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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND AMENDMENT TO SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
----------------
CHRYSLER CORPORATION
(NAME OF SUBJECT COMPANY)
TRACINDA CORPORATION
(BIDDER)
----------------
COMMON STOCK, $1.00 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
171196 10 8
(CUSIP NUMBER OF COMMON STOCK)
ANTHONY L. MANDEKIC
TRACINDA CORPORATION
4835 KOVAL LANE
LAS VEGAS, NV 89109
(702) 737-8060
(NAMES, ADDRESSES AND TELEPHONE NUMBERS OF PERSONS AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
COPIES TO:
STEPHEN FRAIDIN, ESQ. STEPHEN SILBERT, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & CHRISTENSEN, WHITE, MILLER, FINK &
JACOBSON JACOBS
ONE NEW YORK PLAZA 2121 AVENUE OF THE STARS
NEW YORK, NY 10004 EIGHTEENTH FLOOR
(212) 859-8000 LOS ANGELES, CA 90067
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$700,000,000.00 $140,000.00
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* The transaction valuation was determined by multiplying the 14,000,000
shares subject to the tender offer by the offer price of $50.00.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: _______________________________________________________
Form or Registration No.: _____________________________________________________
Filing Party: _________________________________________________________________
Date Filed: ___________________________________________________________________
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(1) Name of Reporting Person
Tracinda Corporation
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S.S. or I.R.S. Identification No. of Above Person
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(2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
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(b)
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(3) SEC Use Only
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(4) Sources of Funds (See Instructions) BK
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(e)
or 2(f).
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(6) Citizenship or Place of Organization Nevada
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(7) Aggregate Amount Beneficially Owned by Each Reporting Person 36,000,000
--------------
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(8) Check if the Aggregate Amount in Row 7 Excludes Certain Shares (See
Instructions).
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(9) Percent of Class Represented by Amount
in Row 7 Approximately 9.75% as of March 31, 1995
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(10) Type of Reporting Person (See Instructions) CO and GM
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2
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(1) Name of Reporting Person
Kirk Kerkorian
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S.S. or I.R.S. Identification No. of Above Person
-----------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
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(b)
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(3) SEC Use Only
--------------------------------------------------------------
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(4) Sources of Funds (See Instructions) AF
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(e)
or 2(f).
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(6) Citizenship or Place of Organization USA
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(7) Aggregate Amount Beneficially Owned by Each Reporting Person 36,000,000
--------------
- --------------------------------------------------------------------------------
(8) Check if the Aggregate Amount in Row 7 Excludes Certain Shares (See
Instructions).
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(9) Percent of Class Represented by Amount
in Row 7 Approximately 9.75% as of March 31, 1995
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(10) Type of Reporting Person (See Instructions) IN and GM
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3
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This Statement on Schedule 14D-1 relates to a tender offer by Tracinda
Corporation, a Nevada corporation (the "Offeror"), to purchase up to
14,000,000 shares of common stock, par value $1.00 per share (including the
associated Preferred Stock Purchase Rights) (the "Shares"), of Chrysler
Corporation, a Delaware corporation (the "Company"), at a purchase price of
$50.00 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated June
27, 1995 (the "Offer to Purchase"), and the related Letter of Transmittal
(which collectively constitute the "Offer"), copies of which are filed as
Exhibits (a)(1) and (a)(2) hereto, respectively, and which are incorporated
herein by reference.
This Statement on Schedule 14D-1 shall also be deemed to amend the Schedule
13D, as amended, previously filed by the Offeror and other joint filers with
respect to the Shares.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Chrysler Corporation. The address of
the principal executive offices of the Company is set forth in Section 7
("Certain Information Concerning the Company") of the Offer to Purchase, which
is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is the Common Stock, par value $1.00 per share, of the Company and the
associated Preferred Stock Purchase Rights. The information set forth in the
"Introduction" to the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares") of the
Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) through (d), (g): The information set forth in Section 8 ("Certain
Information Concerning the Offeror") of the Offer to Purchase is incorporated
herein by reference.
(e) and (f): Neither the Offeror, the sole director of the Offeror nor the
executive officers of the Offeror during the last five years has (i) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b): The information set forth in Section 10 ("Background of the
Offer; Past Contacts, Transactions or Negotiations with the Company") of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b): The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
4
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF BIDDER.
The information set forth in the "Introduction", Section 10 ("Background of
the Offer; Past Contacts, Transactions or Negotiations with the Company") and
Section 11 ("Purpose of the Offer; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference. Except as set forth in Sections
10 and 11 of the Offer to Purchase, the Offeror does not have any present
plans or proposals which relate to or would result in any of the events set
forth in Item 5 of Schedule 14D-1.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the "Introduction" and Section 10
("Background of the Offer; Past Contacts, Transactions or Negotiations with
the Company") is incorporated herein by reference.
(b) None.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "Introduction", Section 8 ("Certain
Information Concerning the Offeror") and Section 10 ("Background of the Offer;
Past Contacts, Transactions or Negotiations with the Company") of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the "Introduction" and in Section 15 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b) The information set forth in Section 14 ("Certain Regulatory and Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 14 ("Certain Regulatory and Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 9 ("Source and Amount of Funds") of
the Offer to Purchase is incorporated herein by reference.
(e) The information set forth in the "Introduction" and in Section 14
("Certain Regulatory and Legal Matters") of the Offer to Purchase is
incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
5
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) --Offer to Purchase, dated June 27, 1995.
(a)(2) --Form of Letter of Transmittal.
(a)(3) --Form of Letter from Wasserstein Perella & Co., Inc. as Dealer
Manager, to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(4) --Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
(a)(5) --Notice of Guaranteed Delivery.
(a)(6) --Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) --Form of Summary Announcement, dated June 27, 1995.
(a)(8) --Press Release issued by Offeror on June 26, 1995.
(b) --Credit Agreement, dated as of June 27, 1991, as amended, between
the Offeror and Bank of America National Trust and Association.
(c)(1) --Consulting Agreement, dated May 9, 1995, between the Offeror and
Lee Iacocca.
(c)(2) --Consulting Agreement, dated June 24, 1995, between the Offeror and
Alfred Boyer.
(c)(3) --Value Sharing Agreement, dated June 24, 1995, between the Offeror
and Lee Iacocca.
(c)(4) --Value Sharing Agreement, dated June 24, 1995, between the Offeror
and Alfred Boyer.
(d) --None.
(e) --Not applicable.
(f) --None.
6
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SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: June 27, 1995
Tracinda Corporation
By: /s/ Anthony L. Mandekic
---------------------------------
Name: Anthony L. Mandekic
Title: Secretary
7
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION PAGE
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(a)(1) --Offer to Purchase, dated June 27, 1995.
(a)(2) --Form of Letter of Transmittal.
(a)(3) --Form of Letter from Wasserstein Perella & Co., Inc. as Dealer
Manager, to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(4) --Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
(a)(5) --Notice of Guaranteed Delivery.
(a)(6) --Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) --Form of Summary Announcement, dated June 27, 1995.
(a)(8) --Press Release issued by Offeror on June 26, 1995.
(b) --Credit Agreement, dated as of June 27, 1991, as amended,
between the Offeror and Bank of America National Trust and
Association.
(c)(1) --Consulting Agreement, dated May 9, 1995, between the Offeror
and Lee Iacocca.
(c)(2) --Consulting Agreement, dated June 24, 1995, between the
Offeror and Alfred Boyer.
(c)(3) --Value Sharing Agreement, dated June 24, 1995, between the
Offeror and Lee Iacocca.
(c)(4) --Value Sharing Agreement, dated June 24, 1995, between the
Offeror and Alfred Boyer.
(d) --None.
(e) --Not applicable.
(f) --None.
</TABLE>
8
<PAGE>
OFFER TO PURCHASE FOR CASH
UP TO 14,000,000 SHARES OF COMMON STOCK
OF
CHRYSLER CORPORATION
AT
$50 NET PER SHARE
BY
TRACINDA CORPORATION
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JULY 25, 1995, UNLESS THE OFFER IS
EXTENDED.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS CONDITIONED ON (i) THE MICHIGAN INSURANCE BUREAU HAVING ISSUED AN
ORDER EXEMPTING, ON TERMS SATISFACTORY TO THE OFFEROR, IN ITS SOLE DISCRETION,
THE OFFER FROM THE PROVISIONS OF THE MICHIGAN INSURANCE CODE OR THE OFFEROR
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF THE MICHIGAN
INSURANCE CODE ARE OTHERWISE INAPPLICABLE TO THE OFFER AND (ii) SATISFACTION
OF CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 13. IN ADDITION, THE NUMBER
OF SHARES THAT MAY BE PURCHASED PURSUANT TO THE OFFER IS SUBJECT TO REDUCTION
UNDER CERTAIN CIRCUMSTANCES. SEE "INTRODUCTION."
IMPORTANT
Any stockholder desiring to tender Shares should either (i) complete and
sign the Letter of Transmittal or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal and deliver the Letter of
Transmittal with the Shares and all other required documents to the Depositary
or follow the procedure for book-entry transfer set forth in Section 3 or (ii)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. A stockholder
having Shares registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such person if he desires to
tender those Shares.
Any stockholder who desires to tender Shares and cannot deliver such Shares
and all other required documents to the Depositary by the expiration of the
Offer must tender such Shares pursuant to the guaranteed delivery procedure
set forth in Section 3.
Questions and requests for assistance or additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase.
----------------
THE DEALER MANAGER FOR THE OFFER IS:
WASSERSTEIN PERELLA & CO., INC.
June 27, 1995
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TABLE OF CONTENTS
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SECTION PAGE
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Introduction............................................................ 1
1.Terms of the Offer; Proration........................................ 2
2.Acceptance for Payment and Payment for Shares........................ 4
3.Procedure for Tendering Shares....................................... 5
4.Withdrawal Rights.................................................... 7
5.Certain Federal Income Tax Consequences.............................. 8
6.Price Range of Shares................................................ 9
7.Certain Information Concerning the Company........................... 9
8.Certain Information Concerning the Offeror........................... 10
9.Source and Amount of Funds........................................... 11
10.Background of the Offer; Past Contacts, Transactions or Negotiations
with the Company....................................................... 12
11.Purpose of the Offer................................................. 27
12.Dividends and Distributions.......................................... 27
13.Certain Conditions to Offeror's Obligations.......................... 28
14.Certain Regulatory and Legal Matters................................. 31
15.Fees and Expenses.................................................... 34
16.Miscellaneous........................................................ 35
</TABLE>
i
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF
CHRYSLER CORPORATION
INTRODUCTION
Tracinda Corporation, a Nevada corporation (the "Offeror"), hereby offers to
purchase up to 14,000,000 shares of Common Stock, par value $1.00 per share
(including the associated Preferred Stock Purchase Rights) (the "Shares"), of
Chrysler Corporation, a Delaware corporation (the "Company"), at a purchase
price of $50 per Share, net to the seller in cash, without interest (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). Tendering holders of Shares will not be obligated to
pay brokerage fees or commissions or, except as set forth in the Letter of
Transmittal, transfer taxes on the purchase of Shares by the Offeror pursuant
to the Offer. The Offeror will pay all charges and expenses of Wasserstein
Perella & Co., Inc. (the "Dealer Manager"), Bank of America Illinois (the
"Depositary") and D.F. King & Co., Inc. (the "Information Agent") in
connection with the Offer.
According to the Company's Form 10-Q for the quarter ended March 31, 1995
(the "Form 10-Q"), as of March 31, 1995, there were 369,075,109 Shares
outstanding. The Offeror currently owns 36,000,000 Shares, or approximately
9.75% of the total outstanding Shares as of March 31, 1995. If 14,000,000
Shares are purchased by the Offeror pursuant to this Offer, the Offeror would
own 50,000,000 Shares, or approximately 13.5% of the total outstanding Shares
as of March 31, 1995. In addition, the Offeror may be deemed to be acting as
part of a group under Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), with Lee A. Iacocca, former Chairman of the
Company, who currently beneficially owns or controls 562,786 Shares and
exercisable options to purchase an additional 1,736,590 Shares (at exercise
prices ranging from $11.75 to $44.07), representing in the aggregate
approximately 0.6% of the total outstanding Shares as of March 31, 1995, and
with Alfred Boyer, an independent financial consultant, who owns listed
options to purchase 5,000 Shares at an exercise price of $40 per Share. The
Offeror, Mr. Iacocca and Mr. Boyer each disclaim any beneficial ownership in
the others' Shares, and neither Mr. Iacocca nor Mr. Boyer is a participant in
this Offer. Executives of the Offeror also own an aggregate of 6,000 Shares.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS, THE MICHIGAN INSURANCE BUREAU
HAVING ISSUED AN ORDER EXEMPTING, ON TERMS SATISFACTORY TO THE OFFEROR, IN ITS
SOLE DISCRETION, THE OFFER FROM THE PROVISIONS OF THE MICHIGAN INSURANCE CODE
OR THE OFFEROR BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF
THE MICHIGAN INSURANCE CODE ARE OTHERWISE INAPPLICABLE TO THE OFFER (THE
"INSURANCE CONDITION").
The Company has two indirect, wholly-owned insurance subsidiaries domiciled
in Michigan (the "Insurance Subsidiaries"), the assets of which, based on
public filings of the Company and the Insurance Subsidiaries, represent an
immaterial percentage of the consolidated assets of the Company. The Michigan
Insurance Code provides that a person may not make a tender offer for or
acquire securities of a Michigan domestic insurer if, after the consummation
of the offer, the person would be in control of the insurer. Control is
presumed to exist if the person holds 10% or more of another person's voting
securities. These provisions do not apply to an offer that the commissioner of
insurance by order exempts as not having been made or entered into for that
purpose and not having the effect of changing or influencing control of the
insurer or as otherwise not comprehended within the provisions of the Michigan
Insurance Code. For a more complete description of the relevant provisions of
the Michigan Insurance Code, see Section 14.
On June 26, 1995, the Offeror filed with the Michigan Insurance Bureau an
application for exemption from the relevant provisions of the Michigan
Insurance Code. Based on discussions between representatives of the Offeror
and the Michigan Insurance Bureau prior to the filing of the application,
there can be no assurance that the Offeror's application will be acted upon
prior to July 25, 1995, the initial Expiration Date (as defined below). Also
on June 26, 1995, the Offeror commenced a lawsuit in federal district court in
Michigan seeking to have the relevant provisions of the Michigan Insurance
Code declared inapplicable to the Offer. See Section 14.
<PAGE>
Based on information publicly available as of the date of this Offer to
Purchase, the purchase by the Offeror of 14,000,000 Shares pursuant to the
Offer would not result in the Offeror becoming the beneficial owner of 15% or
more of the outstanding Shares and, accordingly, would not (i) cause the
Offeror to be deemed an "Acquiring Person" within the meaning of the Amended
and Restated Rights Agreement, dated as of December 14, 1990, as amended,
between the Company and First Chicago Trust Company of New York, as Rights
Agent (the "Rights Agreement"), or (ii) cause the Offeror to be deemed an
"Interested Person" within the meaning of Section 203 of the General
Corporation Law of the State of Delaware (the "DGCL"). According to the Form
10-Q, in December 1994, the Company's Board of Directors approved a $1 billion
common stock repurchase program, subject to market and business conditions.
Also according to the Form 10-Q, during the quarter ended March 31, 1995, the
Company had repurchased approximately 8,600,000 Shares at a cost of
approximately $369,000,000. On May 18, 1995, the Company announced that it had
repurchased through that date an aggregate of $490,000,000 worth of Shares
and, subject to market conditions, expected to complete its $1 billion
repurchase plan within the next several months.
IF, AS A RESULT OF REPURCHASES OF OUTSTANDING SHARES BY THE COMPANY OR FOR
ANY OTHER REASON, THE PURCHASE BY THE OFFEROR OF 14,000,000 SHARES PURSUANT TO
THE OFFER WOULD CAUSE THE OFFEROR TO BE DEEMED AN ACQUIRING PERSON WITHIN THE
MEANING OF THE RIGHTS AGREEMENT OR AN INTERESTED PERSON WITHIN THE MEANING OF
SECTION 203 OF THE DGCL, THEN THE NUMBER OF SHARES TO BE PURCHASED BY THE
OFFEROR PURSUANT TO THE OFFER WILL BE REDUCED BY AN APPROPRIATE NUMBER OF
SHARES (TO BE DETERMINED BY THE OFFEROR, IN ITS SOLE DISCRETION) SO THAT THE
PURCHASE OF SHARES BY THE OFFEROR PURSUANT TO THE OFFER WILL NOT CAUSE THE
OFFEROR TO BE DEEMED AN ACQUIRING PERSON WITHIN THE MEANING OF THE RIGHTS
AGREEMENT OR AN INTERESTED PERSON WITHIN THE MEANING OF SECTION 203 OF THE
DGCL. SEE SECTION 14. In order to determine whether any reduction in the
number of Shares purchased by the Offeror pursuant to the Offer is required by
this paragraph, the Offeror intends to request the Company, immediately prior
to accepting tendered Shares for payment, to provide information concerning
the total number of outstanding Shares as of the then most recent practicable
date. If the Company fails to provide the requested information, the Offeror
will base its determination on the number of outstanding Shares as disclosed
in the Company's most recently filed report under the Exchange Act and such
other information as the Offeror, in its sole discretion, deems relevant under
the circumstances. If the number of Shares to be purchased by the Offeror
pursuant to the Offer is reduced pursuant to this paragraph, the Offer will be
extended until the expiration of a period ending on the tenth business day
from, and including, the date that notice of the reduction is first published,
sent or given to holders of Shares in the manner specified in Section 1. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a federal holiday, and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
The Offeror is seeking to purchase the Shares pursuant to the Offer in order
to increase its equity ownership in the Company and to further its position as
the Company's largest stockholder. As in the past, the Offeror may from time
to time propose to, or discuss with, the Company various means of enhancing
stockholder value, whether through an increase in the regular dividend, a
special dividend, a repurchase of Shares, a restructuring or otherwise. The
Offeror may determine not to take any actions in furtherance of this
objective. The Offeror has considered and is considering seeking the support
of other stockholders of the Company through a consent solicitation or proxy
contest to elect the Offeror's designees (who may or may not be affiliates of
the Offeror) as a minority, the majority, or the entire Board of Directors,
either by adding directors and/or replacing existing ones. The Offeror has
made no final determination with respect to this matter and at this time no
potential designees for directors of the Company have been selected. See
Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; PRORATION.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment and pay for up to 14,000,000
Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn in accordance
2
<PAGE>
with Section 4. The term "Expiration Date" means 12:00 Midnight, New York City
time, on Tuesday, July 25, 1995, unless the Offeror, in its sole discretion,
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by the Offeror, shall expire. The Offeror reserves
the right to accept for payment and to pay for more than 14,000,000 Shares
pursuant to the Offer, although it has no present intention to do so.
If more than 14,000,000 Shares (or such greater number of Shares as the
Offeror elects to accept for payment and pay for) shall be validly tendered by
the Expiration Date, and not withdrawn, the Offeror will, upon the terms and
subject to the conditions of the Offer, purchase 14,000,000 Shares (or such
greater number of Shares) on a pro rata basis (with adjustments to avoid
purchases of fractional Shares) based upon the number of Shares validly
tendered by the Expiration Date and not withdrawn. In the event that proration
of tendered Shares is required, because of the difficulty of determining the
precise number of Shares properly tendered and not withdrawn, the Offeror does
not expect to announce the final results of proration or pay for any Shares
until at least seven New York Stock Exchange ("NYSE") trading days after the
Expiration Date. Preliminary results of proration will be announced by press
release as promptly as practicable. Holders of Shares may obtain such
preliminary information from the Information Agent.
If, as a result of repurchases of outstanding Shares by the Company or for
any other reason, the purchase by the Offeror of 14,000,000 Shares pursuant to
the Offer would cause the Offeror to be deemed an Acquiring Person within the
meaning of the Rights Agreement or an Interested Person within the meaning of
Section 203 of the DGCL, then the number of Shares to be purchased by the
Offeror pursuant to the Offer will be reduced by an appropriate number of
Shares (to be determined by the Offeror in its sole discretion) so that the
purchase of Shares by the Offeror pursuant to the Offer will not cause the
Offeror to be deemed an Acquiring Person within the meaning of the Rights
Agreement or an Interested Person within the meaning of Section 203 of the
DGCL. See "Introduction" and Section 14.
If the Offeror shall decide, in its sole discretion, to increase the Offer
Price and if, at the time that notice of such increase is first published,
sent or given to holders of Shares in the manner specified below, the Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from, and including, the date that such notice is
first so published, sent or given, then the Offer will be extended until the
expiration of such period of ten business days.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE INSURANCE CONDITION AND
CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 13. The Offeror reserves the
right (but shall not be obligated), in accordance with applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"), to
waive any condition to the Offer. If any of the conditions set forth in
Section 13 have not been satisfied by 12:00 Midnight, New York City time, on
July 25, 1995 (or any other time then set as the Expiration Date), the Offeror
may elect to (1) extend the Offer and, subject to applicable withdrawal
rights, retain all tendered Shares until the expiration of the Offer, as
extended, (2) waive any unsatisfied conditions (other than the Insurance
Condition) and, subject to complying with applicable rules and regulations of
the Commission, accept for payment all Shares so tendered (up to a maximum of
14,000,000 Shares) and not extend the Offer, (3) terminate the Offer and not
accept for payment any Shares and promptly return all tendered Shares to
tendering stockholders, or (4) amend the Offer.
The Offeror reserves the right (but will not be obligated), at any time or
from time to time in its sole discretion, to extend the period during which
the Offer is open and, thereby, delay acceptance for payment of and the
payment for any Shares, by giving oral or written notice of the extension to
the Depositary and by making a public announcement of the extension. Any
extension of the Expiration Date will be for the time period determined by the
Offeror in its sole discretion, subject to any minimum time required under the
applicable circumstances by any rule, regulation, interpretation or position
of the Commission or the Commission staff. Under no circumstances will
interest be paid on the purchase price for tendered Shares, whether or not the
Offer is extended. There can be no assurance that the Offeror will exercise
its right to extend the Offer.
Subject to the applicable rules and regulations of the Commission, the
Offeror also expressly reserves the right, at any time and from time to time,
in its sole discretion, (1) to delay payment for any Shares regardless of
3
<PAGE>
whether such Shares were theretofore accepted for payment, or to terminate the
Offer and not to accept for payment or pay for any Shares not theretofore
accepted for payment or paid for if any of the conditions set forth in Section
13 shall cease to be satisfied, by giving oral or written notice of such delay
or termination to the Depositary and (2) to amend the Offer in any respect.
