Purchase and Sale Agreement (2006)Full Document 

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                           PURCHASE AND SALE AGREEMENT

                                  by and among

                           GENERAL MOTORS CORPORATION,

                     GENERAL MOTORS ACCEPTANCE CORPORATION,

                          GM FINANCE CO. HOLDINGS INC.

                                       and

                                FIM HOLDINGS LLC

                        --------------------------------

                            Dated as of April 2, 2006

                        --------------------------------

                                TABLE OF CONTENTS

PAGE ARTICLE I DEFINITIONS...................................................................................................... 1 1.1 Definitions.................................................................................... 1 1.2 Rules of Construction.......................................................................... 18 1.3 Definitional Provisions........................................................................ 18 ARTICLE II PURCHASE AND SALE OF SHARES...................................................................................... 19 2.1 Purchase and Sale of Investor Equity Interests................................................. 19 2.2 Purchase Price................................................................................. 19 2.3 Pre-Closing Transactions....................................................................... 20 ARTICLE III THE CLOSING...................................................................................................... 21 3.1 Closing........................................................................................ 21 3.2 Deliveries at the Closing...................................................................... 21 3.3 Initial Purchase Price Adjustment.............................................................. 22 3.4 Final Purchase Price Adjustment................................................................ 23 ARTICLE IV CLOSING CONDITIONS............................................................................................... 25 4.1 Conditions to Investor's Obligations........................................................... 25 4.2 Conditions to Seller's Obligations............................................................. 26 4.3 Mutual Conditions to Closing Obligations....................................................... 27 ARTICLE V REPRESENTATIONS.................................................................................................. 28 5.1 Representations of Seller...................................................................... 28 (a) Authorization......................................................................... 28 (b) Non-Contravention..................................................................... 28 (c) Governmental Consents................................................................. 29 (d) Ownership of the Equity Interests..................................................... 29 (e) Fairness Opinion...................................................................... 29 (f) Affiliate Transactions................................................................ 29 (g) True Sale............................................................................. 30 5.2 Representations Relating to the Company........................................................ 31 (a) Organization and Corporate Power; Authorization....................................... 31 (b) Capitalization........................................................................ 31 (c) Subsidiaries.......................................................................... 32 (d) Non-Contravention..................................................................... 32 (e) Governmental Consents................................................................. 33 (f) SEC Documents and Other Reports....................................................... 33 (g) Internal Controls..................................................................... 34
i (h) Reports and Complaints................................................................ 35 (i) Undisclosed Liabilities............................................................... 35 (j) Subsequent Filings.................................................................... 36 (k) Properties............................................................................ 37 (l) Intellectual Property................................................................. 38 (m) Certain Contracts..................................................................... 39 (n) Litigation; Decrees................................................................... 41 (o) Absence of Changes or Events.......................................................... 41 (p) Compliance with Applicable Laws....................................................... 42 (q) Compliance with Permits and Mortgage Programs......................................... 42 (r) Certain Business Practices............................................................ 43 (s) Insurance............................................................................. 44 (t) Employee Benefit Plans................................................................ 44 (u) Labor and Employment Matters.......................................................... 46 (v) Taxes................................................................................. 47 (w) Affiliate Transactions................................................................ 