Document:

exv10w1

 

Exhibit 10.1

MEMORANDUM OF UNDERSTANDING

October 29, 2005

     
During the course of the past several months, General Motors and
the UAW have discussed at length GM’s deteriorating
financial situation, including its spiraling health care costs
and competitive challenges. In conjunction with these
discussions, GM has provided the UAW with extensive access to
GM’s financial records and the UAW has conducted a thorough
review of GM’s financial position. As a result of the
discussions the parties agree to the following, subject to
ratification:

Affordability

     
Retirees and surviving spouses who meet the following two-part
test will continue to be covered by the current Health Care
Program for Hourly Employees (“the Plan”), except the
responsibility for the dental plan will be moved to the Defined
Contribution VEBA (DC VEBA), and those changes referred to in
Attachment C will apply:

		
	 	     
    (a) Annual GM pension benefit income of $8,000 or less
    (excluding the lump-sum payment), and
	 
	 	     
    (b) Monthly benefit rate of $33.33 or less.

Amended Plan

Eligibility and Coverage

     
Coverage for active employees, current and future retired
employees, surviving spouses and dependents will be provided in
accordance with existing eligibility rules. References in this
Memorandum of Understanding (MOU) to retirees, Retired
Participants, or similar wording is intended to include current
and future retirees, surviving spouses, and their eligible
dependents unless the context indicates otherwise.

Opting In and/or Out

     
Retired participants who decline coverage under the Plan as
amended herein (“Amended Plan”), will be automatically
covered by a catastrophic plan as set forth in Attachment A.
Retired participants will be allowed to elect between the
Amended Plan and the catastrophic plan only during an annual
enrollment period.

     
Retired participants who fail to initially enroll in the Amended
Plan will be allowed to enroll in the Amended Plan at any time
during the first six months following the effective date.

Amended Plan Structure

     
The Amended Plan will be the 2003-2007 defined benefit plan
(i.e., the current Plan), with only the following modifications:

		
	 	     
    Monthly Contributions (Current and Future Retired
    Participants and Surviving Spouses only)
	 
	 	     
    $50 (single); $105 (multiple party)
	 
	 	     
    Initially reduced to $10 (single); $21 (multiple party) by DC
    VEBA.
	 
	 	     
    Traditional Care Network (TCN) and Preferred Provider
    Organization (PPO) Deductibles (Current and Future Retired
    Participants and Surviving Spouses only)
	 
	 	     
    $300/$600
	 
	 	     
    Initially reduced to $150 (single); $300 (multiple party) by DC
    VEBA.

 

		
	 	     
    TCN and PPO Co-insurance (Current and Future Retired
    Participants and Surviving Spouses only)
	 
	 	     
    10% In Network
	 
	 	     
    30% Out of Network
	 
	 	     
    TCN and PPO Out of Pocket Maximum (Current and Future
    Retired Participants and Surviving Spouses only)
	 
	 	     
    $500/$1000 In Network (including deductibles, excluding monthly
    contributions, prescription co-payments, Durable Medical
    Equipment (DME)/ Prosthetics & Orthotics (P&O),
    Mental Health/ Substance Abuse (MHSA), dental and vision cost
    sharing and other Amended Plan sanctions or exclusions, such as
    MHSA care beyond limits or outside of network)
	 
	 	     
    Initially reduced to $250 (single); $500 (multiple party) by DC
    VEBA.
	 
	 	     
    $1000/$2000 Out of Network (including deductibles, excluding
    monthly contributions, prescription co-payments, DME/ P&O,
    MHSA, dental and vision cost sharing and other Amended Plan
    sanctions or exclusions, such as MHSA care beyond limits or
    outside of network)
	 
	 	     
    Initially reduced to $500 (single); $1000 (multiple party) by DC
    VEBA.
	 
	 	     
    Emergency Room (Current and Future Retired Participants
    and Surviving Spouses only)
	 
	 	     
    $50 co-payment per
    visit unless admitted. The co-payments do not apply to meeting
    Amended Plan deductible amounts and do not apply to meeting
    Amended Plan
    out-of-pocket maximum
    amounts. The co-payments apply regardless of whether the Amended
    Plan out of pocket maximum has been met.
	 
	 	     
    Prescription Drugs (Active, Current and Future Retired
    Participants and Surviving Spouses)
	 
	 	     
    The co-payments do not
    apply to meeting Amended Plan deductible amounts and do not
    apply to meeting Amended Plan
    out-of-pocket maximum
    amounts. The co-payments apply regardless of whether the Amended
    Plan out of pocket maximum has been met.
	 
	 	     
    $5 generic/$10 brand retail co-payment
	 
	 	     
    $10 generic/$15 brand mail order co-payment per 90 day
    supply
	 
	 	     
    $15 retail co-payment for ED Drugs
	 
	 	     
    $18 mail order co-payment for ED Drugs
	 
	 	     
    Plan Design Escalation
	 
	 	     
    All dollar-denominated plan design items such as drug
    co-payments, TCN and PPO deductibles,
    out-of-pocket maximums,
    and contributions will increase annually at a rate not to exceed
    3% as specified in Attachment B.
	 
	 	     
    Dental Plan (Current and Future Retired Participants and
    Surviving Spouses only including those covered by Affordability
    provision)
	 
	 	     
    Coverage will be provided for retirees, surviving spouses and
    dependents from the DC VEBA. The assets of the DC VEBA will be
    used to provide the benefit and will initially pay 100% of
    claims and administrative costs that would have been paid by the
    dental plan.
	 
	 	     
    Health Care Program Modifications (Active, Current and
    Future Retired Participants, Surviving Spouses, and Dependents,
    unless otherwise specified in Attachment C)
	 
	 	     
    See Attachment C.

 

		
	 	     
    Mitigation
	 
	 	     
    The reductions for monthly contributions, deductibles, and
    out-of-pocket maximums,
    as well as the percentage of retiree dental to be provided by
    the assets of the DC VEBA are initially planned to be as set
    forth above. Any subsequent change will be determined by the
    Committee as limited by the trust agreement.
	 
	 	     
    Administration
	 
	 	     
    The administration of the Amended Plan shall be as defined in
    the Plan as well as the supplements, letters and memoranda
    attached thereto. This includes the joint committee identified
    in Exhibit C. Section 4. (d) and the
    miscellaneous letter for the Corporation-Union Committee on
    Health Care Benefits.

Defined Contribution VEBA Administration

     
A new VEBA trust (the “Defined Contribution VEBA” or
“DC VEBA”) will be established. It will be
administered by an independent trust committee (the
“Committee”) which shall not include any GM
representatives. GM will fully cooperate with the DC VEBA by,
for example, either accepting direct monthly payments from the
DC VEBA or directing monthly payments to carriers for mitigation
amounts and by providing sufficient information regarding the
contribution obligations to allow the DC VEBA to faithfully
evaluate and enforce the contribution obligations.

Purpose

     
The purpose of the DC VEBA will be to reduce or reimburse
monthly contributions, deductibles,
out-of-pocket maximums,
and/or co-insurance payable by retired participants, and/or to
pay or reimburse costs related to dental coverage for retired
participants.

DC VEBA Funding

     
Contributions and/or asset transfers to the DC VEBA will be made
as follows upon the entry of Judgment approving this agreement:

		
	 	     
    (a) GM will cause the transfer of $1.0 billion of
    assets from a trust or otherwise to the DC VEBA (the “First
    Contribution”). Such transfer will be made as soon as
    practicable after the entry of Judgment approving this agreement
    and in no event later than the date on which retirees are
    required to make a monthly contribution under this agreement.
    One year following the First Contribution GM will cause the
    transfer of $1.0 billion of assets from a trust or
    otherwise to the DC VEBA (the “Second Contribution”).
    In 2011, on the anniversary date of the First Contribution GM
    will cause the transfer of $1.0 billion of assets from a
    trust or otherwise to the DC VEBA (the “Third
    Contribution”). If after the Second Contribution and prior
    to 2011 the value of the assets in the DC VEBA drops below
    $600 million as of the last day of any month, the Third
    Contribution will be pulled forward and paid within 15 days
    thereafter. In the event the Judgment approving this agreement
    is reversed or materially altered in whole or in part, there
    will be no obligation to make any transfer under this paragraph.
	 
	 	     
    (b) Profit Sharing Payments as defined below.
	 
	 	     
    (c) Wage Deferral Payments as defined below.
	 
	 	     
    (d) Stock Appreciation Rights as defined below.
	 
	 	     
    (e) Stock Dividend Payments as defined below.