The Offeror's right to delay payment for any Shares or not to pay for any
Shares theretofore accepted for payment is subject to the applicable rules and
regulations of the Commission, including Rule 14e-1(c) of the Exchange Act
relating to the Offeror's obligation to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, or termination or amendment of the Offer
will be followed, as promptly as practicable, by public announcement thereof,
such announcement in the case of an extension to be issued not later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rules 14d-4(c) and 14e-1(d) under the Exchange Act. Without
limiting the obligation of the Offeror under such rules or the manner in which
the Offeror may choose to make any public announcement, the Offeror currently
intends to make announcements by issuing a press release to the Dow Jones News
Service and making any appropriate filing with the Commission.
If the Offeror makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Offeror will disseminate additional tender offer materials and
extend the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and
14(e)-1 under the Exchange Act or otherwise. The minimum period during which
an Offer must remain open following material changes in the terms of the Offer
or the information concerning the Offer, other than a change in price or a
change in percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the terms or information
changes. With respect to a change in price or a change in percentage of
securities sought, a minimum ten-business day period is generally required to
allow for adequate dissemination to stockholders.
Requests are being made to the Company pursuant to Rule 14d-5 of the
Exchange Act and Section 220 of the DGCL for the use of the Company's
stockholder lists and security position listings for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares, and will be furnished to brokers, dealers, banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder lists, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares, by the Offeror following receipt
of such lists or listings from the Company, or by the Company if it so elects.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Offeror will accept for payment and will pay for up to
14,000,000 Shares validly tendered prior to the Expiration Date and not
heretofore withdrawn in accordance with Section 4 promptly after the later to
occur of (a) the Expiration Date and (b) subject to compliance with Rule 14e-
1(c) under the Exchange Act, the satisfaction or waiver of the conditions set
forth in Section 13. Subject to compliance with Rule 14e-1(c) under the
Exchange Act, the Offeror expressly reserves the right to delay payment for
Shares in order to comply in whole or in part with any applicable law. See
Sections 1 and 14. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates for such Shares or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company, the Midwest Securities Trust Company
or the Philadelphia Depository Trust Company (each, a "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in Section 3, (ii) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof)
with all required signature guarantees or, in the case of a book-entry
transfer, an Agent's Message (as defined below), and (iii) any other documents
required by the Letter of Transmittal.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as,
if and when the Offeror gives oral or written notice to the Depositary of the
Offeror's acceptance of such Shares for payment. In all cases, payment for
Shares accepted for
4
<PAGE>
payment pursuant to the Offer will be made by deposit of the purchase price
with the Depositary, which will act as agent for tendering stockholders for
the purpose of receiving payment from the Offeror and transmitting such
payment to tendering stockholders. If, for any reason whatsoever, acceptance
for payment of any Shares tendered pursuant to the Offer is delayed, then,
without prejudice to the Offeror's rights under Section 1, the Depositary may,
nevertheless, on behalf of the Offeror, retain tendered Shares, and such
Shares may not be withdrawn, except to the extent that the tendering
stockholders are entitled to withdrawal rights as described in Section 4 below
and as otherwise required by Rule 14e-1(c) under the Exchange Act. Under no
circumstances will interest be paid on the Offer Price for tendered Shares by
the Offeror because of any delay in making such payment. If any tendered
Shares are not purchased for any reasons (including, without limitation,
proration), or if certificates are submitted for more Shares than are
tendered, certificates for such Shares not purchased or tendered will be
returned, without expense to the tendering shareholder (or, in the case of
Shares tendered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility, such Shares will be credited to an
account maintained at the appropriate Book-Entry Transfer Facility), as
promptly as practicable following the expiration or termination of the Offer.
If, prior to the Expiration Date, the Offeror increases the Offer Price,
such increased Offer Price will be paid to all stockholders whose Shares are
purchased pursuant to the Offer.
The Offeror reserves the right to transfer or assign, in whole or from time
to time in part, to one or more affiliates of the Offeror the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not release the Offeror of its obligations under the Offer or
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and any other required documents, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure set forth
below. In addition, either (i) certificates representing such Shares must be
received by the Depositary or such Shares must be tendered pursuant to the
procedure for book-entry transfer set forth below, and a Book-Entry
Confirmation must be received by the Depositary, in each case prior to the
Expiration Date, or (ii) the guaranteed delivery procedure set forth below
must be complied with. No alternative, conditional or contingent tenders will
be accepted. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at each Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may
be effected through book-entry at a Book-Entry Transfer Facility prior to the
Expiration Date, (i) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or an Agent's Message, and any other required documents, must, in any case, be
transmitted to and received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase or (ii) the guaranteed
delivery procedures described below must be complied with.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against the participant.
5
<PAGE>
Guarantee of Signatures. Signatures on the Letter of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the
Securities Transfer Agent's Medallion Program (each of the foregoing
constituting an "Eligible Institution"), unless the Shares tendered thereby
are tendered (i) by a registered holder of Shares who has not completed either
the box labeled "Special Delivery Instructions" or the box labeled "Special
Payment Instructions" on the Letter of Transmittal or (ii) for the account of
any Eligible Institution. If the certificates evidencing Shares are registered
in the name of a person or persons other than the signer of the Letter of
Transmittal, or if payment is to be made, or delivered to, or certificates for
unpurchased Shares are to be issued or returned to, a person other than the
registered owner or owners, then the tendered certificates must be endorsed or
accompanied by duly executed stock powers, in either case signed exactly as
the name or names of the registered owner or owners appear on the certificates
or stock powers, with the signatures on the certificates or stock powers
guaranteed by an Eligible Institution as provided in the Letter of
Transmittal. See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the
Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless
be tendered if all of the following guaranteed delivery procedures are duly
complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Offeror herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect thereto), together with
a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), and any required signature guarantees, or, in the case
of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three NYSE trading days after the date of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after (i) timely
receipt by the Depositary of certificates for such Shares or a Book-Entry
Confirmation with respect thereto, (ii) a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof), with all required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
(iii) any other documents required by the Letter of Transmittal. Accordingly,
tendering stockholders may be paid at different times depending upon when
certificates for Shares or Book-Entry Confirmations with respect to Shares are
actually received by the Depositary.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE FOR SHARES PURCHASED
PURSUANT TO THE OFFER, EACH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH
STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER ("TIN") AND CERTIFY THAT
SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE
INSTRUCTION 8 TO THE LETTER OF TRANSMITTAL.
6
<PAGE>
Determination of Validity. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Offeror, in its sole
discretion, and its determination will be final and binding on all parties.
The Offeror reserves the absolute right to reject any or all tenders of any
Shares that are determined by it not to be in proper form or the acceptance of
or payment for which may, in the opinion of the Offeror, be unlawful. The
Offeror also reserves the absolute right to waive any of the conditions of the
Offer or any defect or irregularity in the tender of any Shares. The Offeror's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the Instructions to the Letter of Transmittal) will be
final and binding on all parties. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of the Offeror, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the Offeror
as such stockholder's proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder
and accepted for payment by the Offeror (and any and all other Shares or other
securities or rights issued or issuable in respect of such Shares on or after
March 31, 1995). All such proxies shall be considered coupled with an interest
in the tendered Shares. This appointment is effective when, and only to the
extent that, the Offeror accepts for payment the Shares deposited with the
Depositary. Upon acceptance for payment, all prior proxies given by the
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent proxies may be given or
written consent executed (and, if given or executed, will not be deemed
effective). The designees of the Offeror will, with respect to the Shares and
other securities or rights, be empowered to exercise all voting and other
rights of such stockholder as they in their sole judgment deem proper in
respect of any annual or special meeting of the Company's stockholders, or any
adjournment or postponement thereof, or any stockholder consent action. The
Offeror reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Offeror's payment for such Shares, the
Offeror must be able to exercise full voting and other rights with respect to
such Shares and the other securities or rights issued or issuable in respect
of such Shares, including voting at any meeting of stockholders (whether
annual or special, whether or not adjourned or postponed, or by giving
consents for stockholders' consent actions) in respect of such Shares.
Tender Constitutes an Agreement. The tender of Shares pursuant to any one of
the procedures described above will constitute an agreement between the
tendering stockholder and the Offeror upon the terms and subject to the
conditions of the Offer.
It is a violation of Rule 14e-4 under the Exchange Act for a person,
directly or indirectly, to tender Shares pursuant to the Offer for a person's
own account unless the person so tendering (i) has a net long position equal
to or greater than the number of (x) Shares tendered or (y) other securities
immediately convertible into, or exercisable or exchangeable for, the number
of Shares tendered and will acquire such Shares for tender by conversion,
exercise or exchange of such other securities and (ii) will cause such Shares
to be delivered in accordance with the terms of the Offer. Rule 14e-4 provides
a similar restriction applicable to the tender or guarantee of a tender on
behalf of another person. The tender of Shares pursuant to any one of the
procedures described above will constitute the tendering stockholder's
representation and warranty that (i) such stockholder has a net long position
in the Shares being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Shares complies with Rule 14e-4.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment pursuant to the Offer, may also be withdrawn
at any time after August 26, 1995. If purchase of or payment for Shares is
delayed for any reason or if the Offeror is unable to purchase or
7
<PAGE>
pay for Shares for any reason, then, without prejudice to the Offeror's rights
under the Offer, tendered Shares may be retained by the Depositary on behalf
of the Offeror and may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 4,
subject to Rule 14e-1(c) under the Exchange Act which provides that no person
who makes a tender offer shall fail to pay the consideration offered or return
the securities deposited by or on behalf of security holders promptly after
the termination or withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name in
which the certificates representing such Shares are registered, if different
from that of the person who tendered the Shares. If certificates for Shares to
be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such certificates, the serial numbers
shown on such certificates must be submitted to the Depositary and, unless
such Shares have been tendered by an Eligible Institution, the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry transfer
set forth in Section 3, any notice of withdrawal must also specify the name
and number of the account at the applicable Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with such Book-Entry
Transfer Facility's procedures. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Offeror, in its sole discretion, and their determination will be final and
binding on all parties. None of the Offeror, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of the principal federal income tax consequences
of the Offer to holders whose Shares are purchased pursuant to the Offer. The
discussion applies only to holders of Shares in whose hands Shares are capital
assets, and may not apply to Shares received pursuant to the exercise of
employee stock options or otherwise as compensation, or to holders of Shares
who are in special tax situations (such as insurance companies, tax-exempt
organizations or non-U.S. persons).
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR GENERAL
INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S
OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO
SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER INCOME TAX LAWS.
The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for federal income tax purposes (and also may be a taxable
transaction under applicable state, local and other income tax laws). In
general, for federal income tax purposes, a holder of Shares will recognize
gain or loss equal to the difference between his adjusted tax basis in the
Shares sold pursuant to the Offer and the amount of cash received therefor.
Gain or loss must be determined separately for each block of Shares (i.e.,
Shares acquired at the same cost in a single transaction) sold pursuant to the
Offer. Such gain or loss will be capital gain or loss and will be long-term
gain or loss if, on the date of sale, the Shares were held for more than one
year.
Payments in connection with the Offer may be subject to "backup withholding"
at a rate of 31%. Backup withholding generally applies if the stockholder (a)
fails to furnish his social security number or TIN, (b) furnishes an incorrect
TIN, (c) fails properly to report interest or dividends, or (d) under certain
8
<PAGE>
circumstances, fails to provide a certified statement, signed under penalties
of perjury, that the TIN provided is his correct number and that he is not
subject to backup withholding. Backup withholding is not an additional tax but
merely an advance payment, which may be refunded to the extent it results in
an overpayment of tax. Certain persons generally are entitled to exemption
from backup withholding, including corporations and financial institutions.
Certain penalties apply for failure to furnish correct information and for
failure to include reportable payments in income. Each stockholder should
consult with his own tax advisor as to his qualification for exemption from
backup withholding and the procedure for obtaining such exemption. Tendering
stockholders may be able to prevent backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. See Section 3.
6. PRICE RANGE OF SHARES.
The Shares are traded principally on the NYSE. The following table sets
forth, for each of the periods indicated, the high and low sales prices per
Share as reported on the NYSE composite tape.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1993:
First Quarter............................................. $41.125 $31.750
Second Quarter............................................ 47.625 37.000
Third Quarter............................................. 49.625 39.500
Fourth Quarter............................................ 58.375 47.625
1994:
First Quarter............................................. $63.500 $48.125
Second Quarter............................................ 55.375 44.625
Third Quarter............................................. 51.250 43.125
Fourth Quarter............................................ 51.500 43.375
1995:
First Quarter............................................. $53.375 $38.250
Second Quarter (through June 23, 1995).................... 52.500 39.000
</TABLE>
On June 23, 1995, the last full day of trading prior to the announcement of
the Offer, the closing price per Share as reported on the NYSE composite tape
was $47.625.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Delaware corporation with its principal offices at 12000
Chrysler Drive, Highland Park, Michigan, 48288-0001. According to the
Company's Annual Report on Form 10-K for the year ended December 31, 1994 (the
"Form 10-K"), the Company and its subsidiaries operate in two principal
industry segments: automotive operations and financial services. Automotive
operations include the research, design, manufacture, assembly and sale of
cars, trucks and related parts and accessories. Financial services operations
include wholesale and retail vehicle financing, servicing nonautomotive leases
and loans, and automotive dealership facility development and management. The
Company also participates in short-term vehicle rental activities through
certain of its subsidiaries and manufactures electronics products and systems
through one of its subsidiaries.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Form 10-K, the Form 10-Q and other documents filed by the
Company with the Commission. The following summary is qualified in its
entirely by reference to the Form 10-K, the Form 10-Q, the other documents and
all the financial information (including any related notes) contained therein.
9
<PAGE>
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
SELECTED FINANCIAL DATA
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ---------------------------
1995 1994 1994 1993 1992
--------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues............... $ 13,613 $ 13,224 $52,224 $43,600 $36,897
Net earnings (loss) on common
stock....................... 578 918 3,633 (2,631) 654
Fully diluted earnings (loss)
per common share............ 1.46 2.30 9.10 (7.62)(1) 2.13
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
AS OF -------------------
MARCH 31, 1995 1994 1993
-------------- --------- ---------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................. $ 4,042 $ 5,145 $ 4,040
Marketable securities..................... 4,292 3,226 1,055
Total assets.............................. 50,750 49,539 43,679
Short-term debt(2)........................ 4,437 4,645 3,297
Long-term debt............................ 8,642 7,650 6,871
Total liabilities......................... 39,927 38,845 36,843
Stockholders' equity(3)................... 10,823 10,694 6,836
</TABLE>
- --------
(1) Represents primary loss per Common Share, since giving effect to common
stock equivalents would be anti-dilutive.
(2) Excludes $760 million, $811 million and $1,283 million at March 31, 1995,
December 31, 1994 and December 31, 1993, respectively, of long-term debt
due within one year.
(3) Includes common and preferred equity.
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, is required to file reports relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Company's directors and officers, their remuneration,
stock options and other matters, the principal holders of the Company's
securities and any material interest of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, DC 20549, and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, NY 10048 and Citicorp Center,
500 West Madison Street (Suite 1400), Chicago, IL 60661. Copies of such
information should be obtainable, by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450
Fifth Street, N.W., Washington, DC 20549. Such material should also be
available for inspection at the offices of NYSE, 20 Broad Street, New York, NY
10005.
The information concerning the Company contained herein has been taken from
or based upon publicly available documents on file with the Commission and
other publicly available information. Although the Offeror does not have any
knowledge that any such information is untrue, the Offeror does not take any
responsibility for the accuracy or completeness of this information, or for
any failure by the Company to disclose events that may have occurred and that
may affect the significance or accuracy of any such information.
8. CERTAIN INFORMATION CONCERNING THE OFFEROR.
The Offeror is a Nevada corporation and an investment company wholly owned
by Kirk Kerkorian with its principal place of business at 4835 Koval Lane, Las
Vegas, Nevada 89109. Mr. Kerkorian is the Offeror's Chief Executive Officer,
President and sole director. The Offeror's other executive officer is Anthony
L. Mandekic,
10
<PAGE>
who serves as Secretary and Treasurer. The business address of Mr. Kerkorian
and Mr. Mandekic is the same as the Offeror's principal place of business.
Mr. Kerkorian's principal occupation or employment is, and has been for at
least five years, serving as the Offeror's principal executive officer and Mr.
Mandekic's principal occupation or employment is, and has been for at least
five years, serving as Secretary and Treasurer of the Offeror. Mr. Kerkorian
and Mr. Mandekic are both United States citizens. In addition, Mr. Kerkorian
is a director of MGM Grand, Inc., a Delaware corporation ("MGM Grand"), in
which the Offeror is the principal stockholder. MGM Grand is engaged in the
hotel and gaming business and has its principal executive offices at 3799
South Las Vegas Boulevard, Las Vegas, Nevada 89109.
Lee A. Iacocca and Alfred Boyer may be deemed to be acting as members of a
group together with the Offeror for purposes of Section 13(d) of the Exchange
Act. The Offeror, Mr. Iacocca and Mr. Boyer each disclaim any beneficial
ownership in the others' Shares, and neither Mr. Iacocca nor Mr. Boyer is a
participant in this Offer.
In May 1995, the Offeror and Mr. Iacocca entered into a Consulting
Agreement, pursuant to which Mr. Iacocca renders consulting services to the
Offeror in connection with its investments, as requested by the Offeror, for a
fee of $41,666.67 per month. The agreement is terminable by either party on
thirty days' notice. Tracinda has agreed to indemnify Mr. Iacocca with respect
to matters arising out of his services under the agreement. To date, Mr.
Iacocca's services under the agreement have been solely related to consulting
services involving the Offeror's investment in the Company. Mr. Iacocca is a
member of the Board of Directors of MGM Grand.
In June 1995, Mr. Boyer and the Offeror entered into a Consulting Agreement,
pursuant to which Mr. Boyer renders consulting services to the Offeror in
connection with its investments, as requested by the Offeror, for a fee of
$250,000, payable upon execution of the agreement. The agreement is terminable
by the Offeror on 30 days' notice and, beginning after one year, terminable by
Mr. Boyer on 30 days' notice. Tracinda has agreed to indemnify Mr. Boyer with
respect to matters arising out of his services under the agreement. To date,
Mr. Boyer's services under the agreement have been solely related to
consulting services involving the Offeror's investment in the Company.
In June 1995, the Offeror entered into Value Sharing Agreements with each of
Mr. Iacocca and Mr. Boyer (each, a "Participant"), pursuant to which the
Offeror has agreed to share certain incremental value with respect to
32,000,000 of the Shares held by the Offeror. Each Participant will receive a
specified percentage (4% for Mr. Iacocca and 1% for Mr. Boyer) of the amount
by which the market value of a Share exceeds $47.00 in June 1999 (or, in the
case of the sale of Shares for cash prior to that time, the amount by which
the cash proceeds of the sale exceed $47.00, subject to adjustment under
certain circumstances).
For information concerning certain litigation involving the Offeror and
others, see Section 14.
9. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Offeror to purchase 14,000,000
Shares pursuant to the Offer and to pay related fees and expenses will be
approximately $704,000,000. These funds will be obtained by the Offeror from
borrowings under a bank credit agreement dated as of June 27, 1991, as amended
(the "Credit Agreement"), between the Offeror and Bank of America National
Trust and Savings Association (the "Bank").
Under the Credit Agreement, borrowings are available up to an amount equal
to the lesser of (a) until June 30, 1997, $900,000,000 and thereafter
$650,000,000, and (b) the Borrowing Base (as such term is defined in the
Credit Agreement). All borrowings under the Credit Agreement mature on June
30, 1998. As of June 23, 1995, the borrowing base was in excess of
$900,000,000 and approximately $709,100,000 was available for additional
borrowings under the Credit Agreement.
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Loans made pursuant to the Credit Agreement are, at the option of the
Offeror, either "Reference Rate Loans" or "Eurodollar Loans." Reference Rate
Loans bear interest at the rate of interest publicly announced from time to
time as its reference rate by the Bank. Eurodollar Loans bear interest at a
per annum amount equal to the sum of the Eurodollar Margin (as defined in the
Credit Agreement) plus the Dollar LIBO Rate (as defined in the Credit
Agreement) or, if applicable, the London Interbank Rate (as defined in the
Credit Agreement). The Offeror is required to pay a commitment fee computed at
the rate of 3/8% per annum on the average daily unutilized portion of the
facility, payable quarterly. All borrowings under the Credit Agreement are
secured by Eligible Collateral, which includes all Shares owned by the Offeror
(including Shares purchased pursuant to the Offer) and all shares of common
stock of MGM Grand owned by the Offeror (the market value of which MGM Grand
Shares was approximately $900,000,000 as of June 23, 1995).
The Credit Agreement prohibits the Offeror from acquiring more than 15% of
the outstanding Shares or effective control of the Company, without, in each
case, the prior approval of the Company's Board of Directors, or waiver by the
Bank but does not prohibit the Offeror from conducting proxy solicitations or
consent solicitations for control of the Board of Directors of the Company.
All substantive conditions to borrowing under the Credit Agreement have been
satisfied. The Credit Agreement contains customary representations and
warranties, covenants and events of default. All borrowings under the Credit
Agreement will be in compliance with the margin requirements of Section 7 of
the Exchange Act.
The Offeror has no present plans or arrangements as to the source of
refinancing or repayment of any borrowings made under the Credit Agreement.
A copy of the Credit Agreement has been filed as an exhibit to the Offeror's
Schedule 14D-1 filed with the Commission and may be examined and copied at the
same places and in the same manner as set forth in Section 7 with respect to
filings made by the Company (except that it will not be available at the
regional offices of the Commission). See Sections 7 and 16.
10. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY.
Between October 11, 1990 and December 12, 1990, the Offeror purchased an
aggregate of 22,000,000 Shares at an average price of $12.37 per Share, in
open market and privately negotiated purchases. On December 14, 1990, the
Offeror issued the following press release:
TRACINDA CORPORATION PURCHASES
22 MILLION SHARES OF CHRYSLER CORPORATION
(LOS ANGELES)--Tracinda Corporation announced that it has
purchased for investment 22,000,000 shares of Chrysler
Corporation's common stock for approximately $272,000,000,
constituting approximately 9.8% of the outstanding shares. The
shares were acquired, in part, as a result of the high regard held
by Tracinda and its sole shareholder, Mr. Kirk Kerkorian, for Mr.
Lee A. Iacocca, Chrysler's Chairman and Chief Executive Officer.
In fact, at the December 7 meeting that Chrysler referred to in
its press release earlier today, Mr. Kerkorian stated to Mr.
Iacocca his high regard for him and his leadership of Chrysler.
