Document:

exv10w1

 

EXHIBIT 10.1

SETTLEMENT AGREEMENT

     This settlement agreement (which, together with the Exhibits hereto, is referred to as the
“Settlement Agreement”), dated February 21, 2008, is between General Motors Corporation (“GM”), by
and through its attorneys, and the International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America (“UAW”), by and through its attorneys, and the Class
Representatives, on behalf of the Class, by and through Class Counsel, in (1) the class action of
Int’l Union, UAW, et. al. v. General Motors Corp., Civil Action No. 07-14074 (E.D. Mich. filed
Sept. 9, 2007) (“Henry II”), and/or (2) the class action of UAW et al. v. General Motors Corp., No.
05-CV-73991, 2006 WL 891151 (E.D. Mich. Mar. 31, 2006, aff’d, Int’l Union, UAW v. General Motors
Corp., 497 F.3d 615 (6th Cir. 2007) (“Henry I”). This Settlement Agreement shall cover and has
application to:

     (i) the Class;

     (ii) the Covered Group;

     (iii) the Existing External VEBA;

     (iv) the trustee and committee that administer the Existing External VEBA;

     (v) the UAW;

     (vi) the GM Plan; and

     (vii) GM.

     With regard to GM, the UAW and the Class, this Settlement Agreement: (i) resolves and settles
all claims that arise in connection with Henry II; (ii) resolves and settles all claims, motions
and other issues pertaining to or remaining in Henry I; (iii) amends, supersedes or otherwise
supplants the settlement agreement dated December 16, 2005 approved in Henry I (“Henry I Settlement
Agreement”); and (iv) provides the basis upon which the judgment entered March 31, 2006 in Henry I
shall be satisfied, superseded or amended as necessary to give full force and effect to the terms
of this Settlement Agreement. This Settlement Agreement also resolves and settles any and all
claims for GM contributions to the Existing External VEBA, and provides for the termination of the
Existing External VEBA and the transfer of all assets and liabilities of the Existing External VEBA
to the New VEBA. However, except as otherwise specifically set forth herein, nothing in this
Settlement Agreement is intended to alter the eligibility provisions of the GM Plan or to provide
GM contributions or benefits to individuals who are not otherwise entitled to such under the GM
Plan.

     This Settlement Agreement is subject to approval by the Court and the parties shall request
that the Court incorporate the entirety of this Settlement Agreement in the Approval Order. In the
event of an inconsistency between this Settlement Agreement and any prior agreements or documents,
including the Memorandum of Understanding Post-Retirement Medical Care September 26, 2007 (“MOU”),
this Settlement Agreement shall control. In the event of an inconsistency between the body of this
Settlement Agreement and the Exhibits
hereto, this Settlement Agreement shall control, unless explicitly stated otherwise in this
Settlement Agreement.

- 1 -

 

     This Settlement Agreement recognizes and approves on the basis set forth herein: (i) the
amendment of the GM Plan to terminate coverage for and exclude from coverage the Class and the
Covered Group; (ii) the division of the Existing Internal VEBA into the UAW Related Account and
Non-UAW Related Account and the transfer of the UAW Related Account to the New VEBA; (iii) the
termination of participation by the Class and the Covered Group under the Existing Internal VEBA;
(iv) the termination of the Existing External VEBA in conjunction with the establishment of the New
Plan, and the transfer to the New VEBA of all assets and liabilities of the Existing External VEBA;
(v) that all claims for Retiree Medical Benefits incurred on or after the Implementation Date by
the Class and the Covered Group, including but not limited to COBRA continuation coverage where
such election is or had been made on or after retirement and any coverage provided on a self-paid
basis in retirement, shall be solely the responsibility and liability of the New Plan and the New
VEBA; (vi) the Committee’s designation under the New Plan and New VEBA as named fiduciary and
administrator of the New Plan; (vii) that the New Plan shall replace the GM Plan regarding the
provision of Retiree Medical Benefits to the Class and the Covered Group; (viii) that the New VEBA
shall receive certain payments as described herein from the Existing Internal VEBA, the Existing
External VEBA, and GM; (ix) that GM’s obligation to pay into the New VEBA is fixed and capped as
described herein; and (x) that the New VEBA shall serve as the exclusive funding mechanism for the
New Plan.

     1. Definitions

     Actuary. The term “Actuary” is defined in Exhibit A to this Settlement Agreement.

     Adjustment Event. The term “Adjustment Event” is defined in Section 13 of this
Settlement Agreement.

     Admissions. The term “Admissions” shall mean any statement, whether written or oral,
any act or conduct, or any failure to act, that could be used (whether pursuant to Rules 801(d)(2)
or 804(b)(3) of the Federal Rules of Evidence, a similar rule or standard under other applicable
law, the doctrines of waiver or estoppel, other rule, law, doctrine or practice, or otherwise) as
evidence in a proceeding of proof of agreement with another party’s position or proof of adoption
of, or acquiescence to, a position that is contrary to the interest of the party making such
statement, taking such action, or failing to act.

     Alternative Convertible Note. The term “Alternative Convertible Note” is defined in
Section 12.F of this Settlement Agreement.

     Approval Order or Judgment. The terms “Approval Order” or “Judgment” shall mean an
order obtained from the Court approving and incorporating this Settlement Agreement in all respects
as set forth in Section 28 of this Settlement Agreement. In the event that the Court enters
separate orders certifying the Class and approving this Settlement Agreement, the terms “Approval
Order” or “Judgment” shall apply to both orders collectively.

     Base Amounts. The term “Base Amounts” shall mean the payment(s) to be made by GM that
are specified in Sections 7.D and 8.E of this Settlement Agreement.

     Board of Directors. The term “Board of Directors” shall mean the Board of Directors
of GM or any committee established by the Board of Directors.

- 2 -

 

     Cash Flow Projections. The term “Cash Flow Projections” shall mean the cash flow
projections described in Exhibit A to this Settlement Agreement, which is for the purpose of
determining whether payment of a Shortfall Amount is required in a given year.

     Class or Class Members. The term “Class” or “Class Members” shall mean all persons
who are:

     (i) GM-UAW Represented Employees who, as of October 15, 2007, were retired from GM with
eligibility for Retiree Medical Benefits under the GM Plan, and their eligible spouses, surviving
spouses and dependents;

     (ii) surviving spouses and dependents of any GM-UAW Represented Employees who attained
seniority and died on or prior to October 15, 2007 under circumstances where such employee’s
surviving spouse and/or dependents are eligible to receive Retiree Medical Benefits from GM and/or
under the GM Plan;

     (iii) UAW retirees of Delphi Corporation (“Delphi”) who as of October 15, 2007 were retired
and as of that date were entitled to or thereafter become entitled to Retiree Medical Benefits from
GM and/or the GM Plan under the terms of the UAW-Delphi-GM Memorandum of Understanding Delphi
Restructuring dated June 22, 2007, Attachment B to the UAW-Delphi-GM Memorandum of Understanding
Delphi Restructuring dated June 22, 2007 (without regard to whether any of the conditions described
in Section K.2 of such Memorandum of Understanding or Section 2 of such Attachment B occur), or the
Benefit Guarantee agreement between GM and the UAW dated September 30, 1999, and their eligible
spouses, surviving spouses and dependents of all such retirees;

     (iv) surviving spouses and dependents of any UAW-represented employee of Delphi who attained
seniority and died on or prior to October 15, 2007 under circumstances where such employee’s
surviving spouse and/or dependents are eligible to receive Retiree Medical Benefits from GM and/or
the GM Plan under the terms of the UAW-Delphi-GM Memorandum of Understanding Delphi Restructuring
dated June 22, 2007, Attachment B to the UAW-Delphi-GM Memorandum of Understanding Delphi
Restructuring dated June 22, 2007 (without regard to whether any of the conditions described in
Section K.2 of such Memorandum of Understanding or Section 2 of such Attachment B occur), or the
Benefit Guarantee agreement between GM and the UAW dated September 30, 1999;

     (v) GM-UAW Represented Employees or former UAW-represented employees who, as of October 15,
2007, were retired from any previously sold, closed, divested or spun-off GM business unit (other
than Delphi) with eligibility to receive Retiree Medical Benefits from GM and/or the GM Plan by
virtue of any other agreement(s) between GM and the UAW, and their eligible spouses, surviving
spouses, and dependents; and

- 3 -

 

     (vi) surviving spouses and dependents of any GM-UAW Represented Employee or any
UAW-represented employee of a previously sold, closed, divested or spun-off GM business unit (other
than Delphi), who attained seniority and died on or prior to October 15, 2007 under circumstances
where such employee’s surviving spouse and/or dependents are eligible to receive Retiree Medical
Benefits from GM and/or the GM Plan.

     Class Certification Order. The term “Class Certification Order” shall mean the final
order entered by the Court as described in Section 28.A of this Settlement Agreement.

     Class Counsel. The term “Class Counsel” shall mean the law firm of Stember,
Feinstein, Doyle & Payne, LLC, or its successor.

     Class Representatives. The term “Class Representatives” shall mean Earl L. Henry,
Bonnie J. Lauria, Raymond B. Bailey, Theodore J. Genco, Marvin C. Marlow, Charles R. Miller,
Laverne M. Soriano, and John Huber.

     Committee. The term “Committee” shall mean the governing body set forth in Section
4.A of this Settlement Agreement that acts on behalf of the EBA and serves as the named fiduciary
and administrator of the New Plan, as those terms are defined in ERISA and that is so described in
the Trust Agreement.

     Convertible Note. The term “Convertible Note” shall mean the $4.3725 billion
aggregate principal amount of 6.75% Series U Convertible Senior Debentures Due December 31, 2012
issued under that Indenture, dated as of January 8, 2008, between GM and the Bank of New York, as
Trustee, including all supplemental indentures thereto, substantially in the form attached as
Exhibit B to this Settlement Agreement.

     Court. The term “Court” shall mean the United States District Court for the Eastern
District of Michigan.

     Covered Group. The term “Covered Group” shall mean:

     (i) all GM Active Employees who have attained seniority as of September 14, 2007, and who
retire after October 15, 2007 under the GM-UAW National Agreements, or any other agreement(s)
between GM and the UAW, and who upon retirement are eligible for Retiree Medical Benefits under the
GM Plan or the New Plan, as applicable, and their eligible spouses, surviving spouses and
dependents;

     (ii) all UAW-represented active employees of Delphi or a former Delphi unit who retire from
Delphi or such former Delphi unit on or after October 15, 2007, and upon retirement are entitled to
or thereafter become entitled to Retiree Medical Benefits from GM and/or the GM Plan or the New
Plan under the terms of the UAW-Delphi-GM Memorandum of Understanding Delphi Restructuring dated
June 22, 2007, Attachment B to the UAW-Delphi-GM Memorandum of Understanding Delphi Restructuring
dated June 22, 2007 (without regard to whether any of the conditions described in Section K.2 of
such Memorandum of Understanding or Section 2 of such Attachment B occur), or the Benefit Guarantee
agreement between GM and the UAW dated September 30, 1999, and the eligible spouses, surviving
spouses and dependents of all such retirees;

- 4 -

 

     (iii) all surviving spouses and dependents of any UAW-represented employee of Delphi or a
former Delphi unit who dies after October 15, 2007 but prior to retirement under circumstances
where such employee’s surviving spouse and/or dependents are eligible or thereafter become eligible
for Retiree Medical Benefits from GM and/or the GM Plan or the New Plan under the terms of the
UAW-Delphi-GM Memorandum of Understanding Delphi Restructuring dated June 22, 2007, Attachment B to
the UAW-Delphi-GM Memorandum of Understanding Delphi Restructuring dated June 22, 2007 (without
regard to whether any of the conditions described in Section K.2 of such Memorandum of
Understanding or Section 2 of such Attachment B occur), or the Benefit Guarantee agreement between
GM and the UAW dated September 30, 1999;

     (iv) all former GM-UAW Represented Employees and all UAW-represented employees who, as of
October 15, 2007, remain employed in a previously sold, closed, divested, or spun-off GM business
unit (other than Delphi), and upon retirement are eligible for Retiree Medical Benefits from GM
and/or the GM Plan or the New Plan by virtue of any other agreement(s) between GM and the UAW, and
their eligible spouses, surviving spouses and dependents; and

     (v) all eligible surviving spouses and dependents of a GM Active Employee, former GM-UAW
Represented Employee or UAW-represented employee identified in (i) or (iv) above who attained
seniority on or prior to September 14, 2007 and die after October 15, 2007 but prior to retirement
under circumstances where such employee’s surviving spouse and/or dependents are eligible for
Retiree Medical Benefits from GM and/or the GM Plan or the New Plan.

     Debt. The term “Debt” shall mean notes, bonds, debentures or other similar evidences
of indebtedness for money borrowed.

     Derivative Contracts. The term “Derivative Contracts” shall mean those various
derivative instruments substantially in the forms set forth in Exhibit H.

     Dispute Party. The term “Dispute Party” is defined in Section 26.B of this Settlement
Agreement.

     DOL. The term “DOL” shall mean the United States Department of Labor.

     Employees Beneficiary Association or EBA. The term “Employees Beneficiary Association”
or “EBA” shall mean the employee organization within the meaning of section 3(4) of ERISA that is
organized for the purpose of establishing and maintaining the New Plan, with a membership
consisting of the individuals who are members of the Class and the Covered Group, and on behalf of
which the Committee acts.

     ERISA. The term “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended.

     Existing External VEBA. The term “Existing External VEBA” shall mean the defined
contribution – Voluntary Employees’ Beneficiary Association trust established pursuant to the Henry
I Settlement Agreement.

- 5 -

 

     Existing Internal VEBA. The term “Existing Internal VEBA” shall mean the General
Motors Welfare Benefit Trust that is funded and maintained by GM.

     Fairness Hearing. The term “Fairness Hearing” is defined in Section 27 of this
Settlement Agreement.

     Final Effective Date. The term “Final Effective Date” shall mean the first date after
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, (i) the Approval Order has not been
disapproved or modified as a result of any appeal(s) or other challenge(s) and (ii) GM has
completed, on a basis reasonably satisfactory to GM, its discussions with the Securities and
Exchange Commission (“SEC”) regarding the accounting treatment with respect to the New Plan and the
New VEBA as set forth in Section 21 of this Settlement Agreement.

     General Motors Asset Management Valuation Policies and Procedures. The term “General
Motors Asset Management Valuation Policies and Procedures” shall mean GMAM’s valuation policies
and procedures, copies of which have been provided to the UAW and Class Counsel, as the same may be
amended from time to time by GMAM (who shall notify the UAW and the Committee about any such
intended amendments in a timely manner).

     GM Active Employees. The term “GM Active Employees” shall mean those hourly employees
of GM who, as of September 14, 2007 or any date thereafter, are covered by the 2007 GM-UAW National
Agreement or are covered by any subsequent GM-UAW National Agreement. For purposes of this
definition, “active employee” shall include hourly 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.

     GM Actuary. The term “GM Actuary” is defined in Exhibit A to this Settlement
Agreement.

     GMAM. The term “GMAM” shall mean General Motors Asset Management Corporation and its
subsidiaries, and as specifically referring to the investment manager for the Existing Internal
VEBA, refers to General Motors Investment Management Corporation. GMAM is a wholly owned
subsidiary of General Motors Corporation.

     GM Plan. The term “GM Plan” shall mean the collectively bargained General Motors
Health Care Program for Hourly Employees as set forth in Exhibit C-1 of the 2007 and prior GM-UAW
National Agreements, as applicable to those GM-UAW Represented Employees who had attained seniority
prior to September 14, 2007.

     GM-UAW National Agreements. The term “GM-UAW National Agreements” shall mean the
agreement(s) negotiated on a multi-facility basis and entered into between GM and the UAW covering
GM employees represented by the UAW. The current GM-UAW National Agreement is dated October 15,
2007.

     GM-UAW Represented Employees. The term “GM-UAW Represented Employees” shall mean
those individuals who were represented by the UAW in their employment with GM.

- 6 -

 

     Implementation Date. The term “Implementation Date” shall mean the later of January
1, 2010 or the Final Effective Date.

     Indemnified Party. The term “Indemnified Party” is defined in Section 23 of this
Settlement Agreement.

     Indemnification Liabilities. The term “Indemnification Liabilities” is defined in
Section 23 of this Settlement Agreement.

     Indemnity Expenses. The term “Indemnity Expenses” is defined in Section 23 of this
Settlement Agreement.

     Independent Attestation. The term “Independent Attestation” shall mean an agreed-upon
procedures engagement performed for GM, the UAW and the Committee by a nationally recognized
independent registered public accounting firm selected by GM and conducted in accordance with the
attestation standards of the Public Company Accounting Oversight Board, the subject matter of which
would be (a) in the case of an Adjustment Event under Section 13.A(i) of this Settlement Agreement
whether the balance of the Existing Internal VEBA and/or specified assets therein have been valued
in accordance with the General Motors Asset Management Valuation Policies and Procedures; or (b) in
the case of an Adjustment Event under Section 13.A(ii) or (iii) of this Settlement Agreement
whether specified assets of the Existing Internal VEBA have been valued in accordance with the
General Motors Asset Management Valuation Policies and Procedures. The agreed-upon procedures
shall be mutually agreed among the accounting firm, GM and the Committee in connection with any
such engagement.

     Independent Audit. The term “Independent Audit” shall mean an audit of the
consolidated financial statements of GM performed in accordance with the standards of the Public
Company Accounting Oversight Board by the independent registered public accounting firm that has
been designated by GM.

     Initial Accounting Period. The term “Initial Accounting Period” shall mean the period
before the later of the date that (a) GM determines that its obligations, if any, with respect to
the New Plan made available to the Class and Covered Group are subject to settlement accounting as
contemplated by paragraphs 90-95 of FASB Statement No. 106, as amended, or its functional
equivalent; or (b) GM is no longer obligated to make any further payments or deposits to the New
VEBA, including, but not limited to, any Shortfall Amounts.

     Initial Effective Date. The term “Initial Effective Date” shall mean the date on
which the Court enters the Approval Order.

     Initial Shortfall Amount. The term “Initial Shortfall Amount” is defined in Section
7.D of this Settlement Agreement.

     Interest. The term “Interest” shall mean an interest rate of 9 percent (9%) per annum
(computed on the basis of a 360-day year consisting of twelve 30-day months and the number of days
elapsed in any partial month), credited and compounded annually, unless otherwise specified in this
Settlement Agreement.

- 7 -

 

     Limited Liability Company. The term “Limited Liability Company” or “LLC” shall mean
LBK, LLC, a Delaware limited liability company created by GM under Section 7.B of this Settlement
Agreement for the purpose of holding the Convertible Note and the Short Term Note, entering into
and holding the Derivative Contracts, and receiving interest on the Convertible Note as described
in this Settlement Agreement.

     Manufacturing Subsidiary. The term “Manufacturing Subsidiary” shall mean any
Subsidiary (A) substantially all the property of which is located within the continental United
States of America, (B) which owns a Principal Domestic Manufacturing Property and (C) in which GM’s
investment, direct or indirect and whether in the form of equity, debt, advances or otherwise, is
in excess of U.S. $2,500,000,000 as shown on the books of GM as of the end of the fiscal year
immediately preceding the date of determination; provided, however, that “Manufacturing Subsidiary”
shall not include GMAC, LLC and its Subsidiaries (or any corporate successor of any of them) or any
other Subsidiary which is principally engaged in leasing or in financing installment receivables or
otherwise providing financial or insurance services to GM or others or which is principally engaged
in financing GM’s operations outside the continental United States of America.

     Mitigation. The term “Mitigation” shall have the same meaning as in the Henry I
Settlement Agreement.

     Mortgage. The term “Mortgage” shall mean any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar encumbrance.

     National Institute for Health Care Reform or Institute. The term “National Institute
for Health Care Reform” or “Institute” is defined in Section 31 of this Settlement Agreement.

     New Plan. The term “New Plan” shall mean the new retiree welfare benefit plan that is
the subject of this Settlement Agreement, and that is funded in part by the GM Separate Retiree
Account (as defined in the Trust Agreement), which New Plan shall provide Retiree Medical Benefits
to the Class and Covered Group.

     New VEBA. The term “New VEBA” shall mean a new trust fund to be established as
described in Section 4 of this Settlement Agreement.

     Non-UAW Related Account. The term “Non-UAW Related Account” is defined in Section
6.A of this Settlement Agreeement.

     Notice Order. The term “Notice Order” is defined in Section 27 of this Settlement
Agreement.

     Pension Plan. The term “Pension Plan” shall mean the General Motors Hourly-Rate
Employees Pension Plan.

     Principal Domestic Manufacturing Property. The term “Principal Domestic Manufacturing
Property” shall mean any manufacturing plant or facility owned by GM or any Manufacturing
Subsidiary which is located within the continental United States of America and,
in the opinion of the Board of Directors, is of material importance to the total business
conducted by GM and its consolidated affiliates as an entity.

- 8 -

 

     Retiree Medical Benefits. The term “Retiree Medical Benefits” shall mean all post
retirement medical benefits, including but not limited to hospital surgical medical, prescription
drug, vision, dental, hearing aid and the $76.20 Special Benefit related to Medicare.

     Short Term Note. The term “Short Term Note” is defined in Section 7.C of this
Settlement Agreement.

     Shortfall Amounts. The term “Shortfall Amount” shall mean the payment(s) to be made
by GM that are defined in Section 10 of this Settlement Agreement.

     State. The term “State” shall mean any state of the United States.

     Subsidiary. The term “Subsidiary” shall mean any corporation or other entity of which
at least a majority of the outstanding stock or other beneficial interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors or other governing body
of such corporation or other entity (irrespective of whether or not at the time stock or other
beneficial interests of any other class or classes of such corporation or other entity shall have
or might have voting power by reason of the happening of any contingency) is at the time owned by
GM, or by one or more Subsidiaries, or by GM and one or more Subsidiaries.

     Temporary Asset Account. The term “Temporary Asset Account” or “TAA” shall mean the
temporary account controlled at all times by GM that is established by GM or a wholly owned
subsidiary of GM under Section 7.A of this Settlement Agreement for the purpose of holding certain
GM payments as described in this Settlement Agreement.

     Trust Agreement. The term “Trust Agreement” shall mean the New VEBA trust agreement
the form of which is set forth in Exhibit E to this Settlement Agreement.

     UAW OPEB 12/31/07 Split. The term “UAW OPEB 12/31/07 Split” is defined in Section 6.A
of this Settlement Agreement.

     UAW Related Account. The term “UAW Related Account” is defined in Section 6.A of this
Settlement Agreeement.

     UAW Releasees. The term “UAW Releasees” shall mean the UAW, the Class
Representatives, the Class, Class Counsel, the Covered Group and anyone claiming on behalf of,
through or under them by way of subrogation or otherwise.

     Wages/COLA Amount. The term “Wages/COLA Amount” shall mean the payments to be made by
GM that are defined in Sections 7.D and 8.F of this Settlement Agreement.

     2. Purpose of New Plan and New VEBA

     The New Plan and the New VEBA will, as of the Implementation Date, be the employee welfare
benefit plan and trust that are exclusively responsible for all Retiree Medical Benefits for

- 9 -

 

which GM, the GM Plan and any other GM entity or benefit plan formerly would have been
responsible with regard to the Class and the Covered Group. All assets paid or transferred by GM
to the New VEBA (including any investment returns thereon) will be credited to a GM Separate
Retiree Account and must be used for the exclusive purpose of providing Retiree Medical Benefits to
the participants of the New Plan and their eligible beneficiaries, and to defray the reasonable
expenses of administering the New Plan, as set forth in the Trust Agreement. All obligations of
GM, the GM Plan and any other GM entity or benefit plan for Retiree Medical Benefits for the Class
and the Covered Group arising from any agreement(s) between GM and the UAW shall be forever
terminated as of the Implementation Date. GM’s sole obligations to the New Plan and the New VEBA
are those set forth in this Settlement Agreement. Eligibility rules for the New Plan shall be the
same as those currently included in the GM Plan, and may not be expanded.

     3. Factual Investigation and Legal Inquiry and Decision to Settle

     Throughout the 2007 negotiations between GM and the UAW over the terms of a new National
Agreement, the parties engaged in extended discussions concerning the impact of rising health care
costs on GM’s financial condition and its ability to compete in the North American marketplace. GM
provided the UAW with extensive information as to its financial condition and health care
expenditures. On behalf of the UAW, a team of investment bankers, actuaries, and legal experts
have reviewed GM’s information, and provided the UAW with an assessment as to the state of GM’s
financial condition and analyzed the benefits of entering into the MOU. GM officials also met with
representatives of the UAW and its team of experts and answered questions and provided further
detail, as requested. The UAW and its team of experts have now analyzed, inter
alia, the funds necessary to provide ongoing Retiree Medical Benefits through the New Plan
and the New VEBA.

     During these discussions, GM asserted, as it had in Henry I, that it has the right to
unilaterally modify and/or terminate the health care benefits applicable to its hourly retirees and
that, without this Settlement Agreement, GM would exercise its right to terminate the Henry I
Settlement Agreement according to its terms as well as exercise its right to unilaterally modify
retiree health care benefits. Although the UAW acknowledges GM’s right to terminate the Henry I
Settlement Agreement, it continues to assert that the retiree health care benefits are vested and
GM does not have the right to unilaterally modify or terminate retiree health care benefits.

     On behalf of the Class, Class Counsel has conducted a substantial factual investigation and
legal inquiry prior to entering into this Settlement Agreement. Similar to what was done by the
UAW, this included, inter alia, review of GM’s financial information, review and analysis of
collective bargaining agreements, relevant health care plan documents, and actuarial information,
and review of material on GM’s health care costs. Class Counsel retained experts to review the
financial and actuarial information and, with the assistance of these experts, conducted an
extensive review of GM’s projected financial condition, GM’s ability to provide Retiree Medical
Benefits over the long term, and the proposed New VEBA’s ability to provide Retiree Medical
Benefits over the long term with the funds available from the proposed Settlement Agreement. Class
Counsel has also thoroughly investigated the law applicable to the Class Members’ claims and has
done so considering the collective bargaining agreements and health care plan

- 10 -

 

documents affecting these claims. Class Counsel examined the benefits and certainty to be
obtained under the proposed Settlement Agreement for an aging Class, and has considered the costs,
risks and delays associated with the prosecution of complex and time-consuming litigation, the
likely appeals of any rulings in favor of any party. Class Counsel has considered the fact that,
under the proposed Settlement Agreement, the benefits of Henry I through 2011 are preserved. Class
Counsel believes that, in consideration of all the circumstances, the proposed settlement embodied
in this Settlement Agreement is fair, reasonable, adequate and in the best interest of all members
of the Class. Class Counsel participated in the negotiation of this Settlement Agreement.

     4. New Plan and New VEBA

     A. Committee. The Approval Order shall provide that the New Plan and New VEBA, both
subject to ERISA, shall be administered by the Committee. The Committee shall be in place within
120 days after the Initial Effective Date. The Committee shall consist of 11 members, 5 of which
are to be appointed by the UAW, and 6 independent members. The Approval Order shall designate the
initial public members who are set forth in Attachment 1 of Exhibit E to this Settlement Agreement.
In the event that any member of the Committee resigns, dies, becomes incapacitated or otherwise
ceases to be a member, a replacement member shall be appointed as described in the Trust Agreement.

     B. Establish and Maintain. The EBA, acting through the Committee, shall establish
and maintain the New Plan for the purpose of providing Retiree Medical Benefits to the Class and
Covered Group as set forth in this Settlement Agreement. The Committee shall begin administering
the New Plan so as to be able to provide Retiree Medical Benefits for the Class and Covered Group
with respect to claims incurred on or after the Implementation Date. The Committee shall implement
the New VEBA at the earlier of (i) the expiration of 180 days following the Initial Effective Date,
or (ii) the Implementation Date. The New Plan shall be ERISA-covered and the New VEBA shall meet
the requirements of Section 501(c)(9) of the Internal Revenue Code.