DC VEBA Profit Sharing Payments

     
For the Plan Years 2006 through 2012 (which is a time period
equivalent in length to the seven year period of prior service
cost amortization associated with the Amended Plan changes set
forth in this agreement), in determining the “Profit
Sharing Amount” as defined in Article II,
Section 2.13 of the Profit Sharing Plan, the impact on
profits associated with the changes (as described in Attachment
D) to the Plan

 

that are implemented pursuant to this agreement will be excluded
from the calculation of “Profits.” An amount equal to
the resulting reduction in the Profit Sharing Amounts otherwise
payable, will be contributed by GM to the DC VEBA. If the amount
payable to the DC VEBA under this paragraph is less than thirty
million dollars ($30,000,000), an incremental amount totaling
the difference between thirty million dollars ($30,000,000) and
the amount payable to the DC VEBA under this paragraph will be
calculated. The cumulative (if multiple years) incremental
amount plus interest will be contributed to the DC VEBA in the
earlier of (a) the next plan year in which profit sharing
is contributed to the DC VEBA, or (b) the 2013 Plan Year.
The interest will be calculated at the OPEB discount rate in
effect for the year (or years, if the incremental amount were
not paid for multiple years) immediately prior to the
incremental contribution.

DC VEBA Wage Deferral Payments

     
Contributions equivalent to one dollar ($1.00) per hour in wage
deferrals and COLA diversions will be made to the DC VEBA which
will consist of the following:

		
	 	     
    Effective with the first quarterly COLA adjustment following
    entry of Judgment approving this agreement, a cumulative total
    of seventeen cents ($0.17) will be diverted from future
    quarterly COLA increases, in additional increments of no more
    than six cents ($.06) in any quarter. Effective with the COLA
    adjustment immediately following the three month period in which
    the full seventeen cent ($0.17 cent) diversion has been reached,
    that amount shall be subtracted from the Cost of Living
    Allowance table, and the table shall be adjusted so that the
    actual three-month Average Consumer Price Index equates to the
    allowance then payable.
	 
	 	     
    In addition, the September 18, 2006 three percent (3%)
    general increase to the hourly wage rate will not be payable.
    Instead an equivalent amount, equating to an average of $0.83
    (eighty-three cents) per hour, will be contributed to the DC
    VEBA.

     
Finally, the current COLA diversion will be increased by an
additional two cents ($0.02) beginning with the quarterly COLA
adjustment following the quarter in which the above referenced
cumulative total of seventeen cents ($0.17) has been diverted,
and for each subsequent quarter.

     
Contributions based on these wage deferrals, additional COLA
diversions and COLA-equivalent deferrals will be calculated on
the basis of the then current total amount of the deferrals
multiplied by every hour worked times a factor of 1.5 in order
to reflect the value of wage-related costs including pay for
time not worked, overtime premiums, shift premiums, etc., that
would otherwise have been incurred by GM had such amounts not
been deferred. Such contributions will be made on a quarterly
basis, in arrears.

     
In the event that the court does not enter the Judgment
approving the agreement, or such judgment is overturned in whole
or in part on appeal, GM will cease any additional contributions
provided for under the preceding paragraphs and prospectively
reinstate the base hourly wage rates and COLA deferrals.

DC VEBA Stock Appreciation Rights (SAR)

     
Following entry of Judgment approving this agreement, GM will
make three cash contributions to the DC VEBA based on the
increase in the notional value of eight (8) million shares
of GM Common Stock, with one third of the number of shares
applied to each contribution. GM will contribute to the DC VEBA
the value of any appreciation in the share price over the
average share price for the week ending October 14, 2005
(“Base Value”). One-third of the shares become
available for generating the contribution amount on the Judgment
date, one third on the first anniversary date of the Judgment,
and the final third on the second anniversary of the Judgment.
All three grants expire three years from the Judgment; the
grants, or any portion thereof, may be exercised by the
Committee at any time following the date they become available
and prior to expiration. The exercise price will be based on the
average share price one week prior to the exercise date. Once
exercised by the Committee, the shares have no additional future
value. The contribution will be based on the difference between
the exercise price and the Base Value times the number of shares
per issue. No contribution will be made if the exercise price on
the exercise date is lower than the Base Value on the effective
date of the agreement. Final documentation will include a
provision for adjustment of the Base Value and/or notional
shares (i.e., the eight [8] million notional shares, or to
the extent notional shares have been exercised, the balance of
non-exercised notional shares outstanding), as appropriate, in
the event of stock

 

splits, reverse splits, exchange offers, stock buybacks, asset
spinoffs, or other transactions on the same basis as that
provided to those covered under the then current GM Stock
Incentive Program. In no event shall a single transaction result
in both a SAR’s related cash distribution under the DC VEBA
Stock Dividend Payment paragraph below and an adjustment of the
Base Value and/or notional shares as described above. In the
event the Judgment approving this agreement is reversed or
materially altered in whole or in part, there will be no
obligation to make a SAR contribution under this paragraph.

DC VEBA Stock Dividend Payments

     
Following entry of the Judgment approving this agreement, as GM
implements its turnaround plan and performance improves, if
through September 14, 2011, GM raises its regular quarterly
cash dividend above $.50 per share, GM will place on a one
time basis, an amount equivalent to four quarters of such
dividend increase in the DC VEBA. In the event that GM declares
any distribution, other than a regular quarterly cash dividend,
to be paid to all shareholders of record, at any time after
October 17, 2005, but prior to the expiration of the Stock
Appreciation Rights as defined above, an equivalent per share
cash contribution to the DC VEBA will be made at that time based
upon the number of non-exercised SAR shares as identified above,
i.e., eight (8) million shares less any exercised SAR
shares. If the obligation in the preceding sentence arises prior
to the establishment of the DC VEBA, GM shall make the
contribution (with interest) as soon as practicable after the DC
VEBA is established. In the event the Judgment approving this
agreement is reversed or materially altered in whole or in part,
there will be no obligation to make a stock dividend
contribution under this paragraph.

Terms of DC VEBA

     
The Trust Agreement governing the DC VEBA will contain
provisions which direct that if there is a termination of this
agreement, the assets of the DC VEBA will be utilized as soon as
reasonably practicable to reimburse GM for the cost of providing
health care for hourly retirees and beneficiaries in an amount
equal to a pro rata share of the DC VEBA assets plus any
earnings on the pro rata share. For purposes of this paragraph,
the pro rata share will be determined by dividing the GM Amounts
contributed/transferred to the DC VEBA by all amounts
contributed/transferred to the DC VEBA. The GM Amounts are equal
to the sum of the amounts GM has caused to be transferred or
contributed to the DC VEBA under a) above,
d) above — Stock Appreciation Rights,
e) above — Stock Dividend Payments, and the
payment of the incremental amount resulting from the
$30 million guarantee under the Profit Sharing provisions
described under b) above.

Plan Administration Costs

     
GM and the UAW will continue to work with third party benefit
administrators and other parties responsible for benefit plan
administration to reduce administrative costs.

Effect of Legislative Changes

     
The impact of legislation on the Health Care Program cannot be
predicted with any certainty. Because these matters are
unsettled, in the event any legislation has the effect of
reducing retiree health care costs, GM and the UAW agree to
discuss the impact of such legislation on this agreement at that
time in order to equitably address any resulting financial
benefit.

Fees

     
The UAW will apply to the court for reimbursement of reasonable
attorney and professional fees (not to include any success fee,
completion bonus or rate premiums) payable by the UAW in
connection with the court proceedings to obtain the Judgment
approving this agreement and approval for the payment of certain
professional fees associated with the settlement process.

 

Indemnification

     
The parties will seek court approval of a mutually agreeable
indemnity provision whereby GM agrees to indemnify the UAW from
liability incurred as a result of the UAW’s entering into,
or participation in the discussions regarding this agreement.

Effective Date

     
Implementation of the matters set forth in Attachment C (the
“Administrative Changes”) will take place in
accordance with the provisions of Attachment C. Other than those
changes described in Attachment C which will occur following
ratification, adoption of the Amended Plan will take place as
soon as practicable after entry of Judgment approving the
agreement by the United States District Court in Detroit. The
parties will jointly work diligently to have this agreement
approved by the Federal District Court in Detroit by
April 1, 2006. Except for the Administrative Changes, the
Plan will continue to operate without modification until entry
of Judgment approving this agreement or termination of this
agreement.

Legal Judgment

     
There is currently a dispute between GM and the UAW regarding
whether GM can unilaterally modify benefits provided by the Plan
or whether such benefits are vested with respect to retired
participants. A declaratory judgment action has been filed by
the UAW and retirees in the federal District Court in Detroit
regarding this dispute. GM and the UAW in such proceeding will
seek a judgment from the Federal District Court approving a
class-wide settlement which (a) incorporates this
agreement, and (b) is applicable to all retired
participants, GM and the UAW (the “Judgment”).

