Exhibit 10.1
Memorandum of Understanding
Post-Retirement Medical Care
September 26, 2007
The UAW and the Company have discussed at length the Company’s on-going
financial difficulties, loss of market share and other competitive challenges.
The parties have also discussed that the current cost of providing
post-retirement medical care is one of the most critical issues facing the
Company’s ability to compete in the North American marketplace. The UAW’s goal
in these discussions was to secure, to the greatest extent possible, these
benefits which are absolutely crucial to the retirement security of UAW retirees
who have spent a lifetime working for the Company.
In connection with these discussions, the Company has provided the UAW extensive
access to the Company’s financial records as well as actuarial information about
the current and future costs of the Company’s post-retirement medical programs.
The UAW, along with its outside consultants and advisors, has conducted a
thorough review of the Company’s financial position and the actuarial
information.
The importance of permanently restructuring post-retirement medical coverage for
UAW represented employees and retirees is underscored by the fact that the
Company advised the UAW that it plans to terminate the settlement agreement
approved in the class action of Int’l Union, UAW, et. al. v. General Motors
Corp., Case No. 06-1475/2064 (the “Henry Case”), in accordance with its terms in
2011, and exercise its right to terminate and/or modify post-retirement medical
coverage for UAW retirees and their dependents. In these discussions, the UAW
has reasserted its legal position that post-retirement medical coverage for
current UAW retirees is vested and unalterable.
As a result of these discussions, the parties have agreed, as set forth below,
that responsibility for providing post retirement medical benefits will
permanently shift from the Company to the New Plan and New VEBA as described in
this MOU. This MOU is subject in its entirety to ratification and necessary
approvals as described below. This shall include, inter alia, approval by the
SEC of settlement or negative plan amendment accounting, and final court
approval of this Memorandum of Understanding (“MOU”) and the Final Settlement
Documentation acceptable to the parties and Class Counsel, including approval of
a non-opt out class.
1. Definitions

  a.   Approval Order shall mean the order to be obtained from the United States
District Court for the Eastern District of Michigan, approving in all respects
this MOU and the Final Settlement Agreement Documentation, on a class-wide
basis, applicable to the Covered Group.

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  b.   Cash Flow Projections shall have the meaning set forth in Appendix A.    
c.   Class Counsel shall mean counsel retained by named plaintiffs in the Henry
Case.     d.   The Committee shall mean the governing body that is responsible
for the management and operation of the New Plan and New VEBA.     e.   Company
shall mean General Motors Corporation.     f.   Covered Group shall mean: i) all
“Class Members” as such term is defined in the settlement agreement in the Henry
Case; ii) all “Future Retirees” as such term is defined in the settlement
agreement in the Henry Case who are retired as of September 14, 2007; iii) all
active UAW-represented employees of the Company who are on roll and have
attained seniority as of September 14, 2007, and who retire from the Company
with eligibility for Retiree Medical Benefits utilizing the eligibility
provisions of the General Motors Health Care Program for Hourly Employees, as
applicable to UAW represented Company employees under the Supplemental Agreement
Covering Health Care Program of the 2003 GM-UAW National Agreement; iv) all UAW
retirees of Delphi who are retired as of September 14, 2007 and entitled to
Retiree Medical Benefits from the Company under the terms of Attachment B to the
UAW-Delphi-GM Memorandum of Understanding Delphi Restructuring; v) all UAW
represented active employees of Delphi or a former Delphi unit as of
September 14, 2007, who retire with eligibility for Retiree Medical Benefits
from the Company under the terms of Attachment B to the UAW-Delphi-GM Memorandum
of Understanding Delphi Restructuring; vi) all UAW retirees of any other closed
or divested Company-UAW business unit who are retired as of the date of this MOU
to the extent the Company has responsibility for their Retiree Medical Benefits;
and vii) all UAW represented active employees of any other closed or divested
Company-UAW business unit who retire after the date of this MOU under
circumstances where the Company has responsibility for their Retiree Medical
Benefits. For purposes of this paragraph, the term active employee shall include
employees on vacation, layoff, protected status, medical or other leave of
absence, and any other employees who have not broken seniority as of
September 14, 2007. The Covered Group shall also include eligible spouses,
surviving spouses and dependents of the employees and retirees in the Covered
Group, and surviving spouses entitled to Retiree Medical Benefits as a
consequence of the death of an employee, who had seniority on or prior to
September 14, 2007 and who died prior to retirement while still an employee with
seniority, but in all cases only if they otherwise meet applicable health care
program eligibility rules for Retiree Medical Benefits. In applying this term,
it is the intent of the parties that all Company obligations for Retiree Medical
Benefits for UAW represented retirees and employees, including that related to
the eligible spouses, surviving spouses and dependents of such UAW represented
retirees and employees, shall be

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      terminated and transferred to the New Plan and New VEBA as of the
Implementation Date. Under no circumstances can the definition of the Covered
Group be expanded beyond such individuals or additional individuals be allowed
to participate in the New Plan or New VEBA.     g.   Existing External VEBA
shall mean the DC VEBA established for mitigation purposes pursuant to the
settlement agreement in the Henry Case.     h.   Existing Internal VEBA shall
mean the General Motors Welfare Benefit Trust which is funded and maintained by
the Company.     i.   Final Effective Date shall mean the date on which any
appeals from, or other challenges to, the Approval Order have been exhausted or
the time periods for filing such appeal(s) or challenge(s) have expired,
provided that the Final Effective Date shall be deemed to have occurred only if,
at such time, the Approval Order has not been disapproved or modified as a
result of any appeal(s) from or other challenge(s) to the Approval Order and the
Company has completed, on a basis reasonably satisfactory to the Company, its
discussions with the staff of the SEC regarding accounting treatment with
respect to the New VEBA and the Company’s post-employment retiree health
obligation for the Covered Group as set forth in paragraph 24 — Accounting
Treatment.     j.   Final Settlement Documentation shall mean a detailed
settlement agreement, trust agreement, and other necessary documents, consistent
in all material respects with this MOU, as agreed to by the UAW, the Company,
and Class Counsel and submitted for court approval.     k.   Implementation Date
shall mean the later of January 1, 2010 or the Final Effective Date.     l.  
Initial Effective Date shall mean the date on which the U.S. District Court
enters the Approval Order.     m.   New Plan shall mean the new retiree health
care plan funded by the New VEBA and established and maintained by either an
independent committee or the joint labor-management committee, as set forth in
paragraph 16 — Trust Management, to provide Retiree Medical Benefits for the
Covered Group.     n.   New VEBA shall mean a new trust fund to be established
effective on the Implementation Date pursuant to this MOU and the Final
Settlement Documentation. Such trust fund shall be qualified as a Voluntary
Employee Beneficiary Association by the Internal Revenue Service under
Section 501(c)(9) of the Internal Revenue Code and, if applicable, meet the
requirements of Section 302(c)(5) of the Labor Management Relations Act, 29
U.S.C. Section 186(c)(5).

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  o.   Retiree Medical Benefits shall mean all post retirement medical benefits,
including but not limited to HSM, prescription drug, vision, dental and the
$76.20 Special Benefit related to Medicare.     p.   Shortfall Amount
Contribution shall mean the contribution amount, if any, defined in section 11 —
Shortfall Amount Contributions of this MOU.