A Tracinda spokesman noted that Chrysler had today announced
amendments to its "shareholder rights plan," apparently in
reaction to Tracinda's purchase of Chrysler stock. The spokesman
said, "We were surprised by the action of the Chrysler Board,
especially since Tracinda's purchases are for investment. It is
hard for us to see how the steps taken by the Board today are in
the best interests of all the shareholders."
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Also on December 14, 1990, the Company issued the following press release:
CHRYSLER REPORTS UNSOLICITED
STOCK PURCHASE BY
KERKORIAN; ANNOUNCES AMENDED
SHARE PURCHASE RIGHTS PLAN
Highland Park, Mich.--Chrysler Corporation announced today it
had been informed that Mr. Kirk Kerkorian had acquired in excess
of nine percent of Chrysler's outstanding common stock.
Chrysler said that Mr. Kerkorian's stock purchase was not
solicited by the Company.
The Company said that it had not yet received a Schedule 13D
report by Mr. Kerkorian and would not comment on his motives for
such an investment.
In addition, Chrysler's Board of Directors today adopted
amendments to the Company's share purchase rights plan.
The amendments reduce from 20 percent to 10 percent the
threshold of beneficial ownership at which the rights "flip in"--
that is, become exercisable to buy Chrysler stock at half-price.
The rights plan now provides that if someone acquires beneficial
ownership of 10 percent of Chrysler's common stock, each of the
rights (other than those held by the 10 percent holder, which
become void) entitles the holder, upon payment of the $120
exercise price, to buy Chrysler common stock having a market value
(as defined in the rights plan) equal to twice the exercise price.
Prior to the amendments adopted today, the rights plan provided
that, if someone acquired beneficial ownership of 10 percent or
more of the Company's common stock, the rights would flip in if
Chrysler's directors determined that the acquirer was an "adverse
person," and otherwise flipped in if someone acquired beneficial
ownership of 20 percent of the Company's common stock.
The amendments also add a provision that, if someone acquires 10
percent, but less than 50 percent, of the Company's common stock,
the Board of Directors may exchange each right (other than those
held by the 10 percent holder) for one share of common stock.
The Company said: "The amendments adopted today are intended to
enhance the ability of Chrysler's Board to act in the best
interest of all the Company's shareholders if someone should seek
to obtain a position of control or substantial influence over
Chrysler."
On October 9, 1991, at the request of the Company, the Offeror purchased an
additional 6,000,000 Shares at a price of $10.125 per Share, pursuant to a
public offering by the Company of 60,000,000 Shares.
Prior to the Company's private placement of Series A Convertible Preferred
Stock in February 1992, there were discussions between the Offeror and the
Company regarding the Offeror's possible participation in the private
placement. The Offeror did not participate in the private placement.
On August 6, 1992, the following letter was sent to the Company:
Board of Directors
Chrysler Corporation
12000 Chrysler Drive
Highland Park, MI 48288-1919
Attention: William J. O'Brien, Esq.
Chief Counsel
Gentlemen:
As you are aware, I am a major stockholder of Chrysler. As I
have repeatedly stated, both publicly and in my SEC filings, I
have been and continue to be a passive investor in the company.
When I made the decision to invest in Chrysler, my investment was
based in great part on Mr. Iacocca's leadership and his continuing
efforts to run the company in the best interests of the
shareholders. In spite of the inherent risk in making an
investment of almost
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$300 million in the company, and while Mr. Iacocca advised me that
he would be resigning as Chief Executive Officer at some point, I
decided to proceed given Mr. Iacocca's assurance that he would
remain as Chairman of the Board through 1994. As a result of my
confidence in Mr. Iacocca and my belief that his goal was not only
to revitalize Chrysler, but also to enhance shareholder values, I
felt completely comfortable in my passive role and did not ask for
representation on Chrysler's Board. In fact, I was even prepared
to give Mr. Iacocca my proxy to vote my shares as he saw fit
during this period.
Recent events, however, have made me concerned about Mr.
Iacocca's continued leadership role in the company and led me to
question whether the interests of the shareholders now require
strengthened representation on the Board of Directors. After
considerable thought, I have reluctantly concluded they do.
Therefore, I would suggest that my representatives meet promptly
with a group of Board Members to resolve these most important
issues.
I will await your response.
Sincerely,
Kirk Kerkorian
On August 13, 1992, the following press release was issued:
Kirk Kerkorian confirmed today that he had met with Chrysler
Chairman Lee Iacocca and Malcolm T. Stamper, a director of
Chrysler and the Chairman of the Nominating Committee of
Chrysler's Board.
Mr. Kerkorian also met with Robert J. Eaton, the current Vice
Chairman of Chrysler, who will succeed Mr. Iacocca as Chairman and
CEO of Chrysler at year-end.
As a result of these discussions, Mr. Kerkorian said he is
convinced that the interests of Chrysler's shareholders are being
well represented by the current Board, and he is comfortable with
Mr. Iacocca's plans to continue as a director of Chrysler and
Chairman of the Board's Executive Committee following his
retirement at the end of this year.
Mr. Kerkorian, accordingly, has withdrawn at this time his
request for representation on the Chrysler Board.
Mr. Kerkorian added that he is very pleased with his investment
in Chrysler and enthusiastic about the Company's future prospects.
On February 10, 1993, at the request of the Company, the Offeror purchased
an additional 4,000,000 Shares at a price of $38.75 per Share pursuant to a
public offering by the Company of 52,000,000 Shares.
During the balance of 1993 and through mid-1994, the Offeror from time to
time had conversations with the Company in the ordinary course of monitoring
its investment in the Company. These conversations included discussions
regarding a possible stock split and possible dividend increases.
During the fall of 1994, the Offeror reviewed its investment in the Company
and considered various alternatives to enhance stockholder value. On September
19, 1994, Mr. Kerkorian met with Mr. Robert Eaton, the Chairman of the Board
of Directors of the Company, and other members of the Company's management to
discuss various means by which the Company could enhance stockholder value,
including a share repurchase, a stock split and dividend increases. Subsequent
to that meeting, various discussions were held between representatives of the
Offeror and the Company concerning alternatives to enhance stockholder value
and a possible "standstill" agreement between the Company and the Offeror.
On October 10, 1994, the Offeror was approached by a third party seeking to
act as intermediary with respect to participation by the Offeror in a
management-led buyout the Company. The Offeror was subsequently advised that
the third party had also contacted the Company.
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<PAGE>
On November 14, 1994, the following letter was sent to the Company's Board
of Directors:
Board of Directors
Chrysler Corporation
12000 Chrysler Drive
Highland Park, MI 48288-1919
To the Directors:
As you know, I have been a long-term investor in Chrysler
Corporation and the company's largest shareholder since 1990. At
the present time I own 32 million shares, or approximately 30
times as many shares as the entire Board of Directors, taken
together. I have stated publicly on a number of occasions, and I
wish to state again in this letter, that I have a very high regard
for the company's management, and I continue to believe that the
company's common stock is an attractive investment. However,
despite the company's excellent operating performance in recent
years, the company's stock price performance has been very
disappointing.
Like any other shareholder, my aim is to enhance the value of my
investment in the company. From time to time I have sought to
encourage management of the company to take steps which would
benefit all shareholders of the company. However, these efforts
have been summarily rebuffed. While other companies, for example,
McDonnell Douglas Corporation, Ford Motor Company and others, have
taken actions which provided substantial value to shareholders,
Chrysler has not taken any such actions and has continued to
accumulate significant amounts of cash.
Although, as described below, I believe that it is imperative
that the Board of Directors of the company act promptly to invest
its surplus cash for the benefit of all shareholders, thereby
increasing shareholder value, I remain a committed long-term
investor in the company. In that regard, I am today filing a Hart-
Scott notification seeking expedited clearance to acquire
additional shares of common stock, and I intend to significantly
raise my investment in the company from its current 9.0% level as
soon as clearance is obtained. However, the ability of
shareholders to acquire shares of the company in excess of 9.99%
of the Common Stock and to influence the company and its Board of
Directors is severely inhibited by the company's poison pill.
In view of the company's market capitalization of approximately
$18 billion, there is no justification for a poison pill. The
majority of companies with market capitalization in excess of $10
billion do not have poison pills, and neither of the other U.S.
auto makers has a pill. Furthermore, Chrysler's poison pill is
unusually extreme compared to those of other companies. In the
first place, the pill reserves to the CURRENT directors and their
management hand-picked successors the absolute and exclusive right
to amend or redeem the pill, thereby denying this right to a board
comprised of directors approved by shareholders but not by
management. Secondly, the pill literally appears to prohibit
significant shareholders from being represented on the Board of
Directors, since their shares would arguably be aggregated with
those of other directors and officers and the company's employee
benefit plans. And thirdly, the poison pill is triggered by the
acquisition of only 10% of the common stock. In this connection, I
would direct your attention to those public companies of which
Chrysler's outside directors are senior executives. Several of
those companies do not have a poison pill and, of those that do--
Northrop-Grumman Corporation, The Boeing Company and K mart
Corporation--none has a poison pill as extreme as Chrysler's.
Indeed, I note that the K mart pill will be redeemed unless
ratified by shareholders at its 1995 annual meeting. Accordingly,
I believe that the company's poison pill is unlawful,
inappropriate and contrary to the shareholders' best interests
and, in view of the foregoing and in view of my intention to
acquire additional shares of the company's common stock, I request
that the Board of Directors take prompt action to redeem the pill.
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In addition to redeeming the poison pill, I think that the Board
of Directors needs to take the following specific steps in the
interests of all shareholders: (a) undertake a meaningful share
repurchase program, to be completed within 12 months; (b) effect a
2 for 1 stock split; and (c) raise the quarterly common stock
dividend. This program should deliver substantial value to all of
the company's shareholders.
I have a high degree of confidence in Chrysler, in its
management and in this program. Accordingly, if Chrysler
undertakes a meaningful share repurchase program to be completed
within 12 months, I am willing to commit that I will not sell any
of my stock while that share repurchase program is in effect.
As I have emphasized in this letter, my objective is to enhance
value for all shareholders of the company. I believe the steps
that I have outlined here will help to accomplish that objective
and, in the interests of all shareholders, I expect the Board to
move expeditiously to that end. If, by December 15, the Board has
not taken action to redeem the poison pill and to initiate a stock
buyback, a stock split and a dividend increase as proposed in this
letter, I intend to take all appropriate steps to pursue these
proposals, including legal action to invalidate the poison pill.
I look forward to your response to the proposals contained in
this letter.
Sincerely,
Kirk Kerkorian
On December 1, 1994, the Company issued the following press release:
HIGHLAND PARK, MI,--December 1, 1994--Chrysler Corporation
(NYSE: C) announced today that it expects to achieve its primary
financial targets by the end of this year of $7.5 billion in cash
and a fully-funded pension plan, and is on track to achieving an
improved credit rating.
After a review of the Company's performance against these
objectives and the financial resources required to support the
Company's Business Plans, the following actions were approved by
the Chrysler Board of Directors:
--An increase in its projected five-year program spending from
the current level of $20.8 billion to $22.9 billion
--An increase in the common stock dividend from the current
annual level of $1.00 per share to $1.60 per share (or $0.40
per quarter), a 60 percent increase
--A $1 billion share repurchase program commencing in the first
quarter of 1995 subject to market conditions
"The Board's view is that the Company should continue on its
current path with the objectives of maintaining cash reserves
adequate to fund its business going forward, regardless of
business cycles, maintain fully-funded pension plans and continue
to reduce overall financial leverage," Chrysler Chairman and CEO
Robert J. Eaton said.
The increased quarterly dividend of $0.25 to $0.40 per share on
the Company's common stock is payable January 13, 1995, to
shareholders of record on December 15, 1994.
"We fully expect that this dividend level is sustainable over
the course of the business cycle," Eaton said.
The Board also declared a dividend of $1.15625 per depositary
share, each representing 1/10 of a share of the Company's Series A
Convertible Preferred Stock, payable January 13, 1995, to
shareholders of record on December 15, 1994.
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Prior to today's announcement, a quarterly dividend increase
from $0.15 to $0.20 was announced on December 2, 1993. A second
increase--from $0.20 to $0.25--was announced on May 19. In total,
the dividend has been increased 167 percent since December 1993.
The Board is not likely to review the dividend level again until
late 1995.
The $1 billion share repurchase program is expected to begin in
the first quarter of 1995 depending on market conditions. In
addition, the Board will consider further actions to enhance
shareholder value in the future, depending on the Company's
financial situation and the market outlook at that time.
"This share repurchase program is a reflection of our confidence
in the long term growth of our business," Eaton said. "We remain
committed to enhancing shareholder value and this is a very
effective method for doing so."
Eaton concluded: "The capital spending increase, the dividend
increase and share repurchase have been under consideration by the
Board for some time. The Company's success in 1994 and the Board's
view of its future prospects now indicate the time is right to
take such actions.
"The outlook for continued market strength remains robust for
1995 and beyond. The increase in our program spending to nearly
$23 billion will give us additional growth opportunities through
the development of more new and innovative products as well as
anticipated international actions. We are confident that our plan
is the correct one and that our financial position will continue
to strengthen."
The Board also amended the Company's shareholder rights plan by
increasing from 10 percent to 15 percent the threshold of stock
ownership that triggers other holders' rights to acquire Chrysler
common stock at a reduced price. The Company's action was
responsive to its largest shareholder's stated interest in
significantly increasing his holdings from his current level of
approximately 9.2 percent. The Company continues to believe that
the shareholder rights plan provides important protection for all
shareholders.
Other amendments to the shareholder rights plan provide that the
rights may not be redeemed once the threshold is exceeded, but
someone who inadvertently crosses the threshold and promptly sells
down below the threshold would not trigger the rights. The
amendments clarify that rights can be redeemed by directors who
are elected before the 15 percent threshold is reached.
On December 9, 1994, Mr. Kerkorian met again with Mr. Eaton and assured Mr.
Eaton of his continuing support of the Company's management. However, Mr.
Kerkorian reiterated his desire that the Company take steps to enhance
stockholder value. From December 19 through December 30, the Offeror purchased
an additional 4,000,000 Shares in open market purchases at an average price of
$47.82 per Share, thereby increasing its ownership to 36,000,000 Shares.
During the period from December 1994 through March 1995, the Offeror
continued to review its investment in the Company and representatives of the
Offeror, from time to time, held telephone conversations with representatives
of the Company. On March 30, 1995, Mr. Boyer and a third party met with
Messrs. Gary Valade and Thomas Denomme, Chief Financial Officer and Chief
Administrative Officer, respectively, of the Company, to discuss a proposed
management buy-out of the Company. Additional telephone conversations were
subsequently held between representatives of the Offeror and the Company. On
April 10, representatives of the Offeror met with Messrs. Valade and Denomme
to discuss a proposed acquisition of the Company by the Offeror (the "Proposed
Buy-Out").
On April 11, Mr. Kerkorian telephoned Mr. Eaton to discuss the impending
announcement of the Proposed Buy-Out. On the same day, a representative of the
Offeror had a telephone conversation with a representative of the Company to
discuss the possible response of the Company to the Proposed Buy-Out.
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The Offeror issued the following press release on April 12, 1995:
TRACINDA INTENDS TO ACQUIRE 100 PERCENT OF CHRYSLER
Las Vegas, Nevada--April 12, 1995--Tracinda Corporation, which
owns approximately 10% of the outstanding common stock of Chrysler
Corporation (NYSE:C), announced today that it intends to acquire
the remaining 90% of Chrysler's equity through an entity organized
by Tracinda. Holders of Chrysler's common stock would receive
$55.00 per share in cash, a premium of approximately 40% over the
closing price of common stock on April 11, 1995. Tracinda's
approximately $2 billion investment will remain as equity after
the transaction. Based upon the 415 million fully diluted
outstanding shares of Chrysler common stock, the total value of
Chrysler's equity would be more than $22.8 billion.
Alex Yemenidjian, an executive of Tracinda, said: "As Chrysler's
largest shareholder, our goal over the last 5 years has been to
seek to enhance value for all Chrysler shareholders. We continue
to believe that Chrysler's Board of Directors and Bob Eaton and
his management team have done an excellent job of managing the
Company's operations. However, despite the efforts of Chrysler's
Board and management to enhance the market value of the Company,
the market continues to undervalue Chrysler stock. We think that
Chrysler shareholders will welcome our offer which enables them to
realize significantly increased value for their stock."
Mr. Yemenidjian continued: "We believe this value can be
achieved in a transaction which involves no fundamental changes in
Chrysler, its business prospects, its management, and its
relationships with its various constituencies; there would be no
planned workforce reductions and no concessions would be sought
from Chrysler employees. We are eager to work with the leaders of
Chrysler's union workers and with management to ensure that all
employees see tangible benefits from this transaction. The only
proposed change would be to provide Chrysler's shareholders with a
substantial premium for their shares."
Former Chrysler Chairman and CEO, Lee Iacocca, who is also a
director of MGM Grand, will join Tracinda as a substantial
investor in this transaction.
Mr. Iacocca said, "Kirk Kerkorian has been a friend of both
Chrysler and of mine for years. Since his initial investment in
1990, he has been a loyal shareholder and a strong supporter of
the company, its management and its employees.
"I have invested 17 years in this company. I have no interest in
actively participating in management. I view this transaction as
an opportunity to continue my investment in Chrysler as a show of
support for its first rate management, its excellent labor force,
its strong dealer network, and its investors."
Mr. Yemenidjian stressed that this will not be a highly
leveraged transaction. "This is not a leveraged buyout, where
assets need to be sold to help finance the transaction. The buyers
are principals who are investing their own money. In fact, after
the proposed transaction is completed, Chrysler will have a lower
debt-to-capital ratio than either General Motors or Ford, and its
free cash flow will remain virtually unchanged without any
reduction in the company's capital expenditures program."
Mr. Yemenidjian added: "Given the strong financial position of
Chrysler and the significant equity component of this transaction,
which would include Tracinda's entire investment in Chrysler, it
is apparent to us that this transaction is readily financeable. We
anticipate that Chrysler would continue to have a conservative
balance sheet after the transaction. We also expect to consider
foreign strategic alliances or partnerships in order to maximize
Chrysler's global business opportunities."
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Also on April 12, 1995, the Company issued the following press release:
CHRYSLER BOARD STATES
COMPANY IS NOT FOR SALE
HIGHLAND PARK, Mich.--In a meeting today, the Board of Directors
of Chrysler Corporation discussed an unsolicited letter received
from Tracinda Corporation, a company owned by Kirk Kerkorian,
outlining a possible acquisition of the equity interest in
Chrysler not owned by Tracinda.
The Chrysler Board of Directors stated that the Company is not
for sale.
Chrysler said that its Board would review in due course
Tracinda's letter with the Company's financial and legal advisors.
The Board noted that the suggested transaction, based on
information thus far provided by Tracinda, amounts to a request to
discuss a leveraged buyout. Moreover, it:
--Contemplates at least $11 billion in new debt financing, none
of which has been lined up.
--Contemplates $3 billion in equity financing, beyond the
shares owned by Tracinda and by Lee Iacocca, none of which has
been lined up.
--Assumes the Company's credit lines would remain in place,
despite the changes in the Company's financial position that
would result if Tracinda's proposal was implemented.
--Contemplates reducing Chrysler's cash reserves by more than
70% to $2 billion. Chrysler noted its need to maintain
adequate cash reserves to weather downturns in the business
cycle, as well as to maintain its ability to develop new
products and to compete.
Robert J. Eaton, Chairman and Chief Executive Officer of
Chrysler, stated: "I want to make absolutely clear that Chrysler
management is in no way involved in Tracinda's proposal. I told
Mr. Kerkorian that last night when he informed me by telephone of
his intention to make an announcement.
"We don't want to put Chrysler at risk," Eaton added. "We've
worked hard to build this Company's financial strength, to
increase shareholder value and to build the confidence of
customers, employees, dealers and suppliers. We have no desire to
reverse the process."
On April 12, 1995, the Offeror also sent the following letter to Mr. Eaton:
Mr. Robert J. Eaton
Chairman of the Board and
Chief Executive Officer
Chrysler Corporation
12000 Chrysler Drive
Highland Park, Michigan 48288
Dear Mr. Eaton:
Tracinda Corporation ("Tracinda") is pleased to make an offer to
purchase all outstanding shares of Common Stock of Chrysler
Corporation ("Chrysler" or the "Company"), at a purchase price of
$55 per share in cash. The purchase price represents a premium of
approximately 40% over the closing price of the Common Stock on
April 11, 1995, the last trading day prior to the date of this
letter, and, based upon the approximately 415 million fully
diluted outstanding shares of Chrysler Common Stock, values the
equity of the Company at more than $22.8 billion.
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The transaction we are proposing involves no fundamental changes
in the Company, its business prospects, its management and its
relationships with its various constituencies. As we have stated
previously, we recognize the role the Company's management has
performed. We believe management's continued efforts are crucial
to the future operational success of the Company, and our proposal
contemplates no change in senior management of the Company.
Importantly, there are no planned workforce reductions and no
concessions would be sought from employees. We are eager to work
with the leaders of Chrysler's union workers and with management
to ensure that all employees see tangible benefits from this
transaction. The only change we propose is to provide the
Company's shareholders with a substantial premium for their
shares.
Our proposal is subject to the execution and delivery of a
definitive agreement relating to this transaction. The agreement
would contain customary terms and conditions, including conditions
with respect to the receipt of all necessary corporate approvals
by the Company, the obtaining of all required governmental and
regulatory approvals, and the obtaining of financing. Given the
strong financial position of Chrysler and the significant equity
component of the transaction, which will include Tracinda's entire
equity investment in the Company, it is apparent to us that this
transaction is readily financeable. Now that information regarding
our proposal is publicly available, we will promptly contact
potential sources of financing so that our financing arrangements
can be completed as soon as possible. We anticipate that Chrysler
will continue to have a conservative balance sheet following the
transaction. In fact, after the transaction is completed, Chrysler
will have a lower debt-to-capital ratio than either General Motors
or Ford, and its free cash flow will remain virtually unchanged
without any reduction in the Company's capital expenditures
program.
We recognize that the Board of Directors has the fiduciary duty
to maximize value for all shareholders. Accordingly, we will not
request any lock up or no shop provisions that could in any way
curtail the ability of the Board to discharge its duties. We
believe that, if the Company responds promptly to our proposal,
this transaction can be completed by year end.
This transaction affords Chrysler shareholders the opportunity
to receive a significant premium for their Chrysler stock, without
adversely impacting the Company's employees and retirees, labor
organizations, creditors, customers, suppliers, dealers and the
communities in which Chrysler does business. Under these
circumstances, we believe that this transaction is in the best
interests of Chrysler, its shareholders and all other
constituencies.