     C. Limitation on GM Role. No member of the Committee shall be a current or former
officer, director or employee of GM or any member of the GM controlled group; provided however,
that a retiree who was represented by the UAW in his/her employment with GM or an employee of GM
who is on leave from GM and who is represented by the UAW is not precluded by this provision from
serving on the Committee. No member of the Committee shall be authorized to act for GM or shall be
an agent or representative of GM for any purpose. Furthermore, GM shall not be a fiduciary with
respect to the New Plan or New VEBA, and will have no rights or responsibilities with respect to
the New Plan or New VEBA other than as specifically set forth in this Settlement Agreement.

     5. Provision and Scope of Retiree Medical Benefits

     A. Before Implementation Date. With respect to claims incurred prior to the
Implementation Date, Retiree Medical Benefits for the Class and the Covered Group will continue to
be provided by the GM Plan and the Existing External VEBA at the same level and scope as provided
for by the GM Plan and the Existing External VEBA under the Henry I

- 11 -

 

Settlement Agreement, including Mitigation from the Existing External VEBA (for those entitled
to it). The payment by GM and/or the GM Plan of Retiree Medical Benefits for claims incurred prior
to the Implementation Date will not reduce GM’s payment obligations to the New Plan and the New
VEBA under this Settlement Agreement.

     B. On and After Implementation Date. With respect to claims incurred on and after
the Implementation Date, the New Plan and the New VEBA shall have sole responsibility for and be
the exclusive source of funds to provide Retiree Medical Benefits for the Class and the Covered
Group, including but not limited to COBRA continuation coverage where such election is made after
retirement. Neither GM, the GM Plan, the Existing Internal VEBA, nor any other GM person, entity,
or benefit plan shall have any responsibility or liability for Retiree Medical Benefits for
individuals in the Class or in the Covered Group for claims incurred on or after the Implementation
Date. GM’s sole obligations to the New Plan and the New VEBA are those set forth in this
Settlement Agreement.

     From the Implementation Date until December 31, 2011, the Retiree Medical Benefits under the
New Plan and the New VEBA will continue to be provided at the levels described in the Henry I
Settlement Agreement and as set forth in the Trust Agreement, except for the additional monthly
contribution attributable to the pension cost pass-through described in Section 15 of this
Settlement Agreement. On and after January 1, 2012, the Committee shall have such authority to
establish Benefits as described in the Trust Agreement, including raising or lowering benefits.
However, in no event may the Committee amend the New Plan or New VEBA to provide benefits other
than Retiree Medical Benefits until the expiration of the Initial Accounting Period. The ability
of the New Plan and the New VEBA to pay for Retiree Medical Benefits will depend on numerous
factors, many of which are outside of the control of UAW, the Committee, the New Plan and the New
VEBA, including, without limitation, the investment returns, actuarial experience and other
factors.

     C. Amendment of GM Plan and Reimbursement of GM. The Approval Order shall provide
that all obligations of GM and all provisions of the GM Plan in any way related to Retiree Medical
Benefits for the Class and/or the Covered Group, and all provisions of applicable collective
bargaining agreements, contracts, letters and understandings in any way related to Retiree Medical
Benefits for the Class and the Covered Group are terminated on the Implementation Date, or
otherwise amended so as to be consistent with this Settlement Agreement and the fundamental
understanding that all GM obligations regarding Retiree Medical Benefits for the Class and the
Covered Group are terminated as set forth in this Settlement Agreement. Summary Plan Descriptions
of the GM Plan are amended to reflect the termination of GM and GM Plan responsibilities for
Retiree Medical Benefits for the Class and the Covered Group for claims incurred on or after the
Implementation Date as set forth herein.

     The New Plan and New VEBA shall reimburse GM or the GM Plan, as applicable, for any Retiree
Medical Benefits advanced or provided by GM or the GM Plan with regard to claims incurred by
members of the Class and the Covered Group on or after the Implementation Date, including, but not
limited to situations where a retirement is made retroactive and the medical claims were incurred
on or after the Implementation Date or where GM is notified of an intent by a member of the Class
and the Covered Group to retire under circumstances where there is insufficient time to transfer
responsibility for Retiree Medical Benefits to the New Plan and GM

- 12 -

 

or the GM Plan provides interim coverage for Retiree Medical Benefits. To the extent such
reimbursement may not be permitted by law, the UAW, the Class, Class Counsel and the Committee will
fully cooperate with GM in securing any legal or regulatory approvals that are necessary to permit
such reimbursement.

     6. Division of Existing Internal VEBA

     A. UAW Related Account. Effective January 1, 2008 for bookkeeping purposes only, GM
will take the necessary steps to divide the Existing Internal VEBA into two bookkeeping accounts.
One account will consist of the percentage of the Existing Internal VEBA’s assets as of January 1,
2008 that is equal to the estimated percentage of GM’s hourly OPEB liability covered by the
Existing Internal VEBA attributable to Non-UAW represented employees and retirees, their eligible
spouses, surviving spouses and dependents (“Non-UAW Related Account”). The second account will
consist of the remaining percentage of the assets in the Existing Internal VEBA as of January 1,
2008 (“UAW Related Account”). GM shall use the same actuarial assumptions, generally consistent
with past practice, in respect of both the Non-UAW Related Account and the UAW Related Account, for
estimating the percentage of GM’s hourly OPEB liability attributable to the Non-UAW Related Account
and the UAW Related Account.

     The value of the UAW Related Account as of January 1, 2008 shall be equal to: (i) the
percentage of GM’s hourly OPEB liability as of December 31, 2007 attributable to UAW associated
employees and retirees, their eligible spouses, surviving spouses and dependents (“UAW OPEB
12/31/07 Split”), multiplied by (ii) the Existing Internal VEBA balance as of December 31, 2007.
The UAW OPEB 12/31/07 Split shall be determined based on the percentage of (i) the discounted
actuarial cash flows for health care and life insurance of OPEB obligations attributable to UAW
associated employees and retirees, their eligible spouses, surviving spouses and dependents, over
(ii) the discounted actuarial cash flows for health care and life insurance of the entire GM hourly
OPEB liability covered by the Existing Internal VEBA. Both calculations will be made as of
December 31, 2007 using the valuation discount rate of the hourly health care obligation of 6.35%.

     The Existing Internal VEBA balance as of December 31, 2007 shall be determined using the
December 31, 2007 valuation from State Street Bank and Trust, which shall be based on the existing
General Motors Asset Management Valuation Policies and Procedures. GM’s hourly OPEB obligation as
of December 31, 2007 shall be determined in accordance with generally accepted accounting
principles in the United States, including Statement of Financial Accounting Standards 106 and 158.

     Both the determination of the Existing Internal VEBA balance as of December 31, 2007 and the
GM hourly OPEB obligation as of December 31, 2007 shall be final and binding on GM, the UAW, the
Committee, the Class Representatives, the Class, the Covered Group and Class Counsel for purposes
of this Settlement Agreement upon an Independent Audit. The determination of the Existing Internal
VEBA balance as of December 31 of each succeeding year shall also be final and binding on GM, the
UAW, the Committee, the Class Representatives, the Class, the Covered Group and Class Counsel for
purposes of this Settlement Agreement upon an Independent Audit of each respective succeeding year.

- 13 -

 

     Utilizing the process referenced above, GM has determined that the UAW OPEB 12/31/07 Split is
92.6 percent. GM shall provide the UAW and Class Counsel as soon as possible with background
information and work papers used to determine the UAW OPEB 12/31/07 Split. Thereafter, the UAW and
Class Counsel shall advise GM as soon as practicable after receipt of such materials of any
concerns regarding GM’s calculation. If any concerns are identified regarding GM’s calculation,
the parties will meet, confer and resolve any concerns by March 3, 2008 so that the face amount of
the Short Term Note is set by such date.

     B. Investment of Assets. GMAM will continue to oversee the investment of the assets
in the Existing Internal VEBA (both in the Non-UAW Related Account and the UAW Related Account) and
all such assets shall continue to be invested under the existing investment policy (as may be
amended from time to time by GM who shall notify the UAW and the Committee about intended
amendments in a timely manner) applicable to the Existing Internal VEBA. Investment returns, net
of Existing Internal VEBA trust expenses (this shall only include expenses to the extent permitted
by ERISA), on all assets of the Existing Internal VEBA on and after January 1, 2008 will be applied
to these accounts proportionally in relation to the value of the assets in the UAW Related Account
in relation to the total amount of assets in the Existing Internal VEBA. In other words,
investment returns (i.e., the percentage return on the total Existing Internal VEBA), net of
Existing Internal VEBA trust expenses (this shall only include expenses to the extent permitted by
ERISA), will be applied to the value of the UAW Related Account and separately to the value of the
Non-UAW Account (as adjusted to reflect any withdrawals by GM). However, neither GM nor GMAM
guarantee or warrant the investment returns on the assets in the Existing Internal VEBA.

     C. Disposition of Assets. No amounts will be withdrawn by GM from the UAW Related
Account, including its investment returns, from January 1, 2008 until transfer to the New VEBA
under Section 12 or termination of this Settlement Agreement under Section 30 of this Settlement
Agreement. GM will retain any and all rights to withdraw amounts from the Non-UAW Related Account,
subject to the rights of the UAW and the Committee pursuant to Section 13 of this Settlement
Agreement. If the Final Effective Date occurs, GM will cause the pro rata share attributable to
the UAW Related Account of all assets in the Existing Internal VEBA, including investment returns
thereon, net of a pro rata share of trust expenses (this shall only include expenses to the extent
permitted by ERISA) not previously taken into account in determining investment returns, to be
transferred from the Existing Internal VEBA to the New VEBA as set forth in Sections 8.A and 12.B
of this Settlement Agreement. GMAM and the Committee shall enter into discussions in advance of
such transfer with regard to the method of allocating, transfering and/or otherwise handling any
illiquid or otherwise non-transferable investments in the Existing Internal VEBA so as to preserve
as much as possible the economic value of such investments and minimize any losses due to the
liquidation of assets. Such discussions shall be completed by June 30, 2009. The determinations
made by GMAM as a product of these discussions with the Committee regarding the way to transfer
illiquid or otherwise non-transferable investments in the Existing Internal VEBA shall be final and
binding on GM, the UAW, the Committee, the Class Representatives, the Class, the Covered Group and
Class Counsel.

- 14 -

 

     7. Temporary Asset Account and Limited Liability Company

     A. Creation of TAA. Prior to April 1, 2008, GM shall establish the TAA to be held by
GM or a wholly owned subsidiary thereof. Subject to termination of this Settlement Agreement, the
sole purpose of the TAA is to serve as tangible evidence of the availability of assets equal to the
sum that GM agrees to pay on the Implementation Date to the New VEBA in this Settlement Agreement.
Neither the TAA nor the assets therein shall be used for any purposes other than as set forth in
this Settlement Agreement. GM shall keep true and correct books and records regarding the assets
held in the TAA as well as all amounts credited to and debited against the TAA, including
investment returns.

     B. Creation of LLC. As of the date of this Settlement Agreement, GM has created LBK,
LLC, a Delaware limited liability company (“LLC”) to hold the Convertible Note and the Short Term
Note, enter into and hold the Derivative Contracts, and receive interest on the Convertible Note.
Interest on the Convertible Note will be deposited in the TAA in accordance with Section 7.D of
this Settlement Agreement. Subject to termination of this Settlement Agreement, the sole purpose
of the LLC is to hold the Convertible Note and the Short Term Note and enter into and hold the
Derivative Contracts, which serve as tangible evidence of the availability of assets equal to the
Convertible Note, the Short Term Note and the Derivative Contracts that GM agrees to pay and/or
transfer on or after the Implementation Date to the New VEBA as provided in this Settlement
Agreement. The LLC shall engage in no activities other than holding the notes, entering into and
holding the Derivative Contracts, and transferring the Convertible Note, the Derivative Contracts
and the amounts payable under the Short Term Note to the New VEBA. The LLC shall not exercise any
conversion rights under the Convertible Note. The LLC shall not agree to any amendments to the
Convertible Note or the Derivative Contracts without the consent of the Committee. Subject to
termination of this Agreement, neither GM nor the LLC will terminate the Derivative Contracts
before their transfer to the New VEBA. If any of the events specified in Section 1(a) of the
Convertible Note occur prior to the transfer of the Convertible Note and the Derivative Contracts
to the New VEBA, the parties will meet and discuss an appropriate alternative (if any) which
provides equivalent economic value to the New VEBA taking into account the impact (if any) of such
event(s) on the Convertible Note and the Derivative Contracts. If any of the events specified in
clauses (iii) – (vi) of Section 1(a) of the Convertible Note occur after the transfer of the
Convertible Note and the Derivative Contracts to the New VEBA, the parties will meet and discuss an
appropriate alternative (if any) which provides equivalent economic value to the New VEBA taking
into account the impact (if any) of such event(s) on the Derivative Contracts for which the New
VEBA is acting in the capacity of “Buyer” and “Counterparty” under and as defined in the Derivative
Contracts. Promptly after creation of the LLC, GM shall cause the LLC to execute and deliver an
instrument of accession in which it agrees to be bound by and to perform the provisions of Sections
7, 8 and 12 of this Settlement Agreement to the extent applicable to the LLC.

     C. GM Deposits in LLC. GM shall make the following deposits in the LLC during the
time period from January 1, 2008 to termination of the TAA.

(i) Convertible Note. GM shall issue the Convertible Note to the LLC on February
22, 2008 or as soon as reasonably practicable thereafter. GM hereby represents that, since
September 26, 2007, no event has occurred that would have given rise to an adjustment

- 15 -

 

of the Conversion Rate (as defined in the Convertible Note) pursuant to Section 3 of the
Convertible Note if such event had occurred after the issuance of the Convertible Note and
GM agrees to adjust the initial Conversion Rate included in the form attached hereto as
Exhibit B accordingly if such an event occurs prior to the issuance of the Convertible Note.
Notwithstanding any provisions in the Convertible Note to the contrary, GM shall (x) not be
entitled to exercise the right to redeem the Convertible Note on or after January 1, 2011,
pursuant to the first paragraph of Section 5 of the Convertible Note, unless the
Implementation Date has occurred and the Convertible Note has been transferred to the New
VEBA in accordance with Sections and 8.C. and 12.F. of this Settlement Agreement, and (y)
only be entitled to make a Termination Redemption (as defined in the Convertible Note) upon
termination of the TAA and LLC as provided in Section 7.G of this Settlement Agreement or
upon determination of an appropriate alternative to transferring the Convertible Note or the
Alternative Convertible Note to the New VEBA as provided in Section 22 of this Settlement
Agreement which is satisfactory to the UAW and Class Counsel.

(ii) Short Term Note. GM shall issue to the LLC a short term note, substantially
in the form attached as Exhibit C to this Settlement Agreement, with the face amount of
$4,015,187,871.00 (the difference between $18.5 billion and the estimated value of the UAW
Related Account on January 1, 2008 (“Short Term Note”), as may be amended in accordance with
Section 6.A). The Short Term Note shall carry Interest on such face amount from and
including the date of the Short Term Note to, but excluding, the date of payment to the New
VEBA pursuant to Sections 8.B and 12.E. The parties agree that $1 billion of the Short Term
Note represents the present value of the COLA adjustments agreed to by GM and the UAW with
respect to the time period between December 1, 2007 and September 1, 2011 of up to four
cents per hour per quarter and continued in perpetuity, and another $1.5 billion of the
Short Term Note represents GM’s agreement to pre-fund what would have been the impact of
providing a 3% general wage increase to UAW represented employees in 2009.

     D. GM Deposits in TAA. GM shall make the following deposits in the TAA during the
time period from January 1, 2008 to termination of the TAA.

(i) Shortfall Amount. On April 1, 2008 or as soon as reasonably practicable
thereafter, GM shall deposit in the TAA $165 million (“Initial Shortfall Amount”) plus
Interest on such amount from and including April 1, 2008 to, but excluding, the date of
deposit. The Initial Shortfall Amount represents the Shortfall Amount payable to the TAA on
April 1, 2008 as set forth in the Shortfall Amount column of the amortization schedule in
Exhibit D to this Settlement Agreement. If prior to the Implementation Date any additional
Shortfall Amount payment is required pursuant to Section 10 and the Shortfall Amount column
of the amortization schedule in Exhibit D to this Settlement Agreement, such Shortfall
Amount payment will also be made by GM to the TAA. At all times, these payments shall be
subject to GM’s right to pre-fund all then-remaining Shortfall Amount payments by paying the
applicable Buyout Amount set forth in the Shortfall Amount column of the amortization
schedule in Exhibit D.

- 16 -

 

(ii) Interest on Convertible Note. On June 30, 2008, GM shall cause the LLC to
deposit $147,571,875 in the TAA. This amount represents the first 6.75% interest payment
payable under the terms of the Convertible Note plus an amount representing a 6.75% return
on the principal amount of the Convertible Note from January 1, 2008 to the date of the
Convertible Note. If $147,571,875 is not deposited in the TAA on June 30, 2008, Interest
shall accrue on such amount from and including June 30, 2008 to but excluding the date of
deposit. If prior to the Implementation Date any additional interest payments are payable
under the terms of the Convertible Note, GM shall cause the LLC to make such payments to the
TAA.

(iii) Henry I Increase in Stock Value and Dividends. On September 1, 2009, GM
shall pay to the TAA (i) the difference between $240 million and the aggregate amount of the
payments related to the “Increase in Stock Value” and “Dividends” as set forth in section
13.D and 13.E of the Henry I Settlement Agreement plus (ii) Interest (x) on $240 million
from and including January 1, 2008 to but excluding the date, if any, on which GM makes a
cash contribution related to the “Increase in Stock Value” and “Dividends,” and thereafter
(y) on the difference between $240 million (plus Interest accrued pursuant to clause (x)
through the date of any applicable cash contribution) and the aggregate of any such cash
contributions made from and including the date of each such cash contribution in each case
to but excluding the date of the following cash contribution, if any, or September 1, 2009
whichever is earlier. Any payments under this Section 7.D(iii) are further subject to
provisions set forth in Section 11 of this Settlement Agreement.

(iv) Additional Deposits in TAA. As soon as reasonably practicable following the
Initial Effective Date, GM will make the following additional deposits in the TAA.

(a)  Base Amount. A lump sum payment of $1.8 billion plus Interest from
January 1, 2008 to the date of deposit in the TAA, or, in GM’s discretion, as set
forth in the Base column of the amortization schedule in Exhibit D to this
Settlement Agreement, annual payments and/or a Buyout Amount as applicable to the
time period up to the date of transfer of the TAA to the New VEBA under Section 12.D
of this Settlement Agreement; provided that GM specifically reserves the right to
pre-fund all then-remaining Base Amount payments by paying the applicable Buyout
Amount set forth in Exhibit D.

(b) Wages/COLA Amount. A lump sum payment of $3.8 billion (which
represents the present value of the future Henry I wage deferrals described in
Section 9.A of this Settlement Agreement), plus Interest from January 1, 2008 to the
date of deposit in the TAA, or, in GM’s discretion, as set forth in the Wages/COLA
column of the amortization schedule in Exhibit D to this Settlement Agreement,
annual payments and/or a Buyout Amount as applicable to the time period up to the
date of transfer of the TAA to the New VEBA under Section 12.D of this Settlement
Agreement; provided that GM specifically reserves the right to pre-fund all
then-remaining Wages/COLA payments by paying the applicable Buyout Amount set forth
in Exhibit D. Any such Wages/COLA payments shall be reduced by the value of the
wage and COLA deferrals paid or payable by GM to the Existing External VEBA pursuant
to the

- 17 -

 

terms of Henry I Settlement Agreement (with Interest on such deferrals) from January
1, 2008 until the date of deposit by GM of a Wages/COLA payment into the TAA.

     E. Derivative Contracts. As soon as reasonably practicable after issuance of the
Convertible Note, GM and the LLC shall enter into the Derivative Contracts which shall be held by
the LLC as provided for in Section 7.B of this Settlement Agreement.

     F. Control of TAA and LLC. Control of the TAA and the LLC and all the assets therein
shall be solely within GM’s discretion. GM agrees to retain GMAM to oversee the investment of the
assets in the TAA. To the extent practicable given the differences in time horizon and other
investment parameters, GMAM shall invest the assets in the TAA in a manner that is consistent with
the investment policy of the Existing Internal VEBA. However, neither GM nor GMAM guarantee or
warrant the investment returns on the assets in the TAA and/or LLC.

     G. Termination of TAA and LLC. If the Final Effective Date does not occur because
(a) the Approval Order has not been entered as described in Section 28.B, (b) the Approval Order
has been disapproved or modified, or (c) GM has not completed, on a basis reasonably satisfactory
to GM, its discussions with the SEC regarding the accounting treatment with respect to the New Plan
and New VEBA as set forth in Section 21 of this Settlement Agreement, or (d) this Settlement
Agreement has been terminated for any other reason as provided in Section 30 of this Settlement
Agreement, the TAA and LLC shall be terminated. In addition, if the Final Effective Date has not
occurred by December 31, 2011, the TAA and LLC shall be terminated; provided however, that this
date may be extended by agreement between GM, the UAW and Class Counsel. Upon termination of the
TAA and LLC for any reason, GM may use the assets of the TAA and LLC for any corporate purpose.

     H. Communications Regarding Investment Results. GM agrees to cause GMAM to
periodically inform and hold discussions with the UAW, Class Counsel and the Committee about the
investment results of and decisions regarding the assets in the TAA and the Existing Internal VEBA.
GMAM shall, with respect to the performance of its duties in managing the Existing Internal VEBA
and the TAA, participate in the following meetings and provide the following reports to the UAW and
the Committee: (i) quarterly reports of TAA and Existing Internal VEBA asset class and benchmark
performance for relevant time periods; and (ii) semi-annual or quarterly meetings with UAW and/or
Committee representatives to report on TAA and Existing Internal VEBA returns and analysis of
performance, and to review significant activities affecting investments. Any input from the UAW,
Class Counsel and/or the Committee shall not be a basis of GM’s or GMAM’s investment decisions
within the meaning of the DOL regulations set forth at 29 CFR § 2510-3.21(c).

     8. GM Payments to New Plan and New VEBA

     GM’s financial obligation and payments to the New Plan and New VEBA are fixed and capped by
the terms of this Settlement Agreement. The timing of all payments to the New VEBA shall be as set
forth in Section 12 of this Settlement Agreement; it being agreed and acknowledged that the New
Plan, funded by the New VEBA, shall provide Retiree Medical Benefits for the Class and the Covered
Group on and after the Implementation Date, and that all

- 18 -

 

obligations of GM and the GM Plan for Retiree Medical Benefits for the Class and the Covered
Group shall terminate as of the Implementation Date, as set forth in this Settlement Agreement.
All assets shall be transferred or paid by GM free and clear of any liens, claims or other
encumbrances. Pursuant to this Settlement Agreement, GM shall have the following, and only the
following, obligations to the New VEBA and the New Plan, and all payments and transfers in this
Section 8 and in Sections 9 through 11 of this Settlement Agreement shall be credited to the GM
Separate Retiree Account of the New VEBA:

     A. UAW Related Account. Provide for the transfer to the New VEBA of the assets (or,
with regard to any illiquid or otherwise non-transferable investments, equivalent alternatives
resulting from discussions between GMAM and the Committee pursuant to Section 6.C of this
Settlement Agreement) of the UAW Related Account in the Existing Internal VEBA, net of Existing
Internal VEBA trust expenses (this shall only include expenses to the extent permitted by ERISA),
as described in Section 12.B of this Settlement Agreement.

     B. Short Term Note. GM shall cause the LLC to pay to the New VEBA $4,015,187,871.00
in cash (which amount is equal to the face amount of the Short Term Note), plus cash in an amount
equal to the Interest accrued on such amount from and including the date of the Short Term Note to,
but excluding, the date of deposit in the New VEBA, as described in Section 12.E of this Settlement
Agreement.

     C. Convertible Note. Cause the LLC to transfer to the New VEBA the Convertible Note
issued to the LLC or, at GM’s option, issue to the New VEBA the Alternative Convertible Note, as
described in Section 12.F of this Settlement Agreement. In the event that the transfer of the
Convertible Note (or the issuance of the Alternative Convertible Note) to the New VEBA occurs
subsequent to a Record Date and on or prior to the Interest Payment Date (as such terms are defined
in the Convertible Note), GM shall cause the LLC to transfer to the New VEBA immediately upon
receipt the interest payment that the LLC will receive that corresponds to such Interest Payment
Date. GM shall pay any and all documentary, stamp or similar issue or transfer taxes that may be
payable in requesting the issue or transfer of the Convertible Note or Alternative Convertible Note
to the New VEBA.

     D. Interest on Convertible Note. Transfer to the New VEBA the assets in the TAA that
represent the value in the TAA, as of the date of transfer to the New VEBA, of the interest paid on
the Convertible Note, and the investment returns thereon, net of expenses (but limited to those
expenses that could be charged under ERISA if the TAA was a plan subject to ERISA), or at GM’s
option cash in lieu of some or all of these assets in the TAA. Thereafter, pay to the New VEBA any
additional interest amounts due under the terms of the Convertible Note.

     E. Base Amount. Transfer to the New VEBA the assets in the TAA that represent the
value in the TAA, as of the date of transfer to the New VEBA, of the Base Amount described in
Section 7.D of this Settlement Agreement and the investment returns thereon, net of expenses (but
limited to those expenses that could be charged to the TAA under ERISA if the TAA was a plan
subject to ERISA), or at GM’s option cash in lieu of some or all of these assets in the TAA.
Thereafter, subject to GM’s option to buy out the Base Amount at any time, pay an annual Base
Amount to the New VEBA as set forth in Exhibit D to this Settlement Agreement. In addition, GM may
at any time request to make a partial pre-payment of a Buyout Amount of the Base

- 19 -

 

Amount on terms that provide economically equivalent present value to the New VEBA, provided
that such partial pre-payment shall be made only if mutually agreed between GM and the Committee.
The Committee shall be entitled to accept or reject any such request in its sole discretion.

     F. Wages/COLA Amount. Transfer to the New VEBA the assets in the TAA that represent
the value in the TAA, as of the date of transfer to the New VEBA of the Wages/COLA Amount described
in Section 7.D of this Settlement Agreement and the investment returns thereon, net of expenses
(but limited to those expenses that could be charged to the TAA under ERISA if the TAA was a plan
subject to ERISA), or at GM’s option cash in lieu of some or all of these assets. Thereafter,
subject to GM’s option to buyout the Wages/COLA Amount at any time, pay an annual Wages/COLA Amount
to the New VEBA as described in Section 9 and Exhibit D to this Settlement Agreement. In addition,
GM may at any time request to make a partial pre-payment of a Buyout Amount of the Wages/COLA
Amount on terms that provide economically equivalent present value to the New VEBA, provided that
such partial pre-payment shall be made only if mutually agreed between GM and the Committee. The
Committee shall be entitled to accept or reject any such request in its sole discretion.

     G. Shortfall Amount. Transfer to the New VEBA the assets in the TAA that represent
the value in the TAA, as of the date of transfer to the New VEBA, of the Initial Shortfall Amount
and any additional Shortfall Amount payment(s) described in Section 7.D of this Settlement
Agreement made to the TAA and the investment returns thereon, net of expenses (but limited to those
expenses that could be charged to the TAA under ERISA if the TAA was a plan subject to ERISA), or
at GM’s option cash in lieu of some or all of these assets. Thereafter, subject to GM’s option to
buy out the Shortfall Amount at any time, pay an annual Shortfall Amount to the New VEBA as
described in Section 10 and Exhibit D to this Settlement Agreement.

     H. Final Henry I Cash Contribution. GM’s final cash payment of $1 billion required
by section 13.A of the Henry I Settlement Agreement will continue to be payable by GM as set forth
in the Henry I Settlement Agreement and judgment. The Approval Order shall provide that such
payment will be made to the New VEBA, rather than the Existing External VEBA, if the payment is
payable after the Implementation Date.

