of the
Delphi Affiliates, and GM, with respect to GM and all of the GM Affiliates,
agree to take all commercially reasonable action to discontinue their respective
uses as promptly as is commercially reasonable of any printed material that
indicates an ownership or other relationship between or among GM and Delphi or
any of their respective Affiliates that has changed as a result of the Initial
Public Offering, the Distribution or any other transactions contemplated hereby;
provided that this Section 2.4 shall not prohibit the use of printed material
containing appropriate and accurate references to such relationship.
2.5 FURTHER ASSURANCES REGARDING THE DISTRIBUTION. In addition to the
actions specifically provided for elsewhere in this Agreement, Delphi shall, at
GM's direction, use all commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things commercially
reasonably necessary, proper or expeditious under applicable laws, regulations
and agreements in order to consummate and make effective the Distribution as
promptly as reasonably practicable. Without limiting the generality of the
foregoing, Delphi shall, at GM's direction, cooperate with GM, and execute and
deliver, or use all commercially reasonable efforts to cause to have executed
and delivered, all instruments, including instruments of conveyance, assignment
and transfer, and to make all filings with, and to obtain all consents,
approvals or authorizations of, any domestic or foreign governmental or
regulatory authority requested by GM in order to consummate and make effective
the Distribution.
2.6 ABANDONMENT OF THE DISTRIBUTION. The parties expressly acknowledge
and agree that GM is not obligated in any respect to proceed with or complete
the Distribution and that GM may, in its sole and absolute discretion, at any
time abandon its plans to proceed with or complete the Distribution. In the
event that GM so determines that it no longer intends to proceed with or
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complete the Distribution, GM shall provide to Delphi a written notification of
such determination (an "Abandonment Notice"). Effective as of the date of the
Abandonment Notice, (a) provided that no Distribution Date has yet occurred,
Sections 4.2 and 4.3 of this Agreement shall terminate, become null and void and
have no further force and effect (it being expressly understood and agreed by
the parties that such Sections shall remain in full force and effect in the
event that a Distribution Date has occurred on or prior to the date of the
Abandonment Notice) and (b) GM's rights, and Delphi's obligations, set forth in
the Registration Rights Agreement shall immediately become effective.
3. EXPENSES.
3.1 GENERAL. Except as otherwise provided in this Agreement, the
Separation Agreement, any of the other Ancillary Agreements or any other
agreement between the parties relating to the Contribution, the Initial Public
Offering or the Distribution, all costs and expenses of either party hereto in
connection with the Contribution, the Initial Public Offering and the
Distribution shall be paid by the party that incurs such costs and expenses.
3.2 CERTAIN EXPENSES RELATING TO THE INITIAL PUBLIC OFFERING. GM shall
be responsible for the payment of all costs, fees and expenses relating to the
Initial Public Offering; provided that Delphi shall be responsible for the
payment of (a) the costs, fees and expenses of all of Delphi's financial, legal,
accounting and other advisors incurred in connection with the Initial Public
Offering and (b) any internal fees, costs and expenses incurred by Delphi or any
Delphi Affiliate in connection with the Initial Public Offering. GM shall be
entitled to any and all amounts received from the underwriters relating to
reimbursement for any costs, fees and expenses relating to the Initial Public
Offering.
3.3 CERTAIN EXPENSES RELATING TO THE DISTRIBUTION. GM shall generally
be responsible for the payment of all costs, fees and expenses relating to the
Distribution; provided that Delphi shall be responsible for the payment of (a)
the costs, fees and expenses of all of Delphi's financial, legal, accounting and
other advisors incurred in connection with the Distribution and (b) any internal
fees, costs and expenses incurred by Delphi or any Delphi Affiliate in
connection with the Distribution.
4. COVENANTS TO PRESERVE TAX-FREE STATUS OF THE DISTRIBUTION AND THE
QUALIFICATION OF THE CONTRIBUTION AS A D REORGANIZATION. Delphi and GM
hereby represent and warrant to, and covenant and agree with, each
other as follows:
4.1 REPRESENTATIONS AND WARRANTIES.
(a) Delphi. Delphi hereby represents and warrants that (i) it
has examined the Tax Opinions/Rulings and the Representation Letters,
and (ii) the facts presented and the representations made therein, to
the extent descriptive of Delphi or the Delphi Business (including,
without limitation, the business purposes for the Distribution, the
representations in the Representation Letters and Tax Opinions/Rulings
to the extent that they relate to
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15
Delphi or the Delphi Business, and the plans, proposals, intentions and
policies of Delphi), are true, correct and complete in all material
respects.
(b) GM. GM hereby represents and warrants that (i) it has
examined the Tax Opinions/Rulings and the Representation Letters, and
(ii) the facts presented and the representations made therein, to the
extent descriptive of GM or the GM Business (including, without
limitation, the business purposes for the Distribution, the
representations in the Representation Letters and Tax Opinions/Rulings
to the extent that they relate to GM or the GM Business, and the plans,
proposals, intentions and policies of GM), are true, correct and
complete in all material respects.
4.2 RESTRICTIONS ON DELPHI.
(a) Pre-Distribution Period. Delphi shall not take any action
(such action to include, if relevant, the issuance of Delphi Capital
Stock upon the exercise by the holders thereof of all options or
convertible securities issued by Delphi) during the Pre-Distribution
Period if, as a result of taking such action, Delphi would issue a
number of shares of Delphi Capital Stock (including by way of the
exercise of stock options or the issuance of restricted stock) that
would cause GM to cease to have Tax Control of Delphi, unless prior to
the consummation of such transaction GM has determined, in its sole and
absolute discretion, which discretion shall be exercised in good faith
solely to preserve the Tax-Free Status of the Distribution, that such
transaction would not jeopardize the Tax-Free Status of the
Distribution. Notwithstanding the foregoing provisions of this Section
4.2(a), Delphi shall be permitted to issue stock options and restricted
stock awards to its employees so long as (i) Delphi repurchases
sufficient shares of issued and outstanding Delphi Capital Stock on or
prior to the date such options are exercisable or restricted stock is
vested (or deemed vested) to insure that, assuming the exercise of all
exercisable options and vesting of such restricted stock, GM would not
cease to have Tax Control of Delphi and (ii) Delphi provides GM with
prior written notification of the procedures by which Delphi intends to
comply with its obligation described in clause (i) above and GM
approves of such procedures (which approval shall not be unreasonably
withheld). All of the restrictions on Delphi contained in this Section
4.2 shall apply to Delphi during the Pre-Distribution Period as well as
the other periods specified in this Section 4.2.
(b) Proposed Acquisition Transactions. Until the first day
after the two-year anniversary of the latest Distribution Date, Delphi
shall not enter into any Proposed Acquisition Transaction or, to the
extent Delphi has the right to prohibit any Proposed Acquisition
Transaction, permit any Proposed Acquisition Transaction to occur
unless prior to the consummation of such Proposed Acquisition
Transaction GM has determined, in its sole and absolute discretion,
which discretion shall be exercised in good faith solely to preserve
the Tax-Free Status of the Distribution, that such Proposed Acquisition
Transaction would not jeopardize the Tax-Free Status of the
Distribution.
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16
The foregoing shall not prohibit Delphi from entering into a contract
or agreement to consummate any Proposed Acquisition Transaction if such
contract or agreement requires satisfaction of the above-described
requirement prior to the consummation of such Proposed Acquisition
Transaction, such requirement to be satisfied through the cooperation
of the parties as described in Section 4.3(b)(ii).
(c) Continuation of Active Trade or Business. Until the
first day after the two-year anniversary of the latest Distribution
Date,
(i) Delphi shall continue to conduct the Active
Trade or Business.
(ii) Subject to clause (c)(iii) below, Delphi shall
not (A) liquidate, dispose of, or otherwise discontinue the
conduct of any portion of the Active Trade or Business with a
Value in excess of $2.0 billion or (B) dispose of any business
or assets that would cause Delphi to be operated in a manner
inconsistent in any material respect with the business
purposes for the Distribution as set forth in the
Representation Letters and Tax Opinions/Rulings, in each case
unless GM has determined, in its sole and absolute discretion,
which discretion shall be exercised in good faith solely to
preserve the Tax-Free Status of the Distribution, that such
liquidation, disposition, or discontinuance would not
jeopardize the Tax-Free Status of the Distribution.
