DaimlerChrysler Retirement Agreement, February 2001

DaimlerChrysler Retirement Agreement, February 2001

Memorandum of Understanding
DaimlerChrysler Canada Inc./CAW Turnaround Plan Agreement

On January 29, 2001, the Company announced its Turnaround Plan to regain competitiveness given declining market conditions. The announcement stated reductions in employment levels were necessary and would be accomplished through a combination of retirements, special programs, layoffs and attrition.

Senior Management and the CAW reviewed the impact of the plan on the Canadian workforce, and in particular on those groups for which the CAW is the bargaining agent, i.e. hourly, MOPAR, salary, and Security.

The Union expressed the need to minimize the impact of the announced reductions, both on employees and on each respective community. To that end, and consistent with the co-operative relationship between the Company and the Union, this Memorandum of Understanding outlines the agreement reached regarding Turnaround Plan initiatives:

1. Retirement Incentive Program
In order to reduce the number of employees laid off as a result of the Plan, the following retirement incentive program will be provided:

a) A lump sum retirement allowance of $26,000 will be paid to eligible employees who choose to retire during the window period applicable to each location. The Company will endeavour to provide eligible employees with a window of at least 4 but no more than 6 weeks to review the package and make their decision.

b) In addition, a New Vehicle Purchase incentive in the form of a $16,000 voucher will be provided to each employee who elects to retire under the above-noted program towards the purchase of a vehicle under the New Vehicle Purchase Program. A payment of $10,500, representing the cash equivalent of anticipated income tax required by the Canada Customs and Revenue Agency on the value of the voucher, will also be provided to the employee. Upon retirement, the employee will elect to receive the voucher and associated cash payment of $10,500 for the income tax thereon either upon retirement or in January, 2002. The voucher will have an expiry date of December 31, 2002.

c) Eligibility extends to employees who are eligible to retire by June 30, 2001 under the 30 & Out, 60 & 10, or 85 point provisions of the DaimlerChrysler Canada Inc.-CAW Pension Agreement. The Retirement Incentive Program will be offered to eligible employees who retire concurrent with reductions in employment levels attributable to the Turnaround Plan.

d) The maximum number of employees eligible for the retirement incentive program will be limited to the number of employees to be laid off as a result of the Plan and as outlined in Attachment A. Windsor Assembly Plant and Pillette Road Truck Assembly Plant limits will be determined on a Windsor Complex basis. Limits for the units represented by CAW Local 1498 will be determined on a Windsor area basis.

e) The cost of lump sum retirement allowances and New Vehicle Purchase incentives will offset future corporation contributions to the SUB fund.

2. Supplemental Unemployment Benefits (SUB)
A maximum reduction of 1 SUB credit unit for each SUB benefit paid, regardless of the state of the SUB fund, will be in force until June 30, 2002.

3. Separation Incentive Program
Where the Retirement Incentive Program has generated insufficient attrition to offset Turnaround Plan layoffs, a separation incentive of $3,600 per full year of seniority (pro-rated at $300 per month for partial years) will be offered to seniority employees with less than five years of seniority at time of layoff. The incentive will be available to employees identified for layoff due to the Plan and payable upon application within two weeks of layoff. The total number of separation incentives available when combined with the total number of retirement incentives taken will not exceed layoffs at each location. The separation incentives will be used to offset future corporation contributions to the SUB fund. Upon receipt of the separation incentive, the employee will cease to be an employee of the company and will be deemed to have lost his/her seniority.

4. Brampton Assembly Plant
The parties agree that Brampton Assembly Plant poses a unique situation given the significant number of employees to be laid off.

a) Training conducted within this context will be authorized for up to (8.0) eight hours and funded by the National Training Committee. The Company will provide $250,000 in start-up costs for this purpose. Training has been designed to ensure workers scheduled for layoff leave the active roll with an understanding of the market conditions leading to the need for the Turnaround Plan.

b) For hourly employees laid off as a result of the Turnaround Plan, Letter (5.9) Preferential Hires, will apply for the purpose of securing positions in other plants covered by the Production and Maintenance agreement.

5. Pre-retirement Counselling
To the extent required, and providing operating circumstances permit, employees electing to retire under the retirement incentive program will be offered pre-retirement counselling for up to 8 hours in duration. The counselling will be authorized and funded by the National Training Committee.

6. Miscellaneous
Employees will be eligible for the Dependent Scholarship and Child Care Reimbursement programs provided they are eligible for health care benefits.

The parties recognize the difficulty of the current market and agree this Memorandum of Understanding applies solely to the CompanyÍs Turnaround Plan without prejudice or precedent with respect to any other matter. The parties also commit themselves to resolve issues as they may arise during the PlanÍs implementation. The parties further pledge that the strong union-management relationship enabling the changes outlined herein, will continue to serve the parties in addressing issues and concerns which may arise.

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