Coverage and Benefits
2. Coverage. Under this MOU and the Final Settlement Documentation the New Plan
and the New VEBA will, as of the Implementation Date, assume responsibility for
all Retiree Medical Benefits for which the Company would have formerly been
responsible with regard to the Covered Group. The medical benefit coverages for
active employees prior to their retirement are not within the scope of this MOU
and will continue to be provided in accordance with the terms of the applicable
collective bargaining agreement and health care benefit plan. Similarly, Retiree
Medical Benefits for UAW-represented employees of the Company who become
seniority employees after September 14, 2007 are outside the scope of this MOU
and such benefits, if any, will be provided in accordance with the applicable
provisions of the 2007 or a subsequent GM-UAW National Agreement.
3. Benefits for the Covered Group. Retiree Medical Benefits for the Covered
Group will be provided as follows: (i) Retiree Medical Benefits will continue to
be provided through the Implementation Date under the General Motors Health Care
Program for Hourly Employees at the same scope and level set forth in the
settlement agreement in the Henry Case, including Mitigation (for those entitled
to it) by the Existing External VEBA; (ii) from the Implementation Date through
December 31, 2015, Retiree Medical Benefits will continue to be provided at the
scope and level set forth in the settlement agreement in the Henry Case but
shall be provided through the New Plan and the New VEBA; and (iii) commencing
January 1, 2016, Retiree Medical Benefits will continue to be provided through
the New Plan and New VEBA at the scope and level set forth in the settlement
agreement in the Henry Case, except that the Escalation (as defined in the
settlement agreement in the Henry Case) will be 4%. Provided that as to both
(ii) and (iii) the Committee will have the authority provided for in the Trust
Agreement as set forth in paragraph 17 — Trust Agreement.
4. Implementation of New VEBA and Benefits Upon the Implementation Date. The New
VEBA shall be solely responsible for providing Retiree Medical Benefits to the
Covered Group beginning with claims incurred on or after the Implementation
Date. In this regard, the Approval Order shall provide that on the
Implementation Date the New VEBA shall assume all the responsibilities and
liabilities of the Company and any Company benefit plan associated with the
provision of Retiree Medical Benefits for the Covered Group for claims incurred
on or after the Implementation Date and all the responsibilities and liabilities
of the Existing External VEBA on such date. The parties agree that the
provisions of the General Motors Health Care Program for Hourly

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Employees in any way related to Retiree Medical Benefits for the Covered Group
and all applicable collective bargaining agreements, letters and understandings
in any way related to Retiree Medical Benefits for the Covered Group will be
amended to terminate effective on the Implementation Date. No Retiree Medical
Benefits or payments related to claims incurred after the Implementation Date
will be provided by the Company or a Company benefit plan to the Covered Group
after the Implementation Date. The General Motors Health Care Program for Hourly
Employees will remain responsible for claims incurred prior to the
Implementation Date and the payment of such claims will not reduce the Company’s
funding obligations regarding the New VEBA under this MOU.
Payments to the New VEBA and Certain Other Financial Items
5. Separate Bookkeeping Within Existing Internal VEBA. Effective January 1, 2008
for bookkeeping purposes only, the Company will cause the Existing Internal VEBA
to be divided into two bookkeeping accounts. One account will consist of the
percentage of the Existing Internal VEBA’s assets as of January 1, 2008 equal to
the percentage of GM’s hourly OPEB liability that is not attributable to UAW
associated employees and retirees, their eligible spouses, surviving spouses and
dependents (the “Non-UAW Related Account”). The second account will consist of
the remaining assets as of January 1, 2008 (the “UAW Related Account”).
Investment returns on and after January 1, 2008 will be applied to the
bookkeeping accounts proportionally in relation to the value the assets in the
UAW Related Account have to all the assets in the Existing Internal VEBA. All
the assets in the Existing Internal VEBA (both in the Non-UAW Related Account
and the UAW Related Account) shall be invested by the Company in the same manner
as it has historically invested the assets of the Existing Internal VEBA. During
the period beginning January 1, 2008 and ending on the Final Effective Date no
amounts from the UAW Related Account, including its asset returns, will be
disbursed from the Existing Internal VEBA. If the Final Effective Date occurs,
the Company will cause the assets in the UAW Related Account on the date of the
transfer to be transferred from the Existing Internal VEBA to the New VEBA as
provided in paragraph 9 — Sequencing of Initial Payments to the New VEBA. The
Company can elect to transfer cash in lieu of some or all of the investments in
the Existing Internal VEBA, including an amount equivalent to accrued and unpaid
interest and dividends net of reasonable liquidation costs.
6. Temporary Asset Account. On January 1, 2008, or as soon as reasonably
practicable thereafter, the Company shall establish a Temporary Asset Account
(“TAA”) to be held by the Company or a wholly owned subsidiary thereof, and
shall deposit to the TAA a contingent cash payment in an amount equal to the
difference between $18.5 billion and the value of the UAW Related Account on
January 1, 2008, plus interest on the amount of the contingent cash payment at
9% for the period from January 1, 2008 to the date of deposit. The $18.5 billion
includes $2.5 billion which represents the present value of the COLA adjustments
($1 billion) and the UAW’s decision to forego a 2009 wage increase
($1.5 billion) as referred to in sub-paragraphs 10.c and 10.b — Wage Deferral of
this MOU. The Approval Order and the Final Settlement Documentation shall
provide that, on the Initial Effective Date, or as soon as reasonably
practicable thereafter,

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the Company will deposit in the TAA: (i) an amount representing the $3.8 billion
on a present value basis as of January 1, 2008, as adjusted below, or in its
discretion an annual amount as described in the amortization schedule under
Appendix C; and (ii) pay a $1.8 billion lump sum on a present value basis as of
January 1, 2008 or in its discretion pay an annual amount as described in the
amortization schedule under Appendix C. The payments in both (i) and (ii) will
be increased to reflect interest at 9% from January 1, 2008 to date of deposit.
With regard to the adjustment of the $3.8 billion, if the Initial Effective Date
is after January 1, 2008, then the $3.8 billion will be reduced by the value of
wage deferral contributions paid or payable to the Existing External VEBA under
the settlement agreement in the Henry Case (assuming a 9% rate of return on such
contributions) from January 1, 2008 through the Initial Effective Date. With
regard to payments in (i) and (ii) above, the Company reserves the right to
pre-fund the future annual payments by paying the applicable “Buyout Amount”
shown in Appendix C. Except as provided in this MOU, control of the TAA and the
assets in it shall be solely within the Company’s discretion. To the extent
practicable the assets in the TAA, other than the GM convertible note, shall be
invested in a manner consistent with the Existing Internal VEBA.
7. Convertible Note. On January 1, 2008, or as soon as practicable thereafter,
the Company will deposit in the TAA the GM convertible note described in
Appendix B.
8. Payment to New VEBA. If the Final Effective Date occurs, the balance in the
TAA as of the Final Effective Date, excluding the convertible note provided for
in Appendix B (the “TAA Equivalency”), shall be deposited in the New VEBA as
provided in section 9 — Sequencing of Initial Payments to the New VEBA. If the
Final Effective Date does not occur because (a) the Approval Order has been
disapproved or modified as the result of an appeal, or (b) the Company has not
completed, on a basis reasonably satisfactory to the Company, its discussions
with the staff of the SEC regarding accounting treatment with respect to the New
VEBA and the Company’s obligation for Retiree Medical Benefits for the Covered
Group as set forth in paragraph 24 — Accounting Treatment, the TAA shall be
terminated. In addition, if the Final Effective Date has not occurred by
December 31, 2011, the TAA shall be terminated. If the TAA is terminated prior
to the Final Effective Date, the Company shall contribute to the Existing
External VEBA cash in an amount equal to the amount that would have otherwise
been contributed to the Existing External VEBA, under the terms of the
settlement agreement in the Henry case, between the Initial Effective Date and
the date of termination of the TAA plus the earnings associated with such
amount. Upon termination of the TAA, the remaining assets may be used for any
corporate purpose or purposes by the Company. The December 31, 2011 date may be
extended by agreement between the Company and the UAW.
9. Sequencing of Initial Payments to the New VEBA; Termination of Existing
External VEBA and TAA. The initial payments to the New VEBA shall be made, and
the Existing External VEBA and TAA shall be terminated, as provided below.