We look forward to meeting with you to discuss this proposal
further. We are eager to proceed promptly and, accordingly, would
appreciate hearing from you at your earliest convenience.
Sincerely,
TRACINDA CORPORATION
By: Anthony Mandekic
Secretary/Treasurer
Also on April 12, 1995, a telephone conversation was held among
representatives of the Offeror and the Company concerning the Company's
initial response to the Proposed Buy-Out. Between April 12, 1995 and April 24,
1995, discussions were held between representatives of the Company and the
Offeror regarding possible financial alternatives to the Proposed Buy-Out and
a related standstill agreement.
20
<PAGE>
On April 24, 1995, the Company issued the following press release:
CHRYSLER BOARD REJECTS TRACINDA PROPOSAL;
CONFIRMS CASH RESERVE POSITION
AUBURN HILLS, Mich.--Chrysler Corporation announced today that
its Board of Directors, after a thorough and careful review, has
unanimously rejected the leveraged buy-out proposal announced on
April 12 by Tracinda Corporation, a company owned by Mr. Kirk
Kerkorian.
The Board concluded that pursuing the proposal would not be in
the best interest of the Company, its shareholders, employees,
dealers, suppliers or customers and reiterated its support of the
management team and its long term strategic vision for the
company.
Also at today's meeting, the Board took the opportunity to
confirm Chrysler's cash reserve policy. Robert J. Eaton, Chairman
and Chief Executive Officer of Chrysler said:
"Chrysler does not accumulate cash needlessly. Our current cash
reserve was set after careful study of what is necessary to remain
globally competitive, especially during the cyclical downturns
that affect our business from time to time.
"We review our needs and our target periodically in light of
changing business conditions. Our current cash reserve target is
$7.5 billion. To the extent that the Company generates cash in
excess of the target, and after taking into account opportunities
for investment in our core businesses and changes in business
conditions, Chrysler plans to use the excess to create additional
shareholder value, through share repurchases or increased
dividends."
Chrysler confirmed that it intends to complete its previously
announced $1 billion share repurchase program. To date the Company
has purchased $403 million of its stock under this program.
Chrysler's directors noted that speculation and uncertainty
about the Tracinda proposal had led to concerns on the part of
credit rating agencies, lenders, employees and dealers. To address
these concerns and the harm to the Company that could result,
Chrysler's directors reaffirmed that the Company is not for sale.
The Board stated that it is Chrysler's policy to be open to
communications with all shareholders, and to consider shareholder
suggestions carefully. However, the Board believes unsolicited
publicly announced proposals such as Tracinda's are disruptive and
do not serve the best interests of our shareholders.
"The primary objective of the directors and management of
Chrysler is to build value for shareholders. The Board is
convinced that the Company's current policies and strategies will
achieve that goal," Mr. Eaton said.
The complete text of the letter outlining the Board's position, sent today
to Mr. Kerkorian by Mr. Eaton, follows:
Dear Mr. Kerkorian:
Chrysler's Board of Directors and our entire senior management
team are committed to achieving increased profitability for
Chrysler and increased value for Chrysler shareholders. We
regularly consider how best to achieve these goals. In this
context, the Board of Directors has reviewed your April 12 letter.
The Board has unanimously determined to reject the proposal
outlined in your letter.
Now and always, Chrysler is focused on the long-term. We are
committed to a sound business strategy that will allow Chrysler to
continue to produce innovative, quality products throughout the
business cycle. And that means ensuring the financial strength
that will enable
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Chrysler to fulfill that commitment. Today, Chrysler is more
financially stable than it has ever been and once more stands
proudly among the top automakers in the U.S. and in the world,
producing exceptional products and profitability.
In the directors' judgment, pursuing your proposal is not in the
best interests of the Company, its shareholders, its employees,
its dealers or its customers. Here are several of the reasons that
underlie this conclusion:
Your letter speaks of an "offer," but it only amounts to an
invitation to Chrysler to join you in a search to see if financing
might be available for a transaction. When you add up what would
be required to pay shareholders and to refinance debt facilities,
more than $30 billion would be needed. Not a single non-Chrysler
dollar of that financing--according to Tracinda's announcements--
has been lined up. We have grave doubts that such a financing is
feasible.
Your letter contains no information whatsoever as to where you
would look for the needed funds. Your representatives have
publicly stated that you would use $5.5 billion of Chrysler's cash
reserves, seek $12-13 billion of debt financing, and seek $3
billion in equity. Beyond these amounts, we believe your proposal
would most likely also require refinancing approximately $10
billion of bank facilities at Chrysler and at Chrysler Financial.
Even if this immense financing could be accomplished, the result
would be a crippled company:
--Given the cyclicality of the automotive business, we think it
would be rash to strip Chrysler of over 70% of its cash
reserves, and leave it vulnerable to the next downturn in the
business cycle.
--Chrysler's financial strength is also essential to developing
new products and maintaining a leadership position in the
intensely competitive world automotive marketplace. Our
planned product spending alone over the next five years is $23
billion. Without the new products from the investment,
Chrysler simply couldn't compete.
To explore an LBO this big would be a long and deeply disruptive
process. Tracinda has acknowledged that close to eight months
would be needed. The risks of failing to complete a transaction,
and of major harm to the Company in the process, are very high.
Since Tracinda announced its letter, Chrysler's relations with
lenders have suffered. In addition, credit rating agencies have
placed Chrysler's debt on credit watch with negative implications.
Key partners in Chrysler's ongoing success--our employees, our
dealers, our suppliers--have also voiced their alarm and concern
about the prospects of a leveraged transaction.
Our directors believe it would be a serious mistake to subject
Chrysler to the kind of leveraged transaction your proposal
contemplates. Your representatives have said that you are willing
to bet your stake in Chrysler on such a transaction. Our directors
do not have any interest in gambling with Chrysler's future.
We believe strongly in Chrysler's future. We also believe that
the benefits from that bright future should be and will be
realized by all of Chrysler's shareholders.
Yours sincerely,
Robert J. Eaton
Chairman and Chief Executive Officer
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<PAGE>
On April 25, 1995, the following letter was sent to Mr. Eaton:
Mr. Robert J. Eaton
Chairman and Chief Executive Officer
Chrysler Corporation
12000 Chrysler Drive
Highland Park, Michigan 48288
Dear Bob:
Tracinda Corporation has been a loyal and supportive shareholder
of Chrysler since 1990, and has always given its financial support
to the company when asked to do so. Specifically, in connection
with the March, 1991 offering of 60 million shares, your
predecessor made a personal appeal to us to purchase 6 million
shares and to issue a press release to show our support for the
offering. We were told that Tracinda's participation was vital to
the successful completion of the offering. Subsequently, you
personally visited me to secure my commitment to purchase 4
million shares in the 1993 public offering. In addition, every
time that Tracinda has requested something from the company, it
has never been for Tracinda alone--it has always been for all the
shareholders.
In light of the events that have transpired during the past two
weeks, it is clear to us that the shareholders, who are the true
owners of the company, are not being given the consideration they
deserve and are not being given an accurate picture of the facts.
The facts are indisputable: Your management team was first
provided with a detailed written presentation regarding the
economics of an acquisition transaction in December, 1994. On
March 14, 1995, a member of Chrysler's management informed us that
a buyout scenario was included on a list of strategic alternatives
approved for further study by you.
On March 30, 1995, members of your top management team were
again given a detailed written presentation of the transaction
and, based on their review, described the transaction as "doable"
and "intriguing." On April 6, 1995, you personally discussed the
proposed transaction with the independent directors of the Board's
executive committee, who suggested that you not discuss the matter
with the entire Board ostensibly to prevent leaks.
On Monday, April 10, 1995, two members of Chrysler's top
management met with representatives of Tracinda. By that time,
Chrysler's management was sufficiently knowledgeable about the
economic aspects of the transaction that the discussions had
progressed beyond the numbers to addressing the cultural issues
and the needs of the various constituencies, which both we and
your management team considered very important to the success of
the transaction. During the April 10th meeting, it was clearly
communicated to Chrysler management, and they understood, that
time was of the essence.
In order to address the needs of labor, one of the most
important constituencies, our proposal included the following
features:
.Twenty-percent ownership of the company to be given to the
employees at no cost.
.No concessions from the employees. In fact, we discussed
improving long-term security for the employees by guaranteeing
pension contributions and providing other assurances.
.Five-percent ownership of the company to be given to
management at no cost.
On Tuesday, April 11, 1995, immediately after reaching our
decision to extend the offer, I called you to notify you of our
intention to proceed. At this time, we discussed the form of the
response you would make.
We were and continue to be shocked by your "surprise" reaction
to our announcement. As the foregoing chronology indicates, your
management team was kept fully informed at all
23
<PAGE>
times. As you know, we never intended, and still don't intend, for
this transaction to be hostile. You turned it into a hostile
---
transaction.
Yesterday, you sent me a letter accompanied by a press release.
Both your letter and the press release are so replete with
contradictions and omissions that I feel compelled to set the
record straight:
.Nowhere in the letter is there a statement regarding the
adequacy of our price. We believe that it is unprecedented that
a Board rejects an acquisition proposal without dealing with what
is clearly its most important aspect--price. Is this because none
of the three investment banking firms (First Boston, Salomon
Brothers and Morgan Stanley) being used by Chrysler concluded that
our offer was inadequate?
.The reason why the financing has not yet been arranged is because
Chrysler, presumably at your direction, and even before the Board's
---------------------------
rejection of our proposal, has openly intimidated commercial
--------------------------
and investment banks into refusing to discuss the financing of
the transaction with us with threats of both commercial
retaliation and legal action. Aside from the questionable
legality of this financial interference, I fail to see how
this is in the best interest of all shareholders. So I find it
very hypocritical on your part when you say you ". . . have
grave doubts that such a financing is feasible."
.You state that ". . . it would be rash to strip Chrysler of
over 70% of its cash reserves, and leave it vulnerable to the
next downturn in the business cycle." Again, this statement is
incorrect. By the time our proposed transaction would close,
Chrysler would have over $4 billion in cash reserves after using
-----
$5.5 billion to help finance the acquisition. As you must surely
know, during its worst downturn at the time of the Gulf War,
Chrysler used $4 billion over a 3-year period. Our financing plan
has prudently taken this into account; even our worst-case
scenario does not show nearly this level of cash requirement to
weather a downturn. This is because Chrysler is a different company
today. With 70% of its costs outsourced, it is much more
nimble and cost effective. Your letter contains no explanation
whatsoever of how your $7.5 billion was arrived at. Why not $5
billion? Why not $10 billion?
.You state that "Chrysler's financial strength is also essential
to developing new products . . ." and ". . . planned product
spending alone over the next five years is $23 billion." As you
and your management team have known for months, our financing
plan did not cut capital expenditures for new products by one
penny. In fact, our proposal includes $500 million more in capital
expenditures than Chrysler's own plan. Knowing this, for you
to suggest that we are trying to finance the acquisition by
sacrificing future product development is simply incorrect.
Why would we want to make a $2 billion investment in a
"crippled company" that could not compete?
.You continue to call our proposal an "LBO" in order to taint a
proposal with a pejorative label that simply doesn't apply. One
reason why members of your top management team found our proposal
"intriguing" (their word, not ours) as recently as two days
prior to our announcement is undoubtedly because they clearly
saw that, after our proposed transactions, Chrysler would have
less leverage than either Ford or GM. In addition, it must
have been clear to them that the transaction was self
financing; that it, the company would be paying interest
instead of dividends and the free cash flow would remain
virtually unchanged. Frankly, we fail to see how this puts
Chrysler in harm's way, particularly since our projections
were significantly more conservative than those of Wall Street
analysts.
.You state that "the primary objective of the directors and
management of Chrysler is to build value for shareholders." Yet
you have never made a specific proposal to enhance shareholder
value, except in response to my letter to the Board on November
14, 1994. Your new "plans" (obviously in response to our offer)
for share
24
<PAGE>
repurchases or increased dividends are hopelessly vague and
noncommittal. Many great companies (GM, IBM, Eastman Kodak,
American Express, Borden) have learned that it is wise to
listen to their shareholders. Why hasn't Chrysler learned that
lesson?
The key decisions regarding the future of Chrysler are being
made by a group of people who own less than 1% of the stock of the
company. Many of those people are not even employees. We have been
the largest shareholder of the company much longer than you have
been the CEO. Accordingly, we challenge you and Board of Directors
to permit the shareholders of the company to vote on the following
matters:
1. Do they favor the sale of the company at $55 per share? If
the shareholders do not support the buyout, we would withdraw our
offer.
2. Alternatively, if it is not believed to be desirable to sell
the Company for $55 per share, do the shareholders favor an
increase in the annual common stock dividend to $5 per share? In
presenting this alternative, it is worthy of note that, according
to our projections, which are more conservative than the consensus
of Wall Street analysts, a $5 per share dividend would only
utilize approximately 50% of Chrysler's projected free cash flow.
Clearly, based on these figures, you would not have to dip into
Chrysler's $7.5 billion cash reserve to maintain this level of
dividend payout.
Very Truly Yours,
Kirk Kerkorian
On May 18, 1995, the Company issued the following press release:
CHRYSLER BOARD INCREASES DIVIDEND;
REITERATES STOCK BUYBACK PLANS
ST. LOUIS, MO, MAY 18, 1995--Chrysler Corporation (NYSE: C)
announced today that its Board of Directors has voted to increase
its dividend by 25 percent, boosting the quarterly dividend from
$0.40 to $0.50 per share on the Company's common stock. The
dividend is payable July 14, 1995, to shareholders of record on
June 15, 1995.
Today's announcement marked the fourth dividend increase in the
last 17 months. From a level of $0.15 per share on December 1,
1993, the dividend has now been increased 233 percent.
"The Board's primary goal in establishing our dividend rate is
to reward shareholders for their investment and confidence in the
Company and to fix a rate that it believes is sustainable
throughout the business cycle," said Chrysler Chairman and Chief
Executive Officer Robert J. Eaton. "While last year was
spectacular in every way for Chrysler, we didn't have to go too
far into 1995 to be reminded about the unpredictability of the
auto industry. It is important for the Company to be able to
maintain its dividend in good times and bad, and the Board
believes, given the current economic outlook, that it will be able
to do so at the $2.00 per share annual rate."
The Board also declared a dividend of $1.15625 per depositary
share, each representing 1/10 of a share of the Company's Series A
Convertible Preferred Stock, payable July 14, 1995, to
shareholders of record on June 15, 1995.
Eaton also reported that Chrysler has repurchased $490 million
worth of common stock since the beginning of the year and, subject
to market conditions, expects to complete the $1 billion
repurchase plan announced in December of 1994 within the next
several months.
25
<PAGE>
"As we have previously stated, once we have completed the $1
billion repurchase program, the Board will consider additional
levels of stock repurchase in light of the existing cash needs and
prevailing business and market conditions," Eaton said. "We are
very cognizant of our shareholders' desire for increased share
value in the near term but we are equally committed to building
long term shareholder value.
"Sales to date in 1995 have been weaker that expected. As a
result we have lowered our U.S. auto industry forecast to 15.2
million cars and trucks," Eaton said. "But we remain confident
that 1995 and much of the remainder of the decade will be good for
the industry and that the long term performance of our Company
will be strong."
On May 31, 1995, the Offeror decided to withdraw the Proposed Buy-Out and
issued the following press release:
TRACINDA WITHDRAWS OFFER FOR CHRYSLER;
SAYS ITS CHRYSLER STOCK IS NOT FOR SALE
WASSERSTEIN PERELLA RETAINED AS
STRATEGIC ADVISOR TO TRACINDA
LAS VEGAS, NV, MAY 31, 1995--Tracinda Corporation announced
today that it is withdrawing its $55 per share offer for Chrysler
Corporation and will evaluate the full range of available options.
Tracinda reiterated that its Chrysler shares are not for sale and
that its goal of maximizing value for all Chrysler shareholders
remains unchanged.
"We have been Chrysler's largest shareholder for nearly five
years and remain committed to maximizing value for all
shareholders while keeping the company well- managed,
conservatively financed and fully competitive in the U.S. and
abroad," said Alex Yemenidjian, an executive at Tracinda.
"Tracinda's 36 million shares of Chrysler stock are not for sale.
Withdrawing our offer will permit us to take a fresh look at the
situation and evaluate our alternatives."
Tracinda also announced that it has retained the investment
banking firm Wasserstein Perella & Co. as a general strategic
advisor. Wasserstein Perella will provide financial advisory
services as to Tracinda's investments and will assist Tracinda in
evaluating alternatives with respect to its stake in Chrysler.
"Kirk Kerkorian is a serious long-term investor whose track
record speaks for itself," said Bruce Wasserstein, chairman of
Wasserstein Perella. "We hope to provide a new perspective and
play a constructive role in achieving Tracinda's objectives."
Wasserstein Perella & Co. is a leading international investment
bank, with an emphasis on merger and acquisition advisory work,
underwriting of equity and high yield debt securities and asset
management services. Headquartered in New York, Wasserstein
Perella has U.S. offices in Chicago, Dallas and Los Angeles, and
international offices in London, Paris, Frankfurt and Tokyo.
Recently, Wasserstein Perella has advised on advisory transactions
in excess of $14 billion, including acting as the mutually-
designated appraiser in conjunction with AT&T's proposed merger
with LIN Broadcasting, advisor to the General Motors Special
Hourly Employees' Pension Trust in connection with the sale of a
portion of the Trust's $8 billion holding of GM Class E common
stock and advisor on a series of healthcare transactions for
SmithKline Beecham.
Both during and after the events described above, the Offeror has held
discussions with individuals and institutions regarding possible participation
with the Offeror in its activities with respect to the Company, including
participation in the Offer.
On the morning of June 26, 1995, Mr. Kerkorian spoke with Mr. Eaton by
telephone to advise him of the announcement of the Offer.
26
<PAGE>
11. PURPOSE OF THE OFFER.
The Offeror is seeking to purchase the Shares pursuant to the Offer in order
to increase its equity ownership in the Company and to further its position as
the largest stockholder of the Company.
As in the past, the Offeror may from time to time propose to, or discuss
with, the Company various means of enhancing stockholder value, whether
through an increase in the regular dividend, a special dividend, a repurchase
of Shares, a restructuring or otherwise. The Offeror may determine not to take
any actions in furtherance of this objective. The Offeror has considered and
is considering seeking the support of other stockholders of the Company
through a consent solicitation or proxy contest to elect the Offeror's
designees (who may or may not be affiliates of the Offeror) as a minority, the
majority, or the entire Board of Directors, either by adding directors and/or
replacing existing ones. The Offeror has made no final determination with
respect to this matter and at this time no potential designees for directors
of the Company have been selected. The Offeror has also held discussions with
certain individuals (who did not include Mr. Iacocca) concerning, and may
consider in the future, the employment of such individual as an executive of
the Offeror so that, if the Offeror were to determine to seek control of the
Company and in fact obtained control of the Company, the individual would be
available, if requested, to serve as Chairman of the Company. In addition, the
Offeror may explore from time to time in the future a variety of other
alternatives, including, without limitation: (a) the acquisition of additional
securities of the Company; (b) an extraordinary corporate transaction
involving the Company or any of its subsidiaries; (c) a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries; (d) a
change in the present Board of Directors or management of the Company; (e) a
material change in the present capitalization or dividend policy of the
Company; (f) a material change in the Company's business or corporate
structure; (g) causing a class of securities of the Company to be delisted
from a national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national securities
association; (h) causing a class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or (i) any action similar to any of those enumerated above.
There is no assurance that the Offeror will develop any plans or proposals
with respect to any of the foregoing matters.
The Offeror has no present intention to dispose of any of its Shares.
Any alternatives which the Offeror may pursue will depend upon a variety of
factors, including the number of Shares tendered pursuant to the Offer, the
responses of the Company and the stockholders of the Company to the Offer and
to any proposals to increase stockholder value which may be made, from time to
time, by the Company, the Offeror or others, current and future trading prices
for the Shares, the Offeror's judgment regarding the financial condition,
results of operations and prospects of the Company and general economic,
financial market and industry conditions.
12. DIVIDENDS AND DISTRIBUTIONS.
If, on or after March 31, 1995, the Company should (a) split, combine or
otherwise change the Shares or its capitalization (other than by redemption of
the Rights in accordance with the terms of the Rights Agreement as publicly
disclosed prior thereto), (b) acquire or otherwise cause a reduction in the
number of outstanding Shares or other securities (other than as aforesaid) or
(c) issue or sell additional Shares (other than the issuance of Shares under
option prior to March 31, 1995), shares of any other class of capital stock,
other voting securities or any securities convertible into, or rights,
warrants or options, conditional or otherwise, to acquire, any of the
foregoing, then, subject to the provisions of Section 13, the Offeror, in its
sole discretion, may make such adjustments as it deems appropriate in the
Offer Price and other terms of the Offer, including, without limitation, the
number or type of securities offered to be purchased.
If, on or after March 31, 1995, the Company should declare or pay any cash
dividend on the Shares (other than regular quarterly dividends not in excess
of $.50 per Share) or other distribution on the Shares, or issue, with respect
to the Shares or any additional Shares, shares of any other class of capital
stock, other voting securities or any securities convertible into, or rights,
warrants or options, conditional or otherwise, to acquire,
27
<PAGE>
any of the foregoing, payable or distributable to stockholders of record on a
date prior to the transfer of the Shares purchased pursuant to the Offer to
the Offeror or its nominees or transferees on the Company's stock transfer
records, then, subject to the provisions of Section 13, the Offer Price may,
in the sole discretion of the Offeror, be reduced by the amount of any such
cash dividend or cash distribution and the whole of any such noncash dividend,
distribution or issuance to be received by the tendering stockholders will (i)
be received and held by the tendering stockholders for the account of the
Offeror and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of the Offeror,
accompanied by appropriate documentation of transfer, or (ii) at the direction
of the Offeror, be exercised for the benefit of the Offeror, in which case the
proceeds of such exercise will promptly be remitted to the Offeror. Pending
such remittance and subject to applicable law, the Offeror will be entitled to
all rights and privileges as owner of any such noncash dividend, distribution,
issuance or proceeds and may withhold the entire Offer Price for the Shares or
deduct therefrom the amount or value thereof, as determined by the Offeror in
its sole discretion.