Duration and Termination

     
This agreement will remain in effect unless and until terminated
in accordance with this section.

     
Termination of the agreement may occur as a result of
litigation-related events as follows:

		
	 	     
    1. If the declaratory judgment action is enjoined or
    stayed, or withdrawn, dismissed, or otherwise terminated prior
    to judgment, or if the Judgment is denied in whole or in
    material part, either GM or the UAW may terminate this agreement
    by 30 days written notice to the other party.
	 
	 	     
    2. If the Judgment is granted by the District Court, but
    overturned in whole or in part on appeal or otherwise, either GM
    or the UAW may terminate this agreement by 30 days written
    notice to the other party.

     
If the agreement does not terminate in accordance with 1 or 2
above, the agreement and the Amended Plan will remain in effect
until at least September 14, 2011. The agreement and the
Amended Plan will continue in effect indefinitely after
September 14, 2011, including but not limited to the
inflation protection provided by the ongoing annual increase not
to exceed 3% in enrollee cost share, provided that GM or the UAW
may declare a termination, by providing 90 days written
notice to the other party. In the event that either party
declares a termination, both parties will remain protected by
the “no prejudice” provision described below.

     
Termination of the agreement and/or the Amended Plan under any
of the methods described above shall not modify or terminate the
“No Prejudice” agreement.

No Prejudice

     
This agreement, and anything occurring in connection with
reaching this agreement, are without prejudice to GM, the UAW
and the retirees. The parties may use this agreement to assist
in securing the Judgment approving the settlement and to
implement the Administrative Changes in accordance with
Attachment C. It is intended that neither party nor the retirees
may use this agreement, or anything occurring in connection with
reaching this agreement, as evidence against GM, the UAW or the
retirees in any circumstance except where the parties are
operating under or enforcing the settlement incorporating this
agreement or the Judgment approving the settlement. The
settlement agreement, and the Judgment approving the settlement,
will include a clear and unequivocal “no prejudice”
provision making clear that, except where

 

the parties are operating under or enforcing the settlement
incorporating this agreement or the Judgment approving the
settlement, neither this agreement nor anything occurring in
connection with reaching this agreement will prejudice any right
of the UAW, the retirees, or GM on any issue, including but not
limited to the issue described under the Legal Judgment
paragraph above, except that in the event the Amended Plan
becomes effective following court approval and the Amended Plan
is later terminated in accordance with termination provisions of
this agreement, neither the retirees nor the UAW would retain
the right to seek reimbursement or recovery in connection with
the health care changes incorporated in this agreement and
Amended Plan for the period prior to termination.

     
The “no prejudice” provision will include the
understanding that in the event the court enters the Judgment,
but this agreement is thereafter terminated by GM, the case law
as it exists on the date of Judgment will be treated as the
applicable body of case law for determining the legal issue
described in the Legal Judgment paragraph above in litigation
between GM, the UAW and current retirees, subject to any and all
changes in the applicable law from subsequent legislative,
regulatory or administrative developments, and provided further
that GM may make any and all arguments in such litigation as are
available to it regarding such case law as of the date of
Judgment.

Final Documents

     
All matters set forth in this agreement are subject to full
legal documentation satisfactory to the parties consistent with
the provisions set forth in this agreement.

Health Care Reform

     
GM will publicly support federal policies to improve the quality
and affordability of health care, and work cooperatively with
the UAW towards that goal. See Attachment E.

Capital Spending

     
During these discussions, the Corporation affirmed its intent to
reinvest in its core automobile business through capital
spending programs. In that regard, General Motors, on average,
has spent $3.9 billion per year for Portfolio Initiatives
over the most recent 6 year period of time and $1.2 Billion
for Non-Portfolio Initiatives during that same time period.
Future capital spending is forecasted to include, on average,
$4.6 Billion for Portfolio Initiatives over the next 6 year
period of time and $1.0 Billion for Non-Portfolio Initiatives
during that same time period. This results in a projected annual
capital spending of $5.6 Billion for GMNA. The parties’
efforts during these recent health care discussions enhance the
ability of GMNA to attain these projected capital spending
levels. As business conditions change and modifications are made
to the capital spending programs, advanced dialogue with the UAW
will occur. The General Motors capital spending programs will be
reviewed at least annually, or upon request, with the UAW.

Agreement dated
                                             ,
2005

	 	 	 
	
    International Union, UAW	 	
    General Motors Corporation
	 
	 	 	 
	 
	 	 	 
	 
	 	 	 
	 
	 	 	 

 

Attachment A

Group Catastrophic Plan

     
This option will be a single catastrophic TCN plan offering
which will consist, in general, of the following:

		
	 	     
    Eligibility: All Hourly retirees are eligible to enroll
    in this catastrophic plan, except for active employees and
    retired and surviving spouse enrollees with annual GM pension
    benefit income of $8,000 or less and a monthly benefit rate of
    $33.33 or less.
	 
	 	     
    Initial and Ongoing Enrollment: Eligible Participants
    electing not to make monthly contributions for program coverage
    or who fail to authorize monthly contributions from their
    pension payments will be defaulted into this “catastrophic
    plan” option. As well, eligible Participants may
    voluntarily elect to enroll in this plan. Eligible Participants
    who are enrolled in this catastrophic TCN Plan will be subject
    to Rolling Enrollment rules.
	 
	 	     
    Plan Design:

		
	 	     
    Monthly Contribution: $0
	 
	 	     
    Deductible: $1,250 (single) and $2,500 (family)
	 
	 	     
    Co-insurance: after deductible is met, 10% in-network and
    30% out of network

			
	 	Out-of-Pocket Maximums:	
    $2,500 (single) and $5,000 (family) in-network; 

     $5,000 (single) and $10,000
    (family) out-of-network

		
	 	     
    ER Co-Payment: $100 per visit, waived if admitted
	 
	 	     
    Rx Co-payment Retail: $15 Generic, $35 Brand; $50
    (Erectile Dysfunction medications)
	 
	 	     
    Rx Co-Payment Mail Order: $30 Generic, $70 Brand; $100
    (Erectile Dysfunction medications)

		
	 	     
    Deductibles, co-insurance, and
    out-of-pocket maximums
    noted above are not subject to mitigation. All
    dollar-denominated plan design items such as drug co-payments,
    deductibles and
    out-of-pocket maximums
    will increase annually at a rate not to exceed 3% as specified
    in Attachment B.

 

Attachment B

Plan Design Escalation

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Escalation

    	 	 	3.0	%	 	 	3.0	%	 	 	3.0	%	 	 	3.0	%	 	 	3.0	%	 	 	3.0	%

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$ (Where Applicable)	 	2006		 	2007		 	2008		 	2009		 	2010		 	2011	
	 	 	 		 	 		 	 		 	 		 	 		 	 	
	
    
    Monthly Contributions

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Single

    	 	 	50	 	 	 	52	 	 	 	53	 	 	 	55	 	 	 	56	 	 	 	58	 
	
    
    Family

    	 	 	105	 	 	 	108	 	 	 	111	 	 	 	115	 	 	 	118	 	 	 	122	 
	 
	
    
    Medical Plan A

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Deductible — Single

    	 	 	300	 	 	 	309	 	 	 	318	 	 	 	328	 	 	 	338	 	 	 	348	 
	
    
    Deductible — Family

    	 	 	600	 	 	 	618	 	 	 	637	 	 	 	656	 	 	 	675	 	 	 	696	 
	
    
    Co-insurance In Network

    	 	 	10.0	%	 	 	10.0	%	 	 	10.0	%	 	 	10.0	%	 	 	10.0	%	 	 	10.0	%
	
    
    Co-insurance Out Network

    	 	 	30.0	%	 	 	30.0	%	 	 	30.0	%	 	 	30.0	%	 	 	30.0	%	 	 	30.0	%
	
    
    MOOP Single (In Network)

    	 	 	500	 	 	 	515	 	 	 	530	 	 	 	546	 	 	 	563	 	 	 	580	 
	
    
    MOOP Family (In Network)

    	 	 	1,000	 	 	 	1,030	 	 	 	1,061	 	 	 	1,093	 	 	 	1,126	 	 	 	1,159	 
	
    
    MOOP Single (Out Network)

    	 	 	1,000	 	 	 	1,030	 	 	 	1,061	 	 	 	1,093	 	 	 	1,126	 	 	 	1,159	 
	
    
    MOOP Family (Out Network)

    	 	 	2,000	 	 	 	2,060	 	 	 	2,122	 	 	 	2,185	 	 	 	2,251	 	 	 	2,319	 
	 
	
    
    E/ R Co-payment**

    	 	 	50	 	 	 	52	 	 	 	53	 	 	 	55	 	 	 	56	 	 	 	58	 
	 
	
    