  a.   Within 10 business days after the Final Effective Date, the Company shall
direct the trustee of the Existing Internal VEBA to transfer to the New VEBA

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      the assets of the UAW Related Account or an amount equal to the balance in
the UAW Related Account on the date of the transfer (“Payment No. 1”). Upon
transfer, the Existing Internal VEBA trust agreement shall be amended to
terminate participation and coverage regarding Retiree Medical Benefits for the
Covered Group.     b.   The Approval Order shall provide that the Existing
External VEBA Committee shall amend the terms of that VEBA to permit the
transfer of its assets to and the assumption of its liabilities by the New VEBA,
and such Committee shall instruct the trustee of the Existing External VEBA to
transfer the entire balance of that VEBA to the New VEBA after Payment No. 1 has
been made and before the 15th business day after the Final Effective Date
(“Payment No. 2”). The Approval Order shall also provide that the Existing
External VEBA shall be terminated after Payment No. 2 has been made.     c.  
The balance in the TAA, excluding the convertible note, or at GM’s discretion
assets having a value equal to the balance in the TAA, excluding the convertible
note, as of the Final Effective Date, shall be transferred to the New VEBA after
Payment No. 2 has been made and before the 20th business day after the Final
Effective Date (Payment No. 3). If the Company elects to transfer cash in lieu
of some or all of the investments in the TAA (other than the convertible note),
it will include an amount equivalent to accrued and unpaid interest and
dividends net of reasonable liquidation costs.     d.   The convertible note
will be transferred to the New VEBA after Payment No. 3 has been made. This
transfer will occur within 25 business days after the Final Effective Date
assuming the contribution is permitted by law. If the convertible note is not a
qualifying employer security, the Company and the New VEBA will apply for a
prohibited transaction exemption to permit the New VEBA to acquire and hold such
employer securities. Similarly, if employer securities and employer real
property would exceed 10 percent of the total assets in the New VEBA immediately
after deposit of the convertible note, the Company and the New VEBA will apply
for a prohibited transaction exemption to permit the New VEBA to acquire and
hold the convertible note. If the Company and New VEBA cannot timely obtain a
needed exemption, the parties will meet and discuss an appropriate alternative
with comparable risk and value parameters. After the contribution of the
convertible note, the TAA shall be terminated.     e.   The UAW and the Company
acknowledge that the instrument establishing the TAA and communications to the
Covered Group regarding the TAA, shall be consistent with the principles set
forth in DOL Advisory Opinions 92-02A, 92-24 and 94-31A so as to avoid the
assets in the TAA being deemed “plan assets” within the meaning of ERISA. In the
event the Company determines that the assets in the TAA are plan assets the
Company will apply for a prohibited transaction exemption to permit the
acquisition and holding of the employer securities in the TAA.

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10. Wage Deferral.

  a.   The Company will continue to deposit into the Existing External VEBA the
wage deferral established pursuant to the Section 13.C. of the settlement
agreement in the Henry Case (including all of the Cost of Living Allowance
“COLA” subtraction and non-payment of the September 18, 2006 general increase to
the hourly wage rate) until the Initial Effective Date. As a result of the
Company agreeing to pre-fund into the TAA the future wage deferral cash flow
impact of $3.8 billion from the Henry Case on the basis set forth in paragraph 6
— Temporary Asset Account, the Approval Order shall provide that the Company
will no longer be required to make deposits of the wage deferral from the Henry
Case and such wage deferral will continue into perpetuity increasing at $0.02
per hour per quarter as described in the settlement agreement in the Henry Case.
    b.   There shall be no general increase to the hourly wage rate in 2009
regardless of whether or not the Final Effective Date occurs. As a result, the
Company agreed to pre-fund into the TAA $1.5 billion which represents the future
impact of a 3% Wage Increase in 2009.     c.   Effective with the December 1,
2007 COLA adjustment and ending September 1, 2011, up to four cents ($0.04) per
hour per quarter will be diverted from COLA otherwise calculated for current or
future employees into perpetuity. As a result, the Company agreed to pre-fund
into the TAA $1 billion which represents the impact of this future COLA
adjustments; provided however, that if the Final Effective Date does not occur
the cumulative effect of four cents ($0.04) per hour per quarter of COLA
referred to in this subsection c. will be reinstated and contributed
prospectively to the Existing External VEBA, if permitted by law. If not
permitted by the law, the Company and the UAW will agree on the disposition of
such COLA adjustment.

11. Shortfall Amount Contributions. The Company will make an initial Shortfall
Amount Contribution of $165 million to the TAA on April 1, 2008. If in a given
year after the year of such initial payment, the Cash Flow Projection shows that
the Company account or sub-account of the New VEBA will become insolvent within
25 years following the January 1 immediately preceding such Cash Flow
Projection, the Company shall contribute to the New VEBA (or the TAA for periods
prior to the Final Effective Date) by April 1 an amount in cash equal to
$165 million per occurrence. There will be no more than 19 Shortfall Amount
Contributions after the initial Shortfall Amount Contribution on April 1, 2008.
For any year in which the Cash Flow Projection shows that the Company’s account
or sub-account will maintain solvency for more than 25 years beyond the January
1 immediately preceding such Cash Flow Projection, no Shortfall Amount
Contribution will be required. (See Appendix A for details concerning the Cash
Flow Projections and Shortfall Amount Contributions calculations.) Further, the
Company reserves the right to pre-fund, at any time, all then-remaining future
annual

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Shortfall Amount payments by paying the applicable “buyout amount” (determined
by the number of Shortfall Amount payments made prior to the exercise of this
pre-payment option) as shown in the amortization schedule in Appendix C.
12. Other Payments to the Existing External VEBA.

  a.   The “Third Contribution” of $1 billion will continue to be payable by the
Company as set forth in the settlement agreement in the Henry Case. In the event
such payment becomes payable only after the Final Effective Date, the Approval
Order shall provide that such payment will be made to the New VEBA rather than
the Existing External VEBA.     b.   The Approval Order shall provide that any
obligation of the Company related to the amounts called for in the “Benefit
Change Profits” or the “Incremental Amount”, as set forth and defined in section
13 of the settlement agreement in the Henry Case, shall cease upon the Initial
Effective Date. In the event that any amounts related to such items have been
paid by the Company to the Existing External VEBA prior to the Final Effective
Date, the required contributions set forth in paragraph 8 — Payment to New VEBA
will be reduced by such amount plus interest at 6%.     c.   The Approval Order
shall also provide that if the contribution related to “Increase in Stock Value”
and “Dividends” as set forth in section 17 of the settlement agreement in the
Henry Case is less than $240 million the Company will contribute to the New VEBA
the difference between the total proceeds received in normal course and
$240 million plus interest at 9% effective from January 1, 2008 up to
September 1, 2009. If the contribution related to “Increase in Stock Value” and
“Dividends” is more than $240 million the required contributions set forth in
paragraph 8 — Payment to New VEBA will be reduced by the amount in excess of
$240 million, plus interest at 9%.