13. CERTAIN CONDITIONS TO OFFEROR'S OBLIGATIONS.
Notwithstanding any other term or provision of the Offer and without
prejudice to the Offeror's other rights under the Offer, the Offeror will not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer), to pay
for any Shares not theretofore accepted for payment or paid for unless the
Insurance Condition shall have been satisfied. Furthermore, notwithstanding
any other term or provision of the Offer, the Offeror will not be required to
accept for payment or, subject as aforesaid, to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer, at any time on or after March 31, 1995, and before the acceptance of
such Shares for payment or the payment therefor, any of the following events
or facts shall have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding, application or counterclaim by any government or governmental,
regulatory or administrative authority or agency, domestic, foreign or
supranational (each, a "Governmental Entity"), or by any other person,
domestic or foreign, before any court or Governmental Entity, (i)(A)
challenging or seeking to, or which is reasonably likely to, make illegal,
delay or otherwise, directly or indirectly restrain or prohibit, or seeking
to, or which is reasonably likely to, impose voting, procedural, price or
other requirements, in addition to those required by federal securities
laws and the DGCL (each as in effect on the date of this Offer to
Purchase), in connection with, the making of the Offer or the acceptance
for payment of, or payment for, some of or all the Shares by the Offeror or
otherwise in connection with the Offeror's investment in the Company, (B)
seeking to obtain material damages in connection with the foregoing or (C)
otherwise directly or indirectly relating to the transactions contemplated
by the Offer or the Offeror's investment in the Company, (ii) seeking to
compel the Offeror to dispose of or hold separate all or any portion of the
Shares held by it, (iii) seeking to impose or confirm limitations on the
ability of the Offeror effectively to exercise full rights of ownership of
the Shares, including, without limitation, the right to vote any Shares
acquired or owned by the Offeror on matters properly presented to the
Company's stockholders, (iv) seeking to require divestiture by the Offeror
of any Shares, (v) seeking any material diminution in the benefits expected
to be derived by the Offeror as a result of the transactions contemplated
by the Offer, (vi) otherwise directly or indirectly relating to the Offer
or which otherwise, in the sole judgment of the Offeror, might materially
adversely affect the Company or any of its subsidiaries or the Offeror or
the value of the Shares, or (vii) in the sole judgment of the Offeror,
materially adversely affecting the business, properties, assets,
liabilities, capitalization, stockholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of the Company or any of its subsidiaries, except, in the cases
of clauses (i) through (vi), for actions, proceedings, applications or
counterclaims existing on the date hereof, unless there shall occur any
material adverse development therein, as determined by the Offeror in its
sole discretion;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to
(i) the Offeror or the Company or any of its subsidiaries or (ii) the Offer
by any government, legislative
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body or court, domestic, foreign or supranational, or Governmental Entity
that, in the sole judgment of the Offeror, might, directly or indirectly,
result in any of the consequences referred to in clauses (i) through (vii)
of paragraph (a) above;
(c) any change shall have occurred or been threatened (or any condition,
event or development shall have occurred or been threatened involving a
prospective change) in the business, properties, assets, liabilities,
capitalization, stockholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
the Company or any of its subsidiaries that, in the sole judgment of the
Offeror, is or may be materially adverse to the Company or any of its
subsidiaries, or the Offeror shall have become aware of any facts that, in
the sole judgment of the Offeror, have or may have material adverse
significance with respect to either the value of the Company or any of its
subsidiaries or the value of the Shares to the Offeror;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) any significant adverse change in the securities or
financial markets in the United States or abroad, including, without
limitation, a decline of at least 10% in either the Dow Jones Average of
Industrial Stocks or the Standard & Poor's 500 Index from that existing at
the close of business on June 26, 1995, or any significant adverse change
in the market price of Shares, (iii) any change in the general political,
market, economic or financial conditions in the United States or abroad
that could, in the sole judgment of the Offeror, have a material adverse
effect upon the business, properties, assets, liabilities, capitalization,
stockholders' equity, condition (financial or otherwise), operations,
licenses or franchises, results of operations or prospects of the Company
or any of its subsidiaries or the trading in, or value of, the Shares, (iv)
any material change in United States currency exchange rates or any other
currency exchange rates or a suspension of, or limitation on, the markets
therefor, (v) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (vi) any limitation
(whether or not mandatory) by any government, domestic, foreign or
supranational, or Governmental Entity, or other event that, in the sole
judgment of the Offeror, might affect, the extension of credit by banks or
other lending institutions, (vii) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States, or (viii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(e) the Company or any of its subsidiaries shall have (i) split, combined
or otherwise changed, or authorized or proposed a split, combination or
other change of, the Shares or its capitalization (other than by redemption
of the Rights in accordance with the terms of the Rights Agreement as
publicly disclosed prior to March 31, 1995), (ii) acquired or otherwise
caused a reduction in the number of, or authorized or proposed the
acquisition or other reduction in the number of, outstanding Shares or
other securities (other than as aforesaid) that would, if 14,000,000 Shares
are purchased in the Offer, result in the Offeror becoming an Acquiring
Person within the meaning of the Rights Agreement, becoming an Interested
Person within the meaning of Section 203 of the DGCL or owning in excess of
15% of the outstanding Shares for purposes of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), unless the
required filings under the HSR Act have been made to permit the Offeror to
own such percentage of the outstanding Shares in excess of 15% and the
applicable waiting periods have expired or been terminated, (iii) issued or
sold, or authorized or proposed the issuance, distribution or sale of,
additional Shares (other than the issuance of Shares under option prior to
March 31, 1995, in accordance with the terms of such options as publicly
disclosed prior to March 31, 1995), shares of any other class of capital
stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of
the foregoing, (iv) declared or paid, or proposed to declare or pay, any
dividend (other than its regular quarterly dividends not in excess of $.50
per Share) or other distribution, whether payable in cash, securities or
other property, on or with respect to any shares of capital stock of the
Company, (v) incurred any debt other than in the ordinary course of
business or any debt containing burdensome covenants, (vi) authorized,
recommended, proposed or entered into an agreement with respect to any
merger, consolidation, liquidation, dissolution, business combination,
acquisition of assets, disposition of assets, release or relinquishment of
any material contractual or other right of the Company or
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any of its subsidiaries or any comparable event not in the ordinary course
of business, (vii) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into, any
agreement or arrangement with any person or group that in the sole judgment
of the Offeror could adversely affect either the value of the Company or
any of its subsidiaries or the value of the Shares to the Offeror, (viii)
entered into any employment, severance or similar agreement, arrangement or
plan with or for the benefit of any of its employees other than in the
ordinary course of business or entered into or amended any agreements,
arrangements or plans so as to provide for increased or accelerated
benefits to the employees as a result of or in connection with the
transactions contemplated by the Offer, (ix) except as may be required by
law, taken any action to terminate or amend any employee benefit plans (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended) of the Company or any of its subsidiaries, or the Offeror
shall have become aware of any such action that was not disclosed in
publicly available filings prior to March 31, 1995, (x) amended, or
authorized or proposed any amendment to, its certificate of incorporation
or its by-laws, or the Offeror shall become aware that the Company or any
of its subsidiaries shall have proposed or adopted any such amendment that
was not disclosed in publicly available filings prior to March 31, 1995 or
(xi) the Company shall have amended or modified the Rights Agreement since
March 31, 1995;
(f) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including the Company or
any of its subsidiaries or affiliates), or it shall have been publicly
disclosed or the Offeror shall have otherwise learned that (i) any person,
entity (including the Company or any of its subsidiaries) or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) shall have
acquired or proposed to acquire beneficial ownership of more than 5% of any
class or series of capital stock of the Company (including the Shares),
other than acquisitions for bona fide arbitrage purposes only and other
than as disclosed in a Schedule 13G on file with the Commission prior to
March 31, 1995, (ii) any such person, entity or group that prior to March
31, 1995, had filed such a Schedule with the Commission has acquired or
proposes to acquire, through the acquisition of stock, the formation of a
group or otherwise, beneficial ownership of 1% or more of any class or
series of capital stock of the Company (including the Shares), or shall
have been granted any right, option or warrant, condition or otherwise, to
acquire beneficial ownership of 1% or more of any class or series of
capital stock of the Company (including the Shares), (iii) any person or
group shall have entered into a definitive agreement or an agreement in
principle or made a proposal with respect to a tender offer or exchange
offer or a merger, consolidation or other business combination with or
involving the Company or (iv) any person shall have filed a Notification
and Report Form under the HSR Act (or amended a prior filing to increase
the applicable filing threshold set forth therein) or made a public
announcement reflecting an interest to acquire the Company or any assets or
subsidiaries of the Company;
(g) any approval, permit, authorization, favorable review or consent of
any Governmental Entity (including those described or referred to in
Section 14) shall not have been obtained on terms satisfactory to the
Offeror in its sole discretion; or
(h) the Offeror shall have reached an agreement or understanding with the
Company providing for termination of the Offer;
which, in the sole judgment of the Offeror in any such case, and regardless of
the circumstances (including any action or inaction by the Offeror) giving
rise to any such condition, makes it inadvisable to proceed with the Offer
and/or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Offeror and may be
asserted by the Offeror regardless of the circumstances giving rise to any
such condition or may be waived by the Offeror in whole or in part at any time
and from time to time in its sole discretion. The failure by the Offeror at
any time to exercise any of the foregoing rights will not be deemed a waiver
of any such right, the waiver of any such right with respect to particular
facts and circumstances will not be deemed a waiver with respect to any other
facts and circumstances and each such right will be deemed an ongoing right
that may be asserted at any time and from time to time. Any determination by
the Offeror concerning the events described in this Section 13 will be final
and binding upon all parties.
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Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall be returned
promptly by the Depositary to the tendering stockholders.
14. CERTAIN REGULATORY AND LEGAL MATTERS.
Except as set forth in this Section, the Offeror is not aware of any
approval or other action by any governmental or administrative agency which
would be required for the acquisition or ownership of Shares by the Offeror as
contemplated herein. Should any such approval or other action be required, it
will be sought, but the Offeror has no current intention to delay the purchase
of Shares tendered pursuant to the Offer pending the outcome of any such
matter, subject, however, to the Offeror's right to decline to purchase Shares
if any of the conditions specified in Section 13 shall not be satisfied. There
can be no assurance that any such approval or other action, if needed, would
be obtained or would be obtained without substantial conditions, or that
adverse consequences might not result to the Company's business or that
certain parts of the Company's business might not have to be disposed of if
any such approvals were not obtained or other action taken.
Michigan Insurance Law. The Company has two indirect, wholly-owned insurance
subsidiaries domiciled in Michigan (the "Insurance Subsidiaries"), the assets
of which, based on public filings of the Company and the Insurance
Subsidiaries, represent an immaterial percentage of the consolidated assets of
the Company. The Michigan Insurance Code provides that a person other than the
issuer shall not make a tender offer for or a request or invitation for
tenders of, or enter into any agreement to exchange securities for, seek to
acquire or acquire, in the open market or otherwise, any voting security of a
domestic insurer if, after the consummation thereof, the person directly or
indirectly, or by conversion or by exercise of any right to acquire, would be
in control of the insurer. The Michigan Insurance Code further provides that a
person shall not enter into an agreement to merge with or otherwise to acquire
control of a domestic insurer or any person controlling a domestic insurer
unless, at the time an offer, request or invitation is made or an agreement is
entered into, or prior to the acquisition of the securities if no offer or
agreement is involved, the person has filed with the commissioner of the
Michigan Insurance Bureau and has sent to the insurer which has sent to its
shareholders, a statement containing the information required by the Michigan
Insurance Code and the offer, request, invitation, agreement or acquisition
has been approved by the commissioner of the Michigan Insurance Bureau in the
manner prescribed by the Michigan Insurance Code. Control is presumed to exist
if any person, by formal or informal arrangement, devise, or understanding,
directly or indirectly, owns, controls, holds with the power to vote, or holds
proxies representing 10% or more of the voting securities of any other person.
This presumption may be rebutted by making a showing, in a petition of
disclaimer filed with the commissioner of the Michigan Insurance Bureau, that
control does not in fact exist. The above-referenced provisions do not apply
to any offer, request, invitation, agreement or acquisition that the
commissioner of the Michigan Insurance Bureau by order exempts as not having
been made or entered into for the purpose and not having the effect of
changing or influencing the control of a domestic insurer or as otherwise not
comprehended within the above-referenced provisions of the Michigan Insurance
Code. There is no statutory time period within which the Michigan Insurance
Bureau must respond to an application for exemption.
On June 26, 1995, the Offeror filed with the Michigan Insurance Bureau an
application for exemption from the relevant provisions of the Michigan
Insurance Code, because, among other reasons, it will continue to be a
minority stockholder and will not have the power, directly or indirectly, to
change the direction of management and policies of the Company or the
Insurance Subsidiaries.
The Offeror believes that the provisions of the Michigan Insurance Code
regarding the regulation of tender offers for Michigan-domiciled insurance
companies are invalid as applied to the Offer, as they are preempted by
federal securities laws and are unconstitutional under the commerce clause of
the Constitution of the United States. Accordingly, on June 26, 1995, the
Offeror filed a complaint in the United States District Court for the Western
District of Michigan against the Commissioner of Insurance of the State of
Michigan and the Company, seeking to have the relevant provisions of the
Michigan Insurance Code declared inapplicable to the Offer.
The Offeror's offer to purchase or pay for the tendered Shares is
conditioned on, among other things, the Michigan Insurance Bureau having
issued an order exempting the Offer from the provisions of the Michigan
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Insurance Code or the Offeror being satisfied, in its sole discretion, that
the provisions of the Michigan Insurance Code are otherwise inapplicable to
the Offer. Based on discussions between representatives of the Offeror and the
Michigan Insurance Bureau, there can be no assurance that the Offeror's
application for exemption from the filing requirements of the Michigan
Insurance Code will be acted upon prior to the initial Expiration Date.
Canadian Insurance Law. The Company owns, directly or indirectly, two
insurance subsidiaries domiciled in Ontario, Canada (the "Canadian Insurance
Subsidiaries"). The Canadian Insurance Companies Act provides that an
acquisition of control of an entity that holds more than 10% of the
outstanding shares of any class of an insurance company regulated by the
Canadian Insurance Companies Act requires approval by the Minister of Finance.
A person acquires control if the securities to which are attached more than
50% of the votes that may be cast to elect directors are beneficially owned by
the person or if that person has any direct or indirect influence that, if
exercised, would result in control in fact of the entity. Acquisition of
control of an entity is deemed to be the acquisition of control of all
entities controlled by that entity. As the Offeror will continue to be a
minority stockholder and will not have any direct or indirect influence that,
if exercised, would result in control in fact of the Company, the Offeror does
not believe that the provisions of the Canadian Insurance Companies Act apply
to the Offer. If the Minister of Finance were to determine that approval was
required, he could seek monetary penalties or divestiture of the Canadian
Insurance Subsidiaries.
Rights Plan. On February 4, 1988, the Board declared a dividend distribution
of one Preferred Share Purchase Right (a "Right") for each outstanding Share.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Junior Participating Cumulative Preferred Stock
("Junior Preferred Stock"), par value $1.00 per share, of the Company at a
price of $120 per one one-hundredth of a share of Junior Preferred Stock,
subject to adjustment. The Rights Agreement provides that the Rights initially
will be attached to all Share certificates, and no separate Rights
certificates will be distributed. The Rights will separate from the Shares and
a "Distribution Date" will occur upon the earlier to occur of (i) ten days
following the time of a public announcement that a Person (as defined in the
Rights Agreement) acquired beneficial ownership of 15% or more of the
outstanding Shares and (ii) ten business days (or, if determined by the Board
of Directors (with the concurrence of a majority of the Continuing Directors
(as defined in the Rights Agreement)), a specified or unspecified later date)
following the commencement or announcement of an intention to make a tender
offer or exchange offer which, if successful, would cause the bidder to own
15% or more of the outstanding Shares (a "Flip-In Event"). The Rights
Agreement also contains a provision which entitles holders of Rights (except a
person who acquires beneficial ownership of more than 15% of the Shares) to
purchase for $120 a number of Shares with a market value of $240 during a
specified period following a Flip-In Event. The foregoing summary of the
Rights Agreement does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement and the other documents included
in the Company's Form 8-K dated December 14, 1990 and Form 8-K dated December
1, 1994. See Section 7 for information on where to obtain the Company's
reports filed with the Commission. Because the Offeror does not intend to
beneficially own (within the meaning of the Rights Agreement) 15% or more of
the outstanding Shares after consummation of the Offer, the Offeror does not
believe the Rights Plan will have an effect upon the Offer.
Section 203 of the DGCL. Section 203, in general, prohibits a Delaware
corporation such as the Company from engaging in a "Business Combination"
(defined as a variety of transactions, including mergers, as set forth below)
with an "Interested Stockholder" (defined generally as a person that is the
beneficial owner of 15% or more of a corporation's outstanding voting stock)
for a period of three years following the date that such person became an
Interested Stockholder unless (a) prior to the date such person became an
Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder, (b) upon consummation of the
transaction that resulted in the stockholder becoming an Interested
Stockholder, the Interested Stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced,
excluding stock held by directors who are also officers of the corporation and
employee stock ownership plans that do not provide employees with the right to
determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer or (c) on or subsequent to the date
such person became an Interested Stockholder, the Business Combination is
approved by the board of directors of the corporation and authorized at a
meeting of stockholders,
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and not by written consent, by the affirmative vote of the holders of at least
66 2/3% of the outstanding voting stock of the corporation not owned by the
Interested Stockholder.
Section 203 provides that, during such three-year period, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate
or associate thereof, and also may not engage in certain other transactions
with an Interested Stockholder or any affiliate or associate thereof,
including, without limitation, (a) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of assets (except proportionately as a
stockholder of the corporation) having an aggregate market value equal to 10%
or more of the aggregate market value of all assets of the corporation
determined on a consolidated basis or the aggregate market value of all the
outstanding stock of a corporation; (b) any transaction which results in the
issuance or transfer by the corporation or by certain subsidiaries thereof of
any stock of the corporation or such subsidiaries to the Interested
Stockholder, except pursuant to a transaction which effects a pro rata
distribution to all stockholders of the corporation; (c) any transaction
involving the corporation or certain subsidiaries thereof which has the effect
of increasing the proportionate share of the stock of any class or series, or
securities convertible into the stock of any class or series, of the
corporation or any such subsidiary which is owned directly or indirectly by
the Interested Stockholder (except as a result of immaterial changes due to
fractional share adjustments); or (d) any receipt of the Interested
Stockholder of the benefit (except proportionately as a stockholder of such
corporation) of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation.
State Takeover Laws. A number of other states have adopted laws and
regulations applicable to attempts to acquire securities of corporations which
are incorporated, or have substantial assets, stockholders, principal
executive offices or principal places of business, or whose business
operations otherwise have substantial economic effects, in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States invalidated on
constitutional grounds the Illinois Business Takeover statute, which, as a
matter of state securities law, made takeovers of corporations meeting certain
requirements more difficult. However in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court held that the State of Indiana may, as a matter
of corporate law and, in particular, with respect to those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining presenting stockholders. The state law
before the Supreme Court was by its terms applicable only to corporations that
had a substantial number of stockholders in the state and were incorporated
there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. The Offeror does not know whether any of these laws will, by their
terms, apply to the Offer and have not complied with any such laws. Should any
person seek to apply any state takeover law to the Offer, the Offeror will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court
proceedings. In the event it is asserted that one or more state takeover laws
is applicable to the Offer, and an appropriate court does not determine that
it is inapplicable or invalid as applied to the Offer, the Offeror might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Offeror might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer. In such case, the Offeror may
not be obligated to accept for payment any Shares tendered. See Section 13.
Antitrust. Pursuant to the requirements of the HSR Act, on November 14,
1994, the Offeror filed a Notification and Report Form for review under the
HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") of a purchase
of Shares for up to 15% of the outstanding Shares of the Company. The waiting
period under the HSR Act with respect to this filing has terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition
of the Shares of the Company. Notwithstanding the termination of the waiting
period under the HSR Act, at any time before or after the Offeror's
acquisition of Shares pursuant to the
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Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or
seeking the divestiture of Shares acquired by the Offeror. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
Certain Pending Litigation. Numerous complaints have been filed arising out
of the Proposed Buy-Out.
On April 27, 1995, a class action complaint was filed in the U.S. District
Court for the District of Nevada, CV-S-95-00407 DWH (RLH) by Robert D.
Sommerfield against the Offeror, Kirk Kerkorian and Does I through X,
inclusive. The complaint alleges that the defendants engaged in a scheme to
manipulate the price of the Shares by publicly announcing a bid to acquire all
of the outstanding Shares without a good faith basis or means to do so. The
conduct is alleged to violate Section 10(b) of the Exchange Act and Regulation
10b-5 promulgated thereunder. No answer to the complaint has yet been filed.
Subsequent to the announcement of the Proposed Buy-Out, approximately 30
complaints were filed by persons claiming to be stockholders of the Company in
the Delaware Court of Chancery in April 1995. Certain of the complaints charge
the Company and its directors with breach of fiduciary duty for failure
adequately to respond to expressions of interest by the Offeror. Other
complaints charge that the $55 price is unfairly low, and that the Company and
its directors would violate their fiduciary duties in contemplating or
effecting a transaction at that price; in twelve of such cases the Offeror is
named as a defendant based on averments that it acted in concert with, and/or
aided and abetted, alleged breaches of fiduciary duties by the Company
defendants. No answer, or other responsive pleading, has been filed by the
Offeror to any of the complaints. Plaintiffs have advised that they intend to
file a consolidated amended complaint.
15. FEES AND EXPENSES.
Neither the Offeror, nor any officer, director, stockholder, agent or other
representative of the Offeror, will pay any fees or commissions to any broker,
dealer or other person (other than the Dealer Manager, the Depositary and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies and other nominees
will, upon request, be reimbursed by the Offeror for customary mailing and
handling expenses incurred by them in forwarding materials to their customers.