    Rx Plan

    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
    
    Generic — Retail

    	 	 	5	 	 	 	5	 	 	 	5	 	 	 	5	 	 	 	6	 	 	 	6	 
	
    
    Brand — Retail

    	 	 	10	 	 	 	10	 	 	 	11	 	 	 	11	 	 	 	11	 	 	 	12	 
	
    
    Select Drugs — Retail*

    	 	 	15	 	 	 	15	 	 	 	16	 	 	 	16	 	 	 	17	 	 	 	17	 
	
    
    Generic — Mail

    	 	 	10	 	 	 	10	 	 	 	11	 	 	 	11	 	 	 	11	 	 	 	12	 
	
    
    Brand — Mail

    	 	 	15	 	 	 	15	 	 	 	16	 	 	 	16	 	 	 	17	 	 	 	17	 
	
    
    Select Drugs — Mail*

    	 	 	18	 	 	 	19	 	 	 	19	 	 	 	20	 	 	 	20	 	 	 	21	 

 

			
	 	* 	
    ED Drugs

		
	** 	
    Not subject to deductible or
    out-of-pocket maximum

Note: All dollar-denominated plan design items affecting
enrollee cost share, i.e., drug co-payments, TCN and PPO
deductibles,
out-of-pocket maximums,
emergency room co-payments, and contributions will increase
annually as measured against the total annual aggregate medical
trend in the overall plan for each respective year at a rate not
to exceed 3% and rounded to the nearest whole dollar.

 

Attachment C

Health Care Program Modifications

(Effective As Noted in Each Item Listed Below)

(Applicable to All Active Employees, Current and Future
Retirees,

Surviving Spouses, and Dependents, Unless Otherwise
Specified)

Coordination With Medicare

			
	 	• 	
    Coverage to Medicare B Benefit (regardless of Med B
    enrollment) and Medicare Part B Maximum Payment
    Provisions:

			
	 	• 	
    For Medicare eligible enrollees (regardless of whether or not
    they are enrolled in Medicare Part B), Program benefits
    will be limited to an amount equal to the secondary balance
    payment that would have been made on the basis that, on the date
    of services, the enrollee was enrolled in Medicare Part B
    and received services from a provider that participates in
    Medicare. In the event an enrollee receives services from a
    provider that does not accept assignment, the enrollee will be
    responsible for all fees charged above the Medicare allowed
    amount, unless the enrollee is in a situation in which the
    enrollee does not have the ability or control to select a
    provider that accepts Medicare assignment to perform the
    service. No enrollee payment over the Medicare allowed amount
    will count towards enrollee cost sharing maximums.
	 
	 	• 	
    It is recognized that the above provisions will indirectly
    require Medicare eligible enrollees who delayed enrollment in
    Medicare B, to enroll upon the implementation date of this
    agreement. The parties agree to send educational pieces
    90-120 days prior
    to implementation, to those enrollees identified as eligible for
    Medicare, but not yet enrolled. Such delayed enrollment into
    Medicare Part B will result in penalties being applied by
    Medicare to the Part B monthly premiums. GM has agreed to
    work with Medicare to identify a way to eliminate penalties
    incurred. This may involve GM making a lump sum payment to
    Medicare; however, these discussions are not complete at this
    time. In the event GM and Medicare cannot reach agreement on
    eliminating the penalty, GM will establish a single nationwide
    Traditional Care Network (TCN) plan in which Medicare eligible
    enrollees who have elected to delay enrollment in Medicare
    Part B will be enrolled and this plan will not be subject
    to the provisions outlined in the first bullet above. Any
    enrollee in this group who later decides to enroll in Medicare
    Part B will be placed in a regular TCN plan and will
    be fully responsible for any and all penalties incurred at that
    time.

			
	 	• 	
    Coordination of Benefits for Medications covered under
    Medicare Part B:

			
	 	• 	
    The parties agree to encourage Medicare Part B enrollees to
    assign Medicare benefits to those pharmacies from which the
    enrollee receives medications that are covered under Medicare
    Part B. A program will be developed and implemented to
    educate enrollees about Medicare paying for certain medications
    and to encourage enrollees to use those pharmacies that have the
    capabilities to electronically bill Medicare and to assign
    Medicare benefits to such pharmacies in order for the Program to
    take advantage of Medicare paying primary on the claim. Further,
    the parties agree to monitor the improvement of electronic
    Medicare billing capabilities across the pharmacy network. Upon
    mutual agreement, the parties may at a later date implement a
    mandatory program. At that point, enrollees who utilize
    pharmacies which do not have electronic claim submission
    capabilities with Medicare will be required to pay for the
    secondary balance of the claim at the point of sale and seek
    reimbursement via submission of a paper claim from the
    prescription drug carrier.
	 
	 	• 	
    The provisions outlined above will not apply to Active enrollees
    eligible for Medicare as their primary coverage.
	 
	 	• 	
    This entire Program Coordination related to Medicare Eligible
    Enrollees will be implemented as soon as practicable after
    approval of the agreement by the Federal District Court.

 

Hospital/Surgical/Medical Modifications — TCN
and PPO, Unless Otherwise Specified

     
1. “Cosmetic” Provisions —
Eliminate coverage for inpatient and outpatient hospital
services (e.g., room & board, lab,
x-rays, etc.) provided
in conjunction with
non-covered
“plastic, cosmetic and reconstructive” surgeries.

			
	 	• 	
    This entire Program Modification related to Modifying
    “Cosmetic” Provisions will be implemented as soon as
    practicable after approval of the agreement by the Federal
    District Court.

     
2. Referral Process for the “Preferred Provider
Organization” Option

			
	 	• 	
    Require prospective authorization of
    out-of-network
    referrals.
	 
	 	• 	
    In the event a referral is not approved prior to a service being
    provided, the enrollee is responsible for the
    out-of-network
    co-insurance. Any amount charged over R&C does not count
    toward enrollee cost sharing maximums.
	 
	 	• 	
    The parties agree not to promote further reductions in PPO
    networks as outlined in the Miscellaneous Letter (Preferred
    Provider Organization), but to support ongoing network
    improvements by the carriers as quality and performance
    evaluation tools continue to develop and are utilized to drive
    members to high performing providers, as mutually agreed upon.
	 
	 	• 	
    This entire Program Modification related to Improving the
    Referral Process for the “Preferred Provider
    Organization” Option will be implemented as soon as
    practicable after approval of the agreement by the Federal
    District Court.

     
3. Integrated Care Management Program: —
The parties agreed, during 2003 bargaining, to conduct a study
of integrated care management. The Request For Proposal (RFP)
will be released during the fourth quarter of 2005. The
assessment of the RFP responses will be completed during
the first quarter of 2006. The new Integrated Care Management
Program will be implemented as soon as practicable upon
completion of the study. The program will include, at a minimum,
the following: Inpatient & Outpatient
“Prospective” Pre-certification, as appropriate;
Disease Management Programs, Centers of Excellence Programs and
a LifeSteps Health Risk Assessment tool. Further, the parties
agree to include a limited office visit benefit, similar to that
currently included in the Coordinated Care Management (CCM)
program. The parties agree to restrict the availability of the
office visit benefits and will mutually define criteria to
determine who is eligible to receive such benefits. However, the
parties further agree that the value of this office visit
benefit will not deteriorate from what is currently available
under CCM.

			
	 	• 	
    The current Health Care Program language allows the parties to
    initiate and implement these Program Modifications related to
    the Integrated Care Management Program. These modifications will
    be implemented as soon as practicable following the ratification
    of this agreement.

     
4. Hold Harmless — Except as otherwise
provided in Section 4 of the Miscellaneous Letter entitled
Understandings With Respect To Health Care-General, when an
enrollee receives services from a physician who is not
participating in Blue Cross Blue Shield (BCBS) or United Health
Care (UHC) networks or from a facility not participating in a
UHC network, the Program will be responsible to pay only up to
the reasonable and customary (R&C) level as determined by
the carrier. The enrollee will be responsible for all fees
charged above R&C, unless the enrollee is in a situation in
which the enrollee does not have the ability or control to
select a par provider to perform the service. Such amounts over
R&C are considered “Other Amounts Not Covered” by
the Health Care Program and therefore will be the responsibility
of the enrollee and will not be applied towards enrollee
cost-sharing.

			
	 	• 	
    This entire Program Modification Related to Modifying Hold
    Harmless will be implemented as soon as practicable after
    approval of the agreement by the Federal District Court.

 

Prescription Drug Tools and Other Modifications

     
In mid-year 2005, the parties jointly hired an independent
consultant with the goal of reviewing various Rx Tools and
with the intent the parties implement, as soon as practicable,
such Rx Tools following review and recommendation by the
consultant and as has been mutually agreed by the parties. These
Rx Tools will be implemented in TCN, PPO and the parties
will recommend that HMO plans implement the recommended
Rx Tools as agreed upon.