     I. Henry I Increase in Stock Value and Dividends. Transfer to the New VEBA the
assets in the TAA that represent the value in the TAA, as of the date of transfer to the New VEBA,
of the Henry I Increase in Stock Value and Dividends payment described in Section 7.D of this
Settlement Agreement, if any, and the investment returns thereon, net of account expenses (but
limited to those expenses that could be charged to the TAA under ERISA if the TAA was a plan
subject to ERISA), or at GM’s option cash in lieu of some or all of these assets.

     J. Derivative Contracts. Cause the LLC to transfer to the New VEBA the Derivative
Contracts held by the LLC as described in Section 12.F of this Settlement Agreement.

     The payments described in this Section 8 are subject to reduction for the amounts set forth in
Sections 11 and 12.A of this Settlement Agreement.

- 20 -

 

     9. Wage and COLA Deferrals

     A. Impact on Henry I Wage and COLA Deferral. GM will continue to deposit into the
Existing External VEBA the wage and COLA deferrals set forth in Section 13.C. of the Henry I
Settlement Agreement (including all COLA subtraction and non-payment of the September 18, 2006
general increase to the hourly wage rate) until the Initial Effective Date. The Wages/COLA Amount
set forth in Sections 7.D and 8.F and Exhibit D to this Settlement Agreement represent the future
wage deferral cash flow impact of such wage and COLA deferrals from the Henry I settlement and
judgment. As a result of GM agreeing to deposit into the TAA and pay to the New VEBA such
Wages/COLA Amount, the Approval Order shall provide that as of the Initial Effective Date (i) GM
will no longer be required to make deposits of the wage and COLA deferrals from Henry I into the
Existing External VEBA, (ii) the Wages/COLA Amount paid by GM pursuant to this Settlement Agreement
shall be in full satisfaction of any and all of GM’s obligations under Section 13.C of the Henry I
Settlement Agreement and the provisions of the judgment in Henry I regarding wage and COLA
deferrals, (iii) GM will have no further obligations as to such payments or contributions to the
Existing External VEBA, and (iv) the Henry I wage and COLA deferrals will inure thereafter solely
to the benefit of GM and continue in perpetuity increasing at $0.02 per hour per quarter as
described in Section 13.C of the Henry I Settlement Agreement.

     If the TAA is terminated prior to the Final Effective Date, GM shall contribute cash to the
Existing External VEBA in an amount equal to the amount that would have otherwise been contributed
to the Existing External VEBA pursuant to the terms of the Henry I Settlement Agreement between the
Initial Effective Date and the date of termination of the TAA, plus an amount equal to the
investment returns that would have been earned on such amounts, at the rate equal to the overall
investment return of the Existing External VEBA for the respective period, if such amounts had been
contributed to the Existing External VEBA in accordance with the terms of the Henry I Settlement
Agreement, and obligations pursuant to the Henry I Settlement Agreement will be reinstated.

     B. 2009 Wage Deferral. In negotiating the MOU and 2007 GM-UAW National Agreement, GM
and UAW agreed that there shall be no general increase to the hourly wage rate for GM Active
Employees in 2009 regardless of whether or not the Final Effective Date occurs. As a result, GM
agreed to include in the Short Term Note the $1.5 billion referred to in Section 7.C of this
Settlement Agreement. This $1.5 billion represents the future impact of a 3% wage increase in 2009
for GM Active Employees. If the Final Effective Date does not occur, the wage increase will not be
reinstated.

     C. 2007 COLA Diversion. In negotiating the MOU and 2007 GM-UAW National Agreement,
GM and UAW also agreed that, 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 GM Active Employees. These deferred amounts will inure solely to the
benefit of GM and will not be reinstated after September 1, 2011 but will continue to be deferred
in perpetuity. As a result, GM agreed to include in the Short Term Note the $1 billion referred to
in Section 7.C of this Settlement Agreement. This $1 billion represents the future cash flow
impact of this 2007 COLA diversion. If the Final Effective Date does not
occur, the cumulative effect of four cents ($0.04) per hour per quarter of COLA will be
reinstated and GM and the UAW will agree on the disposition of such COLA adjustment.

- 21 -

 

     10. Shortfall Amounts

     If in 2009 or any year thereafter, the Cash Flow Projection as set forth in Exhibit A to this
Settlement Agreement shows that the GM account or sub-account of the New VEBA will become insolvent
within 25 years following the January 1 immediately preceding such Cash Flow Projection, GM shall
pay to the New VEBA (or the TAA for periods prior to the Implementation Date) by April 1 of that
year $165 million per occurrence (“Shortfall Amount”); provided however, that the maximum number of
Shortfall Amount payments, excluding the Initial Shortfall Amount on April 1, 2008, shall be
nineteen (19). Beginning in 2009, for any year in which the Cash Flow Projection shows that the GM
account or sub-account of the New VEBA will maintain solvency for at least 25 years beyond the
January 1 immediately preceding such Cash Flow Projection, no Shortfall Amount payment will be
required. Further, GM reserves the right to pre-pay, at any time, all then-remaining future
possible annual Shortfall Amounts by paying the applicable Buyout Amount (which represents the
present value of the remaining possible Shortfall Amount payments as of January 1 of the year of
the buyout, plus Interest from January 1 until the date of the buyout amount) as shown in the
amortization schedule for Shortfall Amount in Exhibit D to this Settlement Agreement.

     11. Other Payments to Existing External VEBA

     The Approval Order shall provide that any obligation of GM related to the amounts called for
in the “Benefit Change Profits” or the “Incremental Amount,” as set forth and defined in section
13.B of the Henry I Settlement Agreement, shall cease upon the Initial Effective Date. In the
event that any amounts related to such items have been paid by GM to the Existing External VEBA
prior to the Final Effective Date, the required payments set forth in Section 8 of this Settlement
Agreement will be reduced by such amount plus interest at 6% per annum (computed on the basis of a
360-day year consisting of twelve 30-day months and the number of days elapsed in any partial
month), credited and compounded annually.

     The Approval Order shall also provide that if the aggregate amount of the payments related to
“Increase in Stock Value” and “Dividends” as set forth in section 13.D and 13.E of the Henry I
Settlement Agreement is less than $240 million, then GM will pay to the New VEBA on September 1,
2009 the amounts set forth in Section 7.D(iii) of this Settlement Agreement.

     If the aggregate amount of the payments related to “Increase in Stock Value” and “Dividends”
as set forth in section 13.D and 13.E of the Henry I Settlement Agreement is more than $240
million, GM shall deduct from the amount required to be transferred from the TAA to the New VEBA
under Sections 8 and 12 of this Settlement Agreement (i) the amount of aggregate cash payments paid
to the Existing External VEBA in excess of $240 million plus (ii) Interest on the portion of the
first such cash payment that resulted in the aggregate exceeding $240 million from and including
the date of its payment and on the amount of each of the following cash payments from and including
their respective payment dates, in each case to but excluding the date of transfer of the amounts
from the TAA to the New VEBA under Sections 8 and 12 of this Settlement Agreement.

- 22 -

 

     12. Sequencing of Initial Deposits to the New VEBA and Termination of Existing
External VEBA, LLC and TAA

     The initial deposits to the New VEBA shall be made and credited to the GM Separate Retiree
Account, and the Existing External VEBA and TAA shall be terminated, as provided below.

     A. Deposit No. 1: Within 30 days of the Initial Effective Date or the establishment of
the New VEBA, whichever is later, GM shall cause a transfer of $1 million from the TAA to the New
VEBA. Thereafter, and until the Implemenation Date, within 30 days of any request by the
Committee, GM shall cause the transfer of such additional amount as the Committee shall request,
provided that there shall be no more than five such requests prior to the Implementation Date and
the aggregate of all such transfers, including the initial transfer, shall not exceed $20 million.
Such amounts shall represent an advance to the New VEBA to cover reasonable and necessary
preparatory expenses incurred by the New Plan or New VEBA in anticipation of the transition of
responsibility for Retiree Medical Benefits as of the Implementation Date as set forth in Section 5
of this Settlement Agreement. These advance payments shall not increase or add to the amounts GM
has agreed to pay under this Settlement Agreement.

     B. Deposit No. 2. Within 10 business days after the Implementation Date, GM shall
direct the trustee of the Existing Internal VEBA to transfer to the New VEBA the UAW Related
Account’s share of assets in the Existing Internal VEBA, the amount of which shall be determined as
provided in Section 6 of this Settlement Agreement. The Approval Order shall provide that, upon
such transfer, the Existing Internal VEBA shall be deemed to be amended to terminate participation
and coverage regarding Retiree Medical Benefits for the Class and the Covered Group, effective as
of the Implementation Date. Accruals for trust expenses (this shall only include expenses to the
extent permitted by ERISA) through the date of transfer will be made and an amount equal to the UAW
Related Account’s share of such accruals will be retained within the Existing Internal VEBA to pay
such expenses. After payment of these trust expenses is completed, a reconciliation of the
accruals and the actual expenses (this shall only include expenses to the extent permitted
by ERISA) will be performed. GM agrees to cause the payment to the New VEBA by the Existing
Internal VEBA of any overaccruals for the UAW Related Account’s share of such expenses. Similarly,
in the event of an underaccrual the New VEBA will return to the Existing Internal VEBA the amount
of the underaccrual of expenses for the UAW Related Account.

     C. Deposit No. 3. The Approval Order shall direct the committee and the trustees of
the Existing External VEBA to transfer all assets and liabilities into the New VEBA and terminate
the Existing External VEBA within 15 days after the Implementation Date. This transfer of assets
and liabilities shall include, but not be limited to, the transfer of all rights and obligations
granted to or imposed on the Existing External VEBA under Section 14.C(e) of the Henry I Settlement
Agreement and GM agrees that, following the Implementation Date, the New VEBA shall be substituted
for the Existing External VEBA for such purposes. 

     D. Deposit No. 4. The balance in the TAA as of the date of transfer, or at GM’s
discretion, cash in lieu of some or all of the assets in the TAA as of the date of transfer, shall
be paid to the New VEBA before the 20th business day after the Implementation Date. If
GM elects

- 23 -

 

to pay cash in lieu of some or all of the investments in the TAA, the cash GM will pay shall
include an amount equivalent to accrued and unpaid interest and dividends on such investments net
of reasonable liquidation costs. Accruals for expenses (but limited to those expenses that could
be charged to the TAA under ERISA if the TAA was a plan subject to ERISA) through the date of
transfer will be made and an amount equal to the TAA’s share of such accruals will be retained
within the TAA to pay such expenses. After payment of these expenses is completed, a
reconciliation of the accruals and the actual expenses (but limited to those expenses that could be
charged to the TAA under ERISA if the TAA was a plan subject to ERISA) will be performed. GM
agrees to cause the payment to the New VEBA by the TAA of any overaccruals for the TAA’s share of
such expenses. Similarly, in the event of an underaccrual the New VEBA will return to the TAA, or
to GM, as applicable, the amount of the underaccrual for the TAA’s share of the expenses.

     E. Deposit No. 5. On or before the 20th business day after the Implementation Date,
GM shall cause the LLC to pay to the New VEBA in cash the face value of the Short Term Note, plus
cash in an amount equal to the Interest accrued on such amount from and including the date of the
Short Term Note to, but excluding, the date of payment to the New VEBA.

     F. Transfer of Convertible Note and Derivative Contracts. GM will cause the LLC to
transfer the Convertible Note and the Derivative Contracts to the New VEBA after Payments No. 4 and
No. 5 have been made, within 25 business days after the Implementation Date if no legal or
regulatory approvals are required, or within 10 business days of securing final legal or regulatory
approval. In lieu of causing the LLC to transfer the Convertible Note, GM, in its sole
discretion, may elect to transfer to the New VEBA a convertible note containing economic terms and
conditions identical to those of the Convertible Note (“Alternative Convertible Note”), including
accrued interest. The transfer of the Convertible Note or the Alternative Convertible Note and the
Derivative Contracts will only occur as permitted by law. GM and/or the New Plan, as applicable,
will apply for any necessary legal or regulatory approvals, including but not limited to the
prohibited transaction exemptions described in Section 22 of this Settlement Agreement and any
required federal or state bank regulatory approvals. The UAW, the Class and Class Counsel will
support and cooperate with any such requests for legal or regulatory approvals. If GM and the New
VEBA cannot timely obtain necessary legal or regulatory approvals, the parties will meet and
discuss appropriate alternatives to the transfer of the Convertible Note that provide equivalent
economic value to the New VEBA. Notwithstanding the foregoing, any transfer of the Convertible
Note or Alternative Convertible Note will be conditioned upon execution and delivery by the New
VEBA of a Security Holder and Registration Rights Agreement substantially in the form of Exhibit F
to this Settlement Agreement.

     The parties acknowledge that, upon completion of GM’s transfer of the assets in the TAA to the
New VEBA as contemplated by this Settlement Agreement, no assets should remain in the TAA and the
TAA shall be terminated. If, however, assets remain in the TAA as the result of GM’s exercise of
its option to transfer cash in lieu of TAA assets, GM’s deduction for payments related to the
Increase in Stock Value and Dividends under Section 11 of this Settlement Agreement, or other
deductions permitted under this Settlement Agreement, then GM may thereafter use or dispose of such
assets, including any investment returns thereon, for any corporate purpose. After deposit Nos. 4
and 5 have been made and after transfer of the

- 24 -

 

Convertible Note or transfer of the Alternative Convertible Note and the Derivative Contracts,
the LLC shall be terminated. All assets transferred or contributed to the New VEBA shall be free
and clear of any liens, claims or other encumbrances.

     If a deposit or payment or any portion thereof is made by GM to the TAA or the New VEBA by
mistake under any provision of this Settlement Agreement, including, but not limited to Sections 7
through 12 of this Settlement Agreement, (i) as to the TAA, GM may deduct such amount from the TAA
plus earnings thereon from the date of deposit in the TAA up to, but excluding, the date of
deduction, and (ii) as to the New VEBA, the Committee shall, upon written direction of GM, return
such amounts as may be permitted by law to GM (plus earnings thereon from the date of payment to
but excluding the date of return) within 30 days of notification by GM that such payment was made
by mistake. If a dispute arises with regard to such payment, the dispute will be resolved pursuant
to Section 26 of this Settlement Agreement.

     13. Adjustment Events

     A. Adjustment Event. “Adjustment Event” shall mean:

(i) the determination of the Existing Internal VEBA balance as of any day on which amounts
are withdrawn by GM from the Non-UAW Related Account as set forth in Section 6 of this
Settlement Agreement and the determination of the value of any assets transferred to GM or
liquidated to effect the withdrawal by GM, other than a withdrawal on December 31 of any
year after January 1, 2008;

(ii) the determination of the value of any assets in lieu of which GM elects to
transfer cash to the New VEBA pursuant to Sections 8 and 12 of this Settlement Agreement; or

(iii) the determination of the value of any illiquid or otherwise non-transferable
investments in the Existing Internal VEBA in case that the discussions between GMAM and the
Committee as set forth in Section 6.C of this Settlement Agreement result in transferring
something other than a pro rata share of such investment.

     B. Due Diligence and Adjustment Mechanism.

     In connection with any Adjustment Event, GM shall deliver, as soon as practicable, to the
Committee (or the UAW prior to establishment of the Committee) information in reasonable detail
about the determinations made by GM with regard to such Adjustment Event and the work papers,
underlying calculations and other documents and materials on which such determinations are based,
including non-privileged materials from GM’s advisors, if any (collectively, the “Determination
Materials”).

     The Committee shall have 30 days from receipt of the Determination Materials from GM to
submit to GM a written request for an Independent Attestation of a determination(s) by GM listed in
Section 13.A(i), (ii) and (iii) of this Settlement Agreement. As a part of this review process,
the Committee may ask for additional information regarding the calculations, and the data and
information provided by GM. GM shall as promptly as practicable, respond to all reasonable
requests from the Committee for such additional information. However, a request for additional
information shall not extend the 30 day review period, unless an extension is
reasonably necessary to allow the Committee to review such additional information, but in no
event longer than 45 days from receipt of the Determination Materials.

- 25 -

 

     All determinations made by GM with regard to a determination(s) listed in Section 13.A(i),
(ii) and (iii) of this Settlement Agreement shall be final and binding on GM, the UAW, the Class
Representatives, the Class, the Covered Group, Class Counsel, the Committee and the New Plan and
New VEBA, unless the Committee timely submits a request for an Independent Attestation. If the
Committee timely submits such a request, GM shall engage a nationally recognized independent
registered public accounting firm to conduct an Independent Attestation regarding a
determination(s) by GM listed in Section 13.A(i), (ii) and (iii) of this Settlement Agreement The
Independent Attestation shall be final and binding on GM, the UAW, the Class Representatives, the
Class, the Covered Group, Class Counsel, the Committee and the New Plan and New VEBA.

     Nothing in the foregoing paragraphs shall prevent the division, deposit, withdrawal or
transfer of any assets the valuation of which is not in dispute pending resolution of the disputed
amounts.

     C. Confidentiality. All information and data provided by GM to the UAW and/or the
Committee under Section 7.H of this Settlement Agreement and as a part of this due diligence and
adjustment process shall be considered confidential. The UAW and the Committee shall use such
information and data solely for the purpose set forth in this Section 13 of the Settlement
Agreement. The UAW and the Committee shall not disclose such information or data to any other
person without GM’s written consent, provided that the UAW and the Committee may disclose such
information and data to their attorneys and professional advisors subject to the agreement of such
attorneys and advisors to the confidentiality restrictions set forth herein.

     14. Future Contributions

     The UAW, the Class and the Covered Group may not negotiate any increase of GM’s funding or
payment obligations set out herein. The UAW also agrees not to seek to obligate GM to: (i)
provide any additional payments to the New VEBA other than those specifically required by this
Settlement Agreement; (ii) make any other payments for the purpose of providing Retiree Medical
Benefits to the Class or the Covered Group; or (iii) provide or assume the cost of Retiree Medical
Benefits for the Class or the Covered Group through any other means. Provided that, the UAW may
propose that GM Active Employees be permitted to make contributions to the New VEBA of amounts
otherwise payable in profit sharing, COLA, wages and/or signing bonuses, if not prohibited by law.

     15. Pension Benefits

     GM and the UAW agree to amend the Pension Plan on the Implementation Date to provide to
retirees and eligible surviving spouses who are members of the Class or 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 Implementation Date. This same benefit will also be provided
to retirees who retire after the Implementation Date and eligible surviving spouses who are members
of the Covered Group, commencing with their

- 26 -

 

entitlement to pension benefits. This special lifetime benefit is intended to serve as a cost
pass-through of an equivalent after-tax increase in the monthly contribution regarding Retiree
Medical Benefits for the Class and the Covered Group. As a result, the New Plan and New VEBA
shall, as of the Implementation Date, assess an additional non-escalating monthly contribution
payable by retirees and eligible surviving spouses of the Class and the Covered Group for Retiree
Medical Benefits of $51.67 per month, to be credited to the GM Separate Retiree Account in the New
VEBA.

     Retirees and surviving spouses who are members of the Class and the Covered Group but who do
not receive a monthly benefit from the Pension Plan will not be entitled to receive the flat
monthly special lifetime benefit of $66.70, and the terms of the New Plan and the New VEBA shall
not require them to make the additional monthly contribution to the New VEBA of $51.67. For
purposes of determining a Class or Covered Group member’s status as a Protected Retiree under the
terms of the Henry I settlement agreement, 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 the determination of pension income.

     Nothing in this Section 14 shall detract from the discretion afforded the Committee as set
forth in the Trust Agreement.

     16. Administrative Costs

     The New VEBA will be responsible for all costs to administer the New Plan and the New VEBA
commencing on the Implementation Date and continuing thereafter. The New Plan and the New VEBA
trust agreement shall be drafted consistent with this requirement.

     17. Trust Agreement; Segregated Account; Indemnification

     Assets paid or transferred to the New VEBA by or at the direction of GM, including all
investment returns thereon, shall be used solely to provide Retiree Medical Benefits to the Class
and the Covered Group as defined in this Settlement Agreement until expiration of the Initial
Accounting Period. Thereafter, Benefits will be provided to the Class and the Covered Group as
described in the Trust Agreement. The Trust Agreement shall provide: (i) for the GM Separate
Retiree Account to be credited with the assets deposited or transferred to the New VEBA by GM, or
at GM’s direction, under this Settlement Agreement; (ii) that the assets in the GM Separate Retiree
Account may be used only to provide Benefits (as defined in the Trust Agreement) for such Class and
such Covered Group; and (iii) that under no circumstances will GM or the GM Separate Retiree
Account be liable or responsible for the obligations of any other employer or for the provision of
Retiree Medical Benefits or any other benefits for the employees or retirees of any other employer.

     Further, the Trust Agreement shall provide that the Committee, on behalf of the New VEBA,
shall take all such reasonable action as may be needed to rebut any presumption of control that
would limit the New VEBA’s ability to own GM common stock or the Convertible Note or as may be
required to comply with all applicable laws and regulations, including but not limited to federal
and state banking laws and regulations.

- 27 -

 

     To the extent permitted by law, the New VEBA shall indemnify and hold the Committee, the UAW,
GM, the GM Plan, and the employees, officers and agents of each of them harmless from and against
any liability that they may incur in connection with the New Plan and New VEBA, unless such
liability arises from their gross negligence or intentional misconduct, or breach of this
Settlement Agreement. 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.

     18. Subsidies

     With regard to claims incurred on or after the Implementation Date, the New VEBA shall be
entitled to receive any Medicare Part D subsidies and other health care related subsidies regarding
benefits actually paid by the New VEBA which may result from future legislative changes, and GM
shall not be entitled to receive any such subsidies related to prescription drug benefits and other
health care related benefits provided to the Class and the Covered Group by the New Plan and New
VEBA.

     19. Default and Cure

          A. General. The Committee will have the right to accelerate some or all of the payment
obligations of GM under this Settlement Agreement (other than the Shortfall Amount payments set
forth in Sections 8.G and 10 and Exhibit D of this Settlement Agreement) if GM defaults on any
payment obligations under this Settlement Agreement and such default is not cured within 15
business days after the Committee gives GM notice of such default. To cure such default, GM will
pay the amount then in default plus accrued Interest on such amount. Payments due under the
Convertible Note may also be accelerated under this provision only to the extent that the
Convertible Note is then held by the New VEBA.

          B. Limitation on Liens. Effective as of the Implementation Date and until all payments
required of GM under this Settlement Agreement, other than the Shortfall Amount payments set forth
in Sections 8.G and 10 and Exhibit D of this Settlement Agreement, have been made, GM will not, nor
will it permit any Manufacturing Subsidiary to, issue or assume any Debt secured by a Mortgage upon
any Principal Domestic Manufacturing Property of GM or any Manufacturing Subsidiary or upon any
shares of stock or indebtedness of any Manufacturing Subsidiary (whether such Principal Domestic
Manufacturing Property, shares of stock or indebtedness are now owned or hereafter acquired)
without in any such case effectively providing concurrently with the issuance or assumption of any
such Debt that the payment obligations by GM under this Settlement Agreement, other than the
Shortfall Amount payments set forth in Sections 8.G and 10 and Exhibit D of this Settlement
Agreement, (together with, if GM shall so determine, any other indebtedness of GM or such
Manufacturing Subsidiary ranking equally with the payment obligations by GM under this Settlement
Agreement and then existing or thereafter created) shall be secured equally and ratably with such
Debt, unless the aggregate amount of Debt issued or assumed and so secured by Mortgages, together
with all other Debt of GM and its Manufacturing
Subsidiaries which (if originally issued or assumed at such time) would otherwise be subject
to the foregoing restrictions, but not including Debt permitted to be secured under clauses (i)
through (vi) of the immediately following paragraph, does not at the time exceed 20% of the
stockholders’ equity of GM and its consolidated subsidiaries, as

- 28 -

 

determined in accordance with
generally accepted accounting principles and shown on the audited consolidated balance sheet
contained in the latest published annual report to the stockholders of GM.

     The above restrictions shall not apply to Debt secured by (i) Mortgages on property, shares of
stock or indebtedness of any corporation or other entity existing at the time such corporation or
other entity becomes a Manufacturing Subsidiary; (ii) Mortgages on property existing at the time of
acquisition of such property by GM or a Manufacturing Subsidiary, or Mortgages to secure the
payment of all or any part of the purchase price of such property upon the acquisition of such
property by GM or a Manufacturing Subsidiary or to secure any Debt incurred prior to, at the time
of, or within 180 days after, the later of the date of acquisition of such property and the date
such property is placed in service, for the purpose of financing all or any part of the purchase
price thereof, or Mortgages to secure any Debt incurred for the purpose of financing the cost to GM
or a Manufacturing Subsidiary of improvements to such acquired property; (iii) Mortgages securing
Debt of a Manufacturing Subsidiary owing to GM or to another Subsidiary; (iv) Mortgages on property
of a corporation or other entity existing at the time such corporation or other entity is merged or
consolidated with GM or a Manufacturing Subsidiary or at the time of a sale, lease or other
disposition of the properties of a corporation or other entity as an entirety or substantially as
an entirety to GM or a Manufacturing Subsidiary; (v) Mortgages on property of GM or a Manufacturing
Subsidiary in favor of the United States of America or any State thereof, or any department, agency
or instrumentality or political subdivision of the United States of America or any State thereof,
or in favor of any other country, or any political subdivision thereof, to secure partial,
progress, advance or other payments pursuant to any contract or statute or to secure any
indebtedness incurred for the purpose of financing all or any part of the purchase price or the
cost of construction of the property subject to such Mortgages; or (vi) any extension, renewal or
replacement (or successive extensions, renewals or replacements) in whole or in part of any
Mortgage referred to in the foregoing clauses (i) to (v), inclusively; provided, however, that the
principal amount of Debt secured thereby shall not exceed by more than 115% the principal amount of
Debt so secured at the time of such extension, renewal or replacement and that such extension,
renewal or replacement shall be limited to all or a part of the property which secured the Mortgage
so extended, renewed or replaced (plus improvements on such property).

     C. Dispute Resolution. The dispute resolution process set forth in Section 26 of this
Settlement Agreement shall apply in the event of a dispute over whether GM has defaulted on any
payment obligation under this Settlement Agreement. In this regard, the time limit applicable to
GM’s right to cure a default shall be 15 business days after agreement by the parties that GM has
defaulted, or entry by the Court of a final ruling determining that GM has defaulted on its payment
obligations. Application of the dispute resolution process set forth in Section 26 of this
Settlement Agreement does not relieve GM of the obligation to pay accrued Interest for the period
of time that the dispute resolution process is in effect in order to cure a default.

     20. Cooperation

     A. Cooperation by GM. GM will cooperate with the UAW and the Committee and at the
Committee’s request undertake such reasonable actions as will assist the Committee in the

- 29 -

 

transition of responsibility for administration of the Retiree Medical Benefits by the Committee
for the New Plan and the New VEBA. Such cooperation will include assisting the Committee in
educational efforts and communications with respect to the Class and the Covered Group so that they
understand the terms of the New Plan, the New VEBA and the transition, and understand the claims
submission process and any other initial administrative changes undertaken by the Committee.
Before and after the Implementation Date, at the Committee’s request and as permitted by law, GM
will 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 Plan and the New
VEBA, including, without limitation, the retrieval of data in a form and to the extent maintained
by GM regarding age, amounts of pension benefits, service, pension and medical benefit eligibility,
marital status, mortality, claims history, births, deaths, dependent status and enrollment
information of the Class and the Covered Group. At the request of the Committee, GM will continue
to perform the necessary eligibility work for a reasonable period of time, not to exceed 90 days
after the Implementation Date in order to allow the Committee to establish and test the eligibility
database, and for which GM will be entitled to reimbursement for reasonable costs. GM shall also
assist the Committee in transitioning benefit provider contracts to the New VEBA. GM shall also
cooperate with the UAW 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 the New VEBA,
including insuring an orderly transition from GM administration of Retiree Medical Benefits to the
New Plan and the New VEBA.