(iii) Delphi shall not under any circumstances
liquidate, dispose of, or otherwise discontinue the conduct of
any portion of the Active Trade or Business if such
liquidation, disposition or discontinuance would breach
Section 4.2(d). Delphi shall continue the active conduct of
the Active Trade or Business primarily through officers and
employees of Delphi or its Subsidiaries (and not primarily
through independent contractors) who are not also officers or
employees of GM or of any GM Affiliates. Notwithstanding the
foregoing, (A) except with respect to any corporation or other
entity the status of which as the direct owner of an active
trade or business is material to the Tax-Free Status of the
Distribution, liquidations of any of Delphi's Subsidiaries
(including Delphi Automotive Systems LLC) into Delphi or one
or more Subsidiaries directly or indirectly controlled by
Delphi shall not be deemed to breach this Section 4.2(c) and
(B) Delphi shall not be prohibited from liquidating, disposing
of or otherwise discontinuing the conduct of one or more
trades or businesses that constituted part of the Active Trade
or Business, or any portion thereof, provided that, in the
case of this clause (B), the aggregate Value of such trades or
businesses, or portions thereof, so liquidated, disposed of or
discontinued shall not exceed $2.0 billion. For purposes of
the preceding sentence and clause (c)(ii) above, asset
retirements, sale-leaseback arrangements and discontinuances
of product lines within a trade or business the active conduct
of which is continued shall not be deemed a liquidation,
disposition or discontinuance of a trade or business or
portion thereof.
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17
(iv) Solely for purposes of this Section 4.2(c),
Delphi shall not be treated as directly or indirectly
controlling a Subsidiary unless Delphi owns, directly or
indirectly, shares of capital stock of such Subsidiary
constituting (i) 80% or more of the total combined voting
power of all outstanding shares of Voting Stock of such
Subsidiary and (ii) 80% or more of the total number of
outstanding shares of each class or series of capital stock of
such Subsidiary other than Voting Stock.
(d) Continuity of Business.
(i) Until the first day after the two-year
anniversary of the latest Distribution Date, (A) Delphi shall
not voluntarily dissolve or liquidate, and (B) except in the
ordinary course of business, neither Delphi nor any
Subsidiaries directly or indirectly controlled by Delphi shall
sell, transfer, or otherwise dispose of or agree to dispose of
assets (including, for such purpose, any shares of capital
stock of such Subsidiaries) that, in the aggregate, constitute
more than (x) 60% of the gross assets of Delphi or (y) 60% of
the consolidated gross assets of Delphi (including Delphi
Automotive Systems LLC) and such Subsidiaries, unless prior to
the consummation of such transaction GM has determined, in its
sole and absolute discretion, which discretion shall be
exercised in good faith solely to preserve the Tax-Free Status
of the Distribution, that such transaction would not
jeopardize the Tax-Free Status of the Distribution. The amount
of gross assets of Delphi and such Subsidiaries shall be based
on the fair market value of each such asset as of the
applicable Distribution Date.
(ii) Sales, transfers or other dispositions by
Delphi or any of its Subsidiaries to Delphi or one or more
Subsidiaries directly or indirectly controlled by Delphi shall
not be included in any determinations under this Section
4.2(d) of whether such 60% or more of the gross assets of
Delphi or 60% of the consolidated gross assets of Delphi and
such Subsidiaries have been sold, transferred or otherwise
disposed of.
(iii) Solely for purposes of this Section 4.2(d),
Delphi shall not be treated as directly or indirectly
controlling a Subsidiary unless Delphi owns, directly or
indirectly, shares of capital stock of such Subsidiary
constituting (A) 80% or more of the total combined voting
power of all outstanding shares of Voting Stock of such
Subsidiary and (B) 80% or more of the total number of
outstanding shares of each class or series of capital stock of
such Subsidiary other than Voting Stock.
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18
(e) Discharge of Intracompany Indebtedness. Prior to the first
Distribution Date, Delphi shall fully discharge and satisfy all of the
then existing indebtedness owed to GM or any GM Affiliate (other than
payables incurred in the ordinary course of the business). From such
date until the first day after the two-year anniversary of the latest
Distribution Date, Delphi shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or allow to exist any such
indebtedness with GM or any GM Affiliate.
(f) Miscellaneous. Until the first day after the two-year
anniversary of the latest Distribution Date, Delphi shall not take, or
permit any of its Subsidiaries to take, any other actions or enter into
any transaction or series of transactions or agree to enter into any
other transactions that would be reasonably likely to jeopardize the
Tax-Free Status of the Distribution or the qualification of the
Contribution as a D Reorganization, including any action or transaction
that would be reasonably likely to be inconsistent with any
representation made in the Representation Letters, unless prior to the
consummation of such action or transaction GM has determined, in its
sole and absolute discretion, which discretion shall be exercised in
good faith solely to preserve the Tax-Free Status of the Distribution
and the qualification of the Contribution as a D Reorganization, that
such action or transaction would not jeopardize the Tax-Free Status of
the Distribution or the qualification of the Contribution as a D
Reorganization. Notwithstanding the foregoing, if and to the extent
that any action or transaction is described in and permitted pursuant
to Sections 4.2(a), (b), (c), (d) and (e) such action or transaction
shall not be prohibited by this Section 4.2(f).
(g) Permitted Actions and Transactions. Notwithstanding the
foregoing, the provisions of Section 4.2 shall not prohibit Delphi from (i)
implementing, or otherwise complying with the provisions of, the Rights Plan
(or any successor stockholders rights plan of Delphi), and (ii) implementing any
transaction upon which the IRS has granted a favorable ruling in, or which is
described in reasonable detail in, any Tax Opinions/Rulings.
4.3 COOPERATION AND OTHER COVENANTS.
(a) Notice of Subsequent Delphi Actions. Each of Delphi and GM
shall furnish the other with a copy of any ruling requests or other
documents delivered to the IRS that relates to the Distribution or that
could otherwise be reasonably expected to have an impact on the
Tax-Free Status of the Distribution or the qualification of the
Contribution as a D Reorganization.
(b) Cooperation.
(i) Each of Delphi and GM shall cooperate with the other
and shall take (or refrain from taking) all such actions as
the other may reasonably request in connection with obtaining
any GM determination referred to in Section 4.2. Such
cooperation shall include, without limitation, providing any
information and/or representations reasonably requested by
the other to enable either party (or counsel
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19
for such party) to obtain and maintain any Subsequent Tax
Opinion/Ruling that would permit any action described in
Section 4.2 to be taken by Delphi or a Delphi Affiliate. From
and after any Representation Date in connection with obtaining
any such determination or the receipt of a Subsequent Tax
Opinion/Ruling and until the first day after the two-year
anniversary of the date of such determination or receipt,
neither party shall take (nor shall it refrain from taking)
any action that would have caused such representation to be
untrue unless the other party has determined, in its sole and
absolute discretion, which discretion shall be exercised in
good faith solely to preserve the Tax-Free Status of the
Distribution and the qualification of the Contribution as a D
Reorganization, that such action would not jeopardize the
Tax-Free Status of the Distribution or the qualification of
the Contribution as a D Reorganization.
(ii) In the event that Delphi notifies GM that it
desires to take one of the actions described in Section 4.2
and GM concludes that such action might jeopardize the
Tax-Free Status of the Distribution or the qualification of
the Contribution as a D Reorganization, GM shall, at the
request of Delphi, elect either to (i) use all commercially
reasonable efforts to obtain a Subsequent Tax Opinion/Ruling
that would permit Delphi to take the specified action, and
Delphi shall cooperate in connection with such efforts, or
(ii) provide all reasonable cooperation to Delphi in
connection with Delphi obtaining such a Subsequent Tax
Opinion/Ruling in form and substance reasonably satisfactory
to GM; provided, however, that the reasonable costs and
expenses incurred by GM of obtaining any such Subsequent Tax
Opinion/Ruling shall be borne by GM.
(c) Notice.
(i) Until all restrictions set forth in Section 4.2
have expired, Delphi shall give GM written notice of any
intention to effect or permit an action or transaction
described in Section 4.2 and which is prohibited thereunder at
such time within a period of time reasonably sufficient to
enable GM (A) to make the determination referred to in Section
4.2 or (B) to prepare and seek any Subsequent Tax Opinion/
Ruling in connection with such proposed action or transaction.
Each such notice by Delphi shall set forth the terms and
conditions of the proposed action or transaction, including,
without limitation, as applicable, the nature of any related
action proposed to be taken by the Board of Directors of
Delphi, the approximate number of shares of Delphi Capital
Stock proposed to be transferred or issued, the approximate
Value of Delphi's assets (or assets of any of Delphi's
Subsidiaries) proposed to be transferred, the proposed
timetable for such action or transaction, and the number of
shares of Delphi Capital Stock otherwise then owned by the
other party to the proposed action or transaction, all with
sufficient particularity to enable GM to make any such
required determination, including information required to
prepare and seek a Subsequent Tax Opinion/Ruling in connection
with such proposed action or
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20
transaction. All information provided by Delphi to GM pursuant
to this Section 4.3 shall be deemed subject to the
confidentiality obligations of Article 6 of the Separation
Agreement.