48 (x) Derivative Transactions............................................................... 48 (y) Investment Securities................................................................. 48 (z) Insurance Reports..................................................................... 49 (aa) Insurance Business.................................................................... 49 (bb) Securitizations....................................................................... 49 (cc) Bank Subsidiaries..................................................................... 50 (dd) Environmental, Health and Safety Matters.............................................. 51 (ee) Sufficiency of Assets................................................................. 51 (ff) Separation and Services Agreements.................................................... 52 (gg) Legal Opinions........................................................................ 52 5.3 Representations of Investor.................................................................... 52 (a) Authorization......................................................................... 52 (b) No Conflicts.......................................................................... 53 (c) Governmental Consents................................................................. 53 (d) Actions and Proceedings, etc.......................................................... 53 (e) Availability of Funds................................................................. 53 (f) Acquisition of Investor Equity Interests for Investment............................... 53 ARTICLE VI COVENANTS AND OTHER AGREEMENTS................................................................................... 54 6.1 Covenants of Seller and the Company............................................................ 54 (a) Access................................................................................ 54 (b) Ordinary Conduct...................................................................... 54 (c) Non-Solicitation of Takeover Proposal................................................. 58 (d) Modifications......................................................................... 58 (e) Non-Competition....................................................................... 59 (f) Insurance............................................................................. 59 (g) Pre-Closing Action.................................................................... 59 (h) Operating Agreement................................................................... 59 6.2 Covenants of Investor.......................................................................... 59 (a) Confidentiality....................................................................... 59
ii (b) No Additional Representations; Disclaimer Regarding Estimates and Projections........................................................................... 60 6.3 Mutual Covenants............................................................................... 61 (a) Consents.............................................................................. 61 (b) Cooperation........................................................................... 61 (c) Publicity............................................................................. 61 (d) Reasonable Best Efforts............................................................... 61 (e) Certain Regulatory Filings............................................................ 62 (f) Employee Matters...................................................................... 64 (g) Notice of Change of Control........................................................... 64 (h) Notice of Breach...................................................................... 64 (i) LLC Operating Agreement Amendments.................................................... 64 (j) Section 754 Election.................................................................. 65 (k) Preferred Interests................................................................... 65 (l) Government Ownership Laws............................................................. 65 ARTICLE VII TAX MATTERS...................................................................................................... 66 7.1 Income Tax Indemnification by Seller........................................................... 66 7.2 Allocation of Certain Taxes and Tax Items...................................................... 67 7.3 Filing and Payment Responsibilities............................................................ 67 7.4 Refunds, Carrybacks and Tax Benefits........................................................... 69 7.5 Cooperation and Exchange of Information........................................................ 70 7.6 Tax Contests................................................................................... 71 7.7 Tax Allocation Agreements...................................................................... 72 7.8 Conflicts...................................................................................... 72 ARTICLE VIII TERMINATION...................................................................................................... 72 8.1 Ability to Terminate........................................................................... 72 8.2 Effect of Termination.......................................................................... 73 8.3 Procedure upon Termination..................................................................... 73 ARTICLE IX INDEMNIFICATION.................................................................................................. 