     To the extent permitted by law, GM will also allow retiree participants to voluntarily have
required contributions withheld from pension benefits and to the extent reasonably practical,
credited to the GM Separate Retiree Account of the New VEBA on a monthly basis. A retiree
participant may elect or withdraw consent for pension withholdings at any time by providing 45 days
written notice to the Pension Plan administrator or such shorter period that may be required by
law.

     To the extent permitted by law, GM will also cooperate with the Committee to make provision
for the New VEBA payments of the $76.20 Special Benefit to be incorporated into monthly GM pension
checks for eligible retirees and surviving spouses. It will be the responsibility of the Committee
and the New VEBA to advise GM’s pension administrator in a timely manner of eligibility changes
with regard to the Special Benefit payment. The timing of the information provided to GM’s pension
administrator will determine the timing for the incorporation into the monthly pension check. It
will be the responsibility of the Committee and the New VEBA to establish a bank account for the
funding of the Special Benefit payments, and GM’s pension administrator will be provided with the
approval to draw on that account for the payment of the benefit. The Committee and the New VEBA
will assure that the bank account is adequately funded for any and all such payments. If adequate
funds do not exist for the payments, then GM’s pension administrator will not make such payments
until the required funding is established in the account. It will be the responsibility of the
Committee and the New VEBA to audit the eligibility for, and payment of, the Special Benefit.
Additionally, the Committee and the New VEBA will be responsible for the payment of reasonable
costs
associated with GM’s administration of the payment of this Special Benefit and the pension
withholdings, including development of administrative and recordkeeping processes, monthly payment
processing, audit and reconciliation functions and the like.

- 30 -

 

     GM will be financially responsible for reasonable costs associated with the transition of
coverage for the Class and the Covered Group to the New Plan and New VEBA. This shall include the
cost of educational efforts and communications with respect to retirees, the New Plan’s initial
creation of administrative procedures, initial development of record sharing procedures, the
testing of computer systems, the Committee’s initial 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 thereunder. GM payments described in this Section shall not reduce its payment
obligations under this Settlement Agreement, and if the New VEBA is a multi-employer welfare trust,
the costs described in this Section, to the extent not allocable to a specific employer, 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.

     B. Cooperation With GM. The UAW and the Committee will cooperate and shall timely
furnish GM with such information related to the New Plan and New VEBA, in a form and to the extent
maintained by the UAW and the Committee, as may be reasonably necessary to permit GM to comply with
requirements of the SEC, including, but not limited to, any disclosures contemplated or agreed to
with the staff of the SEC as a result of GM’s discussions with the staff pursuant to Section 21 of
this Settlement Agreement and any schedules supporting such information, and Generally Accepted
Accounting Principles, including but not limited to SFAS 87, SFAS 106, SFAS 132R, SFAS 157, and
SFAS 158 (as amended), for disclosure in GM’s financial statements and any filings with the SEC.

     21. Accounting Treatment

     Throughout the negotiations of the MOU and this Settlement Agreement, GM has maintained that a
necessary element in its decision to enter into the MOU and this Settlement Agreement is securing
accounting treatment that is reasonably satisfactory to GM regarding the transactions contemplated
by the MOU and this Settlement Agreement. In the event that the 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
Settlement Agreement would give rise to substantive plan amendment accounting. For purposes of
this provision, substantive plan amendment accounting would limit GM’s OPEB obligation to the
revised, fixed and capped obligations as determined under this Settlement Agreement. The parties
agree that this Settlement Agreement and Final Effective Date are contingent on GM securing the
appropriate accounting treatment regarding GM’s obligations to the Class and the Covered Group for
Retiree Medical Benefits. As soon as practicable, GM will discuss the accounting for the New Plan
and the New VEBA and its obligations to the Class and the Covered Group for Retiree Medical
Benefits with the staff of the SEC. If, as a result of those discussions, GM 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 GM, 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 GM reasonably believes will provide such accounting, this
Settlement Agreement will terminate.

- 31 -

 

     22. Prohibited Transaction Exemptions

     The parties agree that the assets of the TAA and LLC shall not be “plan assets” of the New
Plan and New VEBA until actual transfer or payment to the New VEBA. The UAW, GM, and the Class and
Class Counsel acknowledge that the instrument establishing the TAA and communications to the Class
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. If GM determines that the assets in the TAA and/or LLC as described in Section 7
of this Settlement Agreement are likely to be deemed “plan assets,” GM will apply for a prohibited
transaction exemption from the DOL to permit the acquisition and holding of the employer security
in the TAA and/or LLC. The UAW, the Class and Class Counsel will fully cooperate with GM in
securing any such legal or regulatory approvals.

     If GM elects to transfer the Convertible Note or the Alternative Convertible Note to the New
VEBA and such note is not a qualifying employer security, and/or if the Derivative Contracts are
not qualifying employer securities, GM and the New VEBA timely will apply for a prohibited
transaction exemption from the DOL to permit the New VEBA to acquire and hold such securities.
Similarly, if qualifying employer securities and employer real property would exceed 10 percent of
the total assets in the New VEBA immediately after transfer of the Convertible Note or the
Alternative Convertible Note and the Derivative Contracts to the New VEBA, then GM and the New VEBA
timely will apply for a prohibited transaction exemption to permit the New VEBA to acquire and hold
such securities. The UAW, the Class and Class Counsel will fully cooperate with GM and the New
VEBA in securing any such legal or regulatory approvals. If GM and the New VEBA cannot timely
obtain any necessary exemptions, the parties will meet and discuss an appropriate alternative which
provides equivalent economic value to the New VEBA.

     23. Indemnification

     Subject to approval by the Court as part of the Judgment, GM hereby agrees to indemnify and
hold harmless the UAW, and its officers, directors, employees and expert advisors (each, an
“Indemnified Party”), to the extent permitted by law, from and against any and all losses, claims,
damages, obligations, assessments, penalties, judgments, awards, and other liabilities related to
any decision, recommendations or other actions taken prior to the date of this Settlement Agreement
(collectively, “Indemnification Liabilities”), and will fully reimburse any Indemnified Party for
any and all reasonable and documented attorney fees and expenses (collectively, “Indemnity
Expenses”), as and when incurred, of investigating, preparing or defending any claim, action, suit,
proceeding or investigation, arising out of or in connection with any Indemnification Liabilities
incurred as a result of an Indemnified Party’s entering into, or participation in the negotiations
for, this Settlement Agreement and the MOU and the
transactions contemplated in connection herewith; provided, however, that such
indemnity shall not apply to any portion of any such Liability or Expense that resulted from the
gross negligence, illegal or willful misconduct by an Indemnified Party; provided, further, that
such indemnity shall not apply to any Indemnification Liabilities to a GM Active Employee for
breach of the duty of fair representation.

- 32 -

 

     Nothing in this Section 23 or any provision of this Settlement Agreement shall be construed to
provide an indemnity for any member or any actions of the Committee; provided however, that an
Indemnified Party who becomes a member of the Committee shall remain entitled to any indemnity to
which the Indemnified Party would otherwise be entitled pursuant to this Section 23 for actions
taken, or for a failure to take actions, in any capacity other than as a member of the Committee;
and provided further, that nothing in this Section 23 or any other provision of this Settlement
Agreement shall be construed to provide an indemnity for any Indemnification Liabilities or
Indemnity Expenses relating to (i) management of the assets of the New VEBA or (ii) for any action,
amendment or omission of the Committee with respect to the provision and administration of Retiree
Medical Benefits.

     If an Indemnified Party receives notice of any action, proceeding or claim as to which the
Indemnified Party proposes to demand indemnification hereunder, it shall provide GM prompt written
notice thereof. Failure by an Indemnified Party to so notify GM shall relieve GM from the
obligation to indemnify the Indemnified Party hereunder only to the extent that GM suffers actual
prejudice as a result of such failure, but GM shall not be obligated to provide reimbursement for
any Indemnity Expenses incurred for work performed prior to its receipt of written notice of the
claim. If an Indemnified Party is entitled to indemnification hereunder, GM will have the right to
participate in such proceeding or elect to assume the defense of such action or proceeding at its
own expense and through counsel chosen by GM (such counsel being reasonably satisfactory to the
Indemnified Party). The Indemnified Party will cooperate in good faith in such defense. Upon the
assumption by GM of the defense of any such action or proceeding, the Indemnified Party shall have
the right to participate in, but not control the defense of, such action and retain its own counsel
but the expenses and fees shall be at its expense unless (a) GM has agreed to pay such Indemnity
Expenses, (b) GM shall have failed to employ counsel reasonably satisfactory to an Indemnified
Party in a timely manner, or (c) the Indemnified Party shall have been advised by counsel that
there are actual or potential conflicting interests between GM and the Indemnified Party that
require separate representation, and GM has agreed that such actual or potential conflict exists
(such agreement not to be unreasonably withheld); provided, however, that GM shall
not, in connection with any such action or proceeding arising out of the same general allegations,
be liable for the reasonable fees and expenses of more than one separate law firm at any time for
all Indemnified Parties not having actual or potential conflicts among them, except to the extent
that local counsel, in addition to its regular counsel, is required in order to effectively defend
against such action or proceeding. All such fees and expenses shall be invoiced to GM, with such
detail and supporting information as GM may reasonably require, in such intervals as GM shall
require under its standard billing processes.

     If the Indemnified Party receives notice from GM that GM has elected to assume the defense of
the action or proceeding, GM will not be liable for any attorney fees or other legal expenses
subsequently incurred by the Indemnified Party in connection with the matter.

     GM shall not be liable for any settlement of any claim against an Indemnified Party made
without GM’s written consent, which consent shall not be unreasonably withheld. GM shall not,

- 33 -

 

without the prior written consent of an Indemnified Party, which consent shall not be unreasonably
withheld or delayed, settle or compromise any claim, or permit a default or consent to the entry of
any judgment, that would create any financial obligation on the part of the Indemnified Party not
otherwise within the scope of the indemnified liabilities.

     The termination of this Settlement Agreement shall not affect the indemnity provided
hereunder, which shall remain operative and in full force and effect. Notwithstanding anything in
this Section 23 to the contrary, this Section 23 of the Settlement Agreement shall not be
applicable with respect to any of the matters covered by Article VI of the Securityholder and
Registration Rights Agreement.

     24. Costs and Attorneys Fees

          A. Fees and Expenses. GM agrees to support the application by the UAW and Class Counsel
to the Court for reimbursement by GM of reasonable attorney and professional fees and expenses
based on hours worked and determined in accordance with the current market rates (not to include
any upward adjustments such as any lodestar multipliers, risk enhancements, success fee, completion
bonus or rate premiums) incurred in connection with the court proceedings to obtain the Approval
Order and any appeals therefrom. Approval of these fee requests will be included in the Judgment.

          B. Fees After The Final Effective Date. Each party to this Settlement Agreement agrees
not to seek any other future fees or expenses from any other party in connection with either Henry
II or Henry I, except that the Class Representatives or any other party prevailing in any action to
enforce the terms of this Settlement Agreement may seek such fees and costs as may be allowed by
law.

     25. Releases and Certain Related Matters

     A. In consideration of GM’s entry into this Settlement Agreement, and the other obligations of
GM contained herein, the Class Representatives, the Class Counsel and the UAW hereby consent to the
entry of the Judgment, which shall be binding upon all Class Members pursuant to Rule 23(b)(2) of
the Federal Rules of Civil Procedure.

     B. As of the Final Effective Date, each UAW Releasee releases and forever discharges each
other UAW Releasee and each other Indemnified Party and shall be forever released and discharged
with respect to any and all rights, claims or causes of action that such UAW Releasee had, has or
hereafter may have, whether known or unknown, suspected or unsuspected, concealed or hidden,
arising out of or based upon or otherwise related to (a) any of the claims arising, or which could
have been raised, in connection with either Henry I or Henry II concerning the provision of Retiree
Medical Benefits and the terms of this Settlement Agreement, (b) any claims that this Settlement
Agreement, any document referred to or contemplated herein is not in compliance with applicable
laws and regulations, and (c) any
action taken to carry out this Settlement Agreement in accordance with this Settlement
Agreement and applicable law.

     C. As of the Final Effective Date, the UAW Releasees release and forever discharge GM, and its
officers, directors, employees, agents, and subsidiaries, and the GM Plan and its

- 34 -

 

fiduciaries, with
respect to any and all rights, claims or causes of action that any UAW Releasee had, has or
hereafter may have, whether known or unknown, suspected or unsuspected, concealed or hidden,
arising out of, based upon or otherwise related to (a) any of the claims arising, or which could
have been raised, in connection with Henry I or Henry II concerning the provision of Retiree
Medical Benefits and the terms of this Settlement Agreement, (b) any claims that this Settlement
Agreement, any document referred to or contemplated herein is not in compliance with applicable
laws and regulations, and (c) any action taken to carry out this Settlement Agreement in
accordance with this Settlement Agreement and applicable law.

     D. As of the Final Effective Date, the UAW Releasees release and forever discharge the
Existing External VEBA and the fiduciaries, trustees, and committee that administer the Existing
External VEBA, and the Existing Internal VEBA and the fiduciaries, trustees, and committee that
administer the Existing Internal VEBA with respect to any and all rights, claims or causes of
action that any UAW Releasee had, has or hereafter may have, whether known or unknown, suspected or
unsuspected, concealed or hidden, arising out of, based upon or otherwise related to (a) any of the
claims arising, or which could have been raised, in connection with Henry I or Henry II concerning
the provision of Retiree Medical Benefits and the terms of this Settlement Agreement, (b) any
claims that this Settlement Agreement, any document referred to or contemplated herein is not in
compliance with applicable laws and regulations, and (c) any action taken by such fiduciaries,
trustee and/or committees to carry out this Settlement Agreement and to transfer assets of the
Existing External VEBA and Existing Internal VEBA to the New VEBA in accordance with this
Settlement Agreement and applicable law.

     E. As of the Final Effective Date, GM releases and forever discharges the Class
Representatives and Class Counsel from any and all claims, demands, liabilities, causes of action
or other obligations of whatever nature, including attorney fees, whether known or unknown, that
arise from their participation or involvement with respect to the filing of the Henry II lawsuit or
in the negotiations leading to this Settlement Agreement. This release does not extend to
obligations arising from the terms of the Settlement Agreement itself.

     F. Neither the entry into this Settlement Agreement nor the consent to the Judgment is, may be
construed as, or may be used as, an Admission by or against GM or any UAW Releasee of any fault,
wrongdoing or liability whatsoever.

     26. Dispute Resolution

     A. Coverage. Any controversy or dispute arising out of or relating to, or involving
the enforcement, implementation, application or interpretation of this Settlement Agreement shall
be enforceable only by GM, the Committee, the UAW, and if prior to the Implementation Date, Class
Counsel, and the Approval Order will provide that the Court will retain exclusive jurisdiction to
resolve
any such disputes. Notwithstanding the foregoing, any disputes relating solely to eligibility
for participation or entitlement to benefits under the New Plan shall be resolved in accordance
with the applicable procedures such Plan shall establish, and nothing in this Settlement Agreement
precludes Class Members from pursuing appropriate judicial review regarding such disputes; provided
however, that no claims related to Retiree Medical Benefits for claims incurred after the
Implementation Date may be brought against GM, any of its affiliates, or the GM Plan.

- 35 -

 

     B. Attempt at Resolution. Although the Court retains exclusive jurisdiction to
resolve disputes arising out of or relating to the enforcement, implementation, application or
interpretation of this Settlement Agreement, the parties agree that prior to seeking recourse to
the Court, the parties shall attempt to resolve the dispute through the following process:

     (i) The aggrieved party shall provide the party alleged to have violated this Settlement
Agreement (“Dispute Party”) with written notice of such dispute, which shall include a description
of the alleged violation and identification of the Section(s) of the Settlement Agreement allegedly
violated. Such notice shall be provided so that it is received by the Dispute Party no later than
180 calendar days from the date of the alleged violation or the date on which the aggrieved party
knew or should have known of the facts that give rise to the alleged violation, whichever is later,
but in no event longer than 3 years from the date of the alleged violation.

     (ii) If the Dispute Party fails to respond within 21 calendar days from its receipt of the
notice, the aggrieved party may seek recourse to the Court; provided however, that the aggrieved
party waives all claims related to a particular dispute against the Dispute Party if the aggrieved
party fails to bring the dispute before the Court within 180 calendar days from the date of sending
the notice. Provided, however, with respect to disputes relating to assumptions or methodology
used by the GM Actuary or the Actuary in calculating the Cash Flow Projection as set forth in
Exhibit A to this Settlement Agreement the parties may not seek recourse to the Court but will
submit such dispute to a neutral actuary in accordance with Exhibit A.

     All the time periods in Section 26 of this Settlement Agreement may be extended by agreement
of the parties to the particular dispute.

     C. Alternate Means of Resolution. Nothing in this Section shall preclude GM, the UAW,
the Committee, or Class Counsel from agreeing on any other form of alternative dispute resolution
or from agreeing to any extensions of the time periods specified in this Section.

     27. Submission of the Settlement Agreement and Class Action Notice Order

     The parties shall submit this Settlement Agreement to the Court and jointly work diligently to
have this Settlement Agreement approved by the Court as soon as possible either through Henry II or
Henry I as deemed appropriate. In either event, the parties shall seek the Court’s approval of
this Settlement Agreement as superseding or satisfying the Henry I Settlement Agreement. The
parties shall seek from the Court an order (the “Notice Order”)
providing that notice of the hearing on the proposed settlement (the “Fairness
Hearing”) shall be given at GM’s expense to the Class, as defined herein, by mailing a copy of
the notice contemplated in the Notice Order to the Class, and by publishing a notice approved by
the Court in the Detroit News/Free Press weekend edition, and a national newspaper such as USA
Today. Until entry of Judgment, copies of this Settlement Agreement shall also be made available
for inspection by Class Members at the Court, at the UAW offices in Detroit, Michigan, and at the
offices of Class Counsel.

- 36 -

 

     28. Conditions

     This Settlement Agreement is conditioned upon the occurrence or resolution of the conditions
described in subparagraphs A, B, and C of this Section. The failure of subparagraphs A and B will
render this Settlement Agreement voidable at the discretion of any party. The failure of
subparagraph C will render this Settlement Agreement voidable at the sole discretion of GM.

     A. Class Certification Order. A final order must be entered by the Court certifying
Henry II as a non-opt out class action, or amending and re-certifying the Henry I class, such that
the Class is defined as stated in Section 1 of this Settlement Agreement. This condition shall be
deemed to have failed upon the Court’s issuance of a Class Order denying certification of Henry II
as a class action or denial of the motion to amend and re-certify the class in Henry I to include
the Class as defined in this Settlement Agreement, if applicable, or upon issuance of a Class Order
certifying Henry II as a class action or amending and re-certifying a new class in Henry I but
whose membership is less inclusive than as described in this Settlement Agreement unless GM, the
UAW and Class Counsel agree in writing to such alternative class description.

     B. Judgment/Approval Order. A Judgment must be entered by the Court in either Henry I
or Henry II approving this Settlement Agreement in all respects and as to all parties, including
GM, the UAW, and the Class. The Judgment shall be acceptable in form and substance to GM, the UAW
and Class Counsel. This condition shall be deemed to have failed upon issuance of an order
disapproving this Settlement Agreement, or upon the issuance of an order approving only a portion
of this Settlement Agreement but disapproving other portions, unless GM, the UAW and Class Counsel
agree otherwise in writing. Such Approval Order shall, inter alia, contain the conditions set
forth in this Settlement Agreement and direct the transfer of all the assets and liabilities of the
Existing External VEBA into the New VEBA and the termination of the Existing External VEBA.

     C. Accounting Treatment Satisfactory to GM. The discussions between GM and the SEC
regarding accounting treatment shall have been completed in a manner reasonably satisfactory to GM
as set forth in Section 21 of this Settlement Agreement.

     29. No Admission; No Prejudice

     A. Notwithstanding anything to the contrary, whether set forth in this Settlement Agreement,
the MOU, the Judgment, the Notice Order, any documents filed with the Court in either Henry I or
Henry II, any documents, whether provided in the course of or in any manner whatsoever relating to
the 2007 discussions between GM and UAW with respect to health care benefits or relating to this
Settlement Agreement or the MOU, whether distributed, otherwise made available to or obtained by
any person or organization, including without limit, GM Active Employees, Class Members, or their
spouses, surviving spouses or dependents, or to the UAW or GM in the course of the negotiations
that led to entry into this Settlement Agreement, or otherwise:

     (a) GM denies and continues to deny any wrongdoing or legal liability arising out of
any of the allegations, claims and contentions made against GM in Henry I or

- 37 -

 

Henry II and in
the course of the negotiation of the MOU or this Settlement Agreement. Neither the MOU, nor
any disputes or discussions between GM and the UAW with respect to health care benefits or
entry into this Settlement Agreement occurring on or after January 1, 2007, nor this
Settlement Agreement, nor any document referred to or contemplated herein, nor any action
taken to carry out this Settlement Agreement, nor any retiree health care benefits provided
hereunder or any action related in any way to the ongoing administration of such retiree
health care benefits (collectively, the “Settlement Actions”) may be construed as,
or may be viewed or used as, an Admission by or against GM of any fault, wrongdoing or
liability whatsoever, or as an Admission by GM of the validity of any claim or argument made
by or on behalf of the UAW, Active Employees, the Class or the Covered Group, that retiree
health benefits are vested. Without limiting in any manner whatsoever the generality of the
foregoing, the performance of any Settlement Actions by GM may not be construed, viewed or
used as an Admission by or against GM that, following the termination of the December 16,
2005 Settlement Agreement in Henry I, it does not have the unilateral right to modify or
terminate retiree health care benefits.

     (b) Each of the UAW, the Class Representatives and the Class Members claim and continue
to claim that the allegations, claims and contentions made against GM in Henry II have
merit. Neither this Settlement Agreement nor any document referred to or contemplated
herein nor any Settlement Actions may be construed as, or may be viewed or used as, an
Admission by or against any of the UAW, the Class Representatives or the Class Members of
any fault, wrongdoing or liability whatsoever or of the validity of any claim or argument
made by or on behalf of GM that GM has a unilateral right to modify or terminate retiree
health care benefits or that retiree health care benefits are not vested. Without limiting
in any manner whatsoever the generality of the foregoing, the performance of any Settlement
Actions by any of the UAW, the Class Representatives or the Class Members, including without
limitation, the acceptance of any retiree health care benefits under any of the GM health
care plans set forth in this Settlement Agreement, may not be construed, viewed or used as
an Admission by or against any of the UAW, the Class Representatives or the Class that,
following the termination of the December 16, 2005 Settlement Agreement, GM has the
unilateral right to modify or terminate retiree health care benefits.

     (c) There has been no determination by any court as to the factual allegations made
against GM in Henry I or Henry II. Entering into this Settlement Agreement and performance
of any of the Settlement Actions shall not be construed as, or deemed to be evidence of, an
Admission by any of the parties hereto, and shall not be offered or received in evidence in
any action or proceeding against any party hereto in any court, administrative agency or
other tribunal or forum for any purpose whatsoever other than to enforce the provisions of
this Settlement Agreement or to obtain or seek approval of this Settlement Agreement in
accordance with Rule 23 of the Federal Rules of Civil Procedure and the Class Action
Fairness Act of 2005.

     For the purposes of this Section 29, GM and the UAW refer to General Motors Corporation and
the Union, respectively, as organizations, as well as any and all of their respective directors,
officers, employees, and agents.

- 38 -

 

     This Settlement Agreement and anything occurring in connection with reaching this Settlement
Agreement are without prejudice to GM, the UAW and the Class. The parties may use this Settlement
Agreement to assist in securing the Judgment approving the settlement. It is intended that GM, the
UAW, the Committee, the Class Representatives, the Class, the Covered Group and Class Counsel shall
not use this Settlement Agreement, or anything occurring in connection with reaching this
Agreement, as evidence against GM, the UAW, the Class or the Covered Group in any circumstance
except where the parties are operating under or enforcing this Settlement Agreement or the Judgment
approving this Settlement Agreement.

     30. Duration and Termination of Settlement Agreement

     This Settlement Agreement will remain in effect unless and until terminated in accordance with
this Section and as provided for in Section 28 of this Settlement Agreement. If this Settlement
Agreement is terminated, then the Henry I Settlement Agreement and judgment shall remain in full
force and effect and the parties will be restored to their respective positions immediately before
execution of this Settlement Agreement except as specifically noted herein.

     Termination of this Settlement Agreement may occur as follows:

     (i) If Henry II is enjoined or stayed, or withdrawn, dismissed, or otherwise terminated, or if
the Judgment is denied in whole or in material part, either GM, the UAW, or Class Counsel on behalf
of the Class Representatives may terminate this Settlement Agreement by 30 days’ written notice to
the other party; provided however, that the Settlement Agreement may not be terminated pursuant to
this subparagraph (i) if Henry II is stayed, withdrawn, or dismissed by the parties because this
Settlement Agreement is approved as a superseding settlement through the Henry I litigation.

     (ii) If a Class Order satisfactory to the parties, as described in Section 28.A of this
Settlement Agreement, is entered by the Court and subsequently overturned in whole or in part on
appeal or otherwise, either GM, the UAW, or Class Counsel on behalf of the Class may terminate this
agreement upon 30 days’ written notice to the other parties.

     (iii) If an Approval Order satisfactory to the parties, as described in Section 28.B of this
Settlement Agreement, is entered by the Court, but overturned in whole or in part on appeal or
otherwise, either GM, the UAW, or Class Counsel on behalf of the Class Representatives may
terminate this Settlement Agreement upon 30 days’ written notice to the other parties.

     (iv) If after GM’s discussions with the SEC, GM does not believe the accounting treatment for
the New Plan and the New VEBA is reasonably satisfactory to GM as set forth in Section 21 of this
Settlement Agreement, GM may immediately terminate this Settlement Agreement upon written notice to
the other parties.

     (v) If any court, agency or other tribunal of competent jurisdiction issues a determination
that any part of this Settlement Agreement is prohibited or unenforceable, either GM, the UAW, or
Class Counsel on behalf of the Class Representatives may terminate this Settlement Agreement by 30
days’ written notice to the other party.

- 39 -

 

Notwithstanding the foregoing, Sections 7.G, 8.H, 9.A, 9.B and 9.C to the extent these Sections
create rights and obligations relating to the non-occurrence of the Final Effective Date as well as
22, 23, 26 and 29, shall survive the termination of this Settlement Agreement.

          31. National Institute for Health Care Reform

     In recognition of the interest of GM, the UAW, the Class and the Covered Group in improving
the quality, affordability, and accountability of health care in the United States, the parties
agree that as a part of this settlement GM and the UAW shall establish a National Institute for
Health Care Reform (“Institute”). The Institute shall be established and receive its first annual
funding payment as soon as practicable after the Initial Effective Date on the basis set forth in
the term sheet attached hereto as Exhibit G to this Settlement Agreement. The annual funding
payment will be payable in four equal quarterly installments. The funding and operation of the
Institute shall be separate, independent and distinct from the New Plan and the New VEBA. Any
payments by GM to the Institute shall be governed exclusively by the term sheet and are not in any
way related to GM’s payment obligations as described in Sections 8 and 12 of this Settlement
Agreement. Additionally, Section 19 of this Settlement Agreement shall not apply to any obligation
GM may have to make payments with regard to the Institute.

          32. Other Provisions

          A. References in this Settlement Agreement to “Sections,” “Paragraphs” and “Exhibits” refer to
the Sections, Paragraphs, and Exhibits of this Settlement Agreement unless otherwise specified.