Financial Advisory Services. Wasserstein Perella & Co., Inc. ("WP&Co.") is
acting as Dealer Manager in connection with the Offer and is providing, on an
exclusive basis, certain other financial advisory services to the Offeror with
respect to continuing investment banking advice and efforts to enhance
stockholder value with respect to the Offeror's investment in the Company. The
Offeror has paid WP&Co. $7.5 million as a financial advisory fee. WP&Co. is
not receiving any additional compensation for acting as Dealer Manager. Under
the terms of an engagement letter dated May 28, 1995, the Offeror has also
agreed to pay WP&Co. (i) an additional fee of $7.5 million if during the
period of WP&Co.'s engagement and 18 months following the termination thereof,
(a) the Company implements a transaction the stated purpose of which is to
repurchase or exchange not less than $5 billion of the Company's then
outstanding Shares within no more than twelve months of such announcement by
the Company of such transaction (but excluding the $1 billion share repurchase
program announced by the Company on December 1, 1994) or (b) the Company
declares a dividend of not less than $5.00 per share payable on an annualized
basis for no less than eight consecutive quarters; (ii) an additional fee of
$12.5 million (against which any fees paid under (i) above shall be credited)
upon consummation of certain transactions at any time during the period of
WP&Co.'s engagement and 18 months following the termination thereof, including
(a) a purchase by the Offeror or any of its affiliates of a majority of the
then outstanding voting securities of the Company on a fully-diluted basis,
(b) a merger or consolidation involving Offeror or any of its affiliates and
the Company, (c) an asset transfer by the Company of all or a substantial
portion of its assets to Offeror or any of its affiliates or (d) the election
of, or acquisition of the right to elect, such number of nominees,
representatives, or any affiliates to the Board of Directors of the Company
representing in the aggregate at least a majority of the directors of the
Company, without the vote of any other stockholder, whether or not such an
election occurs; (iii) a fee of $5 million (against which the fees paid or
payable under (i) and (ii) above shall be
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credited) in the event the Offeror or any of its affiliates should sell to
others more than 50% of the Shares now owned or subsequently acquired by the
Offeror or its affiliates at any time during the period of WP&Co.'s engagement
and twelve months following the termination thereof; (iv) customary fees (a)
in the event WP&Co. acts as lead or co-lead managing underwriter or managing
placement agent or renders any other service with respect to obtaining private
or public financing for the Offeror in connection with (ii) above or (b) in
the event WP&Co. performs services for which compensation has not previously
been provided; and (v) a fee of $5 million (credited against the fees paid or
payable under (iii) above) in the event a definitive agreement with respect to
any of the transactions defined in (ii) above has been executed and then
subsequently abandoned by the Offeror for reasons reasonably deemed to be
within its control.
The Offeror has also agreed to reimburse WP&Co. for its out-of-pocket
expenses, including reasonable fees and expenses of its counsel and any other
consultants or advisors retained by WP&Co. in connection with its engagement
under the WP&Co. engagement letter and to indemnify WP&Co. and certain related
persons against certain liabilities and expenses.
In the ordinary course of business, WP&Co. engages in securities trading,
market making and brokerage activities and may, at any time, hold long or
short positions and may trade or otherwise effect transactions in securities
of the Company.
The Offeror has retained D.F. King & Co., Inc., as Information Agent, and
Bank of America Illinois, as Depositary, in connection with the Offer. The
Information Agent and the Depositary will receive reasonable and customary
compensation for their services hereunder and reimbursement for their
reasonable out-of-pocket expenses. The Depositary will also be indemnified by
the Offeror against certain liabilities in connection with the Offer.
16. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making
or acceptance thereof would not be in compliance with the securities, blue sky
or other laws of such jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Offeror by the
Dealer Manager or one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
No persons have been authorized to give any information or make any
representation on behalf of the Offeror other than as contained in this Offer
to Purchase or in the Letter of Transmittal, and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by the Offeror.
The Offeror has filed with the Commission a Statement on Schedule 14D-1,
pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-1 promulgated
thereunder, furnishing certain information with respect to the Offer. Such
Schedule 14D-1 and any amendments thereto, including exhibits, may be examined
and copies may be obtained at the same places and in the same manner as set
forth in Section 7 with respect to filings made by the Company (except that
they will not be available at the regional offices of the Commission).
Tracinda Corporation
June 27, 1995
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Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each stockholder of the Company or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at
one of the addresses set forth below:
The Depositary for the Offer is:
BANK OF AMERICA ILLINOIS
By Mail: By Hand or Overnight: Facsimile for Eligible
Institutions:
Bank of America Illinois Bank of America Illinois (312) 923-0271
Corporate Trust Depositary 231 LaSalle Street
P.O. Box 805857 19th Floor Window To confirm fax only:
Chicago, IL 60680-4120 (Clark Street side)
Chicago, IL 60697 (800) 962-9324
ATTN: Corporate Trust Operations Window
or
BANKAMERICA National Trust Company
One World Trade Center
18th Floor
New York, NY 10048-1191
ATTN: Corporate Trust Operations Window
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. Stockholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect:
(212) 425-1685
ALL STOCKHOLDERS CALL TOLL FREE:
1-800-290-6424
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
Call Collect:
212/969-2700
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
CHRYSLER CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 27, 1995
BY
TRACINDA CORPORATION
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JULY 25, 1995 UNLESS THE OFFER IS EXTENDED
THE DEPOSITARY:
BANK OF AMERICA ILLINOIS
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Bank of America (312) 923-0271 Bank of America Illinois
Illinois Corporate To Confirm: 231 LaSalle St.
Trust Depositary P.O. (800) 962-9324 19th Floor Window
Box 805857 Chicago, IL (Clark Street side)
60680-4120 Chicago, IL 60697
BANKAMERICA National Trust
Company
One World Trade Center,
18th Floor New York, NY 10048-1191
Attn: Corporate Trust
Operations Window
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE
APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders of Chrysler
Corporation if certificates are to be forwarded herewith or, unless an Agent's
Message (as defined in Section 3 of the Offer to Purchase) is utilized, if
delivery of Shares (as defined below) is to be made by book-entry transfer to
the Depositary's account at The Depository Trust Company, the Midwest
Securities Trust Company or the Philadelphia Depository Trust Company
(hereinafter collectively referred to as the "Book-Entry Transfer Facilities")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase (as
defined below).
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their Shares and all other documents required hereby to the
Depositary by the Expiration Date (as defined in the Offer to Purchase), or
who cannot comply with the book-entry transfer procedures on a timely basis,
may nevertheless tender their Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
1
<PAGE>
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESSES OF REGISTERED HOLDERS
(PLEASE FILL IN, IF BLANK)
- --------------------------------------------------------------------------------
SHARES TENDERED
(ATTACH ADDITIONAL LIST IF NECESSARY)
- --------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
- ------------------------ ------------------------ ------------------------
- ------------------------ ------------------------ ------------------------
- ------------------------ ------------------------ ------------------------
- ------------------------ ------------------------ ------------------------
- ------------------------ ------------------------ ------------------------
TOTAL SHARES
- --------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares
represented by any certificates delivered to the Depositary are being
tendered. See Instruction 4.
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution _________________________________________________
Account No. ________________________________________________________________ at
[_]The Depository Trust Company
[_]Midwest Securities Trust Company
[_]Philadelphia Depository Trust Company
Transaction Code No. __________________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Stockholder(s) ___________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Name of Institution which Guaranteed Delivery _________________________________
If delivery is by book-entry transfer _________________________________________
Name of Tendering Institution _______________________________________________
Account No. ______________________________________________________________ at
[_]The Depository Trust Company
[_]Midwest Securities Trust Company
[_]Philadelphia Depository Trust Company
Transaction Code No. _______________________________________________________
_______________
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Tracinda Corporation, a Nevada corporation
(the "Offeror"), the above-described shares of Common Stock, $1.00 par value
per share (including the associated Preferred Stock Purchase Rights) (the
"Shares"), of Chrysler Corporation, a Delaware corporation (the "Company"),
pursuant to the Offeror's offer to purchase up to an aggregate of 14,000,000
Shares at a purchase price of $50 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated June 27, 1995 (the "Offer to Purchase"), receipt
of which is hereby acknowledged, and in the Letter of Transmittal (which
together with the Offer to Purchase constitute the "Offer").
Subject to and effective upon acceptance for payment of and payment for the
Shares tendered herewith, the undersigned hereby sells, assigns and transfers
to or upon the order of the Offeror all right, title and interest in and to
all the Shares that are being tendered hereby (and any and all other Shares or
other securities issued or issuable in respect thereof on or after March 31,
1995) and appoints the Depositary the true and lawful agent and attorney-in-
fact of the undersigned with respect to such Shares (and all such other Shares
or securities), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares (and all such other Shares or securities), or
transfer ownership of such Shares (and all such other Shares or securities) on
the account books maintained by any of the Book-Entry Transfer Facilities,
together, in any such case, with all accompanying evidences of transfer and
authenticity, to or upon the order of the Offeror, (b) present such Shares
(and all such other Shares or securities) for transfer on the books of the
Company and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and all such other Shares or securities),
all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints James Aljian and Daniel J.
Taylor and each of them, the attorneys and proxies of the undersigned, each
with full power of substitution, to exercise all rights of the undersigned in
such manner as each such attorney and proxy or his substitute shall in his
sole judgment deem proper, with respect to all of the Shares tendered hereby
which have been accepted for payment by the Offeror prior to the time of any
vote or other action (and any and all other Shares or other securities or
rights issued or issuable in respect of such Shares on or after March 31,
1995), at any meeting of the stockholders of the Company (whether annual or
special and whether or not an adjourned meeting) or otherwise. This proxy is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by the Offeror in accordance with the
terms of the Offer. Such acceptance for payment shall revoke any other proxy
or written consent granted by the undersigned at any time with respect to such
Shares (and all such other Shares or other securities or rights), and no
subsequent proxies will be given or written consents will be executed by the
undersigned (and if given or executed, will not be deemed effective).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares on or after March 31, 1995) and that when
the same are accepted for payment by the Offeror, the Offeror will acquire
good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Depositary or the Offeror to be necessary or desirable
to complete the sale, assignment and transfer of the Shares tendered hereby
(and all such other Shares or securities or rights).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer, this
tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and
the Offeror upon the terms and subject to the conditions of the Offer. It is a
violation of Rule 14e-4 under the Exchange Act for a person, directly or
indirectly, to tender Shares pursuant to the Offer for a person's own account
unless the person so tendering (i) has a net long position equal to or greater
than the number of (x) Shares tendered or (y) other securities immediately
convertible into, or exercisable or exchangeable for, the number of Shares
tendered and will acquire such Shares for tender by conversion, exercise or
exchange of such other securities and (ii) will cause such Shares to be
delivered in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on
behalf of another person. The tender of Shares pursuant to any one of the
procedures described above will constitute the tendering stockholder's
representation and warranty that (i) such stockholder has a net long position
in the Shares being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Shares complies with Rule 14e-4.
3
<PAGE>
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of any Shares purchased, and return any
Shares not tendered or not purchased, in the name(s) of the undersigned (and,
in the case of Shares tendered by book-entry transfer, by credit to the
account at the Book-Entry Transfer Facility designated above). Similarly,
unless otherwise indicated under "Special Delivery Instructions," please mail
the check for the purchase price of any Shares purchased and return any
certificates for Shares not tendered or not purchased (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature(s). In the event that both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the check for the purchase price of any Shares purchased and return any Shares
not tendered or not purchased in the name(s) of, and mail said check and any
certificates to, the person(s) so indicated. The undersigned recognizes that
the Offeror has no obligation, pursuant to the "Special Payment Instructions,"
to transfer any Shares from the name of the registered holder(s) thereof if
the Offeror does not accept for payment any of the Shares so tendered.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the
To be completed ONLY if the check for the purchase price of
check for the purchase price of Shares purchased or certificates
Shares purchased or certificates for Shares not tendered or not
for Shares not tendered or not purchased are to be mailed to
purchased are to be issued in the someone other than the under-
name of someone other than the signed or to the undersigned at
undersigned, or if Shares ten- an address other than that shown
dered by book-entry transfer that below the undersigned's signa-
are not purchased are to be re- ture(s).
turned by credit to an account at
one of the Book-Entry Transfer
Facilities other than that desig-
nated above.
Issue check and/or certificates Mail check and/or certificates
to: to:
Name: ____________________________ Name: ____________________________
(PLEASE PRINT) (PLEASE PRINT)
Address: _________________________ Address: _________________________
__________________________________ __________________________________
(ZIP CODE) (ZIP CODE)
__________________________________ __________________________________
(TAXPAYER IDENTIFICATION NO.) (TAXPAYER IDENTIFICATION NO.)
(SEE SUBSTITUTE FORM W-9)
[_]Credit unpurchased Shares
tendered by book-entry transfer
to the account set forth below:
Name of Account Party _____________
Account No. ____________________ at
[_]The Depository Trust Company
[_]Midwest Securities Trust
Company
[_]Philadelphia Depository Trust
Company
- --------------------------------------------------------------------------------
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
____________________________________________________________________________
____________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
Name(s)_____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title)_______________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number _____________________________________________
Taxpayer Identification Number _____________________________________________
Dated ________________________________________________________________, 1995
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation
or other person acting in a fiduciary or representative capacity, please
set forth full title and see Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
5
<PAGE>
- --------------------------------------------------------------------------------
PAYOR'S NAME: BANK OF AMERICA ILLINOIS
- --------------------------------------------------------------------------------
PART I--PLEASE PROVIDE YOUR PART III--Social
TIN IN THE BOX AT RIGHT AND Security Number or
CERTIFY BY SIGNING AND Employer Identification
DATING BELOW. Number
SUBSTITUTE -----------------------
FORM W-9 (If awaiting TIN write
DEPARTMENT OF "Applied For")
THE TREASURY --------------------------------------------------------
INTERNAL REVENUE PART II--For Payees exempt from backup withholding,
SERVICE see the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9
PAYER'S REQUEST FOR and complete as instructed therein.
TAXPAYER
IDENTIFICATION Certification--Under penalties of perjury, I certify
NUMBER ("TIN") that:
(1) The Number shown on this form is my correct TIN
(or I am waiting for a number to be issued to
me); and
(2) I am not subject to backup withholding either
because I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or the IRS has
notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS--You must cross out Item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
underreporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you were subject to backup withholding, you
received another notification from the IRS that you
were no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the
enclosed Guidelines).
---------------------------------------------------------
SIGNATURE _________________________ DATE ___________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to
me, and either (1) I have mailed or delivered an application to receive a
TIN to the appropriate IRS Center or Social Security Administration Office
or (2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a TIN by the time of payment, 31% of
all payments pursuant to the Offer made to me thereafter will be withheld
until I provide a number.
Signature ___________________________________ Date _______________________
- --------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the
Securities Transfer Agent's Medallion Program (each of the foregoing
constituting an "Eligible Institution"), unless the Shares tendered thereby
are tendered (i) by a registered holder of Shares who has not completed either
the box labeled "Special Delivery Instructions" or the box labeled "Special
Payment Instructions" on this Letter of Transmittal or (ii) for the account of
any Eligible Institution. See Instruction 5. If the certificates evidencing
Shares are registered in the name of a person or persons other than the signer
of this Letter of Transmittal, or if payment is to be made, or delivered to,
or certificates evidencing unpurchased Shares are to be issued or returned to,
a person other than the registered owner or owners, then the tendered
certificates must be endorsed or accompanied by duly executed stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the certificates or stock powers, with the signatures on the
certificates or stock powers guaranteed by an Eligible Institution as provided
herein. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or if
delivery of Shares is to be made by book-entry transfer pursuant to the
procedures set forth in Section 3 of the Offer to Purchase. Certificates for
all physically delivered Shares, or a confirmation of a book-entry transfer
into the Depositary's account at one of the Book-Entry Transfer Facilities of
all Shares delivered electronically, as well as a properly completed and duly
executed Letter of Transmittal, or, in the case of a book-entry transfer, an
Agent's Message, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the front page of this Letter of Transmittal by the Expiration Date.
Stockholders who cannot deliver their Shares and all other required documents
to the Depositary by the Expiration Date must tender their Shares pursuant to
the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. Pursuant to such procedure: (a) the tender is made by or through an
Eligible Institution; (b) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Offeror, is
received by the Depositary prior to the Expiration Date; and (c) the
certificates for all tendered Shares, in proper form for transfer, or a
confirmation of a book-entry transfer into the Depositary's account at one of
the Book-Entry Transfer Facilities of all Shares delivered electronically, as
well as a properly completed and duly executed Letter of Transmittal, or in
the case of a book-entry transfer, an Agent's Message, and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within three New York Stock Exchange trading days after the date of such
Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to
Purchase.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation (as defined in the Offer to Purchase), which states
that such Book-Entry Transfer Facility has received an express acknowledgment
from the participant in such Book-Entry Transfer Facility tendering the Shares
that such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that the Offeror may enforce such agreement against
the participant.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents, including delivery through a Book-Entry Transfer Facility,
is at the option and risk of the tendering stockholder. If delivery is by
mail, registered mail with return receipt requested, properly insured, is
recommended.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal
(or a manually signed facsimile thereof), the tendering stockholder waives any
right to receive any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares Tendered." In
such case, a new certificate for the remainder of the Shares represented by
the old certificate will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the appropriate box on this Letter
of Transmittal, as promptly as practicable following the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
7
<PAGE>
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered or not purchased are to be returned, in the name of any
person other than the registered holder(s). Signatures on any such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the certificate must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the
certificates for such Shares. Signature(s) on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Offeror of the authority of such person so to act must be submitted.
6. Transfer Taxes. The Offeror will pay any stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be returned in the name of, any
person other than the registered holder(s), then the amount of any stock
transfer taxes (whether imposed on the registered holder(s), such other person
or otherwise) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment
of such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instructions. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or
not purchased are to be returned, in the name of a person other than the
person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Stockholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account at any of the Book-Entry
Transfer Facilities as such stockholders may designate under "Special Payment
Instructions." If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facilities designated above.
8. Substitute Form W-9. The tendering stockholder is required to provide the
Depositary with such stockholder's correct TIN on Substitute Form W-9, which
is provided above, unless an exemption applies. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder
to a $50 penalty and to 31% federal income tax backup withholding on the
payment of the purchase price for the Shares.
9. Requests for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase and this Letter of Transmittal may
be obtained from the Information Agent or the Dealer Manager at their
respective addresses or telephone numbers set forth below.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE COPY
HEREOF (TOGETHER WITH CERTIFICATES OR IN THE CASE OF BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ALL OTHER REQUIRED DOCUMENTS) OR NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE
(AS DEFINED IN THE OFFER TO PURCHASE).
8
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on the Substitute Form W-9. If such stockholder is
an individual, the TIN is such stockholder's social security number. If the
Depositary is not provided with the correct TIN, the stockholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. All exempt recipients (including foreign persons
wishing to qualify as exempt recipients) should see the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding on payments that are made
to a stockholder with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of his or her correct TIN by
completing the form certifying that the TIN provided on the Substitute Form W-
9 is correct.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on
which number to report.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect:
(212) 425-1685
ALL STOCKHOLDERS CALL TOLL FREE:
1-800-290-6424
THE DEALER MANAGER FOR THE OFFER IS:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
212/969-2700 (call collect)
9
<PAGE>
OFFER TO PURCHASE FOR CASH
UP TO 14,000,000 SHARES OF COMMON STOCK
OF
CHRYSLER CORPORATION
AT
$50 NET PER SHARE
BY
TRACINDA CORPORATION
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JULY 25, 1995, UNLESS THE OFFER IS
EXTENDED.
June 27, 1995
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We have been appointed by Tracinda Corporation, a Nevada corporation (the
"Offeror"), to act as Dealer Manager in connection with the Offeror's offer to
purchase up to 14,000,000 shares of Common Stock, $1.00 par value per share
(including the associated Preferred Stock Purchase Rights) (the "Shares"), of
Chrysler Corporation, a Delaware corporation (the "Company"), at a purchase
price of $50 per Share, net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
June 27, 1995 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer") enclosed herewith. Holders
of Shares whose certificates for such Shares (the "Certificates") are not
immediately available or who cannot deliver their Certificates and all other
required documents to the Depositary or complete the procedures for book-entry
transfer prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated June 27, 1995.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if neither of the two procedures for tendering Shares set forth in
the Offer to Purchase can be completed on a timely basis.
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name, with space provided for
obtaining such clients' instructions with regard to the Offer.
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, WITHDRAWAL RIGHTS AND
PRORATION PERIOD EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY,
JULY 25, 1995, UNLESS THE OFFER IS EXTENDED.
<PAGE>
Please note the following:
1. The tender price is $50 per Share, net to the seller in cash.
2. The Offer is being made for up to 14,000,000 Shares.
3. The Offer, withdrawal rights and proration period will expire at 12:00
Midnight, New York City time, on July 25, 1995, unless the Offer is
extended.
4. The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is conditioned on (i) the Michigan Insurance Bureau
having issued an order exempting, on terms satisfactory to the Offeror, in
its sole discretion, the Offer from the provisions of the Michigan
Insurance Code or the Offeror being satisfied, in its sole discretion, that
the provisions of the Michigan Insurance Code are otherwise inapplicable to
the Offer and (ii) satisfaction of certain other terms and conditions.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof) and any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase), and other required documents
should be sent to the Depositary and (ii) Certificates representing the
tendered Shares or a timely Book-Entry Confirmation (as defined in the Offer
to Purchase) should be delivered to the Depositary in accordance with the
instructions set forth in the Offer.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may
be effected by following the guaranteed delivery procedures specified in
Section 3 of the Offer to Purchase.
Neither the Offeror nor any officer, director, stockholder, agent or other
representative of the Offeror will pay any fees or commissions to any broker,
dealer or other person (other than the Dealer Manager, the Depositary and the
Information Agent as described in the Offer to Purchase) for soliciting
tenders of Shares pursuant to the Offer. The Offeror will, however, upon
request, reimburse you for customary mailing and handling expenses incurred by
you in forwarding any of the enclosed materials to your clients. The Offeror
will pay or cause to be paid any transfer taxes payable on the transfer of
Shares to it, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
D.F. King & Co., Inc., the Information Agent for the Offer, 77 Water Street,
New York, New York 10005 (212/425-1685) or Wasserstein Perella & Co., Inc.,
the Dealer Manager for the Offer, at 31 West 52nd Street, New York, New York
10019 (212/969-2700).
Requests for copies of the enclosed materials may be directed to the
Information Agent at the above address and telephone number.
Very truly yours,
Wasserstein Perella & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE OFFEROR, THE DEPOSITARY, THE INFORMATION
AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF
THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
UP TO 14,000,000 SHARES OF COMMON STOCK
OF
CHRYSLER CORPORATION
AT
$50 NET PER SHARE
BY
TRACINDA CORPORATION
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JULY 25, 1995, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated June 27,
1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer"), relating to an offer by Tracinda
Corporation, a Nevada corporation (the "Offeror"), to purchase up to
14,000,000 shares of Common Stock, par value $1.00 per share (including the
associated Preferred Stock Purchase Rights) (the "Shares"), of Chrysler
Corporation, a Delaware corporation (the "Company"), at a purchase price of
$50 per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer. This material is being
forwarded to you as the beneficial owner of Shares carried by us in your
account but not registered in your name.
A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU
FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY
US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any or
all of the Shares held by us for your account, upon the terms and conditions
set forth in the Offer.