13. Future Contributions. The UAW and the Covered Group may not negotiate to
increase any of the funding obligations set out herein. The UAW also agrees not
to seek to obligate GM to: (i) provide any additional contributions to the New
VEBA; (ii) make any other payments for the purpose of providing Retiree Medical
Benefits to the Covered Group; or (iii) provide Retiree Medical Benefits through
any other means to the Covered Group. Provided, that, to the extent that may be
proposed by the UAW, employees are permitted to make contributions to the New
VEBA of amounts otherwise payable in profit sharing, COLA, wages and/or signing
bonuses. The Approval Order shall specify that any such future contribution by
employees is permitted under Section 302.
14. Pension Benefits. As part of the consideration for the economic substance of
the matters set forth in this MOU, the Company and the UAW agree to amend the
General Motors Hourly-Rate Employees Pension Plan (“Pension Plan”) on the Final
Effective Date to provide to retirees who are members of the Covered Group and
eligible surviving

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spouses who are members of the Covered Group a flat monthly special lifetime
benefit of $66.70 (which will not be escalated) commencing on the first of the
month immediately following the Final Effective Date. This special lifetime
benefit is intended to serve as a cost pass-through to the New VEBA of an
equivalent after tax increase in the monthly contribution regarding Retiree
Medical Benefits for the Covered Group. As a result, the New Plan and New VEBA
shall assess an additional non-escalating monthly contribution payable by the
Covered Group for Retiree Medical Benefits of $51.67 per month.
Retirees and surviving spouses who are members of the Covered Group but not
currently receiving a monthly benefit from the Pension Plan will not be entitled
to receive the flat monthly special lifetime benefit of $66.70 nor will they be
required to make the monthly contribution to the VEBA of $51.67. For purposes of
determining a current or future Covered Group member’s status as a Protected
Retiree under the terms of the settlement agreement in the Henry Case, the flat
monthly special lifetime benefit described above and any other new pension
increase negotiated in the 2007 GM-UAW National Agreement shall not be included
in pension income.
15. Administrative Costs. The New VEBA will be responsible for all
administrative costs of the New Plan and the New VEBA commencing on the
Implementation Date.
Other Items
16. Trust Management. During the negotiations regarding this MOU, the UAW
proposed that the Company agree to structure the New VEBA as a multi-employer
trust governed by a joint labor-management committee in accordance with
Section 302(c)(5) of the Labor Management Relations Act, 29 U.S.C. §186(c)(5),
that included Company representation. The Company responded by indicating that
it would consider the request subject to the need to secure appropriate
accounting treatment as set forth in paragraph 24 — Accounting Treatment. To
resolve this issue, the Company has agreed to include as a part of its
submission to the SEC a request for guidance on the impact of a Company
representative serving as a member of the New VEBA trust committee in accordance
with the terms of the trust agreement as described in paragraph 17 — Trust
Agreement. If as a result of the Company’s discussions with the SEC staff the
Company reasonably believes that participation on the New VEBA trust committee
would adversely impact the Company’s proposed accounting regarding the
transaction, the Company may elect not to participate on the New VEBA trust
committee. The Company’s failure to secure the required favorable accounting
treatment as set forth in paragraph 24 — Accounting Treatment will result in no
Company participation on the New VEBA trust committee.
In the event that the Company participates on a trust committee with Ford and/or
Chrysler, the Trust Agreement and the Final Settlement Documentation will
provide for separate accounts or separate sub-accounts for each participating
company and that the assets in each separate account or sub-account may only be
used for the covered group of each respective company. If more than one company
participates in the New VEBA, all benefits provided shall be paid from the
respective company’s sub-account. No assets in the Company account or
sub-account may be used to pay for benefits to persons other

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than the Covered Group and assets from any other account or sub-account in the
New VEBA may not be used to pay for benefits for the Covered Group. In addition,
the Trust Agreement, Final Settlement Documentation and Approval Order shall
provide that the Company or the Company’s account or sub-account will not have
any liability for the obligations of either Ford and/or Chrysler or their
retirees if a multi-employer structure should apply.
17. Trust Agreement. The Final Settlement Documentation will include a trust
agreement (the “Trust Agreement”) which will govern the operation of the New
VEBA. The Trust Agreement shall be prepared by the UAW and Class Counsel, and
shall be subject to approval by the Company whose approval shall not be
unreasonably withheld. The trust agreement will incorporate the following:

  a.   The Trust Agreement shall provide that to the extent permitted by law the
New VEBA shall indemnify and hold the Committee, the UAW, GM and the employees,
officers and agents of each of them harmless from and against any liability that
they may incur in connection with their duties in regard to the New Plan and New
VEBA, unless such liability arises from their gross negligence or intentional
misconduct. The Committee shall not be required to give any bond or any other
security for the faithful performance of its duties under the Trust Agreement,
except as such may be required by law.     b.   The Committee shall establish
the New Plan for the Covered Group consistent with the terms of this MOU and, if
applicable, Ford and/or Chrysler covered groups respectively. Except as
otherwise specified in this MOU and the Trust Agreement, the Committee shall
have sole discretion to determine the Retiree Medical Benefits to be provided to
the Covered Group (and if applicable the Ford and/or Chrysler covered groups) by
the New Plan and New VEBA, including without limitation, the form, amount and
conditions of such benefits and the contributions that the Covered Group must
make to help defray the cost of their coverage.     c.   The Committee will be
required to maintain benefit levels in all cases to be consistent with the level
set forth in the terms of the settlement agreement in the Henry Case until
January 1, 2012.     d.   The Committee will have the authority and the
obligation to adjust benefit designs to accommodate evolving clinical standards
and appropriate new technologies. The Committee shall also have authority to
implement utilization management/review programs and take other reasonable steps
to promote efficient delivery of benefits.     e.   The Trust Agreement shall
provide that on or after the Implementation Date the New VEBA shall be entitled
to receive any Medicare Part D

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      subsidies and other health care related subsidies regarding benefits
actually paid by the New VEBA which may result from future legislative changes,
and that the Company shall not be entitled to receive subsidies related to
prescription drug benefits and other health care related benefits provided to
the Covered Group by the New Plan and New VEBA.

18. Default and Cure. The Committee of the New VEBA will have the right to
accelerate some or all of the payment obligations of the Company under this MOU
if the Company defaults on any payment obligations under this MOU and such
default is not cured within 15 business days after the Committee gives the
Company notice of such default. To cure such default, the Company will pay the
amount then in default plus accrued interest on such amount at the rate of 9%
per annum. Payments due under the convertible note may also be accelerated under
this provision only to the extent that the note is then held by the New VEBA. GM
also agrees to provide the trust with the same covenants in Section 4.06 of the
GM indenture, filed with the SEC on Form S-3, dated November 14, 1995.
19. Cooperation. The Company shall cooperate with the Committee and at the
Committee’s request undertake such reasonable actions as will assist the
Committee in the transition of responsibility for plan administration from the
Company to the New VEBA and the Committee. Such cooperation shall include
educational efforts and communications with respect to the Covered Group so that
they understand the transition and understand the claims submission process and
any other administrative changes undertaken by the Committee. Before and after
the Implementation Date, at the Committee’s request and as permitted by law, the
Company shall furnish to the Committee such information and shall provide such
cooperation as may be reasonably necessary to permit the Committee to
effectively administer the New VEBA and the New Plan, including, without
limitation, the implementation and administration of voluntary premium
deductions from the pension benefits of retirees, and the retrieval of data in a
form and to the extent maintained by the Company regarding age, service, pension
and medical benefit eligibility, marital status, mortality, claims history and
enrollment information of the Covered Group. The Company shall also cooperate
with the Union and the Committee and undertake such reasonable actions as will
enable the Committee to perform its administrative functions with respect to the
New Plan and New VEBA, including ensuring an orderly transition from Company
administration of the Retiree Medical Benefits to the New Plan and New VEBA. The
Company shall be financially responsible for reasonable costs associated with
the transition of coverage for the Covered Group to the New Plan and New VEBA.
This shall include educational efforts and communications with respect to
retirees, creation of administrative procedures, initial development of record
sharing procedures, the testing of computer systems, vendor selection and
contracting, and other activities incurred on or before the Implementation Date,
including but not limited to costs associated with drafting the trust agreement
for the New VEBA, seeking from the Internal Revenue Service a determination of
the tax-exempt status of the New VEBA, plan design and actuarial and other
professional work necessary for initiation of the New Plan and New VEBA and the
benefits to be provided