          B. The Court will, subject to Section 26 of this Settlement Agreement, retain exclusive
jurisdiction to resolve any disputes relating to or arising out of or in connection with the
enforcement, interpretation or implementation of this Settlement Agreement. Each of the parties
hereto expressly and irrevocably submits to the jurisdiction of the Court and expressly waives any
argument it may have with respect to venue or forum non conveniens.

          C. This Settlement Agreement constitutes the entire agreement between the parties regarding
the matters set forth herein, and no representations, warranties or inducements have been made to
any party concerning this Settlement Agreement, other than representations, warranties and
covenants contained and memorialized in this Settlement Agreement. This
Settlement Agreement supersedes any prior understandings, agreements or representations by or
between the parties, written or oral, regarding the matters set forth in this Settlement Agreement.

          D. The captions used in this Settlement Agreement are for convenience of reference only and do
not constitute a part of this Settlement Agreement and will not be deemed to limit, characterize or
in any way affect any provision of this Settlement Agreement, and all provisions of this Settlement
Agreement will be enforced and construed as if no captions had been used in this Settlement
Agreement.

          E. The Class Representatives expressly authorize Class Counsel to take all appropriate action
required or permitted to be taken by the Class Representatives pursuant to this Settlement
Agreement to effectuate its terms and also expressly authorize Class Counsel to enter into any
non-material modifications or amendments to this Settlement Agreement on behalf of

- 40 -

 

them that Class
Counsel deems appropriate from the date this Settlement Agreement is signed until the Effective
Date; provided, however, that the effectiveness of any such amendment which
adversely impacts the level of benefits to any Class Member as well as any material amendment shall
be subject to the approval of the Court.

     F. This Settlement Agreement may be executed in two or more counterparts. All executed
counterparts and each of them shall be deemed to be one and the same instrument, provided that
counsel for the parties to this Settlement Agreement shall exchange among themselves original
signed counterparts.

     G. No party to this Settlement Agreement may assign any of its rights hereunder without the
prior written consent of the other parties, and any purported assignment in violation of this
sentence shall be void. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.

     H. Each of GM, the UAW, the Committee, Class Representatives, Class Members and the Class
Counsel shall do any and all acts and things, and shall execute and deliver any and all documents,
as may be necessary or appropriate to effect the purposes of this Settlement Agreement.

     I. This Settlement Agreement shall be construed in accordance with applicable federal laws of
the United States of America.

     J. Any provision of this Settlement 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. To the extent any provision of this Settlement Agreement is invalid or
unenforceable as provided for in Section 32.J of this Settlement Agreement , it shall be replaced
by a valid and enforceable provision agreed to by GM, the UAW and Class Counsel (which agreement
shall not be unreasonably withheld) that preserves the same economic effect for the parties under
this Settlement Agreement; provided however, that to the extent that such prohibited or
unenforceable provision cannot be replaced as contemplated and the consequences of such prohibited
or unenforceable provision causes this Settlement Agreement to fail of its
essential purpose then this Settlement Agreement may be voided at the sole discretion of the
party seeking the benefit of the prohibited or unenforceable provision. Class Counsel is expressly
authorized to take all appropriate action to implement this provision.

     K. In the event that any payment referenced in this Settlement Agreement is due to be made on
a weekend or a holiday, the payment shall be made on the first business day following such weekend
or holiday.

     L. In the event that any legal or regulatory approvals are required to effectuate the
provisions of this Settlement Agreement, GM, the UAW, the Class, the Committee and Class Counsel
will fully cooperate in securing any such legal or regulatory approvals.

     M. Any notice, request, information or other document to be given under this Settlement
Agreement to any of the parties by any other party shall be in writing and delivered

- 41 -

 

personally, or
sent by Federal Express or other carrier which guarantees next-day delivery, transmitted by
facsimile, transmitted by email if in an Adobe Acrobat PDF file, or sent by registered or certified
mail, postage prepaid, at the following addresses. All such notices and communication shall be
effective when delivered by hand, or, in the case of registered or certified mail, Federal Express
or other carrier, upon receipt, or, in the case of facsimile or email transmission, when
transmitted (provided, however, that any notice or communication transmitted by facsimile or email
shall be immediately confirmed by a telephone call to the recipient.):

     If to the Class Representatives or Class Counsel, addressed to:

William T. Payne

Stember Feinstein Doyle & Payne, LLC

Pittsburgh North Office

1007 Mt. Royal Boulevard

Pittsburgh, PA 15222

Tel: (412) 492-8797

wpayne@stargate.net

     In each case with copies to:

John Stember

Edward Feinstein

Stember Feinstein Doyle & Payne, LLC

1705 Allegheny Building

429 Forbes Avenue

Pittsburgh, PA 15219

Tel: (412) 338-1445

jstember@stemberfeinstein.com

efeinstein@stemberfeinstein.com

- 42 -

 

     If to GM, addressed to:

Diana Tremblay

GMNA Vice President of Labor Relations

General Motors Corporation

2000 Centerpoint Parkway

Pontiac, MI 48341

Tel: (248) 753-2243

     in each case with copies to:

Francis S. Jaworski

Office of the General Counsel

General Motors Corporation

Mail Code 482-C25-B21

300 Renaissance Center

P.O. Box 300

Detroit, MI 48265-3000

Tel: (313) 665-4914

francis.s.jaworski@gm.com

     If to UAW, addressed to:

Daniel W. Sherrick

General Counsel

International Union, United Automobile, Aerospace and

Agricultural Implement Workers of America

8000 East Jefferson Avenue

Detroit, MI 48214

Tel: (313) 926-5216

     with a copy to:

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, New York 10006

Attention: A. Richard Susko/Richard S. Lincer/David I. Gottlieb

Tel: (212) 225-2000

Each party may substitute a designated recipient upon written notice to the other parties.

- 43 -

 

     IN WITNESS THEREOF, the parties hereto have caused this Settlement Agreement to be executed by
themselves or their duly authorized attorneys.

	 	 	 	 	 
	AGREED:	 	 
	 
	 	 	 	 
	By:

	 	/s/ Francis S. Jaworski (with consent)
	 	Date: February 21, 2008
	 

	 	 

	 	 
	 

	 	Francis S. Jaworski	 	 
	 

	 	Office of the General Counsel	 	 
	 

	 	General Motors Corporation	 	 
	 

	 	Mail Code 482-C25-B21	 	 
	 

	 	300 Renaissance Center	 	 
	 

	 	P.O. Box 300	 	 
	 

	 	Detroit, MI 48265-3000	 	 
	 

	 	Tel: (313) 665-4914	 	 
	 

	 	francis.s.jaworski@gm.com	 	 
	 
	 	 	 	 
	 

	 	COUNSEL FOR DEFENDANT	 	 
	 

	 	GENERAL MOTORS CORPORATION	 	 
	 
	 	 	 	 
	By:

	 	/s/ Daniel W. Sherrick (with consent)
	 	Date: February 21, 2008
	 

	 	 

	 	 
	 

	 	Daniel W. Sherrick (P37171)	 	 
	 

	 	8000 East Jefferson Avenue	 	 
	 

	 	Detroit, MI 48214	 	 
	 

	 	Tel: (313) 926-5216	 	 
	 
	 	 	 	 
	 

	 	COUNSEL FOR PLAINTIFF	 	 
	 

	 	INTERNATIONAL UNION, UNITED AUTOMOBILE,	 	 
	 

	 	AEROSPACE AND AGRICULTURAL IMPLEMENT

WORKERS OF AMERICA	 	 
	 
	 	 	 	 
	By:

	 	/s/ William T. Payne (with consent)
	 	Date: February 21, 2008
	 

	 	 

	 	 
	 

	 	William T. Payne	 	 
	 

	 	Stember Feinstein Doyle & Payne, LLC	 	 
	 

	 	Pittsburgh North Office	 	 
	 

	 	1007 Mt. Royal Boulevard	 	 
	 

	 	Pittsburgh, PA 15222	 	 
	 

	 	Tel: (412) 492-8797	 	 
	 

	 	wpayne@stargate.net	 	 
	 
	 	 	 	 
	 

	 	COUNSEL FOR PLAINTIFFS	 	 
	 

	 	HENRY, LAURIA, BAILEY, GENCO, MARLOW,

MILLER, SORIANO, HUBER AND THE CLASS	 	 

- 44 -exv10w2

 

Exhibit 10.2

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCES. THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE SECURITIES
ACT AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITY MAY BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (A) (1) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144 UNDER THE SECURITIES ACT, (3) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN
RULE 501(a) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN “INSTITUTIONAL ACCREDITED INVESTOR”))
IF, PRIOR TO SUCH TRANSFER, THE HOLDER FURNISHES THE CORPORATION AND THE TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE) A SIGNED LETTER FROM THE TRANSFEREE CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE OR SUCCESSOR TRUSTEE, AS
APPLICABLE), OR (4) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IF, PRIOR TO SUCH TRANSFER, THE HOLDER FURNISHES THE CORPORATION AND THE TRUSTEE (OR
A SUCCESSOR TRUSTEE, AS APPLICABLE) AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION AND THE
TRUSTEE OR SUCCESSOR TRUSTEE THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (B) TO
GENERAL MOTORS CORPORATION OR ANY SUBSIDIARY THEREOF, (C) FROM LBK, LLC (THE INITIAL HOLDER HEREOF)
TO THE NEW VEBA (AS DEFINED HEREIN) OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND,
IN EACH CASE, SUBJECT TO THE TAX-RELATED CERTIFICATION REQUIREMENTS OF SECTION 8 HEREIN.

WITHOUT THE WRITTEN CONSENT OF THE CORPORATION, THIS SECURITY MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED TO AN AFFILIATE OF THE CORPORATION.

UNLESS (A) THE HOLDING PERIOD APPLICABLE TO SALES BY NON-AFFILIATES UNDER RULE 144 UNDER THE
SECURITIES ACT HAS EXPIRED, (B) SUCH TRANSFER IS BEING MADE PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (C) THIS SECURITY IS HELD BY A QUALIFIED INSTITUTIONAL BUYER
AND IS BEING TRANSFERRED TO A QUALIFIED INSTITUTIONAL BUYER OR (D) THIS SECURITY IS BEING
TRANSFERRED FROM

1

 

LBK, LLC (THE INITIAL HOLDER HEREOF) TO THE NEW VEBA, THE HOLDER MUST, IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY, CHECK THE APPROPRIATE BOX SET FORTH ON THE ASSIGNMENT FORM RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT SUCH ASSIGNMENT FORM AND THIS CERTIFICATE TO THE BANK OF NEW
YORK AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE).

THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF ANY
SERIES U DEBENTURE IN VIOLATION OF THE FOREGOING RESTRICTIONS. THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESTRICTIONS ON TRANSFER SET FORTH IN THIS LEGEND.

No. 1

GENERAL MOTORS CORPORATION

6.75% Series U Convertible Senior Debentures Due December 31, 2012

CUSIP 370442 DB8

     GENERAL MOTORS CORPORATION, a Delaware corporation (the “Company”), for value received, hereby
promises to pay to LBK, LLC, or its registered assigns, the principal sum of FOUR BILLION THREE
HUNDRED SEVENTY TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,372,500,000) (or, if this Note is in
Global Series U Security form, such other principal amount as noted in the “Schedule of Increases
or Decreases” attached hereto), at the Corporate Trust Office of the Paying Agent (as defined
below) or an office or agency maintained by the Company for such purpose, on December 31, 2012 (the
“Maturity Date”), in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, and to pay interest on
said principal sum at the rate of 6.75% per annum, at the Corporate Trust Office of the Paying
Agent, or an office or agency maintained by the Company for such purpose, in like coin or currency,
from the first day of January or July, as the case may be, to which interest on the Series U
Debentures (as defined below) has been paid (unless no interest has been paid on the Series U
Debentures since the original issuance of this Note, in which case from February 22, 2008),
semi-annually on June 30 and December 31 (each, an “Interest Payment Date”), until payment of said
principal sum has been made or duly provided for. If the Company shall default in the payment of
interest due on such June 30 or December 31, then this Note shall bear interest from the next
preceding June 30 or December 31 to which interest has been paid or, if no interest has been paid
on the Series U Debentures since the original issuance of this Note, from February 22, 2008. The
first Interest Payment Date shall be June 30, 2008 in respect of the period from February 22, 2008
to June 30, 2008. The interest so payable on any June 30 or December 31 will, subject to certain
exceptions provided in the Indenture referred to below, be paid to the person in whose name this
Note is registered at the Close of Business (as defined below) on the June 15 or December 15
preceding such June 30 or December 31 (each, a “Record Date”), except that if the Series U
Debentures are to be redeemed by the Company on a date that falls on or after a Record Date and
prior to the

2

 

corresponding Interest Payment Date, the interest so payable will be paid to the Holder that
tenders the Series U Debentures for redemption. At the option of the Company, interest may be paid
by check to the registered Holder hereof entitled thereto at its last address as it appears on the
registry books, and principal may be paid by check to the registered Holder hereof or to any other
Person (as defined herein) entitled thereto against surrender of this Note. If any June 30 or
December 31 falls on a day that is not a Business Day (as defined below), payment of interest shall
be made on the next succeeding Business Day with the same force and effect as if made on the
respective June 30 or December 31, but no additional interest shall accrue as a result of such
delay in payment. The Series U Debentures will bear interest, calculated on the basis of a 360-day
year consisting of twelve 30-day months. Interest payable on the Maturity Date of the Series U
Debentures, or on any redemption date that is not an Interest Payment Date, will be paid to the
person entitled to payment of principal on the Series U Debentures.

     This Note is one of a duly authorized issue of debentures, notes, bonds or other evidences of
indebtedness of the Company (hereinafter called the “Series U Debentures”) of the series herein
specified, all issued or to be issued under and pursuant to an indenture by and between the Company
and The Bank of New York, as trustee (herein called the “Trustee”), dated as of January 8, 2008
(including all supplemental indentures thereto, herein called the “Indenture”), to which Indenture
and all indentures supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company
and the Holders of the Series U Debentures. The Series U Debentures shall be limited in aggregate
principal amount to $4,372,500,000.

     The “Corporate Trust Office of the Paying Agent” means the principal office of the Paying
Agent at which at any time its corporate trust business shall be administered, which office as of
the date hereof is located at 101 Barclay Street, Floor 8 West, New York, New York 10286,
Attention: Corporate Trust Administration, or such other address as the Paying Agent may designate
from time to time by notice to the Holders and the Company, or the principal corporate trust office
of any successor Paying Agent (or such other address as such successor Paying Agent may designate
from time to time by notice to the Holders and the Company).

     Subject to certain exceptions (i) requiring the consent of the Holder of each Security
affected or (ii) authorizing the execution of certain supplemental indentures without the consent
of the Holders of any of the Securities, the Indenture contains provisions permitting the Company
and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal
amount of the Securities at the time outstanding of all series to be affected (voting as one
class), evidenced as in the Indenture, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the Holders of the Securities of
each such series. Any such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in lieu hereof, whether or not notation for such consent or
waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of and interest on this Note at the place, at the respective times, at the rate,
and in the coin or currency, herein prescribed.

3

 

     Section 1. Conversion Privilege.

     Subject to and upon compliance with any applicable provisions set forth below and in the
Indenture (i) upon the occurrence of one or more of the events set forth below in Section 1(a)
(and, in each case, during the corresponding period) at any time after the original issuance of the
Series U Debentures hereunder but prior to 5:00 p.m., New York City time (the “Close of Business”)
on the Business Day immediately preceding September 30, 2012 or (ii) irrespective of the occurrence
of one of the events set forth below in Section 1(a), at any time on or after September 30, 2012
to, and including, the Close of Business on the second Business Day immediately preceding December
31, 2012, the Holders of the Series U Debentures shall have the right, at their option, to convert
the principal amount of this Note, or any portion of such outstanding principal amount that is an
integral multiple of $25.00, at the conversion rate (the “Conversion Rate”) in effect at such time,
by surrender of the Series U Debentures so to be converted, together with any required funds, in
the manner provided in Section 2 below; provided, however, that, with respect to any Series U
Debenture or portion of Series U Debenture that shall be called for redemption by the Company in
accordance with Section 5 below, such conversion right shall terminate at the Close of Business on
the second Business Day immediately preceding the Redemption Date (as defined below) fixed for
redemption of such Series U Debenture or portion of a Series U Debenture unless the Company shall
default in payment due upon redemption thereof. The Conversion Rate is 0.625 shares of the
Company’s common stock, par value
$12/3 per share (the “Common Stock”), per $25.00 principal amount
of Series U Debentures, subject to adjustment from time to time as set forth in Section 3 below.

     (a) The Series U Debentures shall be convertible into cash or cash and shares of Common Stock,
as described in Section 2 below, prior to September 30, 2012, only upon the occurrence of one or
more of the following events (and, in each case, during the corresponding period):

     (i) during any calendar quarter commencing after March 31, 2008, and only during such
calendar quarter, if the Closing Price (as defined below) of the Common Stock for at least
20 Trading Days in the period of 30 consecutive Trading Days ending on the last Trading Day
of the preceding calendar quarter exceeds the Conversion Price Trigger as defined in Section
1(b) (it being understood for purposes of this clause (i) that the Conversion Price in
effect on the close of each of the 30 consecutive Trading Days shall be used);

     (ii) if all or any portion of the outstanding principal amount of the Series U
Debentures have been called for redemption by the Company in accordance with Section 5
below, at any time on or after the date the Holder receives the Redemption Notice (as
defined below) until the Close of Business on the second Business Day immediately preceding
the Redemption Date; provided that only such portion of the outstanding principal amount of
the Series U Debentures that have been called for redemption shall be convertible as a
result of such redemption call;

4

 

     (iii) if the Company elects to distribute to all holders of Common Stock rights,
options or warrants entitling all holders of Common Stock to subscribe for or purchase
Common Stock for a period expiring within 45 days after the record date for such
distribution, at less than the average of the Closing Prices of the Common Stock for the ten
consecutive Trading Days ending on the date immediately preceding the first public
announcement of such distribution, during the period beginning on, and including, the date
the Company provides notice to the Holders of such distribution as set forth in Section 1(c)
and ending on, and including, the earlier of (x) the Close of Business on the Business Day
prior to the Ex-Date for such distribution and (y) the Company’s announcement that such
distribution will not take place;

     (iv) if the Company elects to distribute to all holders of Common Stock cash, debt
securities (or other evidence of indebtedness) or other assets (excluding dividends or
distributions described in Section 3(a) and Section 3(c)), which distribution has a per
share value exceeding 15% of the Closing Price of the Common Stock on the date immediately
preceding the first public announcement of such distribution, during the period beginning
on, and including, the date the Company provides notice to Holders of such distribution as
set forth in Section 1(c) and ending on, and including, the earlier of (x) the Close of
Business on the Business Day prior to the Ex-Date for such distribution and (y) the
Company’s announcement that such distribution will not take place;

     (v) if a Make-Whole Fundamental Change (as defined below) occurs, during the period
from, and including, the date that is 50 Business Days prior to the anticipated effective
date of the transaction to, and including, the date that is 45 calendar days after the
actual effective date of such transaction (or, if such Make-Whole Fundamental Change also
constitutes a Fundamental Change (as defined below), until the Fundamental Change Repurchase
Date (as defined below) related to such Fundamental Change); or

     (vi) if the Company is party to a consolidation, merger, binding share exchange, or
transfer or lease of all or substantially all of the Company’s assets, pursuant to which the
Common Stock would be converted into cash, securities or other assets, during the period
from, and including, the date that is 50 Business Days prior to the anticipated effective
date of the transaction to, and including, the date that is 45 calendar days after the
actual effective date of such transaction (or, if such transaction also constitutes a
Fundamental Change, until the Fundamental Change Repurchase Date related to such Fundamental
Change).

     Upon determining that Holders of Series U Debentures are entitled to convert their Series U
Debentures in accordance with the provisions of this Section 1, the Company shall notify such
Holders in the manner set forth in Section 1.02 of the Indenture and, in the case of Series U
Debentures evidenced by Global Securities, through the facilities of the Depository.

     (b) The “Conversion Price Trigger” on any date shall equal 120% of the Conversion Price on
such date. The Conversion Price Trigger will initially equal $48.00 and shall be automatically
adjusted whenever the Conversion Price is adjusted as a result of an adjustment in the Conversion
Rate pursuant to Section 3. The Conversion Agent will determine at the beginning of each calendar
quarter commencing after March 31, 2008 whether the Series U

5

 

Debentures are convertible as a result of the price of Common Stock exceeding the Conversion
Price Trigger in accordance with Section 1(a)(i) and will notify the Company and the Trustee if the
Series U Debentures are so convertible. The Company hereby initially designates the Paying Agent
as the Conversion Agent.

     (c) Upon the first public announcement of any distribution described in Section 1(a)(iii) or
Section 1(a)(iv), the Company shall notify the Holders at least 50 Business Days prior to the
Ex-Date (as defined below) for such distribution by providing notice to Holders in the manner set
forth in Section 1.02 of the Indenture and, in the case of Series U Debentures evidenced by Global
Securities, through the facilities of the Depository. If the Company fails to notify Holders of
such a distribution at least 50 Business Days prior to the Ex-Date for such distribution, the
respective period during which Holders may surrender their Series U Debentures for conversion will
be extended by the number of days that such notification is delayed or not otherwise provided to
Holders beyond the specified notice deadline.

     (d) Upon the first public announcement of the occurrence of a Make-Whole Fundamental Change
described in Section 1(a)(v) or a transaction described in Section 1(a)(vi), the Company shall
notify Holders and the Trustee as promptly as practicable following (A) the date the Company
publicly announces such transaction but in no event less than 50 Business Days prior to the
anticipated effective date of such transaction and (B) the actual effective date of the Make-Whole
Fundamental Change, but in no event more than 15 days after such effective date, in each case in
the manner set forth in Section 1.02 of the Indenture and, in the case of Series U Debentures
evidenced by Global Securities, through the facilities of the Depository. If the Company fails to
notify Holders with respect to any of the transactions described in the preceding sentence of this
Section 1(d) of (i) the anticipated effective date of such transaction at least 50 Business Days
prior to such anticipated effective date pursuant to the immediately preceding sentence or (ii) the
actual effective date of any Make-Whole Fundamental Change within 15 days of such actual effective
date, the period during which Holders may surrender their Series U Debentures for conversion will
be extended by the number of days that such notification is delayed or not otherwise provided to
Holders beyond the specified notice deadline.

     (e) Holders shall not have the right to convert their Series U Debentures pursuant to Section
1(a)(iii) or Section 1(a)(iv) if in connection with the distribution described in Section 1(a)(iii)
or Section 1(a)(iv) that would otherwise give rise to a right to convert their Series U Debentures,
such Holders are entitled to participate (as a result of holding their Series U Debentures, and at
the same time as Holders of Common Stock participate) in the distribution described in such
Sections as if such Holders held a number of shares of Common Stock equal to the applicable
Conversion Rate on the Ex-Date for such distribution, multiplied by the principal amount (expressed
as a multiple of $25.00) of Series U Debentures held by such Holder, without having to convert
their Series U Debentures.

     “Business Day” is any weekday that is not a day on which banking institutions in The City of
New York are authorized or obligated to close.

     “Closing Price” of the Common Stock or any other security on any date means the closing sale
price per share (or, if no closing sale price is reported, the average of the bid and ask prices
or, if more than one in either case, the average of the average bid and the average ask

6

 

prices) on that date as reported in composite transactions for the principal U.S. securities
exchange on which the Common Stock or such other security is traded. If the Common Stock or such
other security is not listed for trading on a U.S. national or regional securities exchange on the
relevant date, the Closing Price will be the last quoted bid price for the Common Stock or such
other security in the over-the-counter market on the relevant date as reported by the National
Quotation Bureau or similar organization. If the Common Stock or such other security is not so
quoted, the Closing Price will be the average of the mid-point of the last bid and ask prices for
the Common Stock or such other security on the relevant date from each of at least three nationally
recognized independent investment banking firms selected by the Company for this purpose. The
Closing Price will be determined without reference to extended or after hours trading.

     “Conversion Price” per share of Common Stock means, on any date, $25.00, divided by the
Conversion Rate as of that date.

     “Ex-Date” means, with regard to any dividend or distribution on the Common Stock, the first
date on which the shares of Common Stock trade on the applicable exchange or in the applicable
market, regular way, without the right to receive such dividend or distribution.

     (f) A Series U Debenture in respect of which a Holder is exercising its option to require the
Company to repurchase such Series U Debenture upon a Fundamental Change pursuant to Section 6
hereof may be converted only if such Holder withdraws its “Option to Elect Repayment Upon a
Fundamental Change” in accordance with Section 6 hereof.

     Section 2. Conversion Procedures; Conversion Settlement.

     (a) To convert its Series U Debentures, a Holder must: (i) complete and manually sign a
Conversion Notice (or a facsimile thereof), a form of which is on the back of the Series U
Debenture and deliver such Conversion Notice to the Conversion Agent; (ii) surrender the Series U
Debenture to the Conversion Agent; (iii) if required, furnish appropriate endorsement and transfer
documents; (iv) if required, pay all transfer or similar taxes; and (v) if required, pay funds
equal to the portion of interest payable on the next Interest Payment Date as described in Section
2(h) below. If a Holder holds a beneficial interest in a Global Series U Security, to convert such
beneficial interest, such Holder must comply with requirements (iv) and (v) as set forth in the
immediately preceding sentence and comply with the applicable procedures of the Depository for
converting a beneficial interest in a Global Series U Security. The date on which the requirement
set forth in the first sentence of this paragraph (in the case of a certificated Security) or the
second sentence of this paragraph (in the case of a Global Series U Security or a beneficial
interest therein) is fulfilled is referred to as the “Conversion Date.” A Holder receiving shares
of Common Stock upon conversion shall not be entitled to any rights as a holder of Common Stock,
including, among other things, the right to vote and receive dividends and notice of stockholder
meetings, until (i) if the Conversion Obligation (as defined below) is settled in accordance with
Section 2(b)(i), the Close of Business on the last Trading Day in the relevant Observation Period
or (ii) if the Conversion Obligation is settled in accordance with Section 2(b)(ii), the Close of
Business on the Election Deadline Day (as defined below).

7

 

     (b) Upon conversion of any Series U Debentures, the Company shall satisfy its obligation upon
conversion (the “Conversion Obligation”) as follows:

     (i) If the Company either (1) specifies a Cash Percentage (as defined below) within the
time periods provided in Section 2(c) in connection with such conversion or (2) has
previously made an election under Section 2(k), the Company shall satisfy the Conversion
Obligation with respect to all Series U Debentures converted on the relevant Conversion Date
by payment or delivery, as applicable, of (A) cash and shares of Common Stock (if any) equal
to the sum of the Daily Settlement Amounts (as defined below) for each of the 40 Trading
Days during the relevant Observation Period (as defined below) and (B) cash in an amount
equal to the accrued and unpaid interest on the principal amount so converted to but not
including the Conversion Date; provided, however, that if such Conversion Date falls after a
Record Date and on or prior to the corresponding Interest Payment Date, then the full amount
of accrued and unpaid interest, if any, payable on such Interest Payment Date shall be paid
to the Holders of record of such Series U Debentures at the Close of Business on the
corresponding Record Date (which may or may not be the same person to whom the Company will
pay or deliver amounts in satisfaction of the Conversion Obligation) and the Conversion
Obligation shall consist only of the payment or delivery of the amounts required pursuant to
subclause (A) of this sentence. Settlement of the Conversion Obligation in accordance with
this subclause (i) shall occur on the third Trading Day immediately succeeding the last
Trading Day of the relevant Observation Period.