74 9.1 Survival of Representations.................................................................... 74 9.2 Indemnification of Investor by Seller.......................................................... 74 9.3 Indemnification of Seller by Investor.......................................................... 75 9.4 Procedures Relating to Indemnification......................................................... 75 9.5 Compromise and Settlement...................................................................... 76 9.6 Cooperation.................................................................................... 77 9.7 Limitation on Indemnification.................................................................. 77 ARTICLE X CALL OPTION...................................................................................................... 78 10.1 Call Option.................................................................................... 78 10.2 Conditions to Exercise of the Call Option...................................................... 78
iii 10.3 Determination of Fair Market Value............................................................. 79 10.4 Creation of NAO Subsidiary and Contribution of NAO Assets...................................... 80 10.5 Covenants Prior to Exercise of Call Option..................................................... 82 10.6 Covenants After Call Option Notice and Before the Call Option Closing Date..................... 84 10.7 Covenants after the Call Option Closing Date................................................... 85 ARTICLE XI MISCELLANEOUS.................................................................................................... 86 11.1 Directors and Officers Indemnification......................................................... 86 11.2 Further Assurances............................................................................. 87 11.3 Assignment..................................................................................... 87 11.4 No Third-Party Beneficiaries................................................................... 88 11.5 Expenses....................................................................................... 88 11.6 Amendment and Waiver........................................................................... 88 11.7 Notices........................................................................................ 88 11.8 Counterparts................................................................................... 89 11.9 Entire Agreement............................................................................... 89 11.10 Brokerage...................................................................................... 89 11.11 Disclosure on Schedules........................................................................ 90 11.12 Severability................................................................................... 90 11.13 Governing Law.................................................................................. 90 11.14 Jurisdiction; Waiver of Jury Trial............................................................. 91 11.15 Incorporation of Schedules..................................................................... 91 11.16 No Recourse.................................................................................... 91 11.17 Specific Performance........................................................................... 91 11.18 Integration.................................................................................... 91
iv SCHEDULES Schedule 1.1(a)(i) [Reserved] Schedule 1.1(a)(ii) Balance Sheet Adjustments Schedule 1.1(a)(iii) Applicable Principles and Methodologies Schedule 1.1(a)(iv) IO Subsidiaries Schedule 1.1(a)(v) Material Subsidiaries Schedule 1.1(a)(vi) Tangible Adjustments Schedule 1.3(c)(I) Company Knowledge Group Schedule 1.3(c)(II) Investor Knowledge Group Schedule 1.3(c)(III) Seller Knowledge Group Schedule 2.3(a) Converting Entities Schedule 2.3(c) Synthetic Lease Assets Schedule 4.1(b) Seller Group Indebtedness Schedule 4.1(f) A.M. Best Company Rated Subsidiaries Schedule 4.3(a) Governmental Consents Schedule 4.3(b) Governmental Authorizations Schedule 5.1(c) Seller Governmental Consents Schedule 5.1(f)(i) Intercompany Agreements Schedule 5.1(f)(ii) Surviving Intercompany Indebtedness Schedule 5.2(b)(i) Significant Subsidiaries Schedule 5.2(b)(ii) Capitalization Schedule 5.2(b)(iii) Authorized Interests Schedule 5.2(c)(i) Subsidiaries Schedule 5.2(c)(ii) Equity Interests Schedule 5.2(c)(iii) Non-Owned Businesses Schedule 5.2(d) Consents Schedule 5.2(e) Company Governmental Consents Schedule 5.2(h) Reports and Complaints Schedule 5.2(i)(iv) Undisclosed Liabilities Schedule 5.2(k)(i) Leased Real Property Schedule 5.2(k)(iii) Owned Real Property Schedule 5.2(k)(vii) Property Permits Schedule 5.2(l)(i) Registered Intellectual Property Schedule 5.2(l)(ii) Intellectual Property Schedule 5.2(m) Certain Contracts Schedule 5.2(n) Litigation; Decrees Schedule 5.2(o)(i) Absence of Changes Schedule 5.2(o)(ii) Absence of Actions Outside Ordinary Course of Business Schedule 5.2(q) Investigations Schedule 5.2(r) Finite Insurance Schedule 5.2(t)(i) Employee Benefit Plans Schedule 5.2(u) Labor and Employment Matters Schedule 5.2(v)(iv) Audits Schedule 5.2(v)(vi) Tax Allocation Agreements Schedule 5.2(bb)(iv) Securitization Instrument Defaults