(ii) Promptly, but in any event within 15 Business
Days, after GM receives such written notice from Delphi, GM
shall evaluate such information and notify Delphi in writing
of (A) such determination or (B) of GM's intent to seek a
Subsequent Tax Opinion/Ruling and the proposed date for
submission of the request therefor, which date shall not be
more than 45 days after the date GM so notifies Delphi of GM's
intent to seek a Subsequent Tax Opinion/Ruling, provided that
such 45-day period shall be appropriately extended for any
period of noncompliance by Delphi with Section 4.3(b). If GM
makes a determination that an action or transaction described
in Section 4.2 would jeopardize the Tax-Free Status of the
Distribution or the qualification of the Contribution as a D
Reorganization, such notice to Delphi shall set forth, in
reasonable detail, the reasons therefor. GM shall notify
Delphi promptly, but in any event within two Business Days,
after the receipt of a Subsequent Tax Opinion/Ruling.
4.4 INDEMNIFICATION FOR TAX LIABILITIES.
(a) General. Notwithstanding any other provision of this
Agreement or any provision of any of the Tax Agreements to the contrary
but subject to Section 4.4(b), Delphi shall indemnify, defend and hold
harmless GM and each GM Affiliate (or any successor to any of them)
against any and all Tax-Related Losses incurred by GM in connection
with any proposed tax assessment or tax controversy with respect to the
Distribution or the Contribution to the extent caused by any breach by
Delphi of any of its representations, warranties or covenants made
pursuant to this Agreement. All interest or penalties incurred in
connection with such Tax-Related Losses shall be computed for the time
period up to and including the date that Delphi pays its
indemnification obligation in full.
(b) Exceptions to Delphi's Indemnification. If GM (i) makes a
determination pursuant to any clause of Section 4.2, on the basis of a
Subsequent Tax Opinion/Ruling or otherwise, and (ii) delivers to Delphi
written notice of such determination pursuant to Section 4.3(c), Delphi
shall have no obligation pursuant to Section 4.4(a), except to the
extent that any Tax-Related Losses so incurred resulted from the
inaccuracy, incorrectness or incompleteness of any representation
provided by Delphi upon which such Subsequent Tax Opinion/Ruling and/or
determination was based.
(c) Timing and Method of Tax Indemnification Payments. Delphi
shall pay any amount due and payable to GM pursuant to this Section 4.4
on or before the 90th day following the earlier of agreement or
determination that such amount is due and payable to GM. All payments
pursuant to this Section 4.4 shall be made by wire transfer to the bank
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account designated by GM for such purpose, and on the date of such wire
transfer Delphi shall give GM notice of the transfer.
4.5 PROCEDURE FOR INDEMNIFICATION FOR TAX LIABILITIES.
(a) Notice of Claim. If GM receives notice of the assertion of
any Third-Party Claim with respect to which Delphi may be obligated
under Section 4.4 to provide indemnification, GM shall give Delphi
notice thereof (together with a copy of such Third- Party Claim,
process or other legal pleading) promptly after becoming aware of such
Third- Party Claim; provided, however, that the failure of GM to give
notice as provided in this Section shall not relieve Delphi of its
obligations under Section 4.4, except to the extent that Delphi is
actually prejudiced by such failure to give notice. Such notice shall
describe such Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party.
(i) GM and Delphi shall jointly control the defense
of, and cooperate with each other with respect to defending,
any Third-Party Claim with respect to which Delphi is
obligated under Section 4.4 to provide indemnification,
provided that Delphi shall forfeit such joint control right
with respect to a particular Third-Party Claim if Delphi or
any Delphi Affiliate makes any public statement or filing, or
takes any action (including, but not limited to, the filing of
any submission or pleading, or the giving of a deposition or
production of documents, in any administrative or court
proceeding) in connection with such Third-Party Claim that is
inconsistent in a material respect with any representation or
warranty made by Delphi in this Agreement, the Tax
Opinions/Rulings, or the Representation Letters.
(ii) Delphi and GM shall exercise their rights to
jointly control the defense of any such Third-Party Claim
solely for the purpose of defeating such Third-Party Claim
and, unless required by applicable law, neither Delphi nor GM
shall make any statements or take any actions that could
reasonably result in the shifting of liability for any Losses
arising out of such Third-Party Claim from the party making
such statement or taking such action (or any of its
Affiliates) to the other party (or any of its Affiliates).
(iii) Statements made or actions taken by either
Delphi or GM in connection with the defense of any such
Third-Party Claim shall not prejudice the rights of such party
in any subsequent action or proceeding between the parties.
(iv) If either GM or Delphi fails to jointly defend
any such Third-Party Claim, the other party shall solely
defend such Third-Party Claim and the party failing to jointly
defend shall use commercially reasonable efforts to cooperate
with the other party in its defense of such Third-Party Claim;
provided, however, that GM
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22
may not compromise or settle any such Third-Party Claim
without the prior written consent of Delphi, which consent
shall not be unreasonably withheld or delayed. All costs and
expenses of either party in connection with, and during the
course of, the joint control of the defense of any such
Third-Party Claim shall be initially paid by the party that
incurs such costs and expenses. Such costs and expenses shall
be reallocated and reimbursed in accordance with the
respective indemnification obligations of the parties at the
conclusion of the defense of such Third-Party Claim.
4.6 ARBITRATION. Any dispute between the parties arising out of or
relating to this Section 4, including the interpretation of this Section 4, or
any actual or purported breach of this Section 4, shall be resolved only in
accordance with the following provisions:
(a) Negotiation. GM and Delphi shall attempt in good faith to
resolve any such dispute promptly through negotiations of the parties.
In the event of any such dispute, either party may deliver a Dispute
Notice to the other party, and within 20 Business Days after the
receipt of such Dispute Notice, the appropriate representatives of GM
and Delphi shall meet to attempt to resolve such dispute. If such
dispute has not been resolved within the Negotiation Period, or if one
of the parties fails or refuses to negotiate such dispute, the issue
shall be settled by arbitration pursuant to Section 4.6(b). The results
of such arbitration shall be final and binding on the parties.
(b) Arbitration Procedure. Either party may initiate
arbitration with regard to such dispute by giving the other party
written notice either (i) at any time following the end of the
Negotiation Period, or (ii) if the parties do not meet within 20
Business Days of the receipt of the Dispute Notice, at any time
thereafter. The arbitration shall be conducted by three arbitrators in
accordance with the CPR Rules, except as otherwise provided in this
Section 4.6. Within 20 days following receipt of the written notice of
arbitration, GM and Delphi shall each appoint one arbitrator. The two
arbitrators so appointed shall appoint the third arbitrator. If either
GM or Delphi shall fail to appoint an arbitrator within such 20-day
period, the arbitration shall be by the sole arbitrator appointed by
the other party. Whether selected by GM and Delphi or otherwise, each
arbitrator selected to resolve such dispute shall be a tax attorney or
tax accountant who is generally recognized in the tax community as a
qualified and competent tax practitioner with experience in the tax
area involved in the issue or issues to be resolved. Such arbitrators
shall be empowered to determine whether Delphi is required to indemnify
GM pursuant to Section 4.4 and to determine the amount of the related
indemnification payment. Each of GM and Delphi shall bear 50% of the
aggregate expenses of the arbitrators. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. ss.ss.1-14. The
place of arbitration shall be New York, New York. The final decision of
the arbitrators shall be rendered no later than one year from the date
of the written notice of arbitration.
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4.7 EXCLUSIVE REMEDIES. Except for the right to pursue equitable
remedies, the remedies provided in this Section 4 shall be deemed the sole and
exclusive remedies of the parties with respect to the subject matters of the
indemnification provisions of Section 4.4.
5. CERTAIN OTHER COVENANTS.
5.1 FINANCIAL AND OTHER INFORMATION.
(a) Financial Information. Delphi agrees that, for so long as
GM is required to consolidate Delphi's results of operations and
financial position or to account for its investment in Delphi under the
equity method of accounting (determined in accordance with generally
accepted accounting principles consistently applied):
(i) Delphi shall, and shall cause each of its
Subsidiaries to, maintain a system of internal accounting
controls that will provide reasonable assurance that: (A)
Delphi's and such Subsidiaries' books, records and accounts
fairly reflect all transactions and dispositions of assets and
(B) the specific objectives of accounting control are
achieved.
(ii) Delphi shall, and shall cause each of its
Subsidiaries (other than Delphi Automotive Systems India
Limited) to, maintain a fiscal year which commences on January
1 and ends on December 31 of each calendar year.