     (ii) If the Company (1) does not specify a Cash Percentage within the time periods
provided in Section 2(c) in connection with such conversion and (2) has not previously made
an election under Section 2(k), the Company shall satisfy the Conversion Obligation with
respect to all Series U Debentures converted on the relevant Conversion Date by payment or
delivery, as applicable, of (A) shares of Common Stock at the applicable Conversion Rate and
(B) cash in an amount equal to the accrued and unpaid interest on the principal amount so
converted to but not including the Conversion Date; provided, however, that if such
Conversion Date falls after a Record Date and on or prior to the corresponding Interest
Payment Date, then the full amount of accrued and unpaid interest, if any, payable on such
Interest Payment Date shall be paid to the Holders of record of such Series U Debentures at
the Close of Business on the corresponding Record Date (which may or may not be the same
person to whom the Company will pay or deliver amounts in satisfaction of the Conversion
Obligation) and the Conversion Obligation shall consist only of the delivery of the amounts
required pursuant to subclause (A) of this sentence. Settlement of the Conversion
Obligation in accordance with this subclause (ii) shall occur on the third Trading Day
immediately succeeding the Election Deadline Day.

     The “Daily Settlement Amount” for each of the 40 Trading Days during the Observation Period
means (i) an amount of cash (the “Cash Amount”) equal to the product of: (A) the Cash Percentage
and (B) 1/40th of the applicable Conversion Rate and (C) the Daily VWAP of the Common Stock for
such Trading Day, and (ii) the number of shares of the Common Stock equal to the product of: (A)
1/40th of the applicable Conversion Rate and (B) the difference obtained by subtracting (x) the
Cash Percentage from (y) 100%.

8

 

     The “Daily VWAP” of the Common Stock means, for each of the 40 consecutive Trading Days during
the Observation Period, the per share volume-weighted average price as displayed under the heading
“Bloomberg VWAP” on Bloomberg page GM.N <equity> AQR (or any equivalent successor page) in
respect of the period from the scheduled open of trading on the principal U.S. national or regional
securities exchange or market on which the Common Stock is listed or admitted for trading to the
scheduled close of trading on such exchange or market on such Trading Day (without regard to
after-hours trading), or if such volume-weighted average price is unavailable, the market value of
one share of the Common Stock on such Trading Day using a volume-weighted method as determined by a
nationally recognized independent investment banking firm retained for this purpose by the Company.

     The “Observation Period” with respect to any Series U Debenture means the 40 consecutive
Trading Day period beginning on (and including) the third Trading Day immediately following the
Conversion Date for such Series U Debenture; provided, however, that if the Conversion Date for
such Series U Debentures occurs on or after September 30, 2012, the “Observation Period” with
respect to such Series U Debentures means the 40 Trading Day period beginning on (and including)
the 42nd Scheduled Trading Day (as defined below) immediately preceding December 31, 2012.

     “Scheduled Trading Day” means a day that is scheduled to be a Trading Day.

     “Trading Day” means a day during which (i) trading in the Common Stock generally occurs on the
principal U.S. national or regional securities exchange or market on which the Common Stock is
listed or admitted for trading and (ii) there is no VWAP Market Disruption Event (as defined
below). If the Common Stock is not so listed or traded, then “Trading Day” means a Business Day.

     “VWAP Market Disruption Event” means (i) a failure by the principal U.S. national or regional
securities exchange or market on which the Common Stock is listed or admitted to trading to open
for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00
p.m., New York City time, on any Scheduled Trading Day for the Common Stock for an aggregate one
half-hour period of any suspension or limitation imposed on trading (by reason of movements in
price exceeding limits permitted by the stock exchange or otherwise) in the Common Stock or in any
options contracts or futures contracts relating to the Common Stock.

     (c) By the Close of Business on the Business Day immediately preceding the first Scheduled
Trading Day of the relevant Observation Period (or, with respect to any Conversion Date for the
Series U Debentures that occurs on or after September 30, 2012, on or prior to the Close of
Business on September 30, 2012) (the “Election Deadline Day”), the Company may specify a percentage
of the Conversion Obligation for the relevant Observation Period (or for certain specified Holders
with a given Observation Period) that will be settled in cash (the “Cash Percentage”) and will
notify the Paying Agent and the Holders of such Cash Percentage in the manner set forth in Section
1.02 of the Indenture and, in the case of Series U Debentures evidenced by Global Securities,
through the facilities of the Depository (the “Cash Percentage Notice”). The Company need not treat
all converting Holders with the same Observation Period in the same manner. So long as the Company
provides notice of the relevant Cash Percentage as

9

 

described in the first sentence of this Section 2(c), the Company may choose with respect to
all or any portion of converting Holders with the same Observation Period to specify a Cash
Percentage, or the Company may specify different Cash Percentages for each such Holder.

     (d) The Company may, at its option, revoke any Cash Percentage Notice through written notice
to the Holders and the Paying Agent by the Close of Business on the Business Day prior to the first
Scheduled Trading Day of the Observation Period (or, with respect to any Conversion Date for the
Series U Debentures that occurs on or after September 30, 2012, on or prior to the Close of
Business on September 30, 2012).

     (e) Payment of cash and/or delivery of shares of Common Stock pursuant to this Section 2 shall
be made by the Company to the Holder of a Series U Debenture surrendered for conversion, or such
Holder’s nominee or nominees, and the Company shall deliver to the Conversion Agent or to such
Holder, or such Holder’s nominee or nominees, certificates or a book-entry transfer through the
Depository for the number of full shares of Common Stock, if any, to which such Holder shall be
entitled to in satisfaction of the Conversion Obligation.

     (f) The Company shall not issue any fraction of a share of Common Stock in connection with any
conversion of Series U Debentures, but instead shall make a cash payment (calculated to the nearest
cent) equal to such fraction, multiplied by the Closing Price of the Common Stock on (i) if the
Conversion Obligation is settled in accordance with Section 2(b)(i), the last Trading Day of the
relevant Observation Period or (ii) if the Conversion Obligation is settled in accordance with
Section 2(b)(ii), the Election Deadline Day. In respect of any conversion of Series U Debentures
settled in accordance with Section 2(b)(i), the fractional amount of a share of Common Stock to be
delivered, if any, will be based on the sum of the Daily Settlement Amounts for all Trading Days in
the Observation Period (rather than on a per Trading Day basis).

     (g) Before any Holder of a Series U Debenture shall be entitled to convert the same, such
Holder shall, in the case of Series U Debentures evidenced by Global Securities, comply with the
procedures of the Depository in effect at that time, and in the case of certificated Series U
Debentures, surrender such Series U Debentures, duly endorsed to the Company or in blank, at the
office of the Conversion Agent, and shall give written notice to the Company at said office or
place that such Holder elects to convert the same and shall state in writing therein the principal
amount of Series U Debentures to be converted and the name or names (with addresses) in which such
Holder wishes the certificate or certificates for Common Stock to be issued, and, if required, pay
funds equal to the portion of interest payable on the next Interest Payment Date as described in
Section 2(h) below.

     (h) If a Series U Debenture is tendered for conversion during the period after a Record Date
but prior to the next succeeding Interest Payment Date, then the Holder of such Series U Debenture
at the Close of Business on such Record Date shall be entitled to the full amount of interest due
on such Interest Payment Date and the converted Series U Debenture must be accompanied by funds
equal to the interest payable on that Interest Payment Date on the principal amount so converted
with respect to the period from the Conversion Date to but not including the Interest Payment Date;
provided that no such payment by the Holder need be made (i) if the Company has specified a
Fundamental Change Repurchase Date that is after a Record
Date but on or prior to the next succeeding Interest Payment Date, (ii) in respect of any
conversions that occur after the Record Date immediately preceding December 31, 2012 or (iii) to
the extent of any overdue interest that exists at the time of conversion with respect to such
Series U Debenture.

10

 

     (i) The issue of any stock certificates upon conversion of Series U Debentures shall be made
without charge to the converting Holder for any documentary, stamp or similar issue or transfer
taxes in respect of the issue thereof, and the Company shall pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the issue or delivery of shares
of Common Stock on conversion of Series U Debentures pursuant hereto. The Company shall not,
however, be required to pay any such tax which may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock or the portion, if any, of the Series U
Debentures which are not so converted in a name other than that in which the Series U Debentures so
converted were registered, and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Company the amount of such tax or has established to the
satisfaction of the Company that such tax has been paid.

     (j) If more than one Series U Debenture shall be surrendered for conversion at one time by the
same Holder, the amount of cash or number of full shares of Common Stock that shall be deliverable
upon conversion shall be computed on the basis of the aggregate principal amount of the Series U
Debentures (or specified portions thereof to the extent permitted thereby) so surrendered for
conversion. Subject to the next succeeding sentence, the Company will, on (i) the third Trading Day
immediately succeeding the last Trading Day of the relevant Observation Period (if the Conversion
Obligation is settled in accordance with Section 2(b)(i)) or (ii) the third Trading Day immediately
succeeding the Election Deadline Day (if the Conversion Obligation is settled in accordance with
Section 2(b)(ii)), issue and deliver at said office or place to such Holder of a Series U
Debenture, or to such Holder’s nominee or nominees, (1) cash and certificates, as applicable, for
the number of full shares of Common Stock to which such Holder shall be entitled as aforesaid, (2)
cash for the accrued and unpaid interest on the principal amount so converted to which such Holder
shall be entitled as aforesaid, and (3) cash in lieu of any fraction of a share to which such
Holder would otherwise be entitled. The Company shall not be required to deliver certificates for
shares of Common Stock while the stock transfer books for such stock or the security register are
duly closed for any purpose, but certificates for shares of Common Stock shall be issued and
delivered as soon as practicable after the opening of such books or security register.

     (k) Notwithstanding anything in Section 2(b), (c) or (d) to the contrary, at any time prior to
the maturity of the Series U Debentures, the Company may unilaterally and irrevocably make an
election (the “Principal Return Election”) that, in connection with any conversion of Series U
Debentures:

     (i) with respect to each converting Holder, the Cash Amount for each Trading Day during
the relevant Observation Period shall be at least equal to the lesser of (A) $0.625 and (B)
1/40th of the product of (x) the applicable Conversion Rate and (y) the Daily VWAP of the
Common Stock for such Trading Day (such lesser amount, the “Principal Return”); and

11

 

     (ii) in order to ensure that result:

if the Cash Percentage specified by the Company
pursuant to Section 2(c) for any particular Holder yields a Cash Amount
for such Holder on any Trading Day that is less than the Principal
Return for such Trading Day, the Cash Percentage for such Holder for
such Trading Day (and only for such Holder for such Trading Day) shall
be disregarded and shall be deemed to be equal to the percentage amount
(rounded up to the nearest whole percentage amount) that when
substituted for the Cash Percentage in the definition of “Daily
Settlement Amount” would yield a Cash Amount equal to the Principal
Return for such Trading Day; and

if the Company has not specified a Cash Percentage
pursuant to Section 2(c) for any particular Holder, the Cash Percentage
for such Holder for such Trading Day (and only for such Holder for such
Trading Day) shall be deemed to be equal to the percentage amount
(rounded up to the nearest whole percentage amount) that when
substituted for the Cash Percentage in the definition of “Daily
Settlement Amount” would yield a Cash Amount equal to the Principal
Return for such Trading Day.

If the Company makes the Principal Return Election, the Company will notify the Trustee, the Paying
Agent and the Holders of the Principal Return Election in the manner set forth in Section 1.02 of
the Indenture and, in the case of Series U Debentures evidenced by Global Securities, through the
facilities of the Depository and the Company will disclose its Principal Return Election on a Form
8-K.

     (l) In case any Series U Debenture shall be surrendered for partial conversion, the Company
shall execute and the Trustee shall authenticate and deliver to or upon the written order of the
Holder of the Series U Debenture so surrendered, without charge to such Holder unless the new
Series U Debenture or Series U Debentures are to be registered in a name other than that in which
the Series U Debentures were originally registered, a new Series U Debenture or Series U Debentures
in authorized denominations in an aggregate principal amount equal to the unconverted portion of
the surrendered Series U Debentures.

     Section 3. Conversion Rate Adjustments.

     The Conversion Rate shall be subject to adjustment from time to time by the Company as
follows:

     (a) If the Company shall, at any time and from time to time while any of the Series U
Debentures are outstanding, issue dividends or make distributions on the Common Stock payable in
shares of the Common Stock, then the Conversion Rate shall be increased so that the same shall
equal the rate determined by multiplying the Conversion Rate in effect immediately prior to 9:00
a.m., New York City time (the “Open of Business”) on the Ex-Date for such dividend or distribution
by a fraction:

12

 

     (i) the numerator of which shall be the number of shares of Common Stock outstanding at
the Close of Business on the Business Day immediately preceding the Ex-Date for such
dividend or distribution, plus the total number of shares of Common Stock constituting such
dividend or distribution; and

     (ii) the denominator of which shall be the number of shares of Common Stock outstanding
at the Close of Business on the Business Day immediately preceding such Ex-Date.

     Such increase shall become effective immediately after the Open of Business on the Ex-Date for
such dividend or distribution. For the purpose of this paragraph (a), the number of shares of
Common Stock at any time outstanding shall not include shares held in the treasury of the Company.
If any dividend or distribution of the type described in this Section 3(a) is declared but not so
paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate which would then
be in effect if such dividend or distribution had not been declared. In no event shall the
Conversion Rate be decreased pursuant to this Section 3(a).

     (b) If the Company shall, at any time or from time to time while any of the Series U
Debentures are outstanding, distribute to all holders of Common Stock rights, options or warrants
to purchase shares of Common Stock for a period expiring within 45 days of the record date for such
distribution at less than the average of the Closing Prices of Common Stock for the ten consecutive
Trading Days immediately preceding the first public announcement of such distribution, then the
Conversion Rate shall be increased so that the same shall equal the rate determined by multiplying
the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Date for such
distribution by a fraction:

     (i) the numerator of which shall be the number of shares of Common Stock outstanding at
the Close of Business on the Business Day immediately preceding the Ex-Date for such
distribution, plus the total number of additional shares of Common Stock so offered for
purchase; and

     (ii) the denominator of which shall be the number of shares of Common Stock outstanding
on the Close of Business on the Business Day immediately preceding the Ex-Date for such
distribution, plus the number of shares of Common Stock that the aggregate offering price of
the total number of shares of Common Stock so offered would purchase at the Current Market
Price (as defined below) of Common Stock on the first public announcement date for such
distribution (determined by multiplying such total number of shares of Common Stock so
offered by the exercise price of such rights, options or warrants and dividing the product
so obtained by such Current Market Price).

     Such adjustment shall be successively made whenever any such rights, options or warrants are
issued, and shall become effective immediately after the Open of Business on the Ex-Date for such
distribution. To the extent that shares of Common Stock are not delivered after the expiration of
such rights, options or warrants, the Conversion Rate shall be readjusted to the Conversion Rate
that would then be in effect had the adjustments made upon the issuance of such rights, options or
warrants been made on the basis of delivery of only the number of shares of Common Stock actually
delivered. If such rights, options or warrants are not so issued, the

13

 

Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect
if the Ex-Date for such distribution had not occurred. In determining whether any rights, options
or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than
the average of the Closing Prices of Common Stock for the ten consecutive Trading Days immediately
preceding the first public announcement of such distribution, and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken into account any consideration
received by the Company for such rights, options or warrants and any amount payable on exercise or
conversion thereof, the value of such consideration, if other than cash, to be determined by the
Board of Directors (whose determination shall be conclusive, and described in a resolution of the
Board of Directors). In no event shall the Conversion Rate be decreased pursuant to this Section
3(b).

     If the Company elects to make a distribution described in this Section 3(b) that has a per
share of Common Stock value equal to more than 15% of the Closing Price of the Common Stock on the
day preceding the first public announcement of such distribution, the Company shall give notice to
the Holders at least 50 Business Days prior to the Ex-Date for such distribution.

     (c) If the Company shall, at any time or from time to time while any of the Series U
Debentures are outstanding, subdivide or reclassify outstanding shares of Common Stock into a
greater number of shares of Common Stock, then the Conversion Rate in effect at the Open of
Business on the day upon which such subdivision or reclassification becomes effective shall be
proportionately increased, and conversely, if the Company shall, at any time or from time to time
while any of the Series U Debentures are outstanding, combine or reclassify outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then the Conversion Rate in effect at
the Open of Business on the day upon which such combination or reclassification becomes effective
shall be proportionately decreased. In each such case, the Conversion Rate shall be adjusted by
multiplying such Conversion Rate by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately after giving effect to such subdivision,
reclassification or combination and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such subdivision, reclassification or combination.
Such increase or reduction (solely in the case of any combination or reclassification of
outstanding shares of Common Stock into a smaller number of shares of Common Stock), as the case
may be, shall become effective immediately after the Open of Business on the day upon which such
subdivision, reclassification or combination becomes effective.

     (d) If the Company shall, at any time or from time to time while any of the Series U
Debentures are outstanding, distribute to all holders of Common Stock any of its Capital Stock (as
defined below), assets (including shares of any subsidiary of the Company or business unit of the
Company), or debt securities or rights to purchase securities of the Company (excluding (i) any
dividends or distributions described in Section 3(a), (ii) any rights, options or warrants
described in Section 3(b) and (iii) any dividends or distributions described in Section 3(e) or
Section 3(f) (such Capital Stock, assets, debt securities or rights to purchase securities of the
Company hereinafter in this Section 3(d) called the “Distributed Assets”)), then the Conversion
Rate shall be increased so that the same shall equal the rate determined by multiplying the

14

 

Conversion Rate in effect immediately prior to the Open of Business on the Ex-Date for such
distribution by a fraction:

     (i) the numerator of which will be the Current Market Price of Common Stock on the
Business Day immediately preceding the Ex-Date for such distribution, and

     (ii) the denominator of which will be the Current Market Price of Common Stock on the
Business Day immediately preceding the Ex-Date for such distribution, minus the Fair Market
Value (as defined below), as determined by the Board of Directors in a Board Resolution, of
the portion of Distributed Assets so distributed applicable to one share of Common Stock.

     Such increase shall become effective immediately after the Open of Business on the Ex-Date for
such distribution; provided that if “the Fair Market Value, as determined by the Board of Directors
in a Board Resolution, of the portion of Distributed Assets so distributed applicable to one share
of Common Stock” as set forth above is equal to or greater than “the Current Market Price of Common
Stock on the Business Day immediately preceding the Ex-Date for such distribution” as set forth
above, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder
shall receive on the date on which the Distributed Assets are distributed to holders of Common
Stock, for each $25.00 principal amount of Series U Debentures, the amount of Distributed Assets
such Holder would have received on the record date for such distribution had such Holder owned a
number of shares of Common Stock equal to the Conversion Rate as of the Ex-Date for such
distribution. In the event that such distribution is not so made, the Conversion Rate shall again
be adjusted to be the Conversion Rate which would then be in effect if such distribution had not
been declared. In no event shall the Conversion Rate be decreased pursuant to this Section 3(d).

     If the Board of Directors determines the Fair Market Value of any distribution for purposes of
this Section 3(d) by reference to the actual or when issued trading market for any Distributed
Assets comprising all or part of such distribution, it must in doing so consider the prices in such
market over the same period (the “Reference Period”) used in computing the Current Market Price for
purposes of clause (i) above, unless the Board of Directors determines in good faith that
determining the Fair Market Value during the Reference Period would not be in the best interest of
the Holders.

     Notwithstanding anything to the contrary in this Section 3(d), if the Company distributes
Capital Stock of, or similar equity interests in, a subsidiary of the Company or other business
unit of the Company (a “Spin-Off”), then, in lieu of the adjustment set forth above, the Conversion
Rate shall be increased so that the same shall equal the rate determined by multiplying the
Conversion Rate in effect immediately after the Close of Business on the fifteenth Trading Day
immediately following the Ex-Date for such Spin-Off by a fraction:

     (i) the numerator of which will be the sum of (A) the average of the Closing Prices of
Capital Stock or similar equity interest distributed to holders of Common Stock applicable
to one share of Common Stock over the ten consecutive Trading Day period immediately
following, and including, the fifth Trading Day after the Ex-Date for the Spin-Off and (B)
the average of the Closing Prices of Common Stock over the ten
consecutive Trading Day period immediately following, and including, the fifth Trading
Day after the Ex-Date for the Spin-Off; and

15

 

     (ii) the denominator of which is the average of the Closing Prices of Common Stock over
the ten consecutive Trading Day period immediately following, and including, the fifth
Trading Day after the Ex-Date for the Spin-Off.

     In no event shall the Conversion Rate be decreased pursuant to this Section 3(d).

     If the Company elects to make a distribution described in this Section 3(d) that has a per
share of Common Stock value equal to more than 15% of the Closing Price of the Common Stock on the
day preceding the first public announcement of such distribution, the Company shall give notice to
Holders at least 50 Business Days prior to the Ex-Date for such distribution.

     Rights or warrants distributed by the Company to all holders of Common Stock entitling the
holders thereof to subscribe for or purchase shares of the Company’s Capital Stock (either
initially or under certain circumstances), which rights or warrants, until the occurrence of a
specified event or events (“Trigger Event”): (i) are deemed to be transferred with such shares of
Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of
Common Stock, shall be deemed not to have been distributed for purposes hereof (and no adjustment
to the Conversion Rate will be required) until the occurrence of the earliest Trigger Event,
whereupon such rights and warrants shall be deemed to have been distributed and an appropriate
adjustment (if any is required) to the Conversion Rate shall be made pursuant to the first
adjustment formula in this paragraph (d). If any such right or warrant, including any such existing
rights or warrants distributed prior to the date hereof, are subject to events, upon the occurrence
of which such rights or warrants become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any and each such event shall be
deemed to be the date of distribution and record date with respect to new rights or warrants with
such rights (and a termination or expiration of the existing rights or warrants without exercise by
any of the holders thereof). In addition, in the event of any distribution (or deemed distribution)
of rights or warrants, or any Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto that was counted for purposes of calculating a distribution amount
for which an adjustment to the Conversion Rate was made, (1) in the case of any such rights or
warrants that shall all have been redeemed or repurchased without exercise by any holders thereof,
the Conversion Rate shall be readjusted upon such final redemption or repurchase to give effect to
such distribution or Trigger Event, as the case may be, as though it were a cash distribution,
equal to the per share redemption or repurchase price received by a holder or holders of Common
Stock with respect to such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and
(2) in the case of such rights or warrants that shall have expired or been terminated without
exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights and
warrants had not been issued.

     For purposes of paragraphs (a), (b) and (d), any dividend or distribution to which paragraph
(d) is applicable that also includes shares of Common Stock, or rights or warrants to subscribe for
or purchase shares of Common Stock (or both), shall be deemed instead to be: (1) a dividend or
distribution of the evidences of indebtedness, assets or shares of capital stock other

16

 

than such shares of Common Stock or rights or warrants (and any Conversion Rate adjustment
required by paragraph (d) with respect to such dividend or distribution shall then be made),
immediately followed by (2) a dividend or distribution of such shares of Common Stock or such
rights or warrants (and any further Conversion Rate adjustment required by paragraphs (a) and (b)
with respect to such dividend or distribution shall then be made), except any shares of Common
Stock included in such dividend or distribution shall not be deemed “outstanding at the Close of
Business on the Business Day immediately preceding the Ex-Date for such dividend or distribution”
within the meaning of paragraph (a).

     “Capital Stock” for any corporation means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in (however designated)
stock issued by that corporation.

     (e) If the Company shall, at any time or from time to time while any of the Series U
Debentures are outstanding, distribute any regular, quarterly cash dividend or distribution to all
holders of Common Stock during any quarterly fiscal period that does not equal $0.25 per share of
Common Stock (the “Initial Dividend Threshold”), the Conversion Rate shall be adjusted as follows:

     (i) if the per share amount of such regular, quarterly cash dividend or distribution is
greater than the Initial Dividend Threshold, the Conversion Rate immediately prior to the
Open of Business on the Ex-Date for such dividend or distribution will be increased by
multiplying such Conversion Rate by a fraction, the numerator of which will be the Closing
Price of Common Stock on the Trading Day immediately preceding the Ex-Date for such dividend
or distribution, and the denominator of which will be the Closing Price of Common Stock on
the Trading Day immediately preceding the Ex-Date for such dividend or distribution, minus
the amount in cash per share of Common Stock the Company distributes to all holders of
Common Stock in excess of the Initial Dividend Threshold; and

     (ii) if the per share amount of such regular, quarterly cash dividend or distribution
is less than the Initial Dividend Threshold (which, for the avoidance of doubt, would
include the failure to pay any regular, quarterly cash dividend or distribution during the
relevant quarterly fiscal period, in which case the Company will be deemed to have declared
and paid a cash dividend of $0.00, the Ex-Date of which will be deemed to be the second to
last Trading Day of the applicable fiscal period), the Conversion Rate immediately prior to
the Open of Business on the Ex-Date for such dividend or distribution will be decreased by
multiplying such Conversion Rate by a fraction, the numerator of which will be the Closing
Price of Common Stock on the Trading Day immediately preceding the Ex-Date for such dividend
or distribution, and the denominator of which will be the Closing Price of Common Stock on
the Trading Day immediately preceding the Ex-Date for such dividend or distribution, plus
the amount of the Initial Dividend Threshold in excess of cash per share of Common Stock the
Company distributes to all holders of Common Stock.

     In the case of an adjustment pursuant to this Section 3(e), such adjustment shall become
effective immediately after the Open of Business on the Ex-Date for such dividend or

17

 

distribution; provided that in the case of an adjustment pursuant to Section 3(e)(i), if the
portion of the cash so distributed applicable to one share of Common Stock is equal to or greater
than the Closing Price of Common Stock on the Trading Day immediately preceding the Ex-Date for
such dividend or distribution, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Holder shall have the right to receive on the date on which such cash dividend or
distribution is distributed to holders of Common Stock, for each $25.00 principal amount of Series
U Debentures upon conversion, the amount of cash such Holder would have received had such Holder
owned a number of shares equal to the Conversion Rate on the Ex-Date for such distribution. If any
such dividend or distribution described in clause (e)(i) or clause (e)(ii) above is not so paid or
made, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in
effect if such dividend or distribution had not been declared.

     If the Company elects to make a dividend or distribution described in this paragraph that has
a per share of Common Stock value equal to more than 15% of the Closing Price of the Common Stock
on the date preceding the first public announcement of such dividend or distribution, the Company
shall give notice to Holders at least 50 Business Days prior to the Ex-Date for such dividend or
distribution.

     (f) If the Company shall, at any time or from time to time while the Series U Debentures are
outstanding, pay any cash dividend or distribution that is not a regular, quarterly cash dividend
or distribution to all holders of the Common Stock, the Conversion Rate immediately prior to the
Open of Business on the Ex-Date for such dividend or distribution shall be increased by multiplying
such Conversion Rate by a fraction, the numerator of which will be the Closing Price of Common
Stock on the Trading Day immediately preceding the Ex-Date for such dividend or distribution, and
the denominator of which will be the Closing Price of Common Stock on the Trading Day immediately
preceding the Ex-Date for such dividend or distribution, minus the amount of cash per share of
Common Stock that the Company dividends or distributes to all holders of Common Stock.

     Such adjustment shall become effective immediately after the Open of Business on the Ex-Date
for such dividend or distribution; provided that if the portion of the cash so distributed
applicable to one share of the Common Stock is equal to or greater than the Closing Price of Common
Stock on the Trading Day immediately preceding the Ex-Date for such dividend or distribution, in
lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have
the right to receive on the date on which such cash dividend or distribution is distributed to
holders of Common Stock, for each $25.00 principal amount of Series U Debentures upon conversion,
the amount of cash such Holder would have received had such Holder owned a number of shares equal
to the Conversion Rate on the Ex-Date for such dividend or distribution. If such dividend or
distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the
Conversion Rate that would then be in effect if such dividend or distribution had not been
declared.

     If the Company elects to make a dividend or distribution described in this paragraph that has
a per share of Common Stock value equal to more than 15% of the Closing Price of the Common Stock
on the date preceding the first public announcement for such distribution, the Company shall give
notice to Holders at least 50 Business Days prior to the Ex-Date for such dividend or distribution.