     
1. Those tools specifically reviewed by the consultant
and agreed upon by the parties include:

			
	 	• 	
    Select Drugs/Drug Classes

			
	 	• 	
    Proton Pump Inhibitors (PPIs): Restrict coverage to generic
    omeprazole only. Brand dispensing will be permitted only for the
    following:

			
	 	• 	
    Barrett’s esophagitis and Zoellinger-Ellison syndrome
    patients (prior authorization required).
	 
	 	• 	
    Patients demonstrating intolerance to omeprazole or who have
    failed prior prescription drug omeprazole therapy.

			
	 	• 	
    Selective Serotonin Reuptake Inhibitors (SSRIs): Restrict
    coverage to generic citalopram for patients who have not
    previously used either citalopram or escitalopram (Lexapro). For
    patients who have previously used citalopram prescriptions and
    then present a prescription for escitalopram, prior
    authorization is appropriate.
	 
	 	• 	
    Statins: Preferred coverage review for Pravachol and Crestor.

			
	 	• 	
    Specific Rx Tools Edits:

			
	 	• 	
    Dose Duration for PPIs
	 
	 	• 	
    Dose Optimization for Statins
	 
	 	• 	
    Step Therapy for Enbrel
	 
	 	• 	
    Step Therapy for Rheumatoid Arthritis medications
	 
	 	• 	
    Prior Authorization for Erythroid Stimulants
	 
	 	• 	
    Prior Authorization for Alzheimer’s disease medications
	 
	 	• 	
    Prior Authorization for Anti-Emetics

     
2. The Rx Tools Consultant will continue to
evaluate specific medications, tools and other opportunities to
improve the performance of the National Managed Pharmacy
Program, as directed by the parties. Implementation will only be
by mutual agreement. Such tools will include, but not be limited
to, the following:

			
	 	• 	
    Step Therapy Edits — These edits ensure
    treatment is closer to evidence-based or commonly accepted
    guidelines by having patients use acceptable first line
    therapies initially for treatment. For example, use of first
    line treatments could be required prior to dispensing
    COX II Inhibitors used to manage pain.
	 
	 	• 	
    Prior Authorization Edits — These edits are
    designed to confirm diagnosis and other clinical information
    before medications are dispensed. They also act as a safeguard
    to ensure FDA-approved uses (or common medically acceptable
    uses) of certain medications. For example, injectable drugs used
    to treat hepatitis and growth hormones, are examples of
    medications covered by these edits.
	 
	 	• 	
    Dose and Quantity Edits — These edits promote
    medication dosing or length of therapy consistent with FDA
    recommended or commonly acceptable medical practice. These edits
    also could limit quantity per prescription fill to FDA
    recommended or common dosing guidelines. Examples of dose and
    quantity edits include:

			
	 	• 	
    Length of Therapy: limiting treatment of finger/toe nail fungus
    to 3 months as approved in FDA labeling

 

			
	 	• 	
    Dose Duration: limiting availability of high dose medication to
    the period medical guidelines recommend
	 
	 	• 	
    Appropriate Quantity: allowing 8 estrogen patches per
    retail script and 24 per mail order script (dosing is twice
    a week)

			
	 	• 	
    Dose Optimization Edits — These edits promote
    once a day dosing versus multiple dosing per day for drugs where
    no clinical reason exists to divide dosing.
	 
	 	• 	
    “34 day” and “90 day”
    Provisions — These edits are designed to identify
    quantities that appear to be in excess of the amount considered
    usual for a 34 or 90 day supply which then requires a
    conversation between the dispensing pharmacy and physician prior
    to the quantity being dispensed.

     
3. RationalMed on a Nationwide Basis —
Implement this program which identifies patients at risk for
possible adverse Rx treatment outcomes and communicates the
potential risks to treating physicians and provides information
to support therapy decisions.

     
4. Maintenance Drug List (MDL) — Add all
maintenance drugs, as proposed, in Exhibit 1 to
Attachment C.

     
5. Quarterly Mailing of Prescription Drug Explanation of
Benefits (EOBs) — Eliminate mailing of EOBs. EOBs
will be available upon request to the carrier, via the carrier
website or when an adverse determination is made.

     
6. Edits for Select Drugs in TCN, PPO and
HMOs — Implement Prior Authorization for Revatio
to provide approval only for treatment of Pulmonary Arterial
Hypertension (PAH) and exclude Dapoxetine from Program coverage.

     
7. Pharmacy Benefit Manager — Complete an
evaluation of the current (and potential) pharmacy benefit
manager in line with the CUCHCB letter. As well, the parties
agree to evaluate, as part of this process, Specialty Pharmacies.

			
	 	• 	
    The current Health Care Program language allows the parties to
    initiate and implement these Program Modifications,
    items 1-7. These
    modifications will be implemented as soon as practicable
    following the ratification of this agreement.

Health Maintenance Organization (HMO) Benefit Design and
Administration — Effective as soon as
practicable after approval by the Federal District Court, the
HMO plan design will be as follows:

			
	 	• 	
    Monthly Contributions: $50 single; $105 multiple party
    (Current and Future Retired Participants and Surviving Spouses
    only, excludes those covered by the Affordability provision).
    

     

     Initially reduced to $10 (single); $21 (multiple party) by
    DC VEBA.
	 
	 	• 	
    Office Visit co-payments: $10
	 
	 	• 	
    ER co-payments:
    $50 (Current and Future Retired Participants and Surviving
    Spouses only, excludes those covered by the Affordability
    provision)
	 
	 	• 	
    Prescription Drug
    co-payments: (Current
    and Future Retired Participants and Surviving Spouses only,
    excluding those covered by the Affordability provision)

			
	 	• 	
    Retail: $5 generic/$10 brand; $15 Erectile
    Dysfunction medications
	 
	 	• 	
    Mail Order (if offered): $10 generic/$15 brand;
    $18 Erectile Dysfunction medications
	 
	 	• 	
    It is recognized that some HMOs may not be able to or may be
    unwilling to administer the Rx design outlined above. In
    the event this should occur, the parties will jointly agree upon
    an Rx design that achieves comparable savings.
    Additionally, it is agreed that if an HMO has implemented a
    mandatory mail order feature, the mail order
    co-payments will not
    exceed those outlined above.

 

			
	 	• 	
    HMOs may implement all pharmacy management tools currently
    available within their books of business.

			
	 	• 	
    Each HMO will make available to the membership a listing of
    pharmacy management tools employed by the plan.
	 
	 	• 	
    If an enrollee, as a result of dissatisfaction with the pharmacy
    tools used by the HMO, wants to enroll in a different plan
    offering, the enrollee will be permitted to do so at any time.

			
	 	• 	
    This entire Program Modification related to Modifying
    HMO Benefit Design and Administration will be implemented
    as soon as practicable after approval of the agreement by the
    Federal District Court.

     
During these negotiations, the parties discussed a number of
approaches that might possibly be followed in applying the
agreed-to health care
savings associated with the Traditional Care Network (TCN) to
the HMO environment, where the opportunity to implement
parallel changes in plan design is not always possible. The
parties agree that the goal of achieving an equivalent amount of
health care savings from HMO plans would likely require some
combination of the following: an increase in the existing office
visit co-payment;
additional monthly contributions; and other potential changes.
The parties further agree that determining the appropriate mix
and structure of such changes requires further analysis and
study. As a result, the equivalent value of the
TCN-related changes
(i.e., those related to deductibles and out of pocket
maximums) will not be applied to the existing HMO structure
prior to January 1, 2007.