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there under. The Company payments described in this Paragraph shall not reduce
its funding, and if the New VEBA is a multi-employer welfare trust shall be
pro-rated among the participating companies based on the ratio of required
funding for each company. Payment of these costs shall be set forth explicitly
in the Approval Order.
20. Fees. The UAW will apply to the court for reimbursement of reasonable
attorney and professional fees (not to include any success fee, completion bonus
or rate premiums) for work performed in connection with the court proceedings
and approval for the payment of certain professional fees associated with the
settlement process. The Company agrees not to oppose such application for
reasonable fees, and the Company shall bear the cost of mailing all required
notices to Company related class members in connection with obtaining court
approval.
21. Indemnification. The parties will seek court approval of a mutually
agreeable indemnity provision whereby the Company agrees to indemnify the UAW
from liability incurred as a result of the UAW’s entering into, or participation
in the discussions regarding this MOU.
22. Legal Judgment. There is currently a dispute between the Company and the UAW
regarding whether the Company can unilaterally modify Retiree Medical Benefits
or whether such benefits are vested with respect to Covered Group Members
currently receiving Retiree Medical Benefits. The Henry Case was filed by the
UAW and retirees in the U.S. District Court for the Eastern District of Michigan
regarding this dispute. As soon as reasonably practical, GM and the UAW will
jointly file a motion in the Henry Case to modify or amend the settlement
agreement in that case to conform to the terms of this MOU and Final Settlement
Documentation, promptly serve a copy of the motion on Class Counsel, and take
whatever other action is reasonably necessary to obtain a judgment modifying the
existing Henry Case settlement agreement as described and approving a
superseding class-wide settlement which (a) incorporates this MOU and the Final
Settlement Documentation, and (b) is binding on all the Covered Group, the
Company and the UAW. The parties will work diligently and in good faith to
finalize, as soon as possible, a settlement agreement, secure class
certification, and obtain a judgment approving a class settlement that is fair
for all class members, consistent with the terms of this MOU and binding upon
the Covered Group. The parties will also work in good faith to support the
settlement should any appeals be filed.
23. No Prejudice. This MOU, and anything occurring in connection with reaching
this MOU, are without prejudice to the Company, the UAW and the Covered Group.
It is intended that neither party nor the Covered Group may use this MOU, or
anything occurring in connection with reaching this MOU, as evidence against GM,
the UAW or the Covered Group in any circumstance except where the parties are
operating under or enforcing this MOU or the Approval Order.
24. Accounting Treatment. Throughout the negotiations, the Company has
emphasized that a key element in its decision to enter into the MOU is securing
satisfactory accounting treatment regarding the transaction. In the event that
the

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economic substance of the transaction does not meet the specific requirements
for settlement accounting as determined by paragraphs 90-95 of FASB Statement
No. 106, as amended, it is expected that the terms of this MOU would give rise
to substantive plan amendment accounting. For purposes of this provision,
substantive plan amendment accounting would reflect the Company’s revised, fixed
and capped obligations as determined under this MOU. The parties agree that the
MOU, Final Settlement Agreement Documentation and Final Effective Date are
contingent on the Company securing the appropriate accounting treatment for the
Company’s obligations to the Covered Group for Retiree Medical Benefits. As soon
as practicable after ratification of the MOU, the Company will discuss the
accounting for the New VEBA and its obligations to the Covered Group for Retiree
Medical Benefits with the staff of the Securities and Exchange Commission (SEC).
If, as a result of those discussions, the Company believes that the accounting
for the transaction may not be a settlement as contemplated by paragraphs 90-95
of FASB Statement No. 106, as amended, or a substantive negative plan amendment
reasonably satisfactory to the Company, the parties will meet in an effort to
restructure the transaction to achieve such accounting. If the parties are
unable to reach an agreement on terms that the Company reasonably believes will
provide such accounting, the MOU will terminate. If the discussions with the
staff of the SEC are not complete by the date of the Final Settlement
Documentation, the Final Settlement Documentation will contain a corresponding
provision regarding the appropriate accounting and termination of the final
settlement if such accounting is not achieved as to the New VEBA and Company’s
obligations to the Covered Group for Retiree Medical Benefits.
25. Conditions Precedent. This MOU is subject, in its entirety, to ratification
in accordance with the UAW Constitution; obtaining a class certification order
in a form acceptable in form and substance to GM, the UAW and Class Counsel;
obtaining an Approval Order as defined herein including appropriate releases, in
a form acceptable in form and substance to GM, the UAW and Class Counsel;
treatment of the Henry Case Settlement as described in this MOU; the Company’s
completion, on a basis reasonably satisfactory to the Company, of its
discussions with the staff of the SEC regarding accounting treatment with
respect to the New VEBA and the Retiree Medical Benefits for the Covered Group
as set forth in paragraph 24 — Accounting Treatment; if applicable, a
determination by the Company that the New VEBA satisfies the requirements of
Section 302(c)(5) of the Labor Management Relations Act and that the Company
Sub-account can be lawfully segregated from claims by Ford and/or Chrysler
retirees; and the occurrence of the Final Effective Date as defined herein. In
the event that the Final Effective Date has not occurred before January 1, 2012,
but the court approval process is still underway on such date, the Company and
the UAW may, by mutual agreement, maintain in full force and effect the
settlement of the Henry Case.
26. Final Documents. All matters set forth in this agreement are subject to full
legal documentation satisfactory to the parties consistent with the provisions
set forth in this agreement.

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27. Health Care Reform. The Company will publicly support federal policies to
improve the quality and affordability of health care, and work cooperatively
with the UAW towards that goal in accordance with Attachment E of the Memorandum
of Understanding dated October 29, 2005.
28. National Institute For Health Care Reform. The parties agree to form a
National Institute for Health Care Reform to be effective on or after the
Initial Effective Date. The details of such an institute require further
discussion and analysis by the parties with the goal of completing such
discussions by the date of the Final Settlement Documentation. Subject to Ford
and Chrysler participation and their financial support on a proportionate basis,
the Company agrees to make five annual $3 million dollar contributions to
support a National Institute for Health Care Reform commencing on the later of
the Initial Effective Date or establishment of the institute.
Such institute would be established to conduct research and to analyze the
current medical delivery system in the United States, develop targeted and
broad-based reform proposals to improve the quality, affordability and
accountability of the system, and educate the public, policymakers and others
about how these reforms could address the deficiencies in the current system,
e.g., skyrocketing costs, massive number of people left uninsured, profit driven
decision-making on delivery of care, etc. The Institute would be the premier
research and educational health care reform “think tank” dedicated to
understanding, evaluating and developing thoughtful and innovative reform
measures that would improve the medical delivery system in the U.S. and expand
access to high quality, affordable and accountable health coverage for all
Americans. The Institute would:

  •   Engage economists, analysts, academics and others who are experts on the
U.S. and other health care systems as well as the public policies, physician,
hospital and other provider systems that would need to be changed to improve
health care quality, affordability and accountability in the U.S.     •  
Conduct studies and analyses of the current system and alternative structures,
including ways to reduce prescription drug costs, ensure drug safety and better
inform patients of appropriate drug choices     •   Operate as a clearinghouse
for best practices that should be employed throughout the medical delivery
system to ensure that error-free, high quality health care is available
throughout the U.S.     •   Develop innovative policy solutions to improve the
current health care system     •   Host forums for discussion and debate of
public policies that would improve the health care system and facilitate the
interaction of ideas among experts     •   Formulate wide-ranging communications
materials that discuss and describe reform measures.

29. No Responsibility for Asset Returns. The parties recognize that the Company
is not responsible for, nor does it guarantee the asset returns of the amounts
in the TAA or the New VEBA.