18

 

     (g) If the Company or any of its subsidiaries shall, at any time or from time to time, while
any of the Series U Debentures are outstanding, distribute cash or other consideration in respect
of a tender offer or exchange offer for Common Stock, where such cash and the value of any such
other consideration per share of Common Stock validly tendered or exchanged exceeds the Closing
Price of Common Stock on the Trading Day immediately following the last date on which tenders or
exchanges may be made pursuant to the tender or exchange offer (such last date, the “Expiration
Date”), then the Conversion Rate shall be increased so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect immediately prior to the Open of Business
on the Business Day immediately following the Trading Day immediately following the Expiration Date
by a fraction:

     (i) the numerator of which will be the sum of (A) the Fair Market Value, as determined
by the Board of Directors, of the aggregate consideration payable for all shares of Common
Stock that the Company purchases in such tender or exchange offer and (B) the product of the
number of shares of Common Stock outstanding as of the Expiration Date, less the number of shares of Common Stock purchased in the relevant tender offer or exchange offer (the
“Purchased Shares”), and the Closing Price of Common Stock on the Trading Day immediately
following the Expiration Date; and

     (ii) the denominator of which will be the product of the number of shares of Common
Stock outstanding as of the Expiration Date, including the Purchased Shares, and the Closing
Price of Common Stock on the Trading Day immediately following the Expiration Date.

     An adjustment, if any, to the Conversion Rate pursuant to this Section 3(g) shall become
effective immediately after the Open of Business on the Business Day immediately following the
Trading Day immediately following the Expiration Date. In the event that the Company or a
subsidiary of the Company is obligated to purchase shares of Common Stock pursuant to any such
tender offer or exchange offer, but the Company or such subsidiary is permanently prevented by
applicable law from effecting any such purchases, or all such purchases are rescinded, then the
Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if
such tender offer or exchange offer had not been made. If the application of this Section 3(g) to
any tender offer or exchange offer would result in a decrease in the Conversion Rate, no adjustment
shall be made for such tender offer or exchange offer under this Section 3(g).

     If the Company elects to make a distribution described in this paragraph that has a per share
of Common Stock value equal to more than 15% of the Closing Price of the Common Stock on the date
preceding the first public announcement of such distribution, the Company shall give notice to
Holders at least 50 Business Days prior to the Ex-Date for such distribution.

     “Current Market Price” of Common Stock on any day means the average of the Closing Prices of
Common Stock for each of the five consecutive Trading Days ending on the earlier of the day in
question and the day before the Ex-Date with respect to the dividend or distribution requiring such
computation.

19

 

     “Fair Market Value” shall mean the amount which a willing buyer would pay a willing seller in
an arm’s-length transaction.

     (h) The Board of Directors shall make appropriate adjustments to the Conversion Rate, and the
amount of cash and shares of Common Stock, if any, due upon conversion, in its good faith judgment,
to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring
an adjustment to the Conversion Rate where the Ex-Date of the event occurs, during the period
beginning on the Conversion Date and ending on the Close of Business on the last Trading Day of the
relevant Observation Period.

     (i) The Company may make such increases in the Conversion Rate, in addition to those required
by Sections 3(a), (b), (c), (d), (e), (f) or (g), as the Board of Directors considers to be
advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase
Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or
from any event treated as such for income tax purposes. The Company from time to time may also
increase the Conversion Rate by any amount for any period of time if the period is at least twenty
(20) days and the increase is irrevocable during the period, and such determination shall be
conclusive. Whenever the Conversion Rate is increased pursuant to the preceding sentence, the
Company shall provide to Holders, in the manner set forth in Section 1.02 of the Indenture and, in
the case of Series U Debentures evidenced by Global Securities, through the facilities of the
Depository, a notice of the increase at least five (5) Business Days prior to the date the
increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate
and the period during which it will be in effect.

     (j) Notwithstanding anything in this Section 3 to the contrary, no adjustment in the
Conversion Rate shall be required unless such adjustment would require an increase or decrease of
at least one percent (1%) in such rate; provided, that (A) any adjustments that by reason of this
paragraph (j) are not required to be made shall be carried forward and taken into account in any
subsequent adjustment and (B) the Company will make any carry forward adjustments to the Conversion
Rate not otherwise affected on or prior to the 43rd Scheduled Trading Day immediately preceding
December 31, 2012 and each Trading Day thereafter. All calculations shall be made by the Company
and shall be made to the nearest cent or to the nearest one-ten thousandth (1/10,000) of a share of
Common Stock, as the case may be.

     (k) No adjustment to the Conversion Rate need be made in the following circumstances:

     (i) No adjustment need be made for a transaction or event referred to in Section 3(a),
(b), (c), (d), (e), (f) or (g) if Holders participate, without conversion, in the
transaction or event that would otherwise give rise to an adjustment pursuant to such
Section at the same time as holders of Common Stock participate with respect to such
transaction or event and on the same terms as holders of Common Stock participate with
respect to such transaction or event as if Holders, at such time, held a number of shares of
Common Stock equal to the applicable Conversion Rate as of the Ex-Date or Expiration Date,
as the case may be, for such transaction or event, multiplied by the principal amount
(expressed in integral multiples of $25.00) of Series U Debentures held by such Holder,
without having to convert their Series U Debentures;

20

 

     (ii) No adjustment need be made for the issuance of Common Stock or any securities
convertible into or exchangeable for Common Stock or carrying the right to purchase Common
Stock or any such security, except as set forth above in this Section 3;

     (iii) No adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest;

     (iv) No adjustment need be made for a change in the par value or no par value of Common
Stock;

     (v) To the extent the Series U Debentures become convertible pursuant to Section 2 into
cash, no adjustment need be made thereafter as to the cash. Interest will not accrue on the
cash into which the Series U Debentures are convertible;

     (vi) No adjustment need be made for accrued interest.

     (l) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly
file with the Trustee and any Conversion Agent other than the Trustee an Officers’ Certificate
setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. Unless and until a responsible officer of the Trustee shall have
received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any
adjustment of the Conversion Rate and may assume that the last Conversion Rate of which it has
knowledge is still in effect. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion
Rate and the date on which each adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Rate to the Holder of each Series U Debenture at his last address
appearing on the Series U Debenture register provided for in the Indenture, within twenty (20) days
after execution thereof. Failure to deliver such notice shall not affect the legality or validity
of any such adjustment.

     (m) If any of the following events (each, a “Disposition Event”) occurs:

     (i) any reclassification of Common Stock (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a subdivision or
combination);

     (ii) consolidation, merger, or other combination involving the Company; or

     (iii) sale or conveyance to another individual, corporation, partnership, limited
liability company, association, trust or other entity, including a government or political
subdivision or an agency or instrumentality thereof (a “Person”) of all or substantially all
of the assets of the Company;

in each case, in which holders of outstanding Common Stock would be entitled to receive cash,
securities or other property for their shares of Common Stock, if a Holder converts its Series U
Debentures on or after the effective date of any such event, the Series U Debentures will be
convertible into (A) cash in an amount equal to the portion of the Conversion Obligation that the
Company has elected to settle in cash in accordance with Section 2; and (B) in lieu of shares of

21

 

Common Stock otherwise deliverable, if any, the same type (in the same proportions) of
consideration received by holders of Common Stock in the relevant event (collectively, “Reference
Property”). In addition, the amount of cash and Reference Property, if any, Holders will receive
will be based on the Daily Settlement Amounts of Reference Property and the Conversion Rate, as
described in Section 2.

     If a Disposition Event provides the holders of Common Stock with the right to receive more
than a single type of consideration determined based in part upon any form of stockholder election,
the Reference Property shall be comprised of the weighted average of the types and amounts of
consideration received by the holders of Common Stock upon the occurrence of such event.

     Upon the occurrence of a Disposition Event, the Company or the successor or purchasing Person,
as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply
with the Trust Indenture Act as in force at the date of execution of such supplemental indenture if
such supplemental indenture is then required to so comply) permitted under Section 10.01 of the
Indenture providing for the conversion and settlement of the Series U Debentures as set forth
herein. Such supplemental indenture shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section 3. If, in the case
of any Disposition Event, the Reference Property includes shares of stock or other securities and
assets of a Person other than the successor or purchasing Person, as the case may be, in such
reclassification, consolidation, merger, combination, sale or conveyance, then such supplemental
indenture shall also be executed by such other Person and shall contain such additional provisions
to protect the interests of the Holders of the Series U Debentures as the Board of Directors of the
Company shall reasonably consider necessary by reason of the foregoing, including to the extent
required by the Board of Directors and practicable the provisions providing for the repurchase
rights set forth in Section 6 herein.

     In the event the Company shall execute a supplemental indenture pursuant to this Section 3(m),
the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the
reasons therefor, the kind or amount of cash, securities or property or asset that will comprise
the Reference Property after any such Disposition Event, any adjustment to be made with respect
thereto and that all conditions precedent have been complied with.

     The Company shall cause notice of the execution of such supplemental indenture to be mailed to
each Holder of Series U Debentures, at its address appearing on the Security Register for the
Series U Debentures, within twenty (20) days after execution thereof. Failure to deliver such
notice shall not affect the legality or validity of such supplemental indenture. The above
provisions shall similarly apply to successive reclassifications, changes, consolidations, mergers,
combinations, sales and conveyances.

     (n) The Company shall provide, free from preemptive rights, out of its authorized but unissued
shares or shares held in treasury, sufficient shares of Common Stock to provide for the conversion
of the Series U Debentures from time to time as such Series U Debentures are presented for
conversion. Before taking any action which would cause an adjustment increasing the Conversion Rate
to an amount that would cause the Conversion Price to be reduced below the then par value, if any,
of the shares of Common Stock issuable upon conversion of Series U

22

 

Debentures, the Company will take all corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue shares of such Common
Stock at such adjusted Conversion Rate. The Company covenants that all shares of Common Stock which
may be issued upon conversion of Series U Debentures will upon issue be validly issued, fully paid
and non-assessable by the Company and free from all taxes, liens and charges with respect to the
issue thereof. The Company covenants that, if any shares of Common Stock to be provided for the
purpose of conversion of Series U Debentures hereunder require registration with or approval of any
governmental authority under any federal or state law before such shares may be validly issued upon
conversion, the Company will in good faith and as expeditiously as possible, to the extent then
permitted by the rules and interpretations of the Securities and Exchange Commission (or any
successor thereto), secure such registration or approval, as the case may be.

     (o) The Company further covenants that, if at any time the Common Stock shall be listed on the
New York Stock Exchange or any other national securities exchange or automated quotation system,
the Company will, if permitted by the rules of such exchange or automated quotation system, list
and keep listed, so long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Series U Debentures; provided,
that if the rules of such exchange or automated quotation system permit the Company to defer the
listing of such Common Stock until the first conversion of the Series U Debentures into Common
Stock in accordance with the provisions hereof, the Company covenants to list such Common Stock
issuable upon conversion of the Series U Debentures in accordance with the requirements of such
exchange or automated quotation system at such time.

     (p) If (i) the Company shall declare a dividend (or any other distribution) on its Common
Stock that would require an adjustment in the Conversion Rate, (ii) the Company shall authorize the
granting to the holders of all or substantially all of its Common Stock of rights or warrants to
subscribe for or purchase any share of any class or any other rights or warrants; (iii) there shall
be any reclassification or reorganization of the Common Stock of the Company (other than a
subdivision or combination of its outstanding Common Stock, or a change in par value, or from par
value to no par value, or from no par value to par value), or of any consolidation or merger to
which the Company is a party and for which approval of any stockholders of the Company is required,
or of the sale or transfer of all or substantially all of the assets of the Company; or (iv) there
shall be the voluntary or involuntary dissolution, liquidation or winding up of the Company; the
Company shall notify Holders in the manner set forth in Section 1.02 of the Indenture and, in the
case of Series U Debentures evidenced by Global Securities, through the facilities of the
Depository, as promptly as possible but in any event at least ten (10) days prior to the applicable
date hereinafter specified, a notice stating (x) the payment or delivery date for such dividend,
distribution or rights or warrants, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective or
occur, and the date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Failure to give such notice, or any defect therein, shall not affect the legality or validity of
such dividend, distribution, reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up.

23

 

     (q) Each share of Common Stock issued upon conversion of Series U Debentures pursuant to
Section 2 shall be entitled to receive the appropriate number of rights (“Rights”), if any, and the
certificates representing the Common Stock issued upon such conversion shall bear such legends, if
any, in each case as may be provided by the terms of any future rights plan adopted by the Company,
as the same may be amended from time to time (a “Share Holders Rights Plan”). Upon conversion of
Series U Debentures, and subject to the terms, limitations and conditions of the Share Holders
Rights Plan, the Holder will receive, in addition to any Common Stock received in connection with
such conversion, the Rights under the Share Holders Rights Plan, unless prior to any conversion,
the Rights have separated from the Common Stock, in which case the Conversion Rate will be adjusted
at the time of separation as if the Company distributed to all holders of Common Stock, shares of
Capital Stock, assets, debt securities or certain rights to purchase securities of the Company as
described in the first adjustment formula in Section 3(d), subject to readjustment in the event of
the expiration, termination or redemption of such Rights. Subject to the terms, limitations and
conditions of the Share Holders Rights Plan, any distribution of Rights pursuant to a Share Holders
Rights Plan that would allow a Holder to receive upon conversion, in addition to shares of Common
Stock, the Rights described therein (unless such Rights have separated from Common Stock) shall not
constitute a distribution of Rights that would entitle the Holder to an adjustment to the
Conversion Rate.

     Section 4. Adjustment to Conversion Rate Upon a Make-Whole Fundamental Change

     (a) If, after the date hereof and on or prior to the second Business Day immediately preceding
December 31, 2012, a Make-Whole Fundamental Change (as defined below) occurs, and a Holder elects
to convert its Series U Debentures in connection with such Make-Whole Fundamental Change, the
Company will, under certain circumstances, increase the Conversion Rate for the Series U Debentures
so surrendered for conversion by a number of additional shares of Common Stock (the “Make-Whole
Shares”), as determined in this Section 4 below. A conversion of Series U Debentures will be deemed
for these purposes to be “in connection with” a Make-Whole Fundamental Change if the notice of
conversion of the Series U Debentures is received by the Conversion Agent from, and including, the
Effective Date (as defined below) of the Make-Whole Fundamental Change up to, and including, the
45th calendar day immediately following the Effective Date of such Make-Whole Fundamental Change
(or, in the case of an event that also constitutes a Fundamental Change, the Fundamental Change
Repurchase Date for such Fundamental Change).

     If the Company fails to notify Holders as required by Section 1(d) of the effective date of
any Make-Whole Fundamental Change within 15 calendar days of such effective date, the period during
which Holders may surrender their Series U Debentures for conversion and receive the relevant
Make-Whole Shares will be extended by the number of days that such notification is delayed or not
otherwise provided to Holders beyond the specified notice deadline.

     “Make-Whole Fundamental Change” means:

     (i) any transaction or event (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, recapitalization or otherwise) in
connection with which 90% or more of the Common Stock is exchanged for, converted into,
acquired for or constitutes solely the right to receive consideration 10% or

24

 

more of which is not common stock that is listed on, or immediately after the
transaction or event will be listed on, a United States national securities exchange; or

     (ii) any “person” or “group” (as such terms are used for purposes of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or
not applicable), other than the Company or any majority-owned subsidiary of the Company or
any employee benefit plan of the Company or such subsidiary, becomes the “beneficial owner,”
directly or indirectly, of more than 50% of the total voting power in the aggregate of all
classes of Capital Stock then outstanding entitled to vote generally in elections of the
Company’s directors,

     (a) The number of Make-Whole Shares will be determined by reference to the table set forth in
Section 4(c) below and shall be based on the date on which such Make-Whole Fundamental Change
becomes effective (the “Effective Date”) and the price paid per share of Common Stock in the
Make-Whole Fundamental Change (in the case of a Make-Whole Fundamental Change described in clause
(a) of the definition of Make-Whole Fundamental Change, in which holders of Common Stock receive
only cash) or, in the case of any other Make-Whole Fundamental Change, the average of the Closing
Prices per share of Common Stock over the five Trading Day period ending on the Trading Day
preceding the Effective Date of such Make-Whole Fundamental Change (the “Stock Price”).

     (b) The Stock Prices set forth in the top row of the table below will be adjusted as of any
date on which the Conversion Rate is adjusted. The adjusted Stock Prices will equal the Stock
Prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is
the Conversion Rate immediately prior to the adjustment giving rise to the Stock Price adjustment,
and the denominator of which is the Conversion Rate as so adjusted. In addition, the number of
Make-Whole Shares will be subject to adjustment in the same manner as the Conversion Rate as set
forth in Section 3(a) through Section 3(g).

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Effective	 	Stock Price
	Date	 	32.00	 	34.00	 	36.00	 	38.00	 	40.00	 	42.00	 	44.00	 	46.00	 	48.00	 	50.00	 	52.00	 	54.00	 	56.00	 	58.00	 	60.00
	[_______],

20081
	 	0.2176	 	0.1923	 	0.1709	 	0.1527	 	0.1372	 	0.1239	 	0.1124	 	0.1024	 	0.0938	 	0.0862	 	0.0795	 	0.0736	 	0.0684	 	0.0638	 	0.0596
	June 30,
 2008
	 	0.2083	 	0.1824	 	0.1607	 	0.1423	 	0.1267	 	0.1135	 	0.1021	 	0.0923	 	0.0839	 	0.0766	 	0.0702	 	0.0646	 	0.0597	 	0.0553	 	0.0515
	December 31,
2008
	 	0.1973	 	0.1707	 	0.1486	 	0.1300	 	0.1144	 	0.1013	 	0.0901	 	0.0806	 	0.0724	 	0.0655	 	0.0594	 	0.0542	 	0.0497	 	0.0458	 	0.0423
	June 30,
 2009
	 	0.1839	 	0.1565	 	0.1338	 	0.1150	 	0.0994	 	0.0864	 	0.0755	 	0.0664	 	0.0587	 	0.0523	 	0.0468	 	0.0422	 	0.0382	 	0.0348	 	0.0319
	December 31,
 2009
	 	0.1677	 	0.1389	 	0.1154	 	0.0962	 	0.0805	 	0.0678	 	0.0575	 	0.0490	 	0.0421	 	0.0365	 	0.0319	 	0.0281	 	0.0250	 	0.0224	 	0.0203
	June 30,
 2010
	 	0.1476	 	0.1158	 	0.0904	 	0.0703	 	0.0546	 	0.0424	 	0.0332	 	0.0262	 	0.0209	 	0.0170	 	0.0140	 	0.0118	 	0.0102	 	0.0089	 	0.0080
	December 31,
 2010
	 	0.1340	 	0.0937	 	0.0584	 	0.0274	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000
	June 30,
 2011
	 	0.1375	 	0.0961	 	0.0599	 	0.0281	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000
	December 31,
 2011
	 	0.1412	 	0.0987	 	0.0615	 	0.0289	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000
	June 30,
 2012
	 	0.1467	 	0.1026	 	0.0640	 	0.0300	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000
	December 31,
 2012
	 	0.1563	 	0.1103	 	0.0694	 	0.0329	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000

 

			
	1	 	To be the issuance date.

25

 

     (c) If the exact Stock Price and Effective Date is not set forth in the table, then (i) if the
Stock Price is between two Stock Prices in the table or the Effective Date is between two Effective
Dates in the table, the Make-Whole Shares issued upon conversion of the Series U Debentures will be
determined by a straight-line interpolation between the number of Make-Whole Shares set forth for
the higher and lower Stock Prices and/or the earlier and later Effective Dates in the table, as
applicable, based on a 365-day year, (ii) if the Stock Price is in excess of $60.00 per share of
Common Stock (subject to adjustment in the same manner as the Stock Prices set forth in the table
above), no Make-Whole Shares will be issued upon conversion of the Series U Debentures; and (iii)
if the Stock Price is less than $32.00 per share of Common Stock (subject to adjustment in the same
manner as the Stock Prices set forth in the table above), no Make-Whole Shares will be issued upon
conversion of the Series U Debentures.

     (d) In no circumstances shall the Conversion Rate of the Series U Debentures as adjusted
pursuant to this Section 4 exceed 0.8426 per $25.00 principal amount of Series U Debentures,
subject to adjustment in the same manner as the Conversion Rate as set forth in Section 3.

     Section 5. Redemption.

     Prior to January 1, 2011, the Series U Debentures will not be redeemable at the Company’s
option. At any time and from time to time on or after January 1, 2011, the Company may redeem the
Series U Debentures, in whole or in part, in cash at a price (the “Redemption Price") equal to 100%
of the principal amount of the redeemed Series U Debentures, plus (1) accrued and unpaid interest
on the redeemed Series U Debentures to but not including the date of redemption (the “Redemption
Date”), and (2) as applicable and as provided below, the Redemption Adjustment Amount with respect
to the Series U Debentures selected for redemption and scheduled to be redeemed on such Redemption
Date (including any such Series U Debentures selected for redemption with respect to which a
Conversion Date has been set on or prior to the Close of Business on the second Business Day
immediately preceding the Redemption Date) (the “Called Debentures"); provided, however, that if
such Redemption Date falls after a Record Date and on or prior to the corresponding Interest
Payment Date, then the full amount of accrued and unpaid interest, if any, payable on such Interest
Payment Date shall be paid to the Holders of record of the Series U Debentures at the Close of
Business on the corresponding Record Date (which may or may not be the same person to whom the
Company will pay the Redemption Price) and the Redemption Price shall equal 100% of the principal
amount of the redeemed Series U Debentures plus, as applicable and as provided below, the
Redemption Adjustment Amount with respect to the Called Debentures minus an amount equal to the
interest payable on that Interest Payment Date on the principal amount of the redeemed Series U
Debentures with respect to the period from the Redemption Date to but not including the Interest
Payment Date. For the avoidance of doubt, the Redemption Adjustment Amount (if any) shall only be
due and payable upon a redemption under and pursuant to this Section 5 and not upon the occurrence
of, or in connection with, any other circumstance, event or condition, including without limitation
a repurchase pursuant to Section 6 hereof. The Series U Debentures are not entitled to any sinking
fund.

26

 

     In the case of any partial redemption, selection of the Series U Debentures for redemption
will be made by the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Series U Debentures are listed or, if the Series U
Debentures are not listed on a national securities exchange, by lot or by such other method as
directed by the Company. The Trustee will make that selection not more than forty-five days before
the Redemption Date. If a portion of a Holder’s Series U Debentures is selected for redemption and
a Holder converts a portion of its Series U Debentures, the converted portion will, notwithstanding
the conversion, be deemed to be part of the portion selected for redemption (so that only the
difference between the portion selected for redemption and the converted portion will need to
actually be redeemed). The Company shall not redeem any Series U Debentures if it has failed to
pay interest on the Series U Debentures and such failure to pay is continuing. Series U Debentures
that the Trustee selects shall be in principal amounts of $25.00 or integral multiples of $25.00.

     Notwithstanding anything in the first two paragraphs of this Section 5 to the contrary, the
Company may redeem all (but not less than all) of the Series U Debentures if the Board of Directors
determines in good faith by resolution that the Series U Debentures will not be transferred to the
New VEBA (as defined in the Settlement Agreement) in accordance with the terms of that Settlement
Agreement, dated February 21, 2008 (as amended, supplemented, replaced or otherwise altered from
time to time, the “Settlement Agreement”), between the Company, the International Union, United
Automobile, Aerospace and Agricultural Implement Workers of America, and certain class
representatives, on behalf of the class of plaintiffs in (1) the class action of Int’l Union, UAW,
et. al. v. General Motors Corp., Civil Action No. 07-14074 (E.D. Mich. filed Sept. 9, 2007) and/or
(2) the class action of UAW et al. v. General Motors Corp., No. 05-CV-73991, 2006 WL 891151 (E.D.
Mich. Mar. 31, 2006, aff’d, Int’l Union, UAW v. General Motors Corp., 497 F.3d 615 (6th Cir. 2007).
Any such redemption pursuant to the preceding sentence is referred to as a “Termination
Redemption.” A Termination Redemption shall be made in cash at a price equal to 100% of the
principal amount of the Series U Debentures, plus accrued and unpaid interest thereon to but not
including the Redemption Date. For the avoidance of doubt, no Redemption Adjustment Amount shall
be payable in connection with any Termination Redemption.

     The “Redemption Adjustment Amount” shall be payable only as follows:

     (i) If the Redemption Date occurs during the period beginning on January 1, 2011 and
ending on January 1, 2012 and the Closing Price of the Common Stock on the second Business
Day prior to the Redemption Date is less than $69.04 per share, the Redemption Adjustment
Amount shall be paid only on the New VEBA Called Debentures (as defined below) (if any). In
this case, the Redemption Adjustment Amount with respect to any such New VEBA Called
Debentures shall be an amount in cash equal to (1) the Discounted Interest Payments with
respect to such New VEBA Called Debentures minus (2) the Discounted Dividend
Payments with respect to such New VEBA Called Debentures.

     (ii) If the Redemption Date occurs on any date after January 1, 2012 and the Closing
Price of the Common Stock on the second Business Day prior to the Redemption Date is less
than $72.75 per share, the Redemption Adjustment Amount shall be paid

27

 

only on the New VEBA Called Debentures (if any). In this case, the Redemption
Adjustment Amount with respect to any such New VEBA Called Debentures shall be an amount in
cash equal to (1) the Discounted Interest Payments with respect to such New VEBA Called
Debentures minus (2) the Discounted Dividend Payments with respect to such New VEBA
Called Debentures.

     (iii) If the Redemption Date occurs during the period beginning on January 1, 2011 and
ending on January 1, 2012 and the Closing Price of the Common Stock on the second Business
Day prior to the Redemption Date is equal to or greater than $69.04 per share, the
Redemption Adjustment Amount shall be paid only on the New VEBA Stock-Settled Debentures (as
defined below) (if any) that constitute Excess Debentures (as defined below). In this case,
the Redemption Adjustment Amount with respect to any such New VEBA Stock-Settled Debentures
that constitute Excess Debentures shall be an amount in cash equal to (1) the Discounted
Interest Payments with respect to the portion of such New VEBA Stock-Settled Debentures that
constitute Excess Debentures minus (2) the Discounted Dividend Payments with respect
to the portion of such New VEBA Stock-Settled Debentures that constitute Excess Debentures.

     (iv) If the Redemption Date occurs on any date after January 1, 2012 and the Closing
Price of the Common Stock on the second Business Day prior to the Redemption Date is equal
to or greater than $72.75 per share, the Redemption Adjustment Amount shall be paid only on
the New VEBA Stock-Settled Debentures (if any) that constitute Excess Debentures. In this
case, the Redemption Adjustment Amount with respect to any such New VEBA Stock-Settled
Debentures that constitute Excess Debentures shall be an amount in cash equal to (1) the
Discounted Interest Payments with respect to the portion of such New VEBA Stock-Settled
Debentures that constitute Excess Debentures minus (2) the Discounted Dividend
Payments with respect to the portion of such New VEBA Stock-Settled Debentures that
constitute Excess Debentures.

     Any Redemption Adjustment Amount that is payable as provided in clause (iii) or (iv) of the
definition of Redemption Adjustment Amount above on any New VEBA Stock-Settled Debentures that
constitute Excess Debentures need not be paid or deposited in trust with the Trustee or the Paying
Agent at the same time that the other elements of the Purchase Price (that is, 100% of the
principal amount thereof and the accrued and unpaid interest thereon) are paid or deposited in
trust with the Trustee or the Paying Agent in any instance where (x) the Conversion Obligation in
connection with the conversion of such New VEBA Stock-Settled Debentures that constitute Excess
Debentures will be settled in accordance with Section 2(b)(i), (y) the Company has previously made
an election under Section 2(k), and (z) the Company has either (1) specified a Cash Percentage for
the New VEBA that is less than 100% or (2) not specified a Cash Percentage for the New VEBA.
Rather, any such Redemption Adjustment Amount that is so payable on such New VEBA Stock-Settled
Debentures that constitute Excess Debentures in connection with such redemption shall be paid by
the Company to the New VEBA (or deposited in trust with the Trustee or the Paying Agent) on or
prior to the third Trading Day immediately succeeding the last Trading Day of the relevant
Observation Period for the conversion of such New VEBA Stock-Settled Debentures that constitute
Excess Debentures.