 

Exhibit 1 to Attachment C

Additions to MDL

	 	 	 	 	 
	Drug Brand Name	 	Drug Generic Name	 	Therapeutic Class
	 	 	 	 	 
	
    
    ACCURETIC

    	 	
    quinapril/hydrochlorothiazide	 	
    Hypertension
	
    
    ACEON

    	 	
    perindopril	 	
    Hypertension
	
    
    ACTIVELLA

    	 	
    estradiol/norethindrone	 	
    Estrogen Replacement
	
    
    ACTONEL

    	 	
    risedronate	 	
    Osteoporosis
	
    
    ACTOS

    	 	
    pioglitazone	 	
    Diabetes
	
    
    ADVICOR

    	 	
    lovastatin/niacin	 	
    High Cholesterol
	
    
    AGGRENOX

    	 	
    dipyridamole/aspirin	 	
    Antiplatelet Agent — Stroke prevention
	
    
    ALTOPREV

    	 	
    lovastatin xl	 	
    High Cholesterol
	
    
    ATACAND

    	 	
    candesartan	 	
    Hypertension
	
    
    ATACAND HCT

    	 	
    candesartan/hydrochlorothiazide	 	
    Hypertension
	
    
    AVALIDE

    	 	
    irbesartan/hydrochlorothiazide	 	
    Hypertension
	
    
    AVANDAMET

    	 	
    rosiglitazone/metformin	 	
    Diabetes
	
    
    AVANDIA

    	 	
    rosiglitazone	 	
    Diabetes
	
    
    AVAPRO

    	 	
    irbesartan	 	
    Hypertension
	
    
    BENICAR

    	 	
    olmesartan	 	
    Hypertension
	
    
    BENICAR HCT

    	 	
    olmesartan/hydrochlorothiazide	 	
    Hypertension
	
    
    CADUET

    	 	
    amlodipine/atorvastatin	 	
    Hypertension — Cholesterol
	
    
    CLIMARA PRO

    	 	
    estradiol/levonorgestrel	 	
    Estrogen Replacement
	
    
    COMBIPATCH

    	 	
    estradiol/norethindrone	 	
    Estrogen Replacement
	
    
    COMTAN

    	 	
    entacopone	 	
    Parkinson’s Disease
	
    
    COREG

    	 	
    carvedilol	 	
    Hypertension — CHF
	
    
    DIOVAN HCT

    	 	
    valsartan/hydrochlorothiazide	 	
    Hypertension
	
    
    EVISTA

    	 	
    raloxifene	 	
    Osteoporosis
	
    
    FEMHRT

    	 	
    ethinyl estradiol/norethindrone	 	
    Estrogen Replacement
	
    
    FOSAMAX

    	 	
    alendronate	 	
    Osteoporosis
	
    
    GLUCOVANCE

    	 	
    glyburide/metformin	 	
    Diabetes
	
    
    GLYSET

    	 	
    miglitol	 	
    Diabetes
	
    
    HYZAAR

    	 	
    losartan/hydrochlorothiazide	 	
    Hypertension
	
    
    LEXXEL

    	 	
    enalapril/felodipine	 	
    Hypertension
	
    
    LOTREL

    	 	
    amlodipine/benazepril	 	
    Hypertension
	
    
    MIACALCIN

    	 	
    calcitonin	 	
    Osteoporosis
	
    
    MICARDIS

    	 	
    telmisartan	 	
    Hypertension
	
    
    MICARDIS HCT

    	 	
    telmisartan/hydrochlorothiazide	 	
    Hypertension
	
    
    MIRAPEX

    	 	
    pramipexole	 	
    Parkinson’s Disease
	
    
    MOBIC

    	 	
    meloxicam	 	
    Pain Management — NSAID
	
    
    ORTHO-PREFEST

    	 	
    estradiol/norgestimate	 	
    Estrogen Replacement
	
    
    PLAVIX

    	 	
    clopidogrel	 	
    Antiplatelet Agent — Stroke prevention
	
    
    PLETAL

    	 	
    cilostazol	 	
    Platelet Aggregation Inhibitor
	
    
    PRANDIN

    	 	
    repaglinide	 	
    Diabetes
	
    
    PRAVIGARD PAC

    	 	
    pravastatin/aspirin	 	
    Cholesterol — Stroke Prevention
	
    
    PRECOSE

    	 	
    acarbose	 	
    Diabetes
	
    
    REQUIP

    	 	
    ropinarole	 	
    Parkinson’s Disease
	
    
    STARLIX

    	 	
    nateglinide	 	
    Diabetes
	
    
    TARKA

    	 	
    trandolapril/verapamil	 	
    Hypertension
	
    
    TEVETEN

    	 	
    eprosartan	 	
    Hypertension
	
    
    TEVETEN HCT

    	 	
    eprosartan/hydrochlorothiazide	 	
    Hypertension
	
    
    TRICOR

    	 	
    fenofibrate	 	
    Cholesterol — Triglycerides
	
    
    ZETIA

    	 	
    ezetimibe	 	
    High Cholesterol
	
    
    ZIAC

    	 	
    bisoprolol/hydrochlorothiazide	 	
    Hypertension
	
    
    ZYFLO

    	 	
    zileuton	 	
    Asthma

 

Attachment D

10-14-05 Framework Plan Change Effect on Hourly Expense

Projected at Valuation Trend Basis 2006-2011

Discount Rate = 5.75%

(Assumes Plan Change as of 10/1/2005; i.e., no impact on
2005 Expense;

100% savings in 2006 expense; Excludes Impact of VEBA
Contributions)

	 	 	 	 	 	 
	 	 	’06-’11 Avg.	
	 	 	Annual Net Sav.	
	 	 	 	
	
    
    ($B)

    	 	 	 	 
	 
	
    
    Hourly Expense(1)

    	 	 	 	 
	 	
    
    Service Cost

    	 	 	0.1	 
	 	
    
    Interest

    	 	 	0.8	 
	 	
    
    Amortization of Loss(3)

    	 	 	(0.2	)
	 	
    
    Prior Service Cost Amortization(2)

    	 	 	2.2	 
	 	 	 	 
	 	
    
    Total Gross Expense

    	 	 	2.9	 
	 	 	 	 
	 	
    
    Expected Return On Assets

    	 	 	—	 
	 	 	 	 
	 	
    
    Net Expense

    	 	 	2.9	 
	 	 	 	 
	
    
    Cash

    	 	 	1.0	 

Note — Values Estimated using Plan Change
Model & Trued up to 2006 Wyatt Expense Savings Total
for Scenario

Do not consider “Final”/will Require updating
following Legal Judgement

		
	(1) 	
    Value to be used for “setting” projected GM before tax
    profit impact
	 
	(2) 	
    Prior Service Cost Amortization Period = Average Remaining
    Service Life 7.1 Years
	 
	(3) 	
    Loss Amortization Period = Average Remaining Working Life
    8.62 Years

 

Attachment E

Health Care Reform Letter

     
A prominent theme throughout the parties’ current
discussions has been the unsustainable trend of rising health
care costs. The resulting economic burden has not only impaired
the Corporation’s competitiveness and employees’ job
security but also has imperiled workers, families and
communities throughout the country.

     
Over the years, the parties have worked together to improve
various aspects of the health care system, including
accreditation standards for Health Maintenance Organizations
(HMOs) and Preferred Provider Organizations (PPOs), clinical
quality standards, Certificate of Need policies and Electronic
Health Records. Cost trends however continue to rise.

     
Given the fragmented and wasteful nature of the U.S. health
care system, the parties recognize an
issue-by-issue approach
to reform — while necessary — is no longer
sufficient in meeting the needs of purchasers, payers,
consumers, and patients. The parties agree that a lasting
solution to our health care cost crisis cannot be forged at the
bargaining table.

     
Many developed countries have addressed the health care problem
by requiring broad-based financing, cost-effective delivery and
simple, universal administration. In Canada, many companies have
gained a substantial competitive advantage relative to
U.S. labor costs because of such a national health care
system. Here at home government must be more aggressive in
leveling the playing field so American businesses and workers
can be as competitive as possible.

     
To this end, the parties will engage in an unprecedented effort
to enact policies to improve the quality of health care and to
make it more affordable, accessible and accountable on a
comprehensive, national basis. As examples of such an approach,
the parties agree to pursue the following efforts:

     
National Health Care Reform: The parties will develop
and/or support national proposals that, in whole or part,
reinforce risk-pooling, streamline administration, assure access
and foster cost-effective, quality health care.

     
Reinsurance or Stop Loss Coverage: Catastrophic costs
pose a special burden on all payers. The financial risks
underlying such cases are best shared across the population at
large. Therefore, the parties will support federal efforts to
address these high-cost cases and thereby level the competitive
playing field.

     
Prescription Drug Initiatives: Given the growing
importance of prescription drugs in medical treatments,
it’s imperative to ensure safety and cost effectiveness in
the purchase and utilization of prescription drugs. To this end,
the parties will aggressively advocate for and promote
pharmaceutical safety and cost containment policies that include
the following:

		
	 	     
    a. A standardized reporting system for adverse drug
    reactions;
	 
	 	     
    b. Independent comparative evaluation of new drugs against
    existing drugs and broad-based distribution of the findings;
	 
	 	     
    c. An end to the manipulation of patent expirations and
    extensions;
	 
	 	     
    d. FDA approval for generic biopharmaceuticals.

     
Technology Evaluation: While policy analysts debate the
details, almost all agree that technology is the number one
health care cost driver. However, payers and purchasers
frequently lack the necessary information to assess the relative
clinical and economic value of new and emerging technologies.
Therefore, the parties will support increased funding for
technology assessment, including reestablishment of the Office
of Technology Assessment or a similar, independent body.

