Chrysler Settlement Stip On Verdict

JONES DAY 222 East 41st Street New York, New York 10017 Telephone: (212) 326-3939 Facsimile: (212) 755-7306 Corinne Ball Veerle Roovers JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Telephone: (216) 586-3939 Facsimile: (216) 579-0212 David G. Heiman JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia 30309 Telephone: (404) 521-3939 Facsimile: (404) 581-8330 Jeffrey B. Ellman Attorneys for Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x : In re : : Old Carco LLC : (f/k/a Chrysler LLC), et al., : : Debtors. : ---------------------------------------------------------------x

Chapter 11 Case No. 09-50002 (AJG) (Jointly Administered)

STIPULATION AND AGREED ORDER RESOLVING (I) MOTION OF ADRIANA MRAZ, ESTATE OF RICHARD MRAZ, ADDISON MRAZ, JOE LOPEZ AND ROY LOPEZ FOR RELIEF FROM THE AUTOMATIC STAY TO ALLOW APPEAL TO CONTINUE [DOCKET NO. 3326] AND (II) CERTAIN RELATED LITIGATION This Stipulation and Agreed Order (the "Stipulation and Agreed Order") is made by and between (i) Old Carco LLC f/k/a Chrysler LLC ("Old Carco") and its affiliated debtors

and debtors in possession (collectively with Old Carco, the "Debtors"); (ii) Adriana Mraz, the Estate of Richard Mraz, Addison Mraz, Joe Lopez and Roy Lopez (collectively, the "Plaintiffs"); (iii) Safeco Insurance Company of America ("Safeco"); and (iv) the official committee of unsecured creditors appointed in these chapter 11 cases (the "Creditors' Committee"), as of September 4, 2009, with respect to the following: RECITALS A.

On April 30, 2009 (the "Petition Date"), Old Carco and 24 of its affiliated

Debtors commenced their reorganization cases by filing voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). On May 19, 2009, Debtor Alpha Holding LP commenced its reorganization case by filing a voluntary petition under chapter 11 of the Bankruptcy Code. By orders of the Court (Docket Nos. 97 and 2188), the Debtors' chapter 11 cases have been consolidated for procedural purposes only and are being administered jointly. The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. B.

On June 2, 2009, the Plaintiffs filed the Motion of Adriana Mraz, Estate of

Richard Mraz, Addison Mraz, Joe Lopez, and Roy Lopez for Relief from the Automatic Stay to Allow Appeal to Continue (Docket No. 3326) (the "Mraz Lift Stay Motion"). As set forth in the Mraz Lift Stay Motion, following the death of Richard Mraz in an automobile accident, the Plaintiffs commenced a lawsuit against DaimlerChrysler Corporation (as predecessor in interest to Old Carco) ("DCC") captioned as Adriana Mraz, et al. v. DaimlerChrysler Corp., et al., Case No. BC-332487 (the "Prepetition Lawsuit") in the Superior Court of California for the County of Los Angeles (the "Trial Court"), alleging, among other things, that Old Carco was negligent in the design, engineering, manufacture and distribution of a certain 1992 Dodge Dakota truck,

which negligence allegedly resulted in the death of Richard Mraz. On May 11, 2007, following a jury trial, the Trial Court entered judgment for the Plaintiffs in the Prepetition Lawsuit in the amount of $55,213,316.25 (the "Judgment"). C.

DCC timely initiated an appeal (the "Appeal") of the Judgment to

the Second District Court of Appeal for the State of California (the "Appellate Court"). The Prepetition Lawsuit and the Appeal are referred to herein collectively as the "Prepetition Litigation." D.

Pursuant to section 917.1 of the California Code of Civil Procedure, on

July 13, 2007, Safeco Insurance Company of America ("Safeco") posted a supersedeas bond (Bond No. 6388133) in the amount of $81,587,976.93 (the "Bond"). Safeco is holding approximately $111 million in collateral provided by the Debtors (the "Safeco Collateral") on account of the Bond and other bonds issued by Safeco for the Debtors. E.