(iii) Delphi shall deliver to GM a trial balance
submission, which shall include amounts relating to each of
its Subsidiaries, in such format and detail as GM may request,
(A) with respect to each month (other than the last month of
each fiscal year), within four Business Days following the
last day of each such month, and (B) with respect to each
fiscal year, within five Business Days following December 31
of each such year.
(iv) As soon as practicable, and in any event within
seven Business Days after the end of each of the first three
fiscal quarters in each fiscal year of Delphi and within 14
Business Days after the end of each such fiscal year, Delphi
shall deliver to GM a consolidated income statement and
balance sheet for Delphi and its Subsidiaries for such fiscal
quarter or year, as the case may be.
(v) As soon as practicable, and in any event within 35
days after the end of each of the first three fiscal quarters
in each fiscal year of Delphi and no later than five days
before Delphi intends to file its Quarterly Financial
Statements (as defined below) with the SEC, Delphi shall
deliver to GM drafts of (A) the consolidated financial
statements of Delphi and its Subsidiaries (and notes thereto)
for such periods and for the period from the beginning of the
current fiscal year to the end of such quarter, setting forth
in each case in comparative form for each such fiscal
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24
quarter of Delphi the consolidated figures (and notes thereto)
for the corresponding quarter and periods of the previous
fiscal year and all in reasonable detail and prepared in
accordance with Article 10 of Regulation S-X, and (B) a
discussion and analysis by management of Delphi's and its
Subsidiaries' financial condition and results of operations
for such fiscal period, including, without limitation, an
explanation of any material adverse change, all in reasonable
detail and prepared in accordance with Item 303(b) of
Regulation S-K. The information set forth in (A) and (B) above
is herein referred to as the "Quarterly Financial Statements."
No later than the earlier of (x) two Business Days prior to
the date Delphi publicly files the Quarterly Financial
Statements with the SEC or otherwise makes such Quarterly
Financial Statements publicly available or (y) two Business
Days prior to the date on which GM has notified Delphi that it
intends to file its quarterly financial statements with the
SEC, Delphi shall deliver to GM the final form of the
Quarterly Financial Statements certified by the chief
financial officer of Delphi as presenting fairly, in all
material respects, the financial condition and results of
operations of Delphi and its Subsidiaries; provided that
Delphi may continue to revise such Quarterly Financial
Statements prior to the filing thereof in order to make
corrections and non-substantive changes which corrections and
changes shall be delivered by Delphi to GM as soon as
practicable, and in any event within eight hours thereafter;
and, provided, further, that GM and Delphi financial
representatives shall actively consult with each other
regarding any changes (whether or not substantive) which
Delphi may consider making to its Quarterly Financial
Statements and related disclosures during the three Business
Days immediately prior to any anticipated filing with the SEC,
and Delphi shall obtain GM's consent prior to making any
change to Delphi's Quarterly Financial Statements or related
disclosures which would have an effect upon GM's financial
statements or related disclosures. In addition to the
foregoing, no Quarterly Financial Statement or any other
document which refers, or contains information with respect,
to the ownership of Delphi by GM, the separation of Delphi
from GM or the Distribution shall be filed with the SEC or
otherwise made public by Delphi or any of its Subsidiaries
without the prior written consent of GM.
(vi) Delphi shall deliver to GM as soon as practicable,
and in any event within 45 days after the end of each fiscal
year of Delphi and no later than 10 days before Delphi intends
to file its Annual Financial Statements (as defined below)
with the SEC, (A) drafts of the consolidated financial
statements of Delphi (and notes thereto) for such year,
setting forth in each case in comparative form the
consolidated figures (and notes thereto) for the previous
fiscal year and all in reasonable detail and prepared in
accordance with Regulation S-X and (B) a discussion and
analysis by management of Delphi's and its Subsidiaries'
financial condition and results of operations for such year,
including, without limitation, an explanation of any material
adverse change, all in reasonable detail and prepared in
accordance with Item 303(a) of Regulation S-K. The information
set forth in (A) and (B) above is herein referred to as the
"Annual Financial Statements." Delphi shall deliver to GM all
revisions to
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25
such drafts as soon as any such revisions are prepared or
made. No later than the earlier of (1) five Business Days
prior to the date Delphi publicly files the Annual Financial
Statements with the SEC or otherwise makes such Annual
Financial Statements publicly available or (2) five Business
Days prior to the date on which GM has notified Delphi that it
intends to file its annual financial statements with the SEC,
Delphi shall deliver to GM the final form of the Annual
Financial Statements certified by the chief financial officer
of Delphi as presenting fairly, in all material respects, the
financial condition and results of operations of Delphi and
its Subsidiaries; provided that Delphi may continue to revise
such Annual Financial Statements prior to the filing thereof
in order to make corrections and non-substantive changes which
corrections and changes shall be delivered by Delphi to GM as
soon as practicable, and in any event within eight hours
thereafter; and, provided, further, that GM and Delphi
financial representatives shall actively consult with each
other regarding any changes (whether or not substantive) which
Delphi may consider making to its Annual Financial Statements
and related disclosures during the three Business Days
immediately prior to any anticipated filing with the SEC, and
Delphi shall obtain GM's consent prior to making any change to
Delphi's Annual Financial Statements or related disclosures
which would have an effect upon GM's financial statements or
related disclosures. In addition to the foregoing, no Annual
Financial Statement or any other document which refers, or
contains information with respect, to the ownership of Delphi
by GM, the separation of Delphi from GM or the Distribution
shall be filed with the SEC or otherwise made public by Delphi
or any of its Subsidiaries without the prior written consent
of GM. In any event, Delphi shall deliver to GM, no later than
80 days after the end of each fiscal year of Delphi, the final
form of the Annual Financial Statements accompanied by an
opinion thereon by Delphi's independent certified public
accountants.
(vii) Delphi shall deliver to GM all Quarterly and Annual
Financial Statements of each Subsidiary of Delphi which is
itself required to file financial statements with the SEC or
otherwise make such financial statements publicly available,
with such financial statements to be provided in the same
manner and detail and on the same time schedule as those
financial statements of Delphi required to be delivered to GM
pursuant to this Section 5.1.
(viii) All information provided by Delphi or any of its
Subsidiaries to GM pursuant to Sections 5.1(a)(iii) through
(vii) inclusive shall be consistent in terms of format and
detail and otherwise with the procedures in effect on the date
hereof with respect to the provision of such financial
information by the Delphi Automotive Systems Business and/or
Delphi and its Subsidiaries, as applicable, to GM (and, where
appropriate, as presently presented in financial reports to
GM's Board of Directors), with such changes therein as may be
requested by GM from time to time consistent with changes in
reporting by sectors and Subsidiaries of GM.
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(ix) Delphi and each of its Subsidiaries which files
information with the SEC shall deliver to GM: (A) as soon as
the same are prepared, substantially final drafts of: (x) all
reports, notices and proxy and information statements to be
sent or made available by Delphi or any of its Subsidiaries to
their security holders, (y) all regular, periodic and other
reports to be filed under Sections 13, 14 and 15 of the
Exchange Act (including Reports on Forms 10-K, 10-Q and 8-K
and Annual Reports to Shareholders), and (z) all registration
statements and prospectuses to be filed by Delphi or any of
its Subsidiaries with the SEC or any securities exchange
pursuant to the listed company manual (or similar
requirements) of such exchange (collectively, the documents
identified in clauses (x), (y) and (z) are referred to herein
as "Delphi Public Documents"), and (B) as soon as practicable,
but in no event later than four Business Days prior to the
date the same are printed, sent or filed, whichever is
earliest, final copies of all such Delphi Public Documents;
provided that Delphi may continue to revise such Delphi Public
Documents prior to the filing thereof in order to make
corrections and non-substantive changes which corrections and
changes shall be delivered by Delphi to GM as soon as
practicable, and in any event within eight hours thereafter;
and, provided, further, that GM and Delphi financial
representatives shall actively consult with each other
regarding any changes (whether or not substantive) which
Delphi may consider making to any of its Delphi Public
Documents and related disclosures prior to any anticipated
filing with the SEC, and Delphi shall obtain GM's consent
prior to making any change to its Delphi Public Documents or
related disclosures which would have an effect upon GM's
financial statements or related disclosures. In addition to
the foregoing, no Delphi Public Document or any other document
which refers, or contains information with respect, to the
ownership of Delphi by GM, the separation of Delphi from GM or
the Distribution shall be filed with the SEC or otherwise made
public by Delphi or any of its Subsidiaries without the prior
written consent of GM.