     
Universal Coverage: Given the Nation’s
46 million uninsured Americans, the UAW and GM will support
public policies at the federal and state level that will enable
all Americans to have health insurance.

 

     
The parties agree that the stakes are now so high that reforms
are needed at the national and state levels. Preconceptions
should be discarded and mutual efforts should be pursued in a
spirit of pragmatism. The parties recognize that the task is
fraught with difficulty and that we may fail. If we do nothing
however, failure is guaranteed.

     
The UAW and GM will form coalitions with other stakeholders,
including other employers and unions, senior and consumer
groups, hospitals, doctors, insurers, state and local
governments and policymakers interested in improving quality and
reducing costs. The UAW and GM will encourage support for these
national solutions to address health care quality and cost.exv10w2

 

Exhibit 10.2

UAW-GM-DELPHI

SPECIAL ATTRITION PROGRAM

     
Due to the extraordinary circumstances in the domestic auto
industry and the Delphi bankruptcy, the parties agree to the
following special one-time program:

     
1. GM and the UAW agree on a Special Attrition Program at
GM:

		
	 	     
    a. $35,000 for normal or early voluntary retirements
    retroactive to October 1, 2005.
	 
	 	     
    b. 50 & 10 Mutually Satisfactory Retirement (MSR).
	 
	 	     
    c. Any employee with at least 27 and less than
    30 years of credited service regardless of age will be
    eligible for special voluntary placement in a pre-retirement
    program under the following terms:

		
	 	     
    i. Employees electing this pre-retirement program must be
    eligible no later than July 1, 2006.
	 
	 	     
    ii. Employees will retire without additional incentives
    when they first accrue 30 years of credited service under
    the provisions of the General Motors Hourly-Rate Employees
    Pension Plan.
	 
	 	     
    iii. The gross monthly wages while in the program will be:

		
	 	     
    1. 29 years credited service $2,900
	 
	 	     
    2. 28 years credited service $2,850
	 
	 	     
    3. 27 years credited service $2,800
	 
	 	     
    Wages will be paid weekly on an hourly basis (2,080 hours
    per year) and will remain at that rate until 30 years of
    credited service is accrued.

		
	 	     
    d. Due to their unique situations, Oklahoma City, Linden,
    Muncie, Lansing Craft Centre and Baltimore plants will have the
    following additional option:

		
	 	     
    i. Employees with 26 years of credited service will be
    eligible for the pre-retirement program.
	 
	 	     
    ii. The monthly wages while in the program for those who
    sign up with 26 years credited service will be $2,750 paid
    weekly on an hourly basis and will remain at that rate until
    30 years of credited service is accrued.

		
	 	     
    e. Buy out of $140,000 (10 or more years seniority) or
    $70,000 (less than 10 years seniority) to sever all ties
    with GM and Delphi except any vested pension benefits.
	 
	 	     
    f. This program will be offered on a nation-wide basis
    immediately. The application period, timing of the retirements
    and release dates will be determined by the joint UAW-GM
    National Parties.

     
2. GM and the UAW agree on the following items related to
flowbacks from Delphi:

		
	 	     
    a. GM commits to 5,000 Delphi flowbacks. The target date
    for reaching this level is September 1, 2007. This date may
    be extended by mutual agreement of the UAW-GM National Parties
    through December 31, 2007. To further extend the target
    date will require the agreement of the UAW, GM, and Delphi. The
    order of placement will continue to be governed by
    Appendix A and the Flowback Agreement.
	 
	 	     
    b. Employees who flowed from GM to Delphi will have the
    same flowback rights as other Delphi employees covered by the
    Flowback Agreement.
	 
	 	     
    c. Any Delphi employee with flowback rights who turned down
    an area hire offer will be given one more area hire offer to
    return to GM.
	 
	 	     
    d. The employees who were hired at Delphi after
    October 18, 1999, who were on-roll at the time the Delphi
    bankruptcy was declared (October 8, 2005) will be given two
    opportunities to fill openings at GM after all GM employee or
    Delphi flowback applications have been exhausted. One will be
    within a

 

		
	 	
    reasonable distance from their plant (either in the area hire or
    a location to be determined jointly by GM and the UAW) and one
    will be anywhere in the country.

     
3. Delphi and the UAW agree on the following Special
Attrition Program for Delphi employees:

		
	 	     
    a. An attrition program will be run for Delphi employees as
    follows:

		
	 	     
    i. $35,000 for normal or early voluntary retirements
    retroactive to October 1, 2005.
	 
	 	     
    ii. 50 & 10 Mutually Satisfactory Retirement (MSR).

		
	 	     
    b. Any employee with at least 27 and less than
    30 years of credited service regardless of age will be
    eligible for special voluntary placement in a pre-retirement
    program under the following terms:

		
	 	     
    i. Employees electing this pre-retirement program must be
    eligible no later than July 1, 2006.
	 
	 	     
    ii. Employees will retire without additional incentives
    when they first accrue 30 years of credited service under
    the provisions of the Delphi Hourly-Rate Employees Pension Plan.
	 
	 	     
    iii. The gross monthly wages while in the program will be:
	 
	 	     
    1. 29 years credited service $2,900
	 
	 	     
    2. 28 years credited service $2,850
	 
	 	     
    3. 27 years credited service $2,800
	 
	 	     
    Wages will be paid weekly on an hourly basis (2,080 hours
    per year) and will remain at that rate until 30 years of
    credited service is accrued.
	 
	 	     
    iv. Within ten (10) business days after the first date
    on which any employees are eligible to receive wage payments in
    accordance with Paragraph 3.b.iii. above, Delphi will
    establish a segregated payment account (the “Account”)
    in the amount of $75 million (the “Ceiling
    Amount”). The funds in the Account will be available to
    reimburse Delphi for the payment of weekly wage payments (which
    will be paid through Delphi’s normal payroll process) under
    Paragraph 3.b.iii. above or for direct wage payments to
    employees entitled to receive such payments, as described in
    this Paragraph.

		
	 	     
    1. Delphi shall not draw funds from the Account for
    purposes of this Paragraph until a date (the “Permitted
    Draw Down Date”), which shall be the later of the Final
    Election Date or the Adequate Funding Date (see definitions
    below). Prior to the Permitted Draw Down Date, payments to
    satisfy the obligations to employee participants pursuant to
    this Paragraph will be drawn from Delphi’s available cash.
	 
	 	     
    2. If, on the Permitted Draw Down Date, the Anticipated
    Liability is less than the Ceiling Amount, Delphi shall be
    permitted to draw such funds out of the Account so that the
    balance remaining in the Account is equal to the Anticipated
    Liability.

		
	 	     
    The Final Election Date shall be the first of the month
    following the last day on which employees at any UAW-Delphi
    facility can make an election to participate in the
    pre-retirement program described in Paragraph 3.b., or
    sooner if determined by the UAW-Delphi National Parties.
	 
	 	     
    The Adequate Funding Date shall be the date on which the Ceiling
    Amount is greater than or equal to the Anticipated Liability.
	 
	 	     
    The Anticipated Liability shall be an amount, calculated after
    the Final Election Date, sufficient to pay all of the remaining
    liabilities under Paragraph 3.b.iii. for all employees who
    have elected to participate in such program for the full
    remaining duration of such program. The Anticipated Liability
    shall be calculated based on the number of eligible employees,
    the remaining duration of the wage payments, and the applicable
    pay rates.

 

		
	 	     
    3. The funds in the Account shall be available to satisfy
    the obligations of this Paragraph and for no other purpose. The
    Bankruptcy Court order approving this Agreement shall
    specifically provide that under no circumstances (including but
    not limited to conversion of Delphi’s Chapter 11 cases
    to Chapter 7 proceedings) shall the assets in the Account
    be available to satisfy the claims of any party other than the
    employees. This Agreement is, in its entirety, contingent on
    entry of an order which, to the satisfaction of the UAW and
    Delphi National Parties provides the protections described in
    this Paragraph.

		
	 	     
    c. This program will be offered on a nation-wide basis
    immediately. The application period, timing of retirements,
    release dates, and number of
    sign-up dates will be
    determined jointly by Delphi and the UAW. These dates may vary
    by location.

     
4. GM, the UAW and Delphi agree that any employee electing
to retire under option 3.a.i. or 3.a.ii., or electing to retire
under 3.b. above will be permitted to either retire from Delphi
or flowback to GM for purposes of retirement (“check the
box”). Any employee choosing GM under this provision will
be considered a flowback to GM effective the day of retirement
for purposes of the U.S. Employee Matters Agreement and all
GM, UAW and Delphi agreements governing flowbacks, including
this Agreement.

		
	 	     
    a. Any employee choosing option 3.b. above will be
    considered a Delphi employee until they retire.
	 
	 	     
    b. Flowbacks under “check the box” retirements
    will not reduce the 5,000 commitment in 2.a.

