Group and the International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America (the “UAW”) have agreed to a
memorandum of understanding to supplement Chrysler Group’s existing collective
bargaining agreement. Under the MoU, Chrysler Group will provide additional
contributions to the VEBA Trust of an aggregate of $700 million in four equal
annual instalments. The initial payment will be made on closing of a
transaction in which the VEBA Trust will sell to Fiat North America, one of
Fiat’s wholly owned subsidiaries, all of the VEBA Trust’s equity interest in
Chrysler. Additional payments of $175 million will be payable on each of the
next three anniversaries of the initial payment. Chrysler Group expects to fund
the initial contribution to the VEBA Trust from available cash on hand.
consideration for these contributions, the UAW will agree to certain
commitments to continue to support the industrial operations at Chrysler Group
and the further implementation of the Fiat-Chrysler alliance, including to use
best efforts to cooperate in the continued roll-out of Fiat-Chrysler World
Class Manufacturing programs, actively participate in benchmarking efforts
associated with implementation of these programs across all of Fiat-Chrysler
manufacturing sites to ensure objective performance assessments and provide for
proper application of WCM principles and actively assist in the achievement of
the Group’s long-term business plan.
Chrysler Group Board of Directors has also determined to support the
declaration and payment by Chrysler Group of a special distribution in an
aggregate amount of approximately $1,900 million, subject to the Board
completing its diligence and receiving independent assurance regarding the
distribution payment capacity of Chrysler Group, a process that management
expects will be completed on or before January 20, 2014
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