(x) Delphi shall, as promptly as practicable, deliver to
GM copies of all annual and other budgets and financial
projections (consistent in terms of format and detail and
otherwise with the procedures in effect on the date hereof)
relating to Delphi or any of its Subsidiaries and shall
provide GM an opportunity to meet with management of Delphi to
discuss such budgets and projections.
(xi) With reasonable promptness, Delphi shall deliver to
GM such additional financial and other information and data
with respect to Delphi and its Subsidiaries and their
business, properties, financial positions, results of
operations and prospects as from time to time may be
reasonably requested by GM.
(xii) Prior to issuance, Delphi shall deliver to GM copies
of substantially final drafts of all press releases and other
statements to be made available by Delphi or any of its
Subsidiaries to employees of Delphi or any of its Subsidiaries
or to the public concerning material developments in the
business, properties, earnings, results
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27
of operations, financial condition or prospects of Delphi or
any of its Subsidiaries or the relationship between (A) Delphi
or any of its Subsidiaries and (B) GM or any of its
Affiliates. In addition, prior to the issuance of any such
press release or public statement, Delphi shall consult with
GM regarding any changes (other than typographical or other
similar minor changes) to such substantially final drafts.
Immediately following the issuance thereof, Delphi shall
deliver to GM copies of final drafts of all press releases and
other public statements. Delphi and GM will consult with each
other as to the timing of their annual and quarterly earnings
releases and will give each other an opportunity to review the
information therein relating to Delphi and its Subsidiaries
and to comment thereon.
(xiii) Delphi shall cooperate fully, and cause its
accountants to cooperate fully, with GM to the extent
requested by GM in the preparation of GM's public earnings
releases, quarterly reports on Form 10-Q, Annual Reports to
Shareholders, Annual Reports on Form 10-K, any Current Reports
on Form 8-K and any other proxy, information and registration
statements, reports, notices, prospectuses and any other
filings made by GM with the SEC, any national securities
exchange or otherwise made publicly available (collectively,
"GM Public Filings"). Delphi agrees to provide to GM all
information that GM reasonably requests in connection with any
GM Public Filings or that, in the judgment of GM's Legal
Staff, is required to be disclosed or incorporated by
reference therein under any law, rule or regulation. Such
information shall be provided by Delphi in a timely manner on
the dates requested by GM (which may be earlier than the dates
on which Delphi otherwise would be required hereunder to have
such information available) to enable GM to prepare, print and
release all GM Public Filings on such dates as GM shall
determine. Delphi shall cause its accountants to consent to
any reference to them as experts in any GM Public Filings
required under any law, rule or regulation. If and to the
extent requested by GM, Delphi shall diligently and promptly
review all drafts of such GM Public Filings and prepare in a
diligent and timely fashion any portion of such GM Public
Filing pertaining to Delphi. Prior to any printing or public
release of any GM Public Filing, an appropriate executive
officer of Delphi shall, if requested by GM, certify that the
information relating to Delphi, any Delphi Affiliate or the
Delphi Business in such GM Public Filing is accurate, true and
correct in all material respects. Unless required by law, rule
or regulation, Delphi shall not publicly release any financial
or other information which conflicts with the information with
respect to Delphi, any Delphi Affiliate or the Delphi Business
that is included in any GM Public Filing without GM's prior
written consent. Prior to the release or filing thereof, GM
shall provide Delphi with a draft of any portion of a GM
Public Filing containing information relating to Delphi and
its Subsidiaries and shall give Delphi an opportunity to
review such information and comment thereon; provided that GM
shall determine in its sole discretion the final form and
content of all GM Public Filings.
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(b) Auditors and Audits; Annual Statements and Accounting.
Delphi agrees that, for so long as GM is required to consolidate
Delphi's results of operations and financial position or to account for
its investment in Delphi under the equity method of accounting (in
accordance with generally accepted accounting principles):
(i) Delphi shall not select a different accounting firm
than Deloitte & Touche, LLP to serve as its (and its
Subsidiaries') independent certified public accountants
("Delphi's Auditors") without GM's prior written consent
(which shall not be unreasonably withheld).
(ii) Delphi shall use its best efforts to enable the
Delphi Auditors to complete their audit such that they will
date their opinion on Delphi's audited annual financial
statements on the same date that GM's independent certified
public accountants ("GM's Auditors") date their opinion on
GM's audited annual financial statements (the "GM Annual
Statements"), and to enable GM to meet its timetable for the
printing, filing and public dissemination of the GM Annual
Statements.
(iii) Delphi shall provide to GM on a timely basis all
information that GM reasonably requires to meet its schedule
for the preparation, printing, filing, and public
dissemination of the GM Annual Statements. Without limiting
the generality of the foregoing, Delphi will provide all
required financial information with respect to Delphi and its
Subsidiaries to Delphi's Auditors in a sufficient and
reasonable time and in sufficient detail to permit Delphi's
Auditors to take all steps and perform all reviews necessary
to provide sufficient assistance to GM's Auditors with respect
to information to be included or contained in the GM Annual
Statements.
(iv) Delphi shall authorize Delphi's Auditors to make
available to GM's Auditors both the personnel who performed or
are performing the annual audit of Delphi and work papers
related to the annual audit of Delphi, in all cases within a
reasonable time prior to Delphi's Auditors' opinion date, so
that GM's Auditors are able to perform the procedures they
consider necessary to take responsibility for the work of
Delphi's Auditors as it relates to GM's Auditors' report on
GM's statements, all within sufficient time to enable GM to
meet its timetable for the printing, filing and public
dissemination of the GM Annual Statements.
(v) Delphi shall provide GM's internal auditors access
to Delphi's and its Subsidiaries, books and records so that GM
may conduct reasonable audits relating to the financial
statements provided by Delphi pursuant hereto as well as to
the internal accounting controls and operations of Delphi and
its Subsidiaries.
(vi) Delphi shall give GM as much prior notice as
reasonably practical of any proposed determination of, or any
significant changes in, its accounting estimates or accounting
principles from those in effect on the date hereof. Delphi
will consult
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29
with GM and, if requested by GM, Delphi will consult with GM's
independent public accountants with respect thereto. Delphi
will not make any such determination or changes without GM's
prior written consent if such a determination or a change
would be sufficiently material to be required to be disclosed
in Delphi's financial statements as filed with the SEC or
otherwise publicly disclosed therein.
(vii) Notwithstanding clause (vi) above, Delphi shall make
any changes in its accounting estimates or accounting
principles that are requested by GM in order for Delphi's
accounting estimates and principles to be consistent with
those of GM.
Nothing in this Section 5.1 shall require Delphi to violate any
agreement with any of its customers regarding the confidentiality of
commercially sensitive information relating to that customer or its
business; provided that in the event that Delphi is required under this
Section 5.1 to disclose any such information, Delphi shall use all
commercially reasonable efforts to seek to obtain such customer's
consent to the disclosure of such information.
5.2 OTHER COVENANTS. Delphi hereby covenants and agrees that, for
so long as GM beneficially owns at least 50% of the outstanding shares of Delphi
Common Stock:
(a) Delphi shall not, without the prior written consent of GM
(which it may withhold in its sole and absolute discretion), take, or
cause to be taken, directly or indirectly, any action, including making
or failing to make any election under the law of any state, which has
the effect, directly or indirectly, of restricting or limiting the
ability of GM to freely sell, transfer, assign, pledge or otherwise
dispose of shares of Delphi Common Stock or, other than as provided in
the Rights Plan, would restrict or limit the rights of any transferee
of GM as a holder of Delphi Common Stock. Without limiting the
generality of the foregoing, Delphi shall not, without the prior
written consent of GM (which it may withhold in its sole and absolute
discretion), (i) amend, supplement, restate, modify or alter the Rights
Plan or any successor stockholder rights plan in any manner that would
result in (A) the ownership of Delphi Common Stock by GM causing the
rights thereunder to detach or become exercisable and/or (B) GM and its
transferees not being entitled to the same rights thereunder as other
holders of Delphi Common Stock or (ii) take any action, or take any
action to recommend to its stockholders any action, which would among
other things, limit the legal rights of, or deny any benefit to, GM as
a Delphi stockholder in a manner not applicable to Delphi stockholders
generally.
(b) Delphi shall not, without the prior written consent of GM
(which it may withhold in its sole and absolute discretion), issue any
shares of Delphi Capital Stock or any rights, warrants or options to
acquire Delphi Capital Stock (including, without limitation, securities
convertible or exchangeable for Delphi Capital Stock), if after giving
effect to such issuances and considering all of the shares of Delphi
Capital Stock acquirable pursuant to such rights, warrants and options
to be outstanding on the date of such issuance (whether or
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not then exercisable), GM would own less than 50% of the then
outstanding shares of Delphi Common Stock.