     
5. GM and the UAW agree to the following:

		
	 	     
    a. Oklahoma City will be given closed plant treatment for
    purposes of placement under Appendix A.
	 
	 	     
    b. Lordstown will be included in the area hire for
    Pittsburgh as of June 1, 2007. Any move greater than
    50 miles will be eligible for relocation.
	 
	 	     
    c. Employees at Spring Hill who have made application for
    transfer to Bowling Green as of a mutually agreed-upon date will
    be given on a one-time basis the same preference as volunteers
    from plants with closed plant treatment.
	 
	 	     
    d. After the Special Attrition Program has been run, or no
    later than December 31, 2006, GM and the UAW agree to
    discuss:

		
	 	     
    i. Options to address remaining surplus people at specific
    locations. These options may include expanding the area hire and
    other options covered in the National Agreement.
	 
	 	     
    ii. All areas in which the parties can work together to
    close GM’s competitive gap with the foreign competition and
    reduce GM’s structural cost.

		
	 	     
    e. Following the implementation of this program, if there
    are still employees at Delphi who wish to leave Delphi
    (including those who want to flowback to GM), the UAW, GM, and
    Delphi agree to implement a mutually acceptable resolution to
    this matter.
	 
	 	     
    f. GM will use temporary employees as needed to bridge any
    difficulties arising from the implementation of the Special
    Attrition Program subject to the approval of the UAW-GM National
    Parties.
	 
	 	     
    g. During the course of this nationwide Special Attrition
    Program certain obligations from Appendix K will be
    “frozen.” This means:

		
	 	     
    i. No additional obligations from attrition.
	 
	 	     
    ii. No one for two hires from Delphi flowbacks.
	 
	 	     
    iii. No credit against obligations from Delphi flowbacks.

     
6. Delphi and the UAW agree to the following:

		
	 	     
    a. Delphi will use temporary employees as needed to bridge
    any difficulties arising from the implementation of the Special
    Attrition Program subject to the approval of the UAW-Delphi
    National Parties.

 

		
	 	     
    b. Delphi and the UAW may agree to use separated employees
    as contract personnel on a case by case basis as needed to
    bridge any difficulties arising from the implementation of the
    Special Attrition Program.
	 
	 	     
    c. During the course of the Special Attrition Program, the
    eligibility of GM employees to flow to Delphi will be suspended
    and no additional hiring obligations due to attrition or
    flowbacks from Delphi to GM will accrue.

     
7. The parties acknowledge the following matters regarding
the Special Attrition Program:

		
	 	     
    a. Delphi’s participation in this Agreement is subject
    to the approval of the U.S. Bankruptcy Court; which
    approval Delphi will seek promptly at the April 7, 2006
    omnibus hearing should this Agreement be finalized in time for
    Delphi to file a motion by March 22, 2006 or as otherwise
    permitted by the Case Management Order in Delphi’s
    Chapter 11 cases. In the event such participation is not
    allowed by the Bankruptcy Court, GM and the UAW will have no
    obligations hereunder.
	 
	 	     
    b. For the avoidance of doubt, any obligations assumed by
    GM under this Agreement with respect to OPEB under
    Paragraph 4. above or active health care and life insurance
    under 7.d. below shall be conclusively deemed to be comprehended
    by, included within, and shall constitute a prepetition, general
    unsecured claim assertable by GM against the estate of Delphi
    Corporation under the U.S. Employee Matters Agreement
    (including without limitation, related flowback agreements and
    the UAW-GM-Delphi Memorandum of Understanding —
    Benefit Plan Treatment and the UAW-GM-Delphi Flowback Agreements
    contained in the 1999 and 2003 GM-UAW and Delphi-UAW Contract
    Settlement Agreements), Delphi’s Agreement dated
    December 22, 1999 to indemnify GM for its liability under
    the Benefit Guarantee as if all conditions for the triggering of
    GM’s claim shall have occurred, and Delphi’s general
    indemnity of GM under the Master Separation Agreement. GM agrees
    to assume and pay OPEB payments to Delphi employees who
    “check the box” and/or flow back to GM for purposes of
    retirement, and to pay the amounts due under
    Paragraph 3.a.i. above. The presumed triggering of
    GM’s claim against Delphi Corporation described above is
    only for purposes of this Agreement and does not trigger any
    contractual claims against either Delphi or GM beyond their
    respective obligations under this Agreement.
	 
	 	     
    c. This Agreement shall not be subject to abrogation,
    modification or rejection without the mutual consent of the UAW,
    GM and Delphi (with the exception of bilateral agreements of the
    UAW and GM that do not affect Delphi such as Paragraphs 1
    and 5a.-d., f., and g. obligations, which may be modified by the
    UAW-GM National Parties), and the order obtained in the
    Bankruptcy Court by Delphi approving this Agreement shall so
    provide. The parties further agree (and the Bankruptcy Court
    order shall also provide) that this Agreement is without
    prejudice to any interested party (including the parties to this
    Agreement and the Official Committee of Unsecured Creditors) in
    all other aspects of Delphi’s Chapter 11 cases,
    including by illustration, Delphi’s and GM’s
    respective positions in all commercial discussions and claims
    matters between them, all collective bargaining matters
    involving the parties, in any potential proceedings under
    Sections 1113 and/or 1114 of the Bankruptcy Code with
    respect to the UAW and under Section 365 of the Bankruptcy
    Code with respect to GM’s contracts with Delphi, in any
    pension termination proceeding under ERISA and/or the Bankruptcy
    Code, and all claims administration and allowance matters.
	 
	 	     
    d. Nothing in this Agreement shall limit or otherwise
    modify (a) Delphi’s rights under Section 4041 of
    ERISA, or (b) Delphi’s rights under Section 1113
    and/or 1114 of the Bankruptcy Code with regard to any
    obligations which pre-existed this Agreement (including
    pre-existing obligations referenced within this Agreement), such
    as (by way of illustration only) the obligation to maintain the
    hourly pension plan or provide retirees or active employees
    (including employees/retirees participating in the attrition
    programs contained in this Agreement) with levels of healthcare
    or other benefits as specified in pre-existing labor agreements.
    Under no circumstances shall Delphi freeze its pension plan in a
    manner that prevents employees in the pre-retirement program
    described in Paragraph 3.b. above from receiving on-going
    credited service sufficient to reach 30 years of credited
    service. Delphi shall provide the same healthcare and life
    insurance coverage to employees participating in
    Paragraph 3.b. above that it provides to its other active
    UAW employees; provided, however, that if Delphi reduces or
    eliminates such coverage provided to its active UAW employees,
    GM shall subsidize such coverage provided to

 

		
	 	
    employees participating in Paragraph 3.b. above up to the
    level provided to GM-UAW active employees. Except as otherwise
    expressly provided herein, nothing in this Agreement shall
    limit, expand or otherwise modify the rights or obligations of
    any party under the Benefit Guarantee between GM and the UAW.
	 
	 	     
    e. Nothing contained herein shall constitute an assumption
    of any agreement described herein, including, without limitation
    any collective bargaining agreement between the UAW and Delphi
    or any commercial agreement between GM and Delphi, nor shall
    anything herein be deemed to create an administrative or
    priority claim with respect to GM or convert a prepetition claim
    into a postpetition claim or an administrative expense with
    respect to any party.
	 
	 	     
    f. For the avoidance of doubt, any employee participating
    in the Special Attrition Program for Delphi Employees under 3.
    above, who elects to flowback to GM for purposes of retirement
    (“check the box”), will be eligible to retire in
    accordance with Sections 3.a.6. and 3.b.6. of the
    UAW-GM-Delphi Memorandum of Understanding Benefit Plan Treatment
    (MOU). For illustrative purposes, as provided in the MOU, such
    Delphi employees will be eligible for pro-rata pension benefits
    as defined in the MOU, including but not limited to eligibility
    for all basic benefits and supplements. For example, such
    employees checking the box who have 100% of his/her credited
    service in the Delphi Plan will receive 100% of their pension
    benefit from the Delphi Plan. Similarly, any employee retiring
    from GM under 1.b. with credited service under the Delphi Plan
    shall be considered eligible to retire under the Delphi Plan
    with eligibility for pro-rata pension benefits.

	 	 	 	 	 
	 	 	 	 	 
	
    
    General Motors Corporation

    	 	
    Delphi Corporation	 	
    International Union, UAW
	 
	 	 	 	 	 
	
    
    General Motors Corporation

    	 	
    Delphi Corporation	 	
    International Union, UAW
	 
	 	 	 	 	 
	
    
    General Motors Corporation

    	 	
    Delphi Corporation	 	
    International Union, UAW

Date:

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