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30. Termination. This MOU shall terminate if:

  a.   The Final Effective Date has not occurred by December 31, 2011 and the
Company and the UAW do not agree to an extension of time to reach the Final
Effective Date; or     b.   The conditions precedent set forth in paragraph 25
are not met by December 31, 2011 and the Company and the UAW do not agree to an
extension of time to meet the conditions precedent.

             
International Union, UAW
      General Motors Corporation      
 
     
 
   
 
     
 
   
 
     
 
   
Dated:
      Dated:    

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Appendix A — Cash Flow Projections
Timing and Census Data
Each year prior to the Final Effective Date, before February 28th of such year,
a qualified actuary retained by the Company (the “Company Actuary”) or
commencing on the Final Effective Date, before the later of February 28, of such
year, or 45 days after the communication to the Committee by the Company of the
actuarial assumptions described in the first paragraph of Cash Flow Assumptions
below, a qualified actuary retained by the Committee (the “Actuary”), shall
perform a 60 year cash flow projection (the “Cash Flow Projection”) based on
generally accepted actuarial standards of practice including the census data,
assumptions and methods outlined below. (Note: Reference to the “Actuary” herein
shall be deemed to refer to the Company Actuary when describing activities
occurring prior to the Final Effective Date.)
The cash flows included in the Cash Flow Projection will be based on the entire
cash flow amount (i.e., cash flow based on the “expected post-retirement benefit
obligation” as defined by FASB Statement No. 106), and will not be based on a
pro-rata portion of the cash flow based on an employees’ past years of service
(i.e. cash flow based on the “accumulated post-retirement benefit obligation” as
defined by FASB Statement No. 106).
The Cash Flow Projection shall be performed based on an annual actuarial
valuation with a measurement date as of the December 31 immediately prior to the
February 28 delivery date for the Cash Flow Projection. The projected annual
cash flow amounts included in the Cash Flow Projection should be determined on a
calendar year basis.
The participant census data used for the projection should be based on
participant census information collected no more than six (6) months prior to
the measurement date described above, updated for significant changes or events
occurring between the data collection date and the measurement date (examples of
significant events include, but are not limited to, special attrition programs,
divestitures and plant closings). The participant census data file should only
include individuals in the Covered Group.
Cash Flow Assumptions
For purposes of performing the Cash Flow Projection, the following actuarial
assumptions, as communicated to the Committee by the Company should be identical
to those used by the Company for the Covered Group with the FASB Statement
No. 87 (FAS87) actuarial valuation of the General Motors Hourly Pension Plan for
the fiscal year ending on or before the measurement date

  •   Mortality table assumptions for healthy and disabled participants     •  
Employee turnover assumptions     •   Retirement age assumptions     •  
Disability incidence assumptions

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  •   Assumed age difference between employees/retirees and their covered spouse
(except where actual data is used and available such as existing retirees)

The health care trend rate assumption used for the Cash Flow Projection will be
set based on the average assumptions reported in the most recent Deloitte
Consulting Annual Survey of Economic Assumptions and the Watson Wyatt Annual
Survey of Accounting and Other Post-retirement Benefits for SFAS 106/87
Assumptions, as of the measurement date each year. The information used from the
survey shall be as follows:

     
i)
  Initial year health care trend rates

ii)
  Ultimate health care trend rate
iii)
  Number of years from the year of the initial year health care trend rate to
the year of the ultimate trend rate.

The health care trend rate components above shall be set equal to the average of
the median results reported in the two surveys. Health care trend rates between
the initial and ultimate rate will be determined based on grading the rates down
linearly over the number of years from the initial to the ultimate rate.
If the Actuary determines that the default health care trend rate assumptions
described above do not fall within a reasonable range (such as the Best Estimate
Range as defined in the Actuarial Standard of Practice 27) based on emerging
plan experience, the Actuary may adjust those default values to reflect such
anticipated experience, as long as the adjusted values do not differ from the
default calculated values by an amount not to exceed the corridor shown below:

         
i)
  Initial year health care trend   +/- 0.25%
ii)
  Ultimate year health care trend   no corridor
iii)
  Trend for interim years   pro rata from Initial to Ultimate
iv)
  Years to Ultimate: default value   +/- 2 years from rounded

The Company Actuary will provide the UAW and Committee (if in existence) or the
Actuary will provide the Company with documentation to justify the use of
assumptions different from the default health care trend, as anticipated under
the Actuarial Standards of Practice.
The initial year health care trend rate shall be applied to increase base year
per capita costs, as defined below. For example, for the Cash Flow Projections
with a Measurement Date of December 31, 2011, the initial year health care trend
rate is applied to the increases in per capita claims costs from 2010 to 2011.
The health care trend rate assumptions described above shall be applied to all
of the per capita cost amounts described below, except for the per capita costs
for plan

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administrative fees and expenses. The trend rate assumption to be applied to
plan administrative expenses shall be no more than 3% per annum
Health care trend rates shall not include the impact of i) any actual or
anticipated plan design changes, or ii) the impact of any changes in the age or
Medicare-eligibility status of the Covered Group already reflected in the per
capita health care claims costs. Those cost drivers should be separately
reflected appropriately within the valuation, but outside of the medical trend
assumption.
To the extent that the published surveys referenced above cease to be published,
or based on the mutual agreement of the Company, and the Committee (as advised
by their respective Actuaries) cease to be appropriate for use in this analysis,
a suitable alternative shall be found and agreed upon by the parties.
Claim Cost Calculations
Base year per capita health care claims costs shall be prepared utilizing actual
incurred per capita health care claims for the calendar year immediately prior
to the year of the measurement date, with claims run-out for at least 3 months
following the year (for example, for the December 31, 2011 measurement date, per
capita claims costs shall be prepared based on actual per capita claims costs
incurred during the 2010 calendar year, based on claims run-out through at least
March 31, 2011). Per capita claims costs should be adjusted for the estimated
amount of any claims incurred but paid after the run-out date using generally
accepted actuarial principles and historical actual claims run-out experience
for the Retiree Medical Benefits provided to the Covered Group.
Separate per capita claims costs should be prepared for each of the following
benefits: HSM, prescription drugs, dental, vision and plan administrative fees
and expenses. For purposes of per capita claim cost projections determined for
claim costs prior to the Effective Date, a five (5) basis point load for
administrative expenses shall be included in the experience.
To the extent that the results are statistically credible, per capita costs
should be prepared by 5 year age groups. Where cohort groups of five year age
groups or benefits do not result in statistically credible populations,
reasonable actuarial techniques to smooth the claim experience, combine age
groups or otherwise determine costs in such a way as to approximate the desired
level of detail without compromising the integrity of the results will be
permitted. Separate per capita costs should be prepared for gross HMSD costs
(prior to reduction for deductibles, coinsurance and other point-of-care
cost-sharing, but net of the portion of the costs paid by Medicare), HMSD
deductibles, coinsurance and other point-of-care cost-sharing, gross
prescription drug costs (prior to reduction for deductibles, coinsurance and
other point-of-care cost-sharing, but net of the portion of the costs paid by
Medicare), and prescription drug deductibles, coinsurance and other
point-of-care cost-sharing. Separate HMSD per capita costs will be prepared for
the TCN program, the PPO program and for HMOs.