Please note the following:
1. The tender price is $50 per Share, net to you in cash.
2. The Offer is being made for up to 14,000,000 Shares.
3. The Offer, withdrawal rights, and proration period will expire at
12:00 Midnight, New York City time, on Tuesday, July 25, 1995, unless the
Offer is extended.
4. The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is conditioned on (i) the Michigan Insurance Bureau
having issued an order exempting, on terms satisfactory to the Offeror, in
its sole discretion, the Offer from the provisions of the Michigan
Insurance Code or the Offeror being satisfied, in its sole discretion, that
the provisions of the Michigan Insurance Code are otherwise inapplicable to
the Offer and (ii) satisfaction of certain other terms and conditions.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
<PAGE>
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction
form contained in this letter. An envelope to return your instructions to us
is enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise indicated in such instruction form. PLEASE FORWARD
YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER
YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making of the Offer or acceptance
thereof would not be in compliance with the securities laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Offeror by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
UP TO 14,000,000 SHARES OF COMMON STOCK
OF
CHRYSLER CORPORATION
AT
$50 NET PER SHARE
BY
TRACINDA CORPORATION
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Purchase, dated June 27, 1995, and the related Letter of Transmittal (which
together constitute the "Offer") relating to the Offer by Tracinda
Corporation, a Nevada corporation (the "Offeror"), to purchase up to
14,000,000 shares of Common Stock, par value $1.00 per share (the "Shares"),
of Chrysler Corporation, a Delaware corporation.
You are instructed to tender the number of Shares indicated below (or, if no
number is indicated below, all Shares) that are held by you for the account of
the undersigned, upon the terms and subject to the conditions set forth in the
Offer.
SIGN HERE
- ---------------------------
Shares* --------------------------------------------
---------------
- --------------------------- --------------------------------------------
Signature(s)
--------------------------------------------
--------------------------------------------
Please print name(s) and address(es) here
--------------------------------------------
Area Code & Telephone No.
--------------------------------------------
Tax Identification or Social Security No(s).
Dated: _____________,1995
- --------
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
3
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
CHRYSLER CORPORATION
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates for shares of Common Stock, $1.00
par value per share (including the associated Preferred Stock Purchase Rights)
(the "Shares"), of Chrysler Corporation, a Delaware corporation (the
"Company"), are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary on or prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase). Such form may be delivered
by hand or facsimile transmission or mailed to the Depositary. See Section 3
of the Offer to Purchase, dated June 27, 1995 (the "Offer to Purchase").
THE DEPOSITARY:
BANK OF AMERICA ILLINOIS
By Mail: By Facsimile Transmission: By Hand or Overnight
Courier:
Bank of America Illinois (312) 923-0271 Bank of America Illinois
Corporate Trust Depositary 231 LaSalle Street
P.O. Box 805857 To Confirm: 19th Floor (Clark Street side)
Chicago, IL 60680-4120 (800) 962-9324 Chicago, IL 60697
Attn. Corporate Trust
Operations Window
or
BANKAMERICA National Trust
Company
One World Trade Center
18th Floor
New York, NY 10048-1191
Attn: Corporate Trust
Operations Window
---------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID
DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Ladies and Gentlemen:
The undersigned hereby tenders to Tracinda Corporation, upon the terms and
subject to the conditions set forth in the Offer to Purchase, and the related
Letter of Transmittal (which together constitute the "Offer"), receipt of
which is hereby acknowledged, Shares of the Company, pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
SIGN HERE
Number of Shares: ___________________ Name(s): ____________________________
Certificate No(s). (if available): _____________________________________
_____________________________________ (Please Print)
Address: ____________________________
_____________________________________
_____________________________________
If Securities will be tendered by (Zip Code)
book-entry transfer:
Area Code and Telephone No.:
Name of Tendering Institution:
_____________________________________
_____________________________________
Account No.: _____________________ at Signature(s): _______________________
_____________________________________
[_]The Depository Trust Company
[_]Midwest Securities Trust Company
[_]Philadelphia Depository Trust Company
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the
Securities Transfer Agent's Medallion Program guarantees the delivery to
the Depositary of the Shares tendered hereby, together with a properly
completed and duly executed Letter of Transmittal (or manually signed
facsimile(s) thereof) and any other required documents, all within three
NYSE trading days of the date hereof.
Name of Firm: ______________________ Title: _____________________________
____________________________________ Name: ______________________________
(Authorized Signature) (Please Print or Type)
Address: ___________________________ Area Code and Telephone No.: _______
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM--CERTIFICATES SHOULD BE SENT
WITH THE LETTER OF TRANSMITTAL.
Dated: ___________, 1995
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------- -----------------------------------------------
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF-- NUMBER OF--
- -------------------------------------------------- -----------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
2. Two or more individuals The actual owner the identifying
(joint account) of the account number of the
or, if combined personal
funds, any one representative
of the or trustee
individuals/1/ unless the legal
entity itself is
3. Husband and wife (joint The actual owner not designated
account) of the account in the account
or, if joint title.)/5/
funds, either
person/1/ 10. Corporate account The corporation
4. Custodian account of a The minor/2/ 11. Religious, charitable, The organization
minor (Uniform Gift to or educational
Minors Act) organization account
5. Adult and minor (joint The adult or, if 12. Partnership account The partnership
account) the minor is the held in the name of the
only business
contributor, the
minor/1/ 13. Association, club, or The organization
6. Account in the name of The ward, minor, other tax-exempt
guardian or committee or incompetent organization
for a designated ward, person/3/
minor, or incompetent 14. A broker or registered The broker or
person nominee nominee
7. a. The usual revocable The grantor- 15. Account with the The public
savings trust account trustee/1/ Department of entity
(grantor is also Agriculture in the name
trustee) of a public entity
b. So-called trust account The actual (such as a State or
that is not a legal or owner/1/ local government,
valid trust under State school district, or
law prison) that receives
8. Sole proprietorship The owner/4/ agricultural program
account payments
- -------------------------------------------------- -----------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to with-holding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDEN-
TIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments, other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
================================================================================
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated June 27,
1995 and the related Letter of Transmittal and is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. In any jurisdiction where
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer is being made on behalf of the Offeror by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
Up to 14,000,000 shares of Common Stock
of
Chrysler Corporation
at
$50 Net Per Share
by
Tracinda Corporation
Tracinda Corporation, a Nevada corporation ("Offeror"), is offering to
purchase up to 14,000,000 shares of Common Stock, par value $1.00 per share
(including the associated Preferred Stock Purchase Rights) (the "Shares"), of
Chrysler Corporation, a Delaware corporation (the "Company"), at a purchase
price of $50 per Share, net to the seller in cash, without interest (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase dated June 27, 1995 (the "Offer to Purchase") and in the
related Letter of Transmittal (which together constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JULY 25, 1995,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is not conditioned on any minimum number of Shares being tendered.
The Offer is conditioned on (i) the Michigan Insurance Bureau having issued an
order exempting, on terms satisfactory to the Offeror, in its sole discretion,
the Offer from the provisions of the Michigan Insurance Code or the Offeror
being satisfied, in its sole discretion, that the provisions of the Michigan
Insurance Code are otherwise inapplicable to the Offer and (ii) satisfaction of
certain other terms and conditions.
The Offeror is seeking to purchase the Shares pursuant to the Offer in order
to increase its equity ownership in the Company and not to acquire or influence
control of the business of the Company, except that, as in the past, the Offeror
may from time to time propose to, or discuss with, the Company various means of
enhancing stockholder value. The Offeror may determine not to take any actions
in furtherance of this objective. The Offeror has considered and is considering
seeking the support of other stockholders of the Company through a consent
solicitation or proxy contest to elect the Offeror's designees (who may not be
affiliates of the Offeror) as a minority, the majority or the entire Board of
Directors, either by adding additional directors and/or replacing existing ones.
The Offeror has made no final determination with respect to this matter and at
this time no potential designees for directors of the Company have been
selected.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when the Offeror gives oral or written notice to the Depositary of the
Offeror's acceptance of such Shares for payment. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from the Offeror and
transmitting such payment to tendering stockholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for such Shares or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility (as defined in the Offer to Purchase)
pursuant to the procedures set forth in the Offer to Purchase, (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase), and (iii) any other
documents required by the Letter of Transmittal. Under no circumstances will
interest be paid on the Offer Price for tendered Shares by the Offeror because
of any delay in making such payment.
<PAGE>
If more than 14,000,000 Shares (or such greater number of Shares as the
Offeror elects to accept for payment and pay for) shall be validly tendered by
the Expiration Date, and not withdrawn, the Offeror will, upon the terms and
subject to the conditions of the Offer, purchase 14,000,000 Shares (or such
greater number of Shares) on a pro rata basis (with adjustments to avoid
purchases of fractional Shares) based upon the number of Shares validly tendered
by the Expiration Date and not withdrawn. In the event that proration of
tendered Shares is required, because of the difficulty of determining the
precise number of Shares properly tendered and not withdrawn, the Offeror does
not expect to announce the final results of proration or pay for any Shares
until at least seven New York Stock Exchange trading days after the Expiration
Date. Preliminary results of proration will be announced by press release as
promptly as practicable. Holders of Shares may obtain such preliminary
information from the Information Agent.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment pursuant to the
Offer, may also be withdrawn at any time after August 26, 1995. The term
"Expiration Date" means 12:00 midnight, New York City time, on July 25, 1995,
unless the Offeror in its sole discretion shall have extended the period of time
for which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by the Offeror,
shall expire. For a withdrawal to be effective, a written, telegraphic, telex
or facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth in the Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name in which the
certificates representing such Shares are registered, if different from that of
the person who tendered the Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution (as defined in the Offer to Purchase),
the signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been tendered pursuant to the procedures for book-
entry transfer set forth in Section 3 of the Offer to Purchase, any notice of
withdrawal must also specify the name and number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares
and otherwise comply with such Book-Entry Transfer Facility's procedures. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Offeror, in its sole discretion, and its
determination will be final and binding on all parties. Any Shares properly
withdrawn will be deemed not validly tendered for purposes of the Offer, but may
be retendered at any subsequent time prior to the Expiration Date by following
any of the procedures described in Section 3 of the Offer to Purchase.
The Offeror reserves the right (but will not be obligated), at any time or
from time to time, in its sole discretion, to extend the period during which the
Offer is open by giving oral or written notice of the extension to the
Depositary and making a public announcement of the extension.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-
6 under the Securities Exchange Act of 1934, as amended, is contained in the
Offer to Purchase and is incorporated herein by reference.
Requests are being made to the Company for the use of the Company's
stockholder lists and security position listings for the purpose of
disseminating the Offer to holders of Shares. The Offer to Purchase, the related
Letter of Transmittal and other relevant materials will be mailed to record
holders of Shares and will be furnished to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholders lists, or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
The Offer to Purchase and the Letter of Transmittal contain important
information that should be read before any decision is made with respect to the
Offer.
Questions and requests for assistance or for copies of the Offer to Purchase,
the Letter of Transmittal and other tender offer documents may be directed to
the Information Agent or the Dealer Manager, as set forth below, and copies will
be furnished at the Offeror's expense. No fees or commissions will be payable to
brokers, dealers or other persons other than the Dealer Manager and the
Information Agent for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect:
(212) 425-1685
All Stockholders Call Toll Free:
(800) 290-6424
The Dealer Manager for the Offer is:
Wasserstein Perella & Co., Inc.
31 West 52nd Street
New York, New York 10019
Call collect:
(212) 969-2700
June 27, 1995
================================================================================
<PAGE>
FOR IMMEDIATE RELEASE
- ---------------------
Contact: George Sard/Anna Cordasco Michael Claes
Sard Verbinnen & Co. Burson Marsteller
(212) 687-8080 (212) 614-5236
TRACINDA TO COMMENCE CASH TENDER OFFER FOR
14 MILLION CHRYSLER SHARES AT $50.00 PER SHARE
----------------------------------------------
LAS VEGAS, NV, June 26, 1995 -- Tracinda Corporation announced today that
it will commence a cash tender offer for up to 14 million shares of common stock
of Chrysler Corporation (NYSE:C) at a price of $50.00 per share. The tender
offer, which will commence this week, will not be subject to financing.
Tracinda has been Chrysler's largest shareholder for five years. Increasing
its position in Chrysler reflects Tracinda's continuing belief that Chrysler is
a good investment and its ongoing commitment to enhancing value for all Chrysler
shareholders.
The tender offer will be conditioned on, among other things, exemption from
or the non-applicability of a Michigan insurance statute. This statute is
presumed to apply to an owner of 10% or more of Chrysler's outstanding common
shares because Chrysler has insurance operations in Michigan. These operations
represent an immaterial percentage of Chrysler's total assets.
In addition to seeking an exemption from the Michigan insurance statute,
Tracinda also said that it has filed suit in Federal Court in Michigan seeking a
determination that the Michigan Insurance Bureau has no authority to regulate
Tracinda's purchase of additional Chrysler shares pursuant to the offer.
Tracinda is currently blocked from purchasing more than 15% of Chrysler's
total outstanding shares under the terms of Chrysler's poison pill.
Wasserstein Perella & Co., Inc. will be dealer-manager for the tender
offer.
Tracinda currently owns 36 million shares of the approximately 369 million
outstanding shares of Chrysler common stock.
###
<PAGE>
================================================================================
CREDIT AGREEMENT
BETWEEN
TRACINDA CORPORATION
and
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION
Dated as of June 27, 1991
===============================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. DEFINITIONS
1.1 Defined Terms.................................................. 1
1.2 Other Definitional Provisions.................................. 8
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
2.1 The Commitment................................................. 9
2.2 The Master Note................................................ 9
2.3 Types of Loans................................................. 9
2.4 Procedure for Borrowing........................................ 9
2.5 Reference Rate Loans........................................... 11
2.6 Eurodollar Loans............................................... 12
2.7 Termination or Reduction of the Commitment..................... 12
2.8 Procedure for Conversions/Continuation......................... 13
2.9 Interest Periods............................................... 14
SECTION 3. OTHER CREDIT TERMS
3.1 Payments....................................................... 14
3.2 Funding........................................................ 15
3.3 Change of Lending Office....................................... 15
3.4 Alternative Interest Rate...................................... 15
3.5 Prepayment of Loans............................................ 16
3.6 Determination of Interest Rates................................ 17
3.7 Illegality: Termination of Commitment......................... 17
3.8 Compliance with Regulation U................................... 18
SECTION 4. FEES AND OTHER AMOUNTS PAYABLE
4.1 Commitment Fees................................................ 20
4.2 Interest After Default......................................... 20
4.3 Computation of Fees and Interest............................... 20
4.4 Increased Costs................................................ 21
4.5 Capital Adequacy............................................... 22
4.6 Funding Losses................................................. 23
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.1 Corporate Existence............................................ 23
5.2 Corporate Power; Authorization; Enforceable Obligations........ 24
5.3 No Legal Par to Loans.......................................... 24
5.4 No Material Litigation......................................... 24
5.5 No Default..................................................... 25
- i -
<PAGE>
Page
----
5.6 Ownership of Property; Liens................................... 25
5.7 Taxes.......................................................... 25
5.8 ERISA.......................................................... 25
5.9 Financial Condition............................................ 25
5.10 Federal Reserve Regulations.................................... 26
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions of First Loans...................................... 26
6.2 Conditions of All Loans........................................ 27
SECTION 7. AFFIRMATIVE COVENANTS
7.1 Use of Proceeds of Loans....................................... 29
7.2 Payment of Obligations......................................... 29
7.3 Notice......................................................... 29
7.4 Records........................................................ 29
7.5 Information Furnished.......................................... 30
7.6 Maintenance of Corporate Existence............................. 30
7.7 Tangible Net Worth............................................. 31
7.8 Insurance...................................................... 31
7.9 Margin Regulation Compliance................................... 31
7.10 Delivery of Collateral......................................... 31
7.11 Release of Collateral.......................................... 32
SECTION 8. NEGATIVE COVENANTS
8.1 Encumbrance and Liens.......................................... 33
8.2 Borrowings..................................................... 33
8.3 Liquidation or Merger.......................................... 34
8.4 Loans and Guaranties........................................... 34
8.5 Disposal of Assets............................................. 34
8.6 Retirement of Stock............................................ 34
8.7 Payment of Dividends........................................... 34
8.8 Default Under Other Agreements or Contracts.................... 35
8.9 ERISA Plans.................................................... 35
SECTION 9. EVENTS OF DEFAULT
9.1 Failure to Pay................................................. 35
9.2 Performance under Agreements................................... 35
9.3 Performance under Sections 7.3, 7.7, 7.10, and 8.1 through 8.8. 35
9.4 Insolvency..................................................... 35
9.5 Representations and Warranties................................. 36
9.6 Legal Process.................................................. 36
9.7 Appropriation of Property...................................... 36
- ii -
<PAGE>
Page
----
9.8 Stock Ownership................................................ 36
9.9 Violation of Margin Regulations................................ 36
9.10 Security Interest.............................................. 37
SECTION 10: MISCELLANEOUS
10.1 Notices........................................................ 37
10.2 No Waiver; Cumulative Remedies................................. 38
10.3 Survival of Representations and Warranties..................... 38
10.4 Payment of Expenses............................................ 38
10.5 Successors and Assigns......................................... 38
10.6 Participations and Assignments................................. 38
10.7 Counterparts................................................... 40
10.8 Governing Law.................................................. 40
10.9 Headings....................................................... 40
10.10 Indemnity...................................................... 40
EXHIBITS
A - Master Note
B-1 - Notice of Borrowing
B-2 - Borrowing Base Certificate
C - Notice of Conversion/Continuation
D - List of Existing Liens
E - Stock Collateral Pledge Agreement
F - Bailment and Security Agreement
G - Security Agreement - Secured Party in Possession
H - Aircraft Chattel Mortgage and Security Agreement
I - Questionnaire
- iii -
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of June 27, 1991, between TRACINDA
CORPORATION, a Nevada corporation, (the "Company"), and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, a national banking association, (the "Bank").
SECTION 1. DEFINITIONS
-------
1.1 Defined Terms. In addition to the terms defined elsewhere in this
-------------
Agreement, the following terms, as used in this Agreement, shall have the
following meanings, unless the context otherwise requires:
"Acceptable Aircraft" means commercial aircraft with engines having 750
or more rated takeoff horsepower or the equivalent thereof in shaft horsepower,
pounds of thrust or the like.
"A Credit" has the meaning set forth in Section 3.8.
"Aggregate Cost" means, with respect to Margin Stock, as of the date of
determination, the total cost of Margin Stock on the books of the Company,
determined (in the case of purchases and sales of the same Margin Stock) on a
"last-in, first-out" basis.
"Aggregate Market Value" means (a) with respect to all shares of stock,
the sum of the market values (as computed below) of the stock, with the market
value of any such stock being computed as the number of shares of such stock
times the closing price per share of such stock on the trading day immediately
preceding the date of determination, the closing price being the last sale price
regular way or, in case no such sale takes place on such day, the average of the
closing bid and asked prices regular way, in either case on the New York Stock
Exchange, or, if shares of such issue or class are not listed or admitted to
trading on the New York Stock Exchange, on the principal national securities
exchange on which the shares are listed or admitted to trading, or if the shares
are not listed or admitted to trading, the average of the highest reported bid
and lowest reported asked prices as furnished by the National Association of
Securities Dealers, Inc. through NASDAQ; (b) with respect to the Permitted
Investments, the principal amount originally expended by the Company in
acquiring such investment and (c) with respect to Acceptable Aircraft, as of any
date of determination, the net book value of such aircraft determined in
accordance with generally accepted accounting principles consistently applied.
- 1 -
<PAGE>
"Agreement" shall mean this Credit Agreement as it may from time to time
be amended, restated, supplemented or otherwise modified.
"Aircraft Mortgage" means a Aircraft Chattel Mortgage and Security
Agreement substantially in the form attached hereto as Exhibit H as it may from
---------
time to time be amended, restated, supplemented or otherwise modified which
shall be used to grant Bank a security interest in Acceptable Aircraft to the
extent required under this Agreement.
"Availability Period" shall mean a period of time beginning on the date
of this Agreement and ending on June 30, 1994.
"B Credit" has the meaning set forth in Section 3.8.
"Bailee Security Agreement" means a Bailment and Security Agreement
substantially in the form attached hereto as Exhibit F, as it may from time to
---------
time be amended, restated, supplemented or otherwise modified, shall be used to
grant the Bank a security interest in securities held by brokers to the extent
required under this Agreement.
"Bank's Payment Office" means the Bank's office at 1850 Gateway Blvd.
Concord, California 94520 or such other address as the Bank shall from time to
time designate in a written notice to the Company.
"Borrowing Base" means, as of the date of any determination, an amount
equal to the sum of, without duplication:
(a) Fifty percent (50%) of the Aggregate Market Value of Permitted
Investments of the Company as at such time;
plus
----
(b) Fifty percent (50%) of the Aggregate Market Value of the common
stock of Chrysler Corporation owned by the Company as at such time;
plus
----
(c) Fifty percent (50%) of the Aggregate Market Value of the common
stock of MGM Grand owned by the Company as at such time;
plus
----
- 2 -
<PAGE>
(d) Fifty percent (50%) of the Aggregate Market Value of all Control
Stock owned by the Company as at such time;
plus
----
(e) Fifty percent (50%) of the Aggregate Market Value of all
Non-Control stock owned by the Company as at such time;
plus
----
(f) Forty percent (40%) of the Aggregate Market Value of Acceptable
Aircraft owned by the Company as at such time; provided that the portion
of the Borrowing Base that is based upon the Aggregate Market Value of
Acceptable Aircraft shall at no time exceed the lesser of: (i) Thirty
percent (30%) or the Borrowing Base or (ii) Fifty Million Dollars
($50,000,000).
"Borrowing Base Certificate" means a certificate substantially in the
form attached hereto as Exhibit B-2.
-----------
"Borrowing Date" means the date on which any Loan under this Agreement
is advanced or made available to the Company.
"Business Day" means (a) for all purposes other than as covered by
clause (b) below, any day excluding Saturday, Sunday and any day which will be
in San Francisco, California; Los Angeles, California; and the City of New York,
New York a legal holiday or a day on which banking institutions are authorized
by law or other governmental actions to close, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, Eurodollar Loans, any day except Saturday, Sunday and any day which
will be in New York and London, a legal holiday or a day which banking
institutions are authorized by law or other governmental actions to close and
which is also a day for trading by and between banks in Dollar deposits in the
London interbank market.
"Commitment" shall have the meaning given such term in subsection 2.1.
"Collateral" has the meaning given such term in the Collateral
Agreements collectively.