The Appeal is subject to the automatic stay imposed by section 362 of the

Bankruptcy Code (the "Stay"). On the Petition Date, the Debtors filed a notice of suggestion of bankruptcy in the Appeal, and the Appellate Court stayed the proceedings therein. As of the Petition Date, the Appeal was fully briefed. Pursuant to the Mraz Lift Stay Motion, the Plaintiffs sought relief from the Stay to allow the Appeal (and any subsequent proceedings) to proceed to conclusion. F.

On July 9, 2009, the Debtors filed their Objection of Debtors and Debtors

in Possession to Request of Adriana Mraz, Estate of Richard Mraz, Addison Mraz, Joe Lopez and Roy Lopez for Relief from Automatic Stay (Docket No. 4562) (the "Debtors' Objection"). In the Debtors' Objection, the Debtors, among other things, requested that the Court deny the Mraz Lift Stay Motion, provided that, if the Debtors were unable to reach a consensual

resolution with the Plaintiffs, the Court could reconsider the Mraz Lift Stay Motion at the omnibus hearing scheduled in these cases on September 24, 2009. The Debtors' Objection further proposed that, in the event the Court were inclined to grant the Plaintiffs' relief from the Stay, such relief be limited to the completion of the proceedings currently pending before the Appellate Court. G.

On July 9, 2009, Safeco filed its Limited and Conditional Objection of

Safeco Insurance Company of America to Motion of Adriana Mraz, Estate of Richard Mraz, Addison Mraz, Joe Lopez, and Roy Lopez for Relief from the Automatic Stay to Allow an Appeal to Go Forward (Docket No. 4558) (together with the Debtors' Objection, the "Objections"), seeking to preserve its asserted rights with respect to the Bond. H.

On July 22, 2009, the Court entered an Order Granting Limited Relief

from the Automatic Stay in Connection with Motion of Adriana Mraz, Estate of Richard Mraz, Addison Mraz, Joe Lopez and Roy Lopez (Docket No. 4839) (the "Original Order"). The Original Order partially resolved the Mraz Lift Stay Motion by modifying the Stay solely to the extent necessary to (1) allow the Appellate Court to schedule oral argument on the Appeal and (2) permit the Plaintiffs and Safeco (in consultation with the Debtors and the Creditors' Committee) to initiate and participate in settlement discussions with respect to the Prepetition Litigation. In addition, the Original Order provided that the hearing on the remaining relief sought by the Mraz Lift Stay Motion and the Objections was adjourned and would be conducted, if needed, on September 10, 2009. I.

On August 6, 2009, the Appellate Court denied the Plaintiffs' request to

schedule oral argument on the Appeal, finding that "[b]ecause the bankruptcy court's order does not allow this court to completely dispose of the [Appeal], at this time it would be premature to

schedule oral argument." Order of Appellate Court, entered on docket of Appeal on August 6, 2009, at 1. J.

The Debtors, the Plaintiffs, Safeco and the Creditors' Committee have

agreed to resolve the Mraz Lift Stay Motion, the Objections and the Prepetition Litigation as set forth below. STIPULATION NOW, THEREFORE, it is hereby stipulated and agreed by and between the parties to this Stipulation and Agreed Order, through their undersigned counsel: 1.

In resolution of the Mraz Lift Stay Motion and the Objections, and in

resolution and full satisfaction of the Prepetition Litigation, Safeco's obligations under the Bond and any and all claims or causes of action that the Plaintiffs may have against the Debtors or Safeco, the Plaintiffs shall have a general unsecured nonpriority claim against Old Carco in the amount of $24,000,000 (the "General Unsecured Claim"), which shall be fully satisfied by the payment of $24,000,000, plus any interest accruing under paragraph 4 below (the "Settlement Payment"), to the Plaintiffs by Safeco as surety for Old Carco. 2.