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Prescription drug per capita costs shall reflect the level of prescription drug
rebates, subsidies or other discounts that the Committee has negotiated with
their prescription drug vendor or received from CMS or otherwise as of the
measurement date.
The per capita costs should represent costs for the plan designs described in
this MOU (and by reference, the 2005 Henry Case). If the Committee changes the
Retiree Medical Benefits provided to the Covered Group from the plan designs
described in this MOU, and/or if the historical claims information used to
develop the per capita costs reflect claims under a design that differs from the
design described in this MOU, the per capita costs should be appropriately
adjusted to be no larger or smaller than an actuarial estimate of the costs that
would have been incurred under the plan design described in this MOU. Adjustment
factors should be developed based on generally accepted actuarial standards and
reflect differences in items such as (but not limited to) changes in
cost-sharing, changes in government programs and anticipated changes in
utilization of health care services. The adjustment factors used shall be
mutually agreed upon by the Committee, the UAW and the Company.
The current General Motors Hourly OPEB Medical FASB Statement No. 106 actuarial
valuation assumes that any savings attributable to changes in health care
utilization resulting from the plan changes approved in the settlement in the
Henry Case will gradually decrease over time to the extent that actual health
care trend increases are higher than the annual Escalation of the retiree
cost-sharing amounts. The Cash Flow Projection should apply this same assumption
for this gradual decrease in utilization savings, unless actual experience
proves to be different.
The Cash Flow Projection should reflect monthly contributions made by retirees
and any future Escalation on those amounts. The Cash Flow Projection should also
reflect the contribution associated with the flat monthly special lifetime
benefit of $66.70 (which will not be escalated) which, when adjusted for the net
of average expected Federal, State and Local income taxes results in a monthly
amount of $51.67 to be contributed to the VEBA commencing on the first of the
month immediately following the Final Effective Date
The General Motors Hourly OPEB Medical FASB Statement No. 106 actuarial
valuation currently includes assumptions regarding the following:

  •   Percentage of retirees electing coverage     •   Percentage of future
retirees electing coverage for a spouse     •   Prevalence of non-spouse
dependents

As appropriate, and consistent with generally accepted actuarial principles, the
Cash Flow Projection shall include assumptions for the items listed above based
on experience studies of the Covered Group conducted at least every 5 years, and
implemented as soon as practicable following the completion of the experience
study.

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Cash Flow Projections will reflect any wage and COLA contributions as defined in
the settlement agreement in the Henry Case made through the Initial Effective
Date. Additionally all Cash Flow Projections will reflect agreed upon upfront
cash settlements, such as those related to the present value of the COLA
adjustments and the UAW’s decision to forego a 2009 wage increase, and required
future contributions such as the “Third Contribution” and the Increase in Stock
Value Contribution described in Paragraph 12 of the Agreement. No additional
employee contributions permitted under Paragraph 13 of the Agreement will be
included.
Shortfall Contribution
For purposes of determining whether any Shortfall Amount Contributions will be
required under Paragraph 11, the Cash Flow Projection shall use an expected
return on assets compounded equivalent to a 9% annual rate of return. The Cash
Flow Projection shall not assume receipt of any future Shortfall Amount
Contributions.
For purposes of determining whether any Shortfall Amount Contributions will be
required, the Cash Flow Projection shall assume the following with respect to
the timing and crediting of the assumed 9% expected return on assets of cash
in-flows and out-flows:

  •   Health care benefits incurred, plan administrative fees, Medicare Part B
supplemental benefits, retiree point-of-care cost-sharing incurred and retiree
contributions incurred — assume annual amounts are incurred monthly, are equal
to 1/12th of the projected annual calendar year amounts, and are
received/payable:     •   For the $76.20 Special Benefit related to Medicare
Part B supplemental benefits paid, and retiree contributions received: at the
beginning of the month,     •   For all other benefits: at the middle of the
month.     •   The Company Actuary or the Actuary may add a reasonable
additional first year cash flow to reflect the run-out of claims for services
rendered prior to the measurement date and the administrative expenses necessary
to process such claims (IBNR).     •   Cash and stock contributions will be
contributed as of their scheduled date.

For purposes of determining whether any Shortfall Amount Contributions will be
required, the starting and projected value of the assets of the New VEBA shall
be measured on a market value basis, adjusting for accrued income and accrued
expenses. However, if the Committee modifies the benefits provided by the New
Plan or New VEBA the cumulative difference in actual benefits paid versus those
that would have been paid, had there been no change in the benefit structure or
the retiree group will be added/subtracted from the starting market value of
assets to offset for such changes. Such adjustment will also include expected
investment returns on those payments at historical

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rates of return. Reasonable estimates may be used. Actual benefits paid may need
to change depending on asset returns, medical trend, and other factor.
For purposes of measuring the market value of the convertible notes for the
solvency test, the value used will be the greater of the value of the
convertible security on an as converted basis or the average of quotes received
from three financial institutions to be chosen by the Committee. Each of the
financial institutions chosen by the Committee shall be one of the top five
underwriters (in dollar terms) of convertible debt securities in the last year.
The individual quotes from the financial institutions will be based on an
average price of GM common stock for the five business days immediately leading
up to the solvency test date and will be based on common valuation information
provided by the Committee to the three institutions.
Generally accepted actuarial standards and practices evolve over time. In
recognition of this fact, the actuarial assumptions and methods used to prepare
the Cash Flow Projections and to determine whether Shortfall Amount
Contributions are required may be changed from those outlined in this MOU upon
mutual agreement of the Committee and the Company.
In the event that the Company or the UAW disputes the assumptions or methodology
used by the Actuary in calculating the Cash Flow Projection, the dispute shall
be resolved through an expedited dispute resolution procedure (which shall be
set forth in detail in the Final Settlement Agreement Documentation), with final
resolution by a neutral actuarial firm if necessary. In such event, the Cash
Flow Projection will be due not earlier than 30 days following the date of the
dispute resolution.
For purposes of determining the Company’s obligation to make a Shortfall Amount
Contribution, the Cash Flow Projection will not include Ford or Chrysler related
assets or obligations.
Other
After the transfer of UAW Related Assets referenced in paragraph 9, the New VEBA
will reimburse the Company and the Company will reimburse the New VEBA within 10
business days (or, in the case of any Actual Mitigation True Up Amounts, no
later than the October 1 following the Implementation Date) an amount based on
generally accepted actuarial standards, as calculated by the Company Actuary and
reviewed and approved by the Actuary, for any mitigation or other amounts that
the Existing External VEBA owes or owed the Company, including but not limited
to mitigation true up and administrative cost in manner consistent with the
Henry case settlement.
The Company and the Committee shall have the right to audit all information used
to derive any calculation or amount referenced in this section. The parties
shall fully cooperate with any such audit.

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Appendix B — Convertible Note and Registration Rights
Summary Term Sheet:
$4.3725 billion Convertible Note

      Term   Description Issuer:  
GM
   
 
Holder:  
New VEBA Trust
   
 
Aggregate Principal Amount:  
$4.3725 billion
   
 
Annual Interest Rate:  
6.75% yearly payable in cash, semiannually beginning June 30, 2008 (for the
period from January 1, 2008 to June 30, 2008)
   
 
Maturity:  
5 years from issue date
   
 
Conversion Price:  
$40.00
   
 
Equivalent Common Stock:  
109,312,500 shares at $40.00 conversion price
   
 
Issuer Call Option:  
Callable at par at the Issuer’s option at anytime 3 years after the date of
issuance. Issuer will also pay accrued and unpaid interest up to the date of
redemption plus the Make-Whole, if any.
   
 
Holder Conversion Rights:  
(1) Holder will have the option to convert the Convertible Note into GM common
stock upon Issuer providing notice that it intends to exercise its Call Option.
(2) Holder will have the option to convert during the 3 months prior to
maturity. (3) Holder will have the option to convert prior to maturity under the
following circumstance: During any calendar quarter commencing after the
issuance date if the closing price of the common stock exceeds 120% of the
Conversion Price (Conversion Trigger Price of $48.00) for at least 20 trading
days in the 30 consecutive trading days ending on the last trading day of the
preceding calendar quarter. Upon any such conversion by Holder, GM will pay
Holder all accrued and unpaid interest up to the date of conversion in cash as
well as, only, in the case of clause (1), the Make-Whole, if any, in cash.
   