v Schedule 5.2(bb)(v) Credit Enhancements and Guaranties Schedule 5.2(cc) Banks Schedule 5.2(dd) Environmental, Health and Safety Matters Schedule 5.2(ee) Sufficiency of Assets Schedule 5.2(ff) Separation and Services Agreements Schedule 5.3(c) Investor Governmental Consents Schedule 6.1(b)-1 Ordinary Conduct Schedule 6.1(b)-2 New Activities Schedule 6.1(b)(viii) Financing Activities Schedule 6.1(g) Pre-Closing Restructurings Schedule 10.1 Terms and Conditions of Call Option Transactions
EXHIBIT Exhibit A Form of Agreement on Separation Exhibit B Form of Canada Consumer Agreement Exhibit C [Reserved] Exhibit D Summary of Principal Terms of Asset Retention Transaction Exhibit E Form of Dealer Service Agreement Exhibit F Form of Employee Matters Agreement Exhibit G Form of European Cooperation Agreement Exhibit H Summary of Principal Terms of Bank Restructuring Transactions Exhibit I Form of Insurance Services Agreement Exhibit J Form of Information Technology Agreement Exhibit K Form of IO Consumer Finance Agreement Exhibit L Form of License Agreement Exhibit M Form of LLC Operating Agreement Exhibit N Form of Marketing Services Agreement Exhibit O Form of Master Services Agreement Exhibit P Form of Registration Rights Agreement Exhibit Q Summary of Principal Terms of Residual Liability Payout Transaction Exhibit R Summary of Principal Terms of Accelerated Payments Transaction Related to Trade Payables Agreement Exhibit S Form of Synthetic Lease Assignment and Assumption Agreement Exhibit T Form of Termination and Release Agreement Exhibit U Form of Transition Services Agreement Exhibit V Form of U.S. Consumer Agreement Exhibit W Form of Remarketing Service Agreement Exhibit X Summary of Principal Terms of Vehicle Service Contract Premium and Claim Payment Transaction Exhibit Y Form of Warehouse Facility Agreement Exhibit Z Term Sheet for Preferred Interests
vi This PURCHASE AND SALE AGREEMENT (the "Agreement"), is made as of April 2, 2006, by and among GENERAL MOTORS CORPORATION, a Delaware corporation ("Seller"), GENERAL MOTORS ACCEPTANCE CORPORATION, a Delaware corporation (the "Company"), GM FINANCE CO. HOLDINGS INC., a Delaware corporation ("Holdco"), and FIM HOLDINGS LLC, a Delaware limited liability company ("Investor"). Seller, the Company, Holdco and Investor are sometimes referred to herein collectively as the "Parties" and individually as a "Party." WHEREAS, Seller owns 100% of the outstanding capital stock of the Company; WHEREAS, Holdco is a wholly owned subsidiary of Seller; WHEREAS, Investor desires to purchase from Seller, and Seller desires to sell to Investor, common limited liability company interests representing 51% of the common limited liability company interests of the Company outstanding on a fully diluted basis immediately following the purchase of such limited liability company interests; and WHEREAS, Investor and Seller desire to purchase from the Company certain preferred limited liability company interests as described herein; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. (a) As used in this Agreement, the following terms shall have the following meanings: "Adjusted Final Tangible Net Book Value" shall mean the amount resulting from subtracting the Tangible Adjustment Amount from an amount equal to the total assets less total liabilities of the FinanceCo Companies on a consolidated basis as shown on the schedule to the Adjusted Final Closing Balance Sheet. "Affiliate" shall have the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act of 1934, as amended. "Aggregate Gain" shall mean, with respect to any period, the aggregate amount of all Gains during such period. "Aggregate Loss" shall mean, with respect to any period, the aggregate amount of all GMAC Losses during such period. "Agreement on Separation" shall mean an Agreement on Indemnification and Certain Matters Related to Separation by and between Seller and the Company, in the form of Exhibit A attached hereto. "Ancillary Agreements" shall mean the LLC Operating Agreement, Registration Rights Agreement, Call Option Agreement, Carve-Out Agreement, GMAC Bank (FSB) Agreement, Employee Matters Agreement, Synthetic Lease Assignment and Assumption Agreement, Warehouse Facility Agreement, Termination and Release Agreement, Vehicle Service Contract Premium and Claim Payment Agreement, Residual Liability Payout Agreement and Supplier Early Payment Program Termination Agreement. "Antitrust Laws" shall mean the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act, in each case as amended, the MCR and all other federal, provincial, state and foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition. "Applicable Accounting Principles" shall mean GAAP as in effect on September 30, 2005 applied in a manner consistent with the principles employed in the preparation of the audited consolidated financial statements as of December 31, 2004 for the Company and its Subsidiaries or, to the extent of changes in GAAP between December 31, 2004 and September 30, 2005, the principles employed in the preparation of the unaudited consolidated financial statements as of September 30, 2005 for the Company and its Subsidiaries set forth in the Company's Form 10-Q for the quarterly period ending on such date. "Auto Business" shall mean the NAO Business and the IO Business and the assets and liabilities relating thereto (including, without duplication, the Receivables, NAO Subsidiary, the IO Subsidiaries, GMAC Canada, the Securitization SPVs, the Other Auto Assets, GMAC Automotive Bank and the GMAC Unsecured Auto Debt). "Auto Business Fair Market Value" shall mean the fair market value of the Auto Business as of the date of the Call Option Notice determined under Section 10.3 hereof; provided that, in connection with such determination, the
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