(c) To the extent that GM is a party to any contracts or
agreements that provide that certain actions of GM's Subsidiaries may
result in GM being in breach of or in default under such agreements and
GM has advised Delphi of the existence, and has furnished Delphi with
copies, of such contracts or agreements (or the relevant portions
thereof), Delphi shall not take any actions that reasonably could
result in GM being in breach of or in default under any such contract
or agreement. As of the date hereof, the contracts and agreements (or
relevant portions thereof) applicable to this covenant are set forth on
Exhibit A attached hereto. Delphi hereby acknowledges and agrees that
GM has furnished it with copies of each contract or agreement (or the
relevant portion thereof) listed on Exhibit A. The parties acknowledge
and agree that, after the date hereof, GM may in good faith (and not
solely with the intention of imposing restrictions on Delphi pursuant
to this covenant) enter into additional contracts or agreements that
provide that certain actions of GM's Subsidiaries may result in GM
being in breach of or in default under such agreements. In such event,
Exhibit A shall be deemed to be automatically amended to reflect the
addition of any other contracts or agreements (or relevant portions
thereof) of which GM advises Delphi after the date hereof in accordance
with this Section 5.2(c). Delphi agrees to keep confidential and not to
disclose any information provided to it pursuant to this Section
5.2(c).
5.3 COVENANTS REGARDING THE INCURRENCE OF INDEBTEDNESS.
(a) Delphi hereby covenants and agrees that, for so long as GM
continues to beneficially own at least 50% of the outstanding shares of
Delphi Common Stock, Delphi shall not, and shall not permit any of its
Subsidiaries to, without GM's prior written consent (which it may
withhold in its sole and absolute discretion), take any of the
following actions:
(i) create, incur, assume or suffer to exist any Delphi
Indebtedness in excess of an aggregate of $5.0 billion
outstanding at any time; provided, however, that Delphi may
consummate, or agree to consummate, any acquisition or other
similar transaction or series of related transactions
involving Delphi or any of its Subsidiaries acquiring Control
of any Person (an "Acquisition Target") as a result of which
the Delphi Indebtedness would exceed $5.0 billion so long as
both (A) the Acquisition Target has an FFO to Debt Ratio equal
to or greater than 20% and (B) the Delphi Indebtedness after
giving effect to such transaction(s) (including, without
duplication, any Delphi Indebtedness incurred in connection
therewith and any Target Indebtedness that will become Delphi
Indebtedness as a result of such transaction(s)) would not
exceed $6.0 billion; and
(ii) consummate, or agree to consummate, any acquisition
or other similar transaction or series of related transactions
involving Delphi or any of its Subsidiaries acquiring Control
of any Acquisition Target with an FFO to Debt Ratio
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less than 20% unless the Adjusted Delphi Indebtedness would
not exceed $5.0 billion.
(b) In order to implement this Section 5.3, Delphi shall
notify GM in writing at least 15 Business Days prior to the time it or
any of its Subsidiaries contemplates incurring any Delphi Indebtedness
or agreeing to acquire Control of an Acquisition Target of its
intention to do so and shall either (i) demonstrate to GM's
satisfaction that this Section 5.3 shall not be violated by such
proposed additional Delphi Indebtedness or acquisition or (ii) obtain
GM's prior written consent to such proposed additional Delphi
Indebtedness or acquisition. Any such written notification from Delphi
to GM shall include documentation of any existing Delphi Indebtedness
and estimated Delphi Indebtedness after giving effect to such proposed
incurrence of additional Delphi Indebtedness or acquisition and, if
delivered in connection with any transaction(s) involving an
Acquisition Target, (A) documentation of the Acquisition Target's
Target Indebtedness, (B) calculations of the Acquisition Target's FFO
to Debt Ratio and (C) calculations of compliance with this Section 5.3,
including the Adjusted Delphi Indebtedness, if applicable. GM shall
have the right to verify the accuracy of such information and Delphi
shall cooperate fully with GM in such effort (including, without
limitation, by providing GM with access to the working papers and
underlying documentation related to any calculations used in
determining such information).
(c) For purposes of this Section 5.3, the following terms
shall have the following meanings:
"Adjusted Delphi Indebtedness" means, with respect to any
proposed transaction(s) involving an Acquisition Target, the sum of (i)
the Delphi Indebtedness immediately after giving effect to such
transaction(s) (including, without duplication, any Delphi Indebtedness
incurred in connection therewith and any Target Indebtedness that will
become Delphi Indebtedness as a result of such transaction(s)) and (ii)
the amount by which the number described in clause (ii) of the
definition of "FFO to Debt Ratio" set forth in this Section 5.3 would
need to be reduced in order for the Acquisition Target's FFO to Debt
Ratio to equal 20%.
"Delphi Indebtedness" means the sum of (i) the aggregate
principal amount of total liabilities (whether long-term or short-term)
for borrowed money (including capitalized leases) of Delphi and its
Subsidiaries, as determined for purposes of its consolidated financial
statements prepared in accordance with GAAP, and (ii) the aggregate
amount attributable to all factoring or securitization of receivables
and other financial assets by Delphi and its Subsidiaries in excess of
$1.2 billion.
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"FFO to Debt Ratio" means, for any Acquisition Target, as of
immediately prior to Delphi acquiring Control of such Acquisition
Target in the proposed transaction(s), the percentage determined by
dividing (i) the sum of such Acquisition Target's net income plus
depreciation and amortization for the last four full fiscal quarters,
as determined for purposes of its consolidated financial statements
prepared in accordance with GAAP, by (ii) the additional Delphi
Indebtedness that would be incurred in connection with such proposed
transaction(s), including, without limitation, any Target Indebtedness
that will become Delphi Indebtedness as a result of such proposed
transaction(s).
"Target Indebtedness" means, with respect to any proposed
transaction(s) involving an Acquisition Target, such Acquisition
Target's total obligations (whether short-term or long-term) for
borrowed money (including capitalized leases) as of immediately prior
to Delphi acquiring Control of such Acquisition Target in such proposed
transaction(s).
6. INDEMNIFICATION.
6.1 INDEMNIFICATION BY DELPHI. Subject to Section 6.3, Delphi shall
indemnify, defend and hold harmless GM, all GM Affiliates and each of their
respective directors, officers and employees (in their capacities as such), from
and against:
(a) all Losses relating to, arising out of, or due to,
directly or indirectly, any breach by Delphi or any Delphi Affiliate of
any of the provisions of this Agreement;
(b) all Losses relating to, arising out of, or due to,
directly or indirectly, any incorrect, inaccurate or incomplete
financial and other information provided by Delphi or any Delphi
Affiliate to GM pursuant to Section 5.1 of this Agreement;
(c) all Losses relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact
contained in, or incorporated by reference into, the IPO Registration
Statement or the omission or alleged omission to state (whether
pursuant to direct statement or incorporation by reference) in the IPO
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein not misleading other than with
respect to the GM Disclosure Portions; and
(d) all Losses relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact
contained in, or incorporated by reference into, the Distribution
Registration Statement or the omission or alleged omission to state
(whether pursuant to direct statement or incorporation by reference) in
the Distribution Registration Statement a material fact required to be
stated therein or necessary to make the statements therein not
misleading other than with respect to the GM Disclosure Portions.
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6.2 INDEMNIFICATION BY GM. Subject to Section 6.3, GM shall indemnify,
defend, and hold harmless Delphi, all Delphi Affiliates, and each of their
respective directors, officers and employees (in their capacities as such), from
and against:
(a) all Losses relating to, arising out of, or due to,
directly or indirectly, any breach by GM or any GM Affiliate of any of
the provisions of this Agreement;
(b) all Losses relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact
contained in, or incorporated by reference into, the GM Disclosure
Portions of the IPO Registration Statement or the omission or alleged
omission to state (whether pursuant to direct statement or
incorporation by reference) in the GM Disclosure Portions of the IPO
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein not misleading; and
(c) all Losses relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact
contained in, or incorporated by reference into, the GM Disclosure
Portions of the Distribution Registration Statement or the omission or
alleged omission to state (whether pursuant to direct statement or
incorporation by reference) in the GM Disclosure Portions of the
Distribution Registration Statement a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
6.3 OTHER LIABILITIES.
(a) Except as provided in Section 6.4, this Section 6 shall
not be applicable to any Tax-Related Losses, which shall be governed by
Section 4 of this Agreement.
(b) This Section 6 shall not be applicable to any Losses
relating to, arising out of, or due to any breach of the provisions of
any other contract, agreement or understanding between GM or any GM
Affiliate and Delphi or any Delphi Affiliate, including, without
limitation, the Separation Agreement and any of the other Ancillary
Agreements, which Losses shall be governed by the terms of such
contract, agreement or understanding.