 
Make-Whole:  
Upon call of all or a portion of the Convertible Note (the “Called Amount”) by
GM, GM will pay to the New VEBA Trust the Call Payment. The Call Payment is
equal to the present value, at 9%, to the date of the call of the Remaining Cash
Flow Payments due on the Called Amount. The Remaining Cash Flow Payments are
equal to the difference between the interest payments (at 6.75%) that would have
otherwise been received on the Called Amount to the Maturity Date less the
dividend payments (based on the annual dividend in effect at the time of the
call) to be received on the shares that the Called Amount would be converted
into (at a $40.00 conversion price) to the Maturity Date. The Call Payment is
not a transferable instrument. GM should not have to pay the Call Payment if GM
stock has already accreted to $69.04 after year 3 and $72.75 after year 4 for
the portion of the stock that the New VEBA Trust would be free to sell at that
time.
   
 
Registration:  
GM will provide registration rights for the resale of the (1) Convertible Note
or (2) GM Common Stock issuable upon the conversion of the Convertible Note, on
terms consistent with the Registration Rights Agreement Summary Term Sheet
attached hereto.
   
 
Anti-Dilution:  
Standard anti-dilution protections.
   
 
Lock-Up:  
Holder shall not sell, hedge, assign or transfer any interest in the Convertible
Note or GM Common Stock as a result of the conversion without the prior consent
of GM until 1/1/2010. After 1/1/2010, Holder may sell the Convertible Note or GM
Common Stock subject to reasonable volume restrictions for public offerings and
limitations on block sales to a single holder or group of holders.
   
 
Ranking:  
The Convertible Note will constitute part of Issuer’s senior debt. It will rank
equally with all the Issuer’s other unsecured and unsubordinated debt.
   
 
Voting:  
Shares of GM Common Stock issued upon conversion of the Convertible Note and
held by the Holder will be voted by the Trustee in the same proportion as votes
cast by all stockholders in the election.

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      Term   Description Events of Default and Acceleration:  
The Convertible Note is subject to the same Events of Default and Acceleration
as outlined in the May 24, 2007 Prospectus Supplement. Further, the MOU will
contain language that to the extent that obligations under the MOU have been
accelerated, Holder may also accelerate the obligations under this Convertible
Note.
   
 
Other:  
Other standard terms as included in GM’s latest convertible note security issued
in May 2007, including without limitation, Section 4.06 of the GM indenture,
filed with the SEC on Form S-3, dated November 14, 1995.

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Summary Term Sheet:
Registration Rights Agreement
Registration Rights are typically requested by holders of restricted securities.
These rights require the issuer to file a registration statement so that holders
of the security can sell their securities in the public market and thus obtain
the highest price for the holder given liquidity that the capital markets offer.
In turn, the issuer typically agrees to file a registration statement in return
for certain restrictions placed on the holders of the securities. Share volume
restrictions are typical to ensure that an orderly sale of the securities is
executed.
Following are provisions to be included in the Registration Rights Agreement
between GM and the VEBA Trust. These are typical of a registration rights
agreement and are similar to those registration rights provided in connection
with GM’s contribution of GM securities to VEBA trusts in 2003 while taking into
consideration the type and structure of the security being issued.

          Provision   Description   Terms  
Applicability of restrictions on convertible notes and common stock:
      The following restrictions apply to the convertible note and common stock
after conversion. To evaluate the convertible or to perform any calculations on
the convertible volume restrictions, the number of common shares underlying the
convertible note should be used. In addition, the hedging of shares is also
subject to the same volume restrictions
 
       
Demand Rights:
  Restrictions on the number and size of plan registrations that the holder can
request. Can only demand after lock-up period expires   Later of 1/1/2010 or
when convertible notes are transferred to New VEBA: One Demand Registration per
year (min. $500 million or 12.5 million shares /max. 54 million shares). No more
than 54 million shares per year in combination with Rule 144 sales
 
       
Rule 144 Sales:
  Ability to execute a transfer without registration under a Rule 144 exemption
  Later of 1/1/2010 or when convertible notes are transferred to New VEBA:
13.5 million shares per quarter. No more than 54 million shares per year in
combination with Demand Registration
 
       
Piggyback Rights:
  Ability to participate in issuer offerings of common stock   No limitation as
long as capacity exists and underwriters determine amount is appropriate.
Priority given to issuer but in case of excess demand, pro-rated among piggyback
right holders
 
       
Priority over other
  Ability to exercise registration rights in   Plan participates in offerings on
pro-rata

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          Provision   Description   Terms
Holders of Registration Rights:
  advance of other holders of registration rights on the same security.
Important if a number of security holders have registration rights   basis
relative to beneficial ownership of GM stock.
 
       
Shelf Registration:
  Registration statement covering note/stock “on the shelf” — filed and
immediately available following demand   Available immediately after lock-up
expires, however shelf requires amendment by GM prior to sale of securities
 
       
Restrictions on
Block Sales:
      No sales of blocks bigger than 2% of shares outstanding or to 5% holders
who have intent to influence
 
       
Tender Offers:
  Ability to participate in tender offers for the securities held   The trustee
may participate in a tender offer only if the offer has been recommended by an
independent committee of the GM Board
 
       
Blackouts:
  Issuer’s right to postpone registrations / transfers   Up to 180 days
 
       
Initial Lockup:
  Initial restriction on the transferring of securities   Holder shall not sell,
hedge, assign or transfer any interest in the convertible note or GM common
stock as a result of the conversion without the prior consent of GM until later
of 1/1/2010 or when convertible notes are transferred to New VEBA
 
       
Voting:
  Restrictions on voting rights attributable to common stock held   Shares of GM
Common Stock issued upon conversion of the Convertible Note and held by the
Holder will be voted by the Trustee in the same proportion as votes cast by all
stockholders in the election
 
       
Marketing Rights:
  Issuer support for marketing of securities (i.e., management time for road
shows, etc)   Management available for transfers of at least 20 million shares,
but no more than once per calendar year
 
       
Underwriters:
  Rights to appoint and responsibility of underwriters   In a Demand
Registration, GM may choose one of two underwriters to sell the securities and
the Trust may choose the other. GM’s appointed underwriter has the ability to
exercise a cutback right if the offering is too large to clear the market in an
orderly fashion
 
       
Right of First Offer:
  Issuer’s right of first offer on stock transfers   GM has the right of first
offer to purchase the securities from the Trust after notice from the Trustee
that the Trust plans to sell a certain number of securities
 
       
Standstill
Agreement:
      Trust will not accumulate additional GM shares or securities convertible
into GM common stock without GM Board’s consent. Trust will not launch or aid
anyone in launching any proxy contest or consent solicitation without GM Board’s
consent

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Appendix C
(GRAPH) [k19262k1926203.gif]
Base and Wage/COLA — The Buyout Amounts listed above are based on payment as of
January 1 of the applicable year. If the Company makes a Buyout Amount payment
on January 1, it shall pay the amount listed in the Buyout Column for the
applicable year. If the Company makes a Buyout Amount payment between January 1
and the applicable scheduled annual payment date as listed above, it shall
increase the applicable Buyout Amount listed above to reflect 9% annual earnings
for the period between January 1 and the date of payment.
Shortfall Amount — The annual payments listed above shall be made on or before
April 1 of each year in which a Shortfall Payment is required. The Buyout Amount
listed above represents the present value of the remaining shortfall payments,
as of January 1. If the Company elects to pay the Buyout Amount, it shall make
such payment between January 1 and April 1 and shall increase the applicable
Buyout Amount listed above to reflect 9% annual earnings for the period between
January 1 and the date of payment.

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