The Plaintiffs agree that the Settlement Payment shall fully resolve and

satisfy any and all prepetition and postpetition claims, demands or liabilities, known or unknown, arising from or in connection with the Prepetition Litigation. Therefore, upon payment of the Settlement Payment, the Plaintiffs fully release and discharge the Debtor and Safeco and their respective subsidiaries and affiliates, and any agents, servants, employees, representatives, officers, directors and attorneys of any of the foregoing and the Creditors' Committee, from and against any and all claims, demands or liabilities arising from or in connection with the Prepetition Litigation and the Bond. Consequently, upon payment of the Settlement Payment, the Plaintiffs waive all rights under California Civil Code § 1542, which provides: "A general

release does not extend to claims that the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." 3.

Safeco is authorized to use the Safeco Collateral to make the Settlement

Payment. Accordingly, upon Safeco's exercise of such right, Safeco shall not have any claim against the Debtors or the Creditors' Committee on account of the Settlement Payment. 4.

On or before October 5, 2009 (the "Settlement Payment Date"), Safeco

shall make the Settlement Payment by wire transfer to the "Lieff, Cabraser, Heimann & Bernstein LLP Attorney Client Trust Account" (the "Trust Account"), pursuant to wire transfer instructions to be provided to Safeco by counsel for Plaintiffs. In the event that the Settlement Payment is not paid in full by the Settlement Payment Date, simple interest shall accrue at an annual percentage rate of 6% on any unpaid portion of the Settlement Payment. 5.

Prior to the Settlement Payment Date, the Plaintiffs shall furnish Safeco

with all information necessary for it to comply with the requirements of (a) 26 U.S.C. §§ 6041 and 6045 and (b) 26 C.F.R. §§ 1.6041-1 and 1.6041-6, including, but not limited to, a fully completed IRS Form 1099-MISC in form and content suitable for filing by Safeco with the Internal Revenue Service ("IRS"), together with such similar reporting forms as shall be required under the laws or regulations of any state having jurisdiction relating to such payments, including but not limited to the State of California. The Plaintiffs' undersigned counsel signing on behalf of Lieff, Cabraser, Heimann & Bernstein LLP warrants and represents that (a) he/she is duly authorized to receive all monies to be paid by Safeco under the Bond to or for the Plaintiffs in the Trust Account as provided in this Stipulation and Agreed Order, (b) he/she will promptly and properly hold and distribute all such monies in the appropriate manner to all Plaintiffs,

attorneys and others (if any) entitled thereto and (c) he/she shall fully comply with all reporting requirements of the IRS and of the aforesaid states under the statutes and regulations described in this paragraph, including, but not limited to, 26 C.F.R. § 1.6045-5 (if applicable to such counsel). 6.

Within two business days of the later of (a) Plaintiffs' receipt of the

Settlement Payment and (b) the date the Stipulation and Agreed Order becomes a final order, the Plaintiffs shall, at their own cost and expense, file with the Trial Court and/or the Appellate Court (as appropriate) (a) an Acknowledgement of Full Satisfaction of Judgment in the form attached hereto as Exhibit A and (b) an Exoneration of Bond with respect to the Bond in the form attached hereto as Exhibit B. Within two business days of the filing and service by Plaintiffs of the Acknowledgement of Full Satisfaction of Judgment and Exoneration of Bond, the Debtors shall, at their own cost and expense, file with the Appellate Court a Request for Dismissal of Appeal in the form attached hereto as Exhibit C. The Stay is hereby modified solely for the limited purpose of allowing Plaintiffs and the Debtors to make the filings required by this paragraph. 7.

Except to the extent expressly set forth herein, this Stipulation and Agreed

Order shall not (a) affect, alter, expand or diminish, and shall not be deemed or construed to effect a waiver of, any rights of the Debtors, the Plaintiffs, the Creditors' Committee or Safeco with respect to the Debtors or these bankruptcy cases under applicable federal or state law, whether arising under statute, common law, the Bond or other bonds posted by Safeco and any collateral supporting such bonds, indemnity agreements or any other agreements, or otherwise, and whether by way of equitable subrogation, equitable assignment, equitable lien or otherwise; or (b) be deemed or construed to create any further rights of the Debtors or Safeco with respect to any matters related to the Prepetition Litigation, including, but not limited to the Bond.

8.