6.4 TAX EFFECTS OF INDEMNIFICATION.
(a) Any indemnification payment made under this Agreement
shall be characterized for tax purposes as if such payment were made
immediately prior to the latest Distribution Date, and shall therefore
be treated, to the extent permitted by law, as either (i) a
distribution from Delphi to GM or (ii) a capital contribution from GM
to Delphi.
(b) The amount of any Loss or Tax-Related Losses for which
indemnification is provided under this Agreement shall be (i) increased
to take account of net Tax cost, if any, incurred by the Indemnitee
arising from the receipt or accrual of an Indemnity Payment hereunder
(grossed up for such increase) and (ii) reduced to take account of net
Tax benefit,
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if any, realized by the Indemnitee arising from incurring or paying
such Loss or Tax-Related Losses. In computing the amount of any such
Tax cost or Tax benefit, the Indemnitee shall be deemed to recognize
all other items of income, gain, loss, deduction or credit before
recognizing any item arising from the receipt or accrual of any
Indemnity Payment hereunder or incurring or paying any indemnified Loss
or Tax-Related Losses. Any Indemnity Payment hereunder shall initially
be made without regard to this Section 6.4 and shall be increased or
reduced to reflect any such net Tax cost (including gross-up) or net
Tax benefit only after the Indemnitee has actually realized such cost
or benefit. For purposes of this Agreement, an Indemnitee shall be
deemed to have "actually realized" a net Tax cost or a net Tax benefit
to the extent that, and at such time as, the amount of Taxes payable by
such Indemnitee is increased above or reduced below, as the case may
be, the amount of Taxes that such Indemnitee would be required to pay
but for the receipt or accrual of the Indemnity Payment or the
incurrence or payment of such Loss or Tax-Related Losses, as the case
may be. The amount of any increase or reduction hereunder shall be
adjusted to reflect any final determination (which shall include the
execution of Form 870-AD or successor form) with respect to the
Indemnitee's liability for Taxes, and payments between GM and Delphi to
reflect such adjustment shall be made if necessary.
6.5 EFFECT OF INSURANCE UPON INDEMNIFICATION. The amount which an
Indemnifying Party is required to pay to any Indemnitee pursuant to this Section
6 shall be reduced (including retroactively) by any Insurance Proceeds and other
amounts actually recovered by such Indemnitee in reduction of the related Loss,
it being understood and agreed that each of Delphi and GM shall use commercially
reasonable efforts to collect any such proceeds or other amounts to which it or
any of its Affiliates is entitled, without regard to whether it is the
Indemnifying Party hereunder. No Indemnitee shall be required, however, to
collect any such proceeds or other amounts prior to being entitled to
indemnification from an Indemnifying Party hereunder. If an Indemnitee receives
an Indemnity Payment in respect of a Loss and subsequently receives Insurance
Proceeds or other amounts in respect of such Loss, then such Indemnitee shall
pay to such Indemnifying Party an amount equal to the difference between (a) the
sum of the amount of such Indemnity Payment and the amount of such Insurance
Proceeds or other amounts actually received and (b) the amount of such Loss, in
each case adjusted (at such time as appropriate adjustment can be determined) to
reflect any premium adjustment attributable to such claim.
6.6 PROCEDURE FOR INDEMNIFICATION INVOLVING THIRD-PARTY CLAIMS.
(a) Notice of Claim. If any Indemnitee receives notice of the
assertion of any Third-Party Claim with respect to which an
Indemnifying Party is obligated under this Agreement to provide
indemnification (other than pursuant to Section 4), such Indemnitee
shall give such Indemnifying Party notice thereof (together with a copy
of such Third-Party Claim, process or other legal pleading) promptly
after becoming aware of such Third-Party Claim; provided, however, that
the failure of any Indemnitee to give notice as provided in this
Section shall not relieve any Indemnifying Party of its obligations
under this Section 6,
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except to the extent that such Indemnifying Party is actually
prejudiced by such failure to give notice. Such notice shall describe
such Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party. An Indemnifying Party,
at such Indemnifying Party's own expense and through counsel chosen by
such Indemnifying Party (which counsel shall be reasonably acceptable
to the Indemnitee), may elect to defend any Third-Party Claim. If an
Indemnifying Party elects to defend a Third-Party Claim, then, within
ten Business Days after receiving notice of such Third-Party Claim (or
sooner, if the nature of such Third-Party Claim so requires), such
Indemnifying Party shall notify the Indemnitee of its intent to do so,
and such Indemnitee shall cooperate in the defense of such Third-Party
Claim. Such Indemnifying Party shall pay such Indemnitee's reasonable
out-of-pocket expenses incurred in connection with such cooperation.
Such Indemnifying Party shall keep the Indemnitee reasonably informed
as to the status of the defense of such Third-Party Claim. After notice
from an Indemnifying Party to an Indemnitee of its election to assume
the defense of a Third-Party Claim, such Indemnifying Party shall not
be liable to such Indemnitee under this Section 6 for any legal or
other expenses subsequently incurred by such Indemnitee in connection
with the defense thereof other than those expenses referred to in the
preceding sentence; provided, however, that such Indemnitee shall have
the right to employ one law firm as counsel, together with a separate
local law firm in each applicable jurisdiction ("Separate Counsel"), to
represent such Indemnitee in any action or group of related actions
(which firm or firms shall be reasonably acceptable to the Indemnifying
Party) if, in such Indemnitee's reasonable judgment at any time, either
a conflict of interest between such Indemnitee and such Indemnifying
Party exists in respect of such claim, or there may be defenses
available to such Indemnitee which are different from or in addition to
those available to such Indemnifying Party and the representation of
both parties by the same counsel would be inappropriate, and in that
event (i) the reasonable fees and expenses of such Separate Counsel
shall be paid by such Indemnifying Party (it being understood, however,
that the Indemnifying Party shall not be liable for the expenses of
more than one Separate Counsel (excluding local counsel) with respect
to any Third-Party Claim (even if against multiple Indemnitees)) and
(ii) each of such Indemnifying Party and such Indemnitee shall have the
right to conduct its own defense in respect of such claim. If an
Indemnifying Party elects not to defend against a Third-Party Claim, or
fails to notify an Indemnitee of its election as provided in this
Section 6 within the period of ten Business Days described above, the
Indemnitee may defend, compromise, and settle such Third-Party Claim
and shall be entitled to indemnification hereunder (to the extent
permitted hereunder); provided, however, that no such Indemnitee may
compromise or settle any such Third-Party Claim without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, the
Indemnifying Party shall not, without the prior written consent of the
Indemnitee, (i) settle or compromise any Third-Party Claim or consent
to the entry of any judgment which does not include as an unconditional
term thereof the delivery by the claimant or plaintiff to the
Indemnitee of a written release from all liability in respect of such
Third-Party Claim or (ii) settle or
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compromise any Third-Party Claim in any manner that would be reasonably
likely to have a material adverse effect on the Indemnitee.
(c) Joint Defense of Certain Claims. Notwithstanding the
provisions of Section 6.6(b), GM and Delphi shall jointly control the
defense of, and cooperate with each other with respect to defending,
any Third-Party Claim with respect to which each party is claiming that
it is entitled to indemnification under Section 6.1 or 6.2. If either
GM or Delphi fails to defend jointly any such Third-Party Claim, the
other party shall solely defend such Third-Party Claim and the party
failing to defend jointly shall use all commercially reasonable efforts
to cooperate with the other party in its defense of such Third-Party
Claim; provided, however, that neither party may compromise or settle
any such Third-Party Claim without the prior written consent of the
other party, which consent shall not be unreasonably withheld or
delayed. All costs and expenses of either party in connection with, and
during the course of, the joint control of the defense of any such
Third-Party Claim shall be initially paid by the party that incurs such
costs and expenses. Such costs and expenses shall be reallocated and
reimbursed in accordance with the respective indemnification
obligations of the parties at the conclusion of the defense of such
Third-Party Claim.