28

 

     Notwithstanding anything to the contrary in the definition of Redemption Adjustment Amount
above, no Redemption Adjustment Amount shall be payable with respect to any Series U Debentures to
the extent that any Person other than the New VEBA is the Holder of, or the beneficial owner of an
interest in, such Series U Debenture. In addition, each of the $69.04 and $72.75 per share prices
referenced in the definition of Redemption Adjustment Amount above shall be adjusted as of any date
on which the Conversion Rate is adjusted by multiplying such price by a fraction, the numerator of
which is the Conversion Rate immediately prior to the event giving rise to the adjustment, and the
denominator of which is the Conversion Rate as so adjusted.

     The “New VEBA Called Debentures” means, with respect to any redemption, the Called Debentures
that are held or beneficially owned by the New VEBA.

     The “New VEBA Called/Converted Debentures” means, with respect to any redemption, the Called
Debentures that are (x) held or beneficially owned by the New VEBA and (y) converted by the New
VEBA such that a Conversion Date is set on or prior to the Close of Business on the second Business
Day immediately preceding the Redemption Date.

     The “New VEBA Stock-Settled Debentures” means, with respect to any redemption, the portion of
any New VEBA Called/Converted Debentures equal to the product of:

     (A) the aggregate principal amount of such New VEBA Called/Converted Debentures,

     multiplied by

     (B) either (x) the number 1, if the Conversion Obligation in connection with such
conversion of the New VEBA Called/Converted Debentures by the New VEBA will be settled in
accordance with Section 2(b)(ii), (y) a fraction equal to 1 minus the Cash Percentage
(expressed as a fraction) for such conversion of the New VEBA Called/Converted Debentures by
the New VEBA, if the Conversion Obligation in connection with such conversion by the New
VEBA will be settled in accordance with Section 2(b)(i) and the Company has not previously
made an election under Section 2(k) or (z) a fraction equal to 1 minus the average of the
Cash Percentages (expressed as fractions) for such conversion of the New VEBA
Called/Converted Debentures by the New VEBA for each Trading Day in the relevant Observation
Period in connection with such conversion, if the Conversion Obligation in connection with
such conversion by the New VEBA will be settled in accordance with Section 2(b)(i) and the
Company has previously made an election under Section 2(k).

     The “Excess Debentures” means, with respect to any redemption, the aggregate principal amount
(if greater than zero) of any New VEBA Stock-Settled Debentures in connection with such redemption
equal to the amount (if any) by which (x) the sum of (1) the principal amount of New VEBA
Stock-Settled Debentures in connection with such redemption and (2) the aggregate principal amount
of all Series U Debentures that constituted “New VEBA Stock-Settled Debentures” in connection with
all prior redemptions having Redemption Dates
within less than one year prior to the Redemption Date in connection with the current redemption is
greater than (y) $2,160,000,000.

29

 

     The “Subject Debentures” means, as applicable, any New VEBA Called Debentures or any portion
of any New VEBA Called/Converted Debentures that constitute Excess Debentures.

     The “Discounted Interest Payments” means, with respect to any Subject Debentures, the amount
obtained by discounting all Remaining Interest Payments with respect to such Subject Debentures
from their respective assumed due dates to the Redemption Date with respect to such Subject
Debentures, in accordance with accepted financial practice and at a discount factor (applied on the
same periodic basis as that on which interest on the Series U Debentures is payable) equal to 9%
per annum.

     The “Discounted Dividend Payments” means, with respect to any Subject Debentures, the amount
obtained by discounting all Expected Dividend Payments with respect to such Subject Debentures from
their respective assumed payment dates to the Redemption Date with respect to such Subject
Debentures, in accordance with accepted financial practice and at a discount factor (applied on the
same periodic basis as that on which dividends on the Common Stock are payable) equal to 9% per
annum.

     The “Expected Dividend Payments” means, with respect to any Subject Debentures:

     (e) a stream of quarterly dividend payments from the Redemption Date through the
Maturity Date on the number of shares (the “Underlying Shares”) of Common Stock into which
such Subject Debentures are then convertible, calculated as if (1) such Subject Debentures
are then convertible (notwithstanding any terms hereof to the contrary), (2) the Holder so
converted such Subject Debentures on the Redemption Date, (3) the Company does not specify a
Cash Percentage in connection with such conversion, (4) the Company has not previously made
an election under Section 2(k) hereof, (5) each quarterly dividend payment on each
Underlying Share is in an amount (the “Dividend Amount”) equal to the average of the regular
quarterly per share dividends paid by the Company over the last four quarters immediately
preceding the Redemption Date and (6) the payment dates for each such quarterly dividend
payment are set on the same calendar days as the respective payment dates for the regular
quarterly dividends paid by the Company over the last four quarters immediately preceding
the Redemption Date (provided, that if the Company did not pay a regular quarterly dividend
with respect to any such quarter, the calendar day on which the Company last paid a regular
quarterly dividend with respect to such quarter in a prior year shall be used), and

     (b) a final dividend payment on such Underlying Shares on the Maturity Date in an
amount equal to the product of (1) such number of Underlying Shares multiplied by (2) the
Dividend Amount multiplied by (3) a fraction, (x) the numerator of which is the number of
calendar days from the last assumed payment date under clause (a)(6) of this definition to
the Maturity Date (or, in the event that clause (a) of this definition yields no quarterly
dividend payment as a result of the first assumed payment date under clause
(a)(6) being after the Maturity Date, the number of calendar days from the Redemption
Date to the Maturity Date) and (y) the denominator of which is 90.

30

 

     The “Remaining Interest Payments” means, with respect to any Subject Debentures, all payments
of interest thereon that would otherwise have become due and payable after the Redemption Date with
respect to such Subject Debentures if no payment of the principal amount of such Subject Debentures
was made prior to its scheduled due date, provided, that (i) if such Redemption Date falls after an
Interest Payment Date and on or prior to the next succeeding Record Date, then, for purposes of
this definition, the amount of the next succeeding scheduled interest payment will be reduced by
the amount of interest that has accrued on the principal amount of such Subject Debentures to such
Redemption Date and (ii) if such Redemption Date falls after a Record Date and on or prior to the
corresponding Interest Payment Date, then, for purposes of this definition, the amount of the next
succeeding interest payment will be deemed to be $0.

     Section 6. Repurchase of Series U Debentures Upon a Fundamental Change

     (f) If there shall occur a Fundamental Change (as defined in Section 6(b) below) at any time
prior to December 31, 2012, then each Holder shall have the right, at such Holder’s option, to
require the Company to repurchase all of such Holder’s Series U Debentures, or any portion thereof
that is an integral multiple of $25.00 principal amount, on the date (the “Fundamental Change
Repurchase Date”) that is thirty (30) days after the date the Company provides the Fundamental
Change Notice (as defined below) (or, if such 30th day is not a Business Day, the next succeeding
Business Day), for cash at a repurchase price (the “Fundamental Change Repurchase Price”) equal to
100% of the principal amount thereof, together with accrued and unpaid interest to, but excluding,
the Fundamental Change Repurchase Date; provided, however, that if such Fundamental Change
Repurchase Date falls after a Record Date and on or prior to the corresponding Interest Payment
Date, then the full amount of accrued and unpaid interest, if any, payable on such Interest Payment
Date shall be paid to the Holders of record of the Series U Debentures at the Close of Business on
the corresponding Record Date (which may or may not be the same person to whom the Company will pay
the Fundamental Change Repurchase Price) and the Fundamental Change Repurchase Price shall equal
100% of the principal amount of Series U Debentures to be repurchased.

     (g) A “Fundamental Change” of the Company is any transaction or event (whether by means of an
exchange offer, liquidation, tender offer, consolidation, merger, combination, recapitalization or
otherwise) in connection with which 90% or more of the Common Stock is exchanged for, converted
into, acquired for or constitutes solely the right to receive, consideration 10% or more of which
is not common stock that is listed on, or immediately after the transaction or event will be listed
on, a United States national securities exchange, but only if such transaction or event also
includes either of the following: (i) the filing by any person, including the Company’s Affiliates
(as defined below) and associates, other than the Company and its employee benefit plans, of a
Schedule 13D or Schedule TO, or any successor schedule, form or report, under the Exchange Act,
disclosing that such person has become the beneficial owner of 50% or more of the voting power of
the Common Stock or other Capital Stock into which the Common Stock is reclassified or exchanged;
or (ii) the consummation of any share exchange, consolidation or merger pursuant to which the
Common Stock would be converted to

31

 

cash, securities or other property, other than any share exchange, consolidation or merger of
the Company in which the holders of Common Stock immediately prior to the share exchange,
consolidation or merger have, directly or indirectly, at least a majority of the total voting power
in the aggregate of all classes of Capital Stock of the continuing or surviving corporation
immediately after the share exchange, consolidation or merger.

     “Affiliate” of any specified person means any other person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified person. For
purposes of this definition, “control” when used with respect to any specified person means the
power to direct or cause the direction of the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” have meanings correlative to the foregoing.

     (h) The Company will make payment of the Fundamental Change Repurchase Price on the later of
the Fundamental Change Repurchase Date and the time of book-entry transfer, in the case of Series U
Debentures evidenced by Global Securities, or delivery of the Series U Debentures.

     (i) On or before the fifteenth day after the occurrence of a Fundamental Change, the Company
or at its written request (which must be received by the Trustee at least five (5) Business Days
prior to the date the Trustee is requested to give notice as described below, unless the Trustee
shall agree in writing to a shorter period) the Trustee, in the name of and at the expense of the
Company, shall mail or cause to be mailed to all Holders of record on the date of the Fundamental
Change a notice (the “Fundamental Change Notice”) of the occurrence of such Fundamental Change and
of the repurchase right at the option of the Holders arising as a result thereof. If the Company
shall give such notice, the Company shall also deliver a copy of the Fundamental Change Notice to
the Trustee at such time as it is mailed to Holders.

     (j) Each Fundamental Change Notice shall include a form of Option to Elect Repayment Upon A
Fundamental Change, a form of which comprises part of this Note, and shall specify the
circumstances constituting the Fundamental Change, the Fundamental Change Repurchase Date, the
Fundamental Change Repurchase Price, that the Holder must exercise the repurchase right on or
before the Close of Business on the Business Day immediately preceding the Fundamental Change
Repurchase Date (the “Fundamental Change Expiration Time”), a description of the procedure which a
Holder must follow to exercise such repurchase right and to withdraw any surrendered Series U
Debentures, the place or places where the Holder is to surrender such Holder’s Series U Debentures,
the amount of interest accrued on each $25.00 principal amount of the Series U Debentures to the
Fundamental Change Repurchase Date and the “CUSIP” number or numbers of the Series U Debentures (if
then generally in use). No failure of the Company or its successor to give the foregoing notices
and no defect therein shall limit the Holder’s repurchase right or affect the validity of the
proceedings for the repurchase of the Series U Debentures pursuant to this Section 6.

     (k) For a Series U Debenture to be so repurchased at the option of the Holder, the Paying
Agent must receive such Series U Debenture with the form entitled “Option to Elect Repayment Upon A
Fundamental Change” on the reverse thereof duly completed, together with

32

 

such Series U Debentures duly endorsed for transfer, on or before the Fundamental Change
Expiration Time. All questions as to the validity, eligibility (including time of receipt) and
acceptance of any Series U Debenture for repayment shall be determined by the Company, whose
determination shall be final and binding absent manifest error.

     (l) Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent
the Option to Elect Repayment Upon a Fundamental Change shall have the right to withdraw such
Option to Elect Repayment Upon a Fundamental Change at any time up to the Close of Business on the
Business Day prior to the Fundamental Change Repurchase Date by delivery of a written notice of
withdrawal (a “Withdrawal Notice”) to the Paying Agent. The Paying Agent shall promptly notify the
Company of the receipt by it of any Option to Elect Repayment Upon a Fundamental Change or
Withdrawal Notice. The Withdrawal Notice shall state: (i) the principal amount of Series U
Debentures withdrawn (which must be in an amount of $25.00 or a integral multiple thereof); (ii)
the certificate numbers of the withdrawn Series U Debentures or evidence of compliance with the
appropriate Depository procedures if certificated Series U Debentures have not been issued; and
(iii) the principal amount, if any, of Series U Debentures that remains subject to the “Option to
Elect Repayment Upon a Fundamental Change.”

     (m) The Company and its successor shall comply with any tender offer rules under the Exchange
Act that may be applicable in connection with the repurchase rights of the Holders of Series U
Debentures in the event of a Fundamental Change.

     (n) The Company shall not repurchase any Series U Debentures in the event of a Fundamental
Change if the principal amount of the Series U Debentures has been accelerated (other than as a
result of a failure to pay the relevant Fundamental Change Repurchase Price), and such acceleration
has not been rescinded on or prior to the Fundamental Change Repurchase Date.

     (o) Prior to 10:00 a.m. (New York City Time) on the Fundamental Change Repurchase Date, the
Company or its successor shall deposit with the Trustee or with the Paying Agent an amount of cash
(in immediately available funds if deposited on such Business Day) sufficient to pay the aggregate
Fundamental Change Repurchase Price of all the Series U Debentures or portions thereof that are to
be purchased as of the Fundamental Change Repurchase Date. If prior to 10:00 a.m. (New York City
Time) on the Fundamental Change Repurchase Date the Trustee or Paying Agent holds an amount of cash
sufficient to pay the aggregate Fundamental Change Repurchase Price of the Series U Debentures that
are to be so repurchased, then, on and after the Fundamental Change Repurchase Date (i) the Series
U Debentures to be repurchased will cease to be outstanding; (ii) interest on such Series U
Debentures will cease to accrue; and (iii) all other rights of the Holders with respect to such
Series U Debentures will terminate, other than the right to receive the Fundamental Change
Repurchase Price upon delivery of the Series U Debentures. This will be the case whether or not
book-entry transfer of the Series U Debentures has been made or the Series U Debentures have been
delivered to the Paying Agent.

     (p) Any certificated Series U Debenture that is to be repurchased only in part shall be
surrendered at the office of the Paying Agent (with, if the Company, its successor or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the

33

 

Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly
authorized in writing) and the Company or its successor shall execute and the Trustee shall
authenticate and deliver to the Holder of such Series U Debenture, without any service charge, a
new Series U Debenture or Series U Debentures, of any authorized denomination as requested by such
Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal
amount of the Series U Debenture so surrendered which is not purchased.

     (q) The Trustee and the Paying Agent shall return to the Company or its successor any cash
that remains unclaimed, together with interest, if any, thereon, held by them for the payment of
the Fundamental Change Repurchase Price; provided, however, that to the extent that the aggregate
amount of cash deposited by the Company or its successor exceeds the aggregate Fundamental Change
Repurchase Price of the Series U Debentures or portions thereof which the Company or its successor
is obligated to purchase as of the Fundamental Change Repurchase Date then, unless otherwise agreed
in writing with the Company or its successor, promptly after the Business Day following the
Fundamental Change Repurchase Date the Trustee shall return any such excess to the Company.

     Section 7. Events of Default

     In case an Event of Default, as defined in the Indenture and as supplemented by this Section
7, with respect to the Series U Debentures shall have occurred and be continuing, the principal
hereof may be declared, and upon such declaration shall become, due and payable in the manner, with
the effect and subject to the conditions provided in the Indenture.

     In addition to the Events of Default set forth in the Indenture, each of the following (for
whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment decree or order of any court or any
order, rule or regulation of any administrative or governmental body) shall constitute an Event of
Default with respect to the Series U Debentures:

     (i) default in the issuance of a Fundamental Change Notice, and such default continues for a
period of (A) five Business Days (in the case of a Fundamental Change, the occurrence of which is
not publicly announced) or (B) five Business Days after written notice of such default has been
provided to the Company by the Trustee or a Holder of, or a holder of a beneficial interest in,
Series U Debentures (in the case of a Fundamental Change, the occurrence of which is publicly
announced);

     (ii) failure to issue any notice pursuant to Section 1(c) or Section 1(d) during the time
periods described in such Sections, which failure continues for a period of (A) five Business Days
(in the case of any such transaction or event, the occurrence of which is not publicly announced)
or (B) five Business Days after written notice of such failure has been provided to the Company by
the Trustee or a Holder of, or a holder of a beneficial interest in, Series U Debentures (in the
case of any such transaction or event, the occurrence of which is publicly announced);

     (iii) failure to comply with the obligation to convert the Series U Debentures into shares of
Common Stock and cash, if any, as required by Section 2; or

34

 

     (iv) failure to comply with the Company’s payment obligations under the Settlement Agreement
for a period of 15 Business Days after the date on which written notice of such failure, requiring
the Company to remedy the same, shall have been given to the Company by the committee that
administers the New VEBA, unless, within such 15 Business Day period, the Company remedies the
failure to comply with its payment obligations under the Settlement Agreement by paying the amount
then in default plus accrued interest on such amount at the rate of 9% per annum; provided that an
Event of Default shall not arise under this clause (iv) with respect to any portion of the
principal amount of any Series U Debentures that is held or beneficially owned by any Person other
than the New VEBA.

     Section 8. Registration, Transfer, Governing Law.

     Upon due presentment for registration of transfer of this Note at the office or agency
designated and maintained by the Company for such purpose in The Borough of Manhattan, The City of
New York, pursuant to the provisions of the Indenture, a new Note for an equal aggregate principal
amount will be issued to the transferee in exchange therefor, subject to the limitations provided
in the Indenture and in this Note (including any legends set forth on the face of this Note and
including the certification requirements of Section 8(i) or (ii) below), without charge except for
any tax or other governmental charge imposed in connection therewith.

     The Company, the Trustee and any authorized agent of the Company or the Trustee may deem and
treat the Holder in whose name this Note is registered as the absolute owner of this Note (whether
or not this Note shall be overdue and notwithstanding any notation of ownership or other writing
hereon), for the purpose of receiving payment of, or on account of, the principal hereof and
premium, if any, and subject to the provisions contained herein, interest hereon, and for all other
purposes, and neither the Company nor the Trustee nor any authorized agent of the Company or the
Trustee shall be affected by any notice to the contrary.

     The obligation of the Company, the Trustee and any authorized agent of the Company or the
Trustee to register any transfer of the Note to any transferee whatsoever (other than a transferee
that will hold this Note in Global Series U Security form if the Company or the Trustee concludes
that the satisfaction of the following requirements is not necessary for such transferee) is
subject to the following provisions which must be satisfied by such transferee prior to such
transfer:

     (i) Each transferee that is not a “U.S. Person” as defined in Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended (the “Code”) (a “Non-U.S. Transferee”) shall deliver to
the Company, the Trustee and any authorized agent of the Company or the Trustee, as the case may
be, two copies of either U.S. Internal Revenue Service Form W-8BEN (claiming benefits under an
applicable treaty), Form W-8ECI or Form W-8IMY, or, in the case of a Non-U.S. Transferee claiming
exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of “portfolio interest,” a properly completed and duly executed certificate as
described in Section 871(h)(5) of the Code and a Form W-8BEN, or any subsequent versions thereof or
successors thereto, properly completed and duly executed by such Non-U.S. Transferee claiming
complete exemption from U.S. federal withholding tax on all payments under this Note. Such forms
shall be delivered by each Non-U.S. Transferee on or before the date of such transfer or
assignment. In addition, each

35

 

Non-U.S. Transferee shall deliver such forms, or other applicable forms or similar
documentation, promptly as may be required to maintain the validity of exemption from or reduction
of the withholding tax or upon the receipt of notice from the Company, the Trustee and any
authorized agent of the Company or the Trustee of the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Transferee. Notwithstanding anything to the contrary in this
Note, the Company may properly withhold from any payments of principal or interest under this Note
any tax due as a result of a Non-U.S. Transferee’s failure to comply with this Section 8 or tax
otherwise due as a result of such Non-U.S. Transferee failing to qualify for complete exemption
from any U.S. federal withholding tax with respect to the payments of principal and interest under
this Note, including under Section 871(h) or 881(c) of the Code as “portfolio interest” exemption;
and

     (ii) Each transferee that is a “U.S. person” as described in Section 7701(a)(30) of the Code
(a “U.S. Transferee”) shall deliver to the Company, the Trustee and any authorized agent of the
Company or the Trustee two copies of properly completed and duly executed U.S. Internal Revenue
Service Form W-9, or any subsequent versions or successors thereto, on or before the date of such
transfer or assignment. In addition, each U.S. Transferee shall deliver such forms, or other
applicable forms or similar documentation, promptly as may be required to maintain the validity of
exemption from backup withholding of U.S. federal income tax, or upon the receipt of notice from
the Company, the Trustee and any authorized agent of the Company or the Trustee of the obsolescence
or invalidity of any form previously delivered by such U.S. Transferee. Notwithstanding anything
to the contrary in this Note, the Company may properly withhold from any payments of principal or
interest under this Note any tax due as a result of a U.S. Transferee’s failure to comply with this
Section 8 or tax otherwise due as a result of such U.S. Transferee becoming subject to any tax
backup withholding or any other type of withholding tax.

     For the avoidance of doubt, any taxes withheld or paid by the Company under Sections 8(i) or
(ii) above shall be treated under this Note as having been paid to the transferee and shall not
result in the Company being viewed or treated as in default of its obligations under this Note for
any reason.

     Notwithstanding anything to the contrary set forth herein, nothing in this Section 8 shall
prevent the (1) transfer of this Note into a Global Series U Security form to be held by the
Depository or a nominee of the Depository or (2) transfer of this Note to the New VEBA.

     No recourse under or upon any obligation, covenant or agreement of the Company in the
Indenture or any indenture supplemental thereto or in this Note, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or
director, as such, of the Company or of any successor corporation, either directly or through the
Company or any successor corporation, under any rule of law, statute or constitutional provision or
by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance hereof and as part of the
consideration for the issue hereof.

     This Note is governed by the laws of the State of New York.

36

 

     Terms used herein without definition which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.

     This Note shall not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been signed by the Trustee under the Indenture.

     For the avoidance of doubt, in the event of any inconsistency between this Section 8 and the
Indenture, the Indenture shall govern to the extent of such inconsistency.

37

 

WITNESS THE SEAL OF THE COMPANY AND THE SIGNATURES OF ITS DULY AUTHORIZED OFFICERS.

	 	 	 	 	 
	Dated: February 25, 2008 	 	GENERAL MOTORS CORPORATION

 	 
	 	By:  	/s/ Frederick A. Henderson
 	 
	 	 	Name:  	Frederick A. Henderson 	 
	 	 	Title:  	Vice Chairman and Chief Financial
Officer 	 
	 

[SEAL]

	 	 	 	 	 
	 	By:  	Martin I. Darvick
 	 
	 	 	Name:  	Martin I. Darvick	 
	 	 	Title:  	Assistant Secretary
	 

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

THIS IS ONE OF THE SECURITIES OF THE SERIES DESIGNATED THEREIN REFERRED TO IN THE WITHIN-MENTIONED
INDENTURE.

THE BANK OF NEW YORK, AS TRUSTEE,

	 	 	 	 	 
	By:

	 	Sherma Thomas	 	 
	 

	 	 

Name: Sherma Thomas
	 	 
	 

	 	Title: Assistant Treasurer	 	 

 

 

ASSIGNMENT FORM

FOR VALUE RECEIVED the undersigned hereby sells,

assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

______________________________________________________________

______________________________________________________________

______________________________________________________________

Please print or typewrite name and address including postal zip code of assignee

______________________________________________________________the within Note of GENERAL MOTORS
CORPORATION and hereby irrevocably constitutes and appoints                                                                                 
attorney to transfer said Note on the books of the within-named Company, with full power of
substitution in the premises.

Additional Certifications:

     In connection with any transfer of this Note (other than (i) any transfer pursuant to a
registration statement that has been declared effective under the Securities Act, (ii) any transfer
from a qualified institutional buyer to another qualified institutional buyer or (iii) any transfer
by LBK, LLC (the initial holder of this Note) to the New VEBA), unless the holding period
applicable to sales by non-Affiliates under Rule 144 under the Securities Act has expired, the
undersigned confirms that this Note is being transferred:

	 	o 	 	To a person whom the seller reasonably believes is a “qualified
institutional buyer” in a transaction meeting the requirements of Rule
144A under the Securities Act of 1933, as amended; or
	 
	 	o	 	 Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended; or
	 
	 	o	 	 To an Institutional Accredited Investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or
	 
	 	o	 	 In accordance with another exemption from the registration
requirements of the Securities Act of 1933, as amended; or
	 
	 	o	 	 To General Motors Corporation or a subsidiary thereof.

and unless the box below is checked, the undersigned confirms that this Note is not being
transferred to an Affiliate of the Company.

	 	o	 	 The transferee is an Affiliate of the Company.

Dated:___________________________

	 	 	 	 	 	 	 
	 

	 	SIGN HERE	 	 	 	 
	 

	 	 	 	 

NOTICE: THE SIGNATURE OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE WITHIN INSTRUMENT
IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	SIGNATURE GUARANTEED	 	 

 

 

CONVERSION NOTICE

To convert this Note into cash, if any, and Common Stock, if any, as described in Section 2 hereof,
check the box o

To convert only part of this Note, state the principal amount to be converted (which must be $25.00
or an integral multiple of $25.00):

If you want the stock certificate made out in another person’s name fill in the form below:

______________________________________________________________

______________________________________________________________

(Insert the other person’s soc. sec. tax ID no.)

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

______________________________________________________________

(Print or type other person’s name, address and zip code)

______________________________________________________________

Date: ________________ Your Signature: ________________________________________

______________________________________________________________

(Sign exactly as your name appears on the other side of this Note) Signature Guaranteed

______________________________________________________________

Participant in a Recognized Signature Guarantee Medallion Program

By:_____________________________________

     Authorized Signatory

 

 

OPTION TO ELECT REPAYMENT UPON A FUNDAMENTAL CHANGE

			
	TO:	 	GENERAL MOTORS CORPORATION

THE BANK OF NEW YORK, AS TRUSTEE

The undersigned registered owner of this Series U Debenture hereby irrevocably acknowledges receipt
of a notice from General Motors Corporation (the “Company”) as to the occurrence of a Fundamental
Change with respect to the Company and requests and instructs the Company to repay the entire
principal amount of this Series U Debenture in cash, or the portion thereof (which is $25.00 or an
integral multiple thereof) below designated, in accordance with the terms of this Series U
Debenture at the Fundamental Change Repurchase Price, to the registered Holder hereof. Capitalized
terms used herein but not defined shall have the meanings ascribed to such terms in the Series U
Debenture. The Series U Debentures shall be purchased by the Company as of the Fundamental Change
Repurchase Date pursuant to the terms and conditions specified in the Series U Debenture.

Dated: ________________________

Signature(s): ________________________

NOTICE: The above signatures of the Holder(s) hereof must correspond with the name as written upon
the face of the Series U Debenture in every particular without alteration or enlargement or any
change whatever.

Certificate Number (if applicable): ________________________

Principal amount to be repaid (if less than all): ________________________

Social Security or Other Taxpayer Identification Number: ________________________

 

 

SCHEDULE OF INCREASES OR DECREASES

     The following increases or decreases in part of this Note have been made; provided that any
increases or decreases may be made only if this Note is in Global Series U Security form:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	Amount of	 	Principal Amount	 	 
	 	 	Increase in	 	Decrease in	 	of this Note	 	 
	 	 	Principal	 	Principal	 	following such	 	 
	 	 	Amount of	 	Amount of this	 	Increase or	 	Signature of Authorized
	Date	 	this Note	 	Note	 	Decrease	 	Officer or Trustee

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]