Any modification, alteration or amendment of this Stipulation and Agreed

Order in whole or in part shall be subject to the further approval of the Court. No statement made or action taken in the negotiation of this Stipulation and Agreed Order may be used by any party for any purpose whatsoever. In the event this Stipulation and Agreed Order is not approved and entered by the Court, it shall be null and void in its entirety, and neither its execution, any provision contained herein (including, without limitation, the provisions of paragraph 1 relating to the General Unsecured Claim), nor its submission to the Court shall constitute or be directly or indirectly construed to constitute the submission by Plaintiffs to the jurisdiction of the Court for any purpose whatsoever, and the parties to this Stipulation and Agreed Order shall retain all rights pertaining to the Prepetition Litigation, the Bond, and the Mraz Lift Stay Motion as if this Stipulation and Agreed Order was never executed by the parties. 9.

Nothing contained herein shall constitute an assumption of any executory

contract pursuant to section 365 of the Bankruptcy Code. 10.

This Stipulation and Agreed Order shall be effective upon its entry by the

11.

The entry of this Stipulation and Agreed Order by the Court shall

Court.

constitute the Court's determination that (a) the terms of this Stipulation and Agreed Order satisfy the factors set forth in In re Iridium Operating LLC, 487 F. 3d 452 (2d Cir. 2007) and are, therefore, fair, reasonable and appropriate, are in the best interests of the Debtors' estates and creditors and constitute a proper exercise of the Debtors' business judgment; (b) the agreements herein are approved pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure; and (c) the Debtors are authorized to take such actions as are necessary or appropriate to implement the terms hereof.

12.

This Stipulation and Agreed Order is the entire agreement between the

parties in respect of the subject matter hereof and may be signed in counterpart originals. 13.

Each person signing this Stipulation and Agreed Order represents and

warrants that this Stipulation and Agreed Order is duly authorized by and binding on the party to this Stipulation and Agreed Order whom such person represents. 14.

The Court shall retain jurisdiction to hear and determine all matters arising

from the implementation of this Stipulation and Agreed Order. [Remainder of page intentionally left blank]

Dated: September 4, 2009

Respectfully submitted,

/s/ Jeffrey B. Ellman Corinne Ball Veerle Roovers JONES DAY 222 East 41st Street New York, New York 10017 Telephone: (212) 326-3939 Facsimile: (212) 755-7306

/s/ Edward J. Peterson Edward J. Peterson, III STICHTER, RIEDEL, BLAIN & PROSSER, P.A. 110 East Madison Street Suite 200 Tampa, Florida 33602 Telephone: (813) 229-0144 Facsimile: (813) 229-1811

David G. Heiman JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Telephone: (216) 586-3939 Facsimile: (216) 579-0212 Jeffrey B. Ellman JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia 30309 Telephone: (404) 521-3939 Facsimile: (404) 581-8330 ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION

/s/ Robert J. Nelson Elizabeth J. Cabraser Robert J. Nelson Scott P. Nealey LIEFF CABRASER HEIMANN AND BERNSTEIN, LLP 275 Battery Street, 30th Floor San Francisco, California 94111-3339 Telephone: (415) 956-1000 Facsimile: (415) 956-1008 ATTORNEYS FOR ADRIANA MRAZ, ESTATE OF RICHARD MRAZ, ADDISON MRAZ, JOE LOPEZ AND ROY LOPEZ

/s/ T. Scott Leo T. Scott Leo Grace Winkler Cranley LEO & WEBER One N. LaSalle St., Suite 3600 Chicago, Illinois 60602 Telephone: (312) 857-0910 Facsimile: (312) 857-1240 ATTORNEYS FOR SAFECO INSURANCE COMPANY OF AMERICA

/s/ Adam C. Rogoff Thomas Moers Mayer Kenneth H. Eckstein Adam C. Rogoff KRAMER LEVIN NAFTALIS & FRANKEL LLP 1177 Avenue of the Americas New York, New York 10036 Telephone: (212) 715-9100 Facsimile: (212) 715-8000 COUNSEL FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS

IT IS SO ORDERED. Dated: New York, New York September 24, 2009

s/Arthur J. Gonzalez UNITED STATES BANKRUPTCY JUDGE