6.7 PROCEDURE FOR INDEMNIFICATION NOT INVOLVING THIRD-PARTY
CLAIMS. If any Indemnitee desires to assert against an Indemnifying Party any
claim for indemnification under this Section 6 other than a Third-Party Claim (a
"Claim"), the Indemnitee shall deliver to the Indemnifying Party notice of its
demand for satisfaction of such Claim (a "Request"), specifying in reasonable
detail the amount of such Claim and the basis for asserting such Claim. Within
30 days after the Indemnifying Party has been given a Request, the Indemnifying
Party shall either (i) satisfy the Claim requested to be satisfied in such
Request by delivering to the Indemnitee payment by wire transfer or a certified
or bank cashier's check payable to the Indemnified Party in immediately
available funds in an amount equal to the amount of such Claim, or (ii) notify
the Indemnitee that the Indemnifying Party contests such Claim by delivering to
the Indemnitee a Dispute Notice, stating that the Indemnifying Party objects to
such Claim and specifying in reasonable detail the basis for contesting such
Claim. Any dispute described in clause (ii) of this Section 6.7 shall be subject
to the provisions of Section 7.1.
6.8 EXCLUSIVE REMEDIES. Except for the right to pursue equitable
remedies, the remedies provided in this Section 6 shall be deemed the sole and
exclusive remedies of the parties with respect to the subject matters of the
indemnification provisions of this Section 6.
7. MISCELLANEOUS.
7.1 DISPUTE RESOLUTION. GM and Delphi shall attempt in good faith
to resolve any dispute between the parties arising out of or relating to this
Agreement promptly through negotiations of the parties prior to seeking any
other legal or equitable remedy.
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7.2 SURVIVAL. The representations and warranties contained in this
Agreement shall survive the execution and delivery hereof and all Distribution
Dates until the expiration of all applicable statutes of limitations.
7.3 COMPLETE AGREEMENT. Except as otherwise set forth in this
Agreement, this Agreement and the exhibits hereto shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all prior agreements and understandings, whether written or
oral, between the parties with respect to such subject matter.
7.4 AUTHORITY. Each of the parties hereto represents to the other that
(a) it has the corporate power and authority to execute, deliver and perform
each of this Agreement and the Registration Rights Agreement, (b) the execution,
delivery and performance of each of this Agreement and the Registration Rights
Agreement by it has been duly authorized by all necessary corporate action, (c)
it has duly and validly executed and delivered each of this Agreement and the
Registration Rights Agreement, and (d) each of this Agreement and the
Registration Rights Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.
7.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (other than the laws regarding
conflicts of laws) as to all matters, including matters of validity,
construction, effect, performance and remedies.
7.6 CONSENT TO EXCLUSIVE JURISDICTION. Any action, suit or proceeding
arising out of any claim that the parties cannot settle through good faith
negotiations (except any claim to which Section 4.6 applies) shall be litigated
exclusively in the state courts of Delaware. Each of the parties hereto hereby
irrevocably and unconditionally (a) submits to the jurisdiction of the state
courts of Delaware for any such action, suit or proceeding, (b) agrees not to
commence any such action, suit or proceeding except in the state courts of
Delaware, (c) waives, and agrees not to plead or to make, any objection to the
venue of any such action, suit or proceeding in the state courts of Delaware,
(d) waives, and agrees not to plead or to make, any claim that any such action,
suit or proceeding brought in the state courts of Delaware has been brought in
an improper or otherwise inconvenient forum, (e) waives, and agrees not to plead
or to make, any claim that the state courts of Delaware lack personal
jurisdiction over it, and (f) waives its right to remove any such action, suit
or proceeding to the federal courts except when such courts are vested with sole
and exclusive jurisdiction by statute. GM and Delphi shall cooperate with each
other in connection with any such action, suit or proceeding to obtain reliable
assurances that confidential treatment will be accorded any information that
either party shall reasonably deem to be confidential or proprietary. Each of
the parties hereto irrevocably designates and appoints its respective Service
Agent as its agent to receive service of process in any such action, suit or
proceeding. Each of the parties hereto further covenants and agrees that, until
the expiration of all applicable statutes of limitations relating to potential
claims under this Agreement, each such party shall maintain a duly appointed
agent for the service of summonses and other legal process in the State of
Delaware, and shall promptly notify
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the other party hereto of any change in the name or address of its Service Agent
and the name and address of any replacement for its Service Agent, if such agent
is no longer the Service Agent named herein. This Section 7.6 is meant to comply
with 6 Del. C. Section 2708. Notwithstanding anything contained in this Section
7.6, all claims for indemnification under Section 6 shall be governed by the
provisions thereof.
7.7 NOTICES. All Notices shall be in writing and shall be deemed given
upon (a) a transmitter's confirmation of a receipt of a facsimile transmission
(but only if followed by confirmed delivery of a standard overnight courier the
following Business Day or if delivered by hand the following Business Day), or
(b) confirmed delivery of a standard overnight courier or delivered by hand, to
the parties at the following addresses:
if to GM to:
General Motors Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
General Motors Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
General Motors Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and, if delivered pursuant to Section 4, with a copy to:
General Motors Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Tax Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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if to Delphi, to:
Delphi Automotive Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Delphi Automotive Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and, if delivered pursuant to Section 4, with a copy to:
Delphi Automotive Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Tax Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either party hereto may have furnished to the other
party by a Notice in writing in accordance with this Section 7.7.
7.8 AMENDMENT AND MODIFICATION. This Agreement may not be amended or
modified in any respect except by a written agreement signed by both of the
parties hereto.
7.9 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon the parties hereto and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Except with respect to a merger of either party with another Person,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either party hereto without the prior written consent of
the other party, which consent shall not be unreasonably withheld or delayed.
7.10 THIRD PARTY BENEFICIARIES. The Indemnitees and their respective
successors shall be third party beneficiaries of the indemnification provisions
of Sections 4 and 6, as applicable, and shall be entitled to enforce those
provisions and in connection with such enforcement shall be subject to Section
7.6, in each such case as fully and to the same extent as if they were parties
to this Agreement. Except as provided in the previous sentence, nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
any legal or equitable right, benefit or remedy
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of any nature whatsoever under or by reason of this Agreement, and no Person
(other than as provided in the previous sentence) shall be deemed a third party
beneficiary under or by reason of this Agreement.
7.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The Agreement may be
executed by facsimile signature.
7.12 WAIVER. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in writing signed by the party against which such
waiver is to be asserted. Unless otherwise expressly provided in this Agreement,
no delay or omission on the part of any party in exercising any right or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any right or privilege under this Agreement
operate as a waiver of any other right or privilege under this Agreement nor
shall any single or partial exercise of any right or privilege preclude any
other or further exercise thereof or the exercise of any other right or
privilege under this Agreement. No failure by either party to take any action or
assert any right or privilege hereunder shall be deemed to be a waiver of such
right or privilege in the event of the continuation or repetition of the
circumstances giving rise to such right unless expressly waived in writing by
the party against whom the existence of such waiver is asserted.
7.13 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.14 REMEDIES. Each of GM and Delphi shall be entitled to enforce its
rights under this Agreement specifically, to recover damages and costs
(including reasonable attorneys' fees) caused by any breach of any provision of
this Agreement and to exercise all other rights existing in its favor. Each of
GM and Delphi acknowledges and agrees that under certain circumstances the
breach by GM or any of its Affiliates or Delphi or any of its Affiliates of a
term or provision of this Agreement will materially and irreparably harm the
other party, that money damages will accordingly not be an adequate remedy for
such breach and that the non-defaulting party, in its sole discretion and in
addition to its rights under this Agreement and any other remedies it may have
at law or in equity, may apply to any court of law or equity of competent
jurisdiction (without posting any bond or deposit) for specific performance
and/or other injunctive relief in order to enforce or prevent any breach of the
provisions of this Agreement.
7.15 PERFORMANCE. Each of the parties hereto shall use all commercially
reasonable efforts to cause to be performed all actions, agreements and
obligations set forth herein to be performed by any Affiliate of such party.
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7.16 REFERENCES; CONSTRUCTION. The table of contents and the section
and other headings and subheadings contained in this Agreement and the exhibits
hereto are solely for the purpose of reference, are not part of the agreement of
the parties hereto, and shall not in any way affect the meaning or
interpretation of this Agreement or any exhibit hereto. All references to days
or months shall be deemed references to calendar days or months. All references
to "$" shall be deemed references to United States dollars. Unless the context
otherwise requires, any reference to a "Section" or an "Exhibit" shall be deemed
to refer to a section of this Agreement or an exhibit to this Agreement, as
applicable. The words "hereof," "herein" and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, unless otherwise
specifically provided, they shall be deemed to be followed by the words "without
limitation." This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or
causing the document to be drafted.
* * * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first written above.
GENERAL MOTORS CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇
Its: Vice President and Treasurer
DELPHI AUTOMOTIVE SYSTEMS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Vice President and General Counsel
43
EXHIBIT A
AGREEMENTS SUBJECT TO SECTION 5.2(C)
1. GM is a party to various agreements containing the covenants described
on the pages attached hereto as Schedule A-1. Such covenants shall be
subject to Section 5.2(c) of the IPO and Distribution Agreement.