"Collateral Agreements" means the Aircraft Mortgage, the Bailee Security
Agreement, the Investment Security Agreement and the Pledge Agreement and any
other pledge or security agreement executed in connection herewith or therewith
of the type described in Section 7.10.
- 3 -
<PAGE>
"Control Stock" means common stock issued by a U.S. corporation which
stock is publicly traded in the U.S. and of which the Company directly or
indirectly owns or controls the power to vote ten percent (10%) or more of the
aggregate outstanding voting common shares of such issuer.
"Default" shall mean any event specified in Section 9, whether or not
any requirement for the giving of notice or the lapse of time or both or any
other condition has been satisfied.
"Desert Inn" means the Desert Inn Hotel and Country Club located in Las
Vegas, Nevada.
"Dollars" and the sign "$" means dollars in lawful currency of the
United States of America.
"Dollars LIBO Rate" means the rate in respect of an Interest Period
determined on the basis of the offered rates for deposits in Dollars for a
period equal to the Interest Period which appear on the Reuters Screen LIBO Page
as of 11:00 a.m., London time, on the day that is two London Business Days
preceding the first day of that Interest Period. If at least two rates appear
on the Reuters Screen LIBO Page, the rate for the first day of said Interest
Period will be the arithmetic mean (rounded upwards, if necessary, to the
nearest 1/32 of one percent) of such rates. If fewer than two rates appear, the
rate for an Interest Period will be the London Interbank Rate.
"Eligible Collateral" means Permitted Investments maintained in the
custody of Bank, common stock of Chrysler Corporation, common stock of MGM
Grand, Non-control Stock, Control Stock and Acceptable Aircraft.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may from time to time be amended, supplemented or otherwise modified.
"Eurodollar Loan" means any Loan of the Bank in Dollars during any
period when bearing interest at the Eurodollar Rate; and "Eurodollar Loans"
means any Loans during any period when bearing interest at such rates.
"Eurodollar Margin" means ONE AND SEVEN EIGHTHS percent (1 7/8%) per
annum.
"Eurodollar Rate" means a rate per annum equal to the sum of the
Eurodollar Margin plus the Dollar LIBO Rate or, if acceptable, the London
Interbank Rate.
"Event of Default" shall mean any event specified in Section 9, provided
that any requirement for the giving of notice
- 4 -
<PAGE>
or the lapse of time or both or the happening of any other condition has been
satisfied.
"Governmental Authority" means any government, foreign or domestic, and
any political subdivision thereof, any court or any foreign or domestic,
federal, state, municipal, local or other department, commission, board, bureau,
agency, public authority or instrumentality, including, without limitation, any
taxing authority thereof.
"Governmental Requirement" means any law, ordinance, order, rule or
regulation or proclamation having the effect of rule of law of a Governmental
Authority or any interpretation thereof.
"Interest Determination Date" means with respect to each Eurodollar Loan
each date for calculating the Dollar LIBO Rate or, if applicable, the London
Interbank Rate for the purpose of determining the Eurodollar Rate in respect of
the Interest Period of such Eurodollar Loan, which date will be two London
Business Days prior to the commencement of such Interest Period.
"Interest Period" means and includes any interest period applicable to a
Eurodollar Loan as determined in accordance with Section 2.9.
"Investment Security Agreement" means the Security Agreement - Secured
Party in Possession substantially in the form attached hereto as Exhibit G
---------
as it may from time to time be amended, restated, supplemented or otherwise
modified which shall be used to grant Bank a security interest in Eligible
Collateral that consists of Permitted Investments to the extent required under
this Agreement.
"Lending Office" means the Bank's office at 1850 Gateway Blvd. Concord,
California 94520 or such other address as the Bank shall from time to time
designate in a written notice to the Company.
"Lien" shall mean any mortgage, pledge, security, interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction).
"Loan" or "Loans" means such advance of Dollars by the Bank to the
Company under this Agreement as described in Section 2.
"London Interbank Rate" means the rate in respect of an Interest Period
determined on the basis of the rates at which
- 5 -
<PAGE>
deposits in Dollars are offered by the Bank at approximately 11:00 a.m., London
time, on the day that is two London Business Days preceding that Interest Period
to prime banks in the London interbank market for a period equal to the Interest
Period commencing on the first day thereof and in a Representative Amount.
"London Business Day" means any day except Saturday, Sunday and any day
which will be in London, a legal holiday or a day on which banking institutions
are authorized by law or other governmental actions to close and which is also a
day for trading by and between banks in Dollar deposits in the London interbank
market.
"Margin Regulations" means Regulations U, G, and X issued by the Board of
Governors of the Federal Reserve System, or any successor regulations regulating
purchase or carrying of securities pursuant to Section 7 of the Securities
Exchange Act of 1934, or any successor law.
"Margin Stock" means a security included within the definition of "margin
stock" in the Margin Regulations.
"Master Note" means the note described in Section 2.2 as such note may from
time to time be amended, extended, restated, supplemented or otherwise modified.
"Maturity Date" means the last day of the Availability Period.
"MGM Grand" means MGM Grand, Inc., a Delaware corporation.
"Non-Control Stock" means common stock issued by a U.S. corporation which
stock is publicly traded in the U.S. and of which the Company directly or
indirectly owns or controls the power to vote less than ten percent (10%) of the
aggregate outstanding voting common shares of such issuer.
"Non-Purpose Credit" has the meaning specified in the Margin Regulations.
"Notice of Borrowing" means any notice in the form of Exhibit B-1 attached
-----------
hereto and delivered pursuant to Section 2.4.
"Notice of Conversion/Continuation" has the meaning given such term in
Section 2.8.
"Permitted Investments" means (a) direct obligations of the United States
government or any agency thereof, or obligations guaranteed by the United States
government or any
- 6 -
<PAGE>
agency thereof, and which mature within one year from the date of acquisition
thereof or within such longer period as Bank may expressly agree from time to
time; (b) certificates of deposit, bankers acceptances or time deposits of Bank,
or of Swiss Bank Corporation, in each case having a final maturity of one year
or less, or with such longer maturity as Bank may expressly agree from time to
time; (c) certificates of deposit, bankers' acceptances or time deposits; in
each case having a final maturity of one year or less (or such longer maturity
as Bank may expressly agree from time to time) of any other commercial bank
having a capital and surplus in excess of $500,000,000 and whose long-term debt
obligations (or the long-term debt obligations of its parent holding company)
have a rating of at least A by Standard & Poors Corporation or A2 by Moody's
Investors Service, Inc., or their respective successors (but not more than an
aggregate principal amount of Fifty Million Dollars ($50,000,000) in such
obligations of any such commercial bank at any given time) and (d) prime
commercial paper maturing or redeemable at the option of the holder thereof
within six months of the acquisition thereof and having a rating of at least A1
or P1 by Standard & Poors Corporation or Moody's Investors Service, Inc.
"Person" shall mean and include an individual, a partnership, a corporation
(including a business trust), a joint stock company, a trust, an unincorporated
association, a joint venture or other entity or a government or any agency or
political subdivision thereof.
"Plan" shall mean any plan of a type described in Section 4021(a) of ERISA
in respect of which the company or any Subsidiary of the Company is an
"employer" or a "substantial employer" as defined in Sections 3(5) and
4001(a)(2) of ERISA, respectively.
"Pledge Agreement" means the Pledge Agreement substantially in the form of
Exhibit E hereto, as it may from time to time be amended, restated, supplemented
- ---------
or otherwise modified, which shall be used to grant Bank a security interest in
MGM Grand stock and other equity securities that are not in the custody of a
broker.
"Purpose Credit" has the meaning set forth in the Margin Regulations.
"Reference Margin" means ONE HALF percent (1/2%) per annum.
"Reference Rate" means the rate of interest publicly announced from time to
time by the Bank in San Francisco, California, as its reference rate. It is a
rate set by the Bank based upon various factors including Bank of America's
costs and desired return, general economic conditions, and other factors,
- 7 -
<PAGE>
and is used as a reference point for pricing some loans. Bank of America may
price loans at, above or below the Reference Rate. Any change in the Reference
Rate shall take effect on the date specified in the public announcement of such
change.
"Reference Rate Loan" means any Loan bearing interest at the rates
calculated with respect to the Reference Rate.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor) as the same may be amended, modified or
replaced from time to time.
"Regulation U" means Regulation U referred to in the definition of "Margin
Regulations."
"Rule 144" means Rule 144 under the Securities Act of 1933, as amended.
"Representative Amount" means an amount that is representative for a single
transaction in the relevant market at the relevant time.
"Subsidiaries" means those business associations (other than MGM Grand, the
Desert Inn or any other business association the shares of which are publicly-
traded in the United States) of which the Company or its Subsidiaries own more
than 50% of the outstanding common stock.
"Tangible Net Work" means the total assets of the Company (exclusive of
goodwill, patents, trademarks, trade names, organization expense, treasury
stock, unamortized debt discount and premium, deferred charges and other like
intangibles) less all liabilities (including accrued and deferred income taxes
and subordinated liabilities); provided, however, that in computing Tangible
Net Worth for purposes of Sections 7.7 and 8.7, all Eligible Collateral owned by
the Company, except Acceptable Aircraft, shall be valued on the date of any
determination of Tangible Net Worth at the Aggregate Market Value of such
Eligible Collateral.
"Type" means any type of Loan, i.e., whether a Reference Rate Loan or a
Eurodollar Loan.
"U.S." means the United States of America, but excluding Puerto Rico and
any other possession or territory outside the 50 States and the District of
Columbia.
1.2 Other Definitional Provisions.
-----------------------------
(a) All terms defined in this Agreement shall have the defined
meanings when used in the Master Note, or any
- 8 -
<PAGE>
certificate, report or other document made or delivered pursuant hereto,
unless the context shall otherwise require.
(b) As used herein, and in the Master Note, certificate, report or
other document made or delivered pursuant hereto, accounting terms not defined
in subsection 1.1 or any other subsection hereof, and accounting terms partly
defined to the extent not defined, shall have the respective meanings given them
under generally accepted accounting principles in effect at the time such terms
are construed.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
2.1 The Commitment. Subject to all of the terms of this Agreement, the
--------------
Bank will make available to the Company, during the Availability Period, Loans
pursuant to this Section 2; provided, however, at no time shall the aggregate
-------- -------
principal amount of Loans outstanding exceed the lesser of ONE HUNDRED SEVENTY-
FIVE MILLION DOLLARS ($175,000,000) and the Borrowing Base. All Loans made
under this credit facility are Loans which may be repaid and reborrowed during
the Availability Period.
2.2 The Master Note. The Loans made by the Bank to the Company hereunder
---------------
shall be evidenced by a Master Note in the principal amount of the Commitment,
substantially in the form of Exhibit A attached hereto with appropriate
---------
insertions, made and executed by the Company, dated the date hereof. The Bank is
authorized to indicate upon the grid attached to the Master Note the principal
amount, interest rate and borrowing date of each Loan and all payments of
principal and interest thereon. Such notations shall be presumptive as to the
aggregate unpaid principal amount of the Loans made by the Bank, and interest
due thereon, but the failure by the Bank to make such notations shall not affect
the obligations of the Company hereunder or under the Master Note.
2.3 Types of Loans. Each Loan will, at the option of the Company, be a
--------------
Reference Rate Loan or a Eurodollar Loan; provided, however, that all the Loans
-------- -------
will be designated by the Company as to Type. Each Loan may be continued or
converted, as provided in Section 2.8.
2.4 Procedure for Borrowing.
-----------------------
(a) Notice of Borrowing. Whenever the Company desires to borrow
-------------------
hereunder, it will give the Bank prior notice in writing (by telex, telegram,
telecopier or otherwise in
- 9 -
<PAGE>
writing) by delivery to the Bank of a Notice of Borrowing, duly completed, which
notice shall be irrevocable. The Notice of Borrowing shall be accompanied by a
Borrowing Base Certificate duly executed and completed as of the date of such
Notice of Borrowing. (The Company may also give notice of borrowing by
telephone, provided that not later than 1:00 p.m. California time on the date
--------
any such telephonic notice of borrowing is given, the Bank receives from the
Company a written Notice of Borrowing and a Borrowing Base Certificate as
described above.) Except as provided in Section 2.4(d) and Section 2.4(e), in
the case of a borrowing of Reference Rate Loan, such written or telephonic
notice must be received by the Bank by 11:00 a.m. California time on the
proposed Borrowing Date of such Reference Rate Loans. Except as provided in
Section 2.4(d), in the case of a borrowing of a Eurodollar Loan such notice must
be received by the Bank by 11:00 a.m. California time four (4) Business Days
prior to the Borrowing Date of such Eurodollar Loans. Each such Notice of
Borrowing must specify (i) the aggregate principal amount the Company desires to
borrow hereunder, (ii) the proposed Borrowing Date of the Loan (which will be a
Business Day), (iii) whether the Loan then being made is to be initially
maintained as Reference Rate Loan or a Eurodollar Loan, (iv) if to be maintained
as a Eurodollar Loan, the Interest Period to be applicable thereto determined in
accordance with Section 2.9 and (v) whether or not the proceeds of the Loan are
to be used to purchase Margin Stock. Each Eurodollar Loan will be in the minimum
amount of $1,000,000 and in integral multiples of $1,000,000 in excess thereof.
Each Reference Rate Loan will be in the minimum amount of $100,000.
(b) Funding of Loans. On the Borrowing Date, the Bank shall cause the
----------------
principal amount of its Loan to be available in immediately available funds as
soon as practicable (but in no event more than one Business Day) after receipt
of notice at Bank's Payment Officer for credit to the account of the Company.
(c) Failure to Give Notice of Continuation. If the Bank shall not have
--------------------------------------
received a timely Notice of Conversion/Continuation with respect to any
outstanding Eurodollar Loan prior to the last day of the Interest Period thereof
as provided in Section 2.8, the Company will be deemed to have requested that
the Bank make a Reference Rate Loan in the amount of such outstanding Eurodollar
Loan.
(d) Loans Requested in Connection with Acquisitions. If (i) the
-----------------------------------------------
Company is requesting a Loan in connection with the acquisition of the assets of
any Person or the acquisition of the equity of any Person, (ii) immediately
following such proposed acquisition, the Company would own TEN PERCENT (10%) or
more of the assets or outstanding equity of such Person and (iii) such
acquisition has not been approved by the Board of Directors (or other equivalent
governing body) of such
- 10 -
<PAGE>
Person, the Notice of Borrowing and Borrowing Base Certificate with respect to
such Loan must be received by the Bank not less than ten (10) Business Days
prior to the proposed Borrowing Date. Such Notice of Borrowing shall specify, in
addition to the information set forth above in Section 2.4(a), the name and
address of the Person the assets or equity of which is being acquired by the
Company. If the Bank in its sole discretion deems that making such Loan would
place the Bank in a position of conflict of interest, the Bank shall so notify
the Company, which notice must be received by the Company not later than five
(5) Business Days before the proposed Borrowing Date. If the Bank does so notify
the Company, the Bank shall have no obligation to make the Loan requested. The
Company agrees that, in the case of any acquisition of assets or equity by the
Company, whether or not notice must be given to the Bank pursuant to this
Section 2.4(d), the Bank shall under no circumstances have any duty to the
Company to disclose to the Company any information concerning the financial
condition, operations or intentions of the Person whose assets or equity the
Company intends to acquire that may be available to the Bank.
(e) Loans requiring delivery of Eligible Collateral. If the
-----------------------------------------------
Company is requesting a Loan that would cause the aggregate principal amount of
Loans outstanding hereunder to exceed FIFTY MILLION DOLLARS ($50,000,000), or,
if outstanding Loans have already been secured by Eligible Collateral but
additional Eligible Collateral is required in order to comply with the
provisions of Sections 3.5(c) or 7.10, then, the Notice of Borrowing and
Borrowing Base Certificate with respect to such Loan must be received by the
Bank not less than four (4) Business Days prior to the proposed Borrowing Date
and must be accompanied by delivery to the Bank of the necessary Collateral
Agreement and the related Eligible Collateral (or additional Eligible Collateral
and/or Collateral Agreements if outstanding Loans are already secured but
additional Eligible Collateral is required pursuant to Sections 3.5(c) or 7.10)
and all other documentation necessary to assure Bank that it will have a
perfected first-priority security interest in the Eligible Collateral on or
prior to the proposed Borrowing Date.
2.5 Reference Rate Loans.
--------------------
(a) Interest. The Company agrees to pay interest in respect of
--------
the unpaid principal amount of each Reference Rate Loan from the date the
proceeds thereof are made available to the Company until the Maturity Date or
such earlier date as such Reference Rate Loan will be due and payable (whether
by acceleration or otherwise) at a rate per annum which will be the sum of the
Reference Margin and the Reference Rate.
(b) Payments. In respect of each Reference Rate Loan the Company
--------
agrees to pay interest accruing during each
- 11 -
<PAGE>
calendar quarter on the 10th day of each January, April, July, and October next
following the last day of each such calendar quarter, on the Maturity Date and
on any earlier date as such Reference Rate Loan will be due and payable (whether
by acceleration or otherwise).
(c) Principal. The principal amount of each Reference Rate
---------
Loan will be payable in full on the Maturity Date or such earlier date as such
Loan may become due and payable (whether by acceleration or otherwise).
2.6 Eurodollar Loans.
----------------
(a) Interest. All Loans maintained as Eurodollar Loans shall
have Interest Periods of one, two, three, or six months calculated in accordance
with Section 2.9 and no Interest Period may be selected that would end after the
Maturity Date. The Company agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof are
made available to the Company until the Maturity Date or such earlier date as
such Eurodollar Loan will be due and payable (whether on the expiration date of
an Interest Period, by acceleration or otherwise) at a rate per annum equal to
the Eurodollar Rate.
(b) Payments. In respect of each Eurodollar Loan the Company
--------
agrees to pay interest in respect of each Eurodollar Loan on the expiration date
of each Interest Period applicable to such Eurodollar Loan, on the day which is
three months after the first day of the relevant Interest Period, if such
Interest Period is a 6 month period, upon conversion into any other Type of
Loan, upon any prepayment (to the extent accrued on the principal amount
prepaid) and on the Maturity Date or such earlier date as such Eurodollar Loan
will be due and payable (whether by acceleration or otherwise).
(c) Principal. The principal amount of each Eurodollar Loan
---------
will be payable in full on the Maturity Date, or such earlier date as such Loan
may become due and payable in full (whether by acceleration or otherwise).
2.7 Termination or Reduction of the Commitment.
------------------------------------------
(a) Voluntary Reduction of Commitment. The Company will have the
---------------------------------
right, upon not less than ten (10) Business Days' prior written notice to the
Bank, to terminate or, from time to time, reduce the Commitment, and any such
reduction will be in an aggregate amount of $1,000,000 or an integral multiple
thereof.
(b) Mandatory Reduction of Commitment. The Commitment shall
---------------------------------
automatically be reduced by the amount of any proceeds received by the Company,
net of reasonable commissions,
- 12 -
<PAGE>
related costs of sale and related taxes from the sale of any of its shares of
the common stock of MGM Grand, or of Chrysler Corporation, or of any Control
Stock or of any Subsidiary or of any securities (other than Permitted
Investments), whether or not such securities are Margin Stock or Control Stock,
or from the sale of any Acceptable Aircraft. All such reductions of the
Commitment shall be effective upon receipt by the Company of any such proceeds
of such sale. Upon any such sale Company shall promptly notify the Bank of the
amount of the proceeds of such sale and shall provide the Bank with all relevant
computations and backup information concerning commissions, costs of sale, and
related taxes.
(c) Effect of Termination or Reduction. Any termination in
----------------------------------
full of the Commitment will be accompanied by prepayment in full of the unpaid
principal amount of the Loans then outstanding thereunder, together with the
payment of any accrued and unpaid interest or fees, or both, on the amount
prepaid. Any reduction of the Commitment will be accompanied by the prepayment
of Loans to the extent, if any, that the aggregate unpaid principal amount
thereof outstanding exceeds the Commitment as then reduced. Once terminated or
reduced the Commitment cannot be reinstated.
2.8 Procedure for Conversion/Continuation. The Company shall have the
-------------------------------------
option, subject to the following provisions of this Section, to (i) convert on
any Business Day (which in the case of a Eurodollar Loan will be the expiration
dated of an Interest Period) all or any part of the outstanding principal amount
of any Loan from one Type to another Type or Types (provided that any Loan
converted to a Eurodollar Loan shall be in a principal amount of $1,000,000 or
a multiple thereof); (ii) continue all or any part of the outstanding principal
amount of any Loan (provided that any amount continued as a Eurodollar Loan
shall be in a principal amount of $1,000,000 or a multiple thereof), by giving
the Bank irrevocable prior notice in writing (or by telephone, confirmed in
writing not later than 1:00 p.m. California time on the date such Notice of
Conversion/Continuation is given by telephone) thereof which must be received by
the Bank by 11:00 a.m. California time at least four Business Days in the case
of conversion into or continuation of Eurodollar Loans or prior to the date such
conversion or continuation is to be made (a "Notice of Conversion/
Continuation"), which Notice of Conversion/Continuation will be in the form of
Exhibit C and will specify, in the case of a conversion or continuation of a
- ---------
Eurodollar Loan, the Interest Period therefor. Upon any such conversion the
proceeds thereof will be applied directly to repay the outstanding principal
amount of the Loans being converted. No Loans may be converted into or continued
as Eurodollar Loans so long as a Default or Event of Default has occurred and is
continuing.
- 13 -
<PAGE>
2.5 Interest Periods.
----------------
(a) Determination of Interest Period. Pursuant to each Notice of
--------------------------------
Borrowing or Notice of Conversion/Continuation requesting Eurodollar Loans, the
Company will specify, subject to the following provisions, whether the Interest
Period commencing on any such date will be a one-month, two-month, three-month
or six-month period. If the Bank will not have received timely notice of a
designation of an Interest Period as herein provided, the Company will be deemed
to have selected an Interest Period of three months or such shorter period as
may be necessary to satisfy the following requirements of this Section. The
determination of Interest Periods will be subject to the following provisions:
(i) The initial Interest Period, for any Eurodollar Loan
will commence on the date of such Eurodollar Loan (including the date
of any conversion of another Type of Loan into a Eurodollar Loan) and
each Interest Period occurring thereafter in respect of such
Eurodollar Loan will commence on the day on which the next preceding
Interest Period expires.
(ii) If any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period will expire on the
next succeeding Business Day; provided, however, that if any such
-------- -------
Interest Period would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period will expire on the next
preceding Business Day.
(iii) Each Interest Period will be selected and conducted
in accordance with the practices and customs of banking institutions
in connection with the London interbank market, set forth in the 1987
Interest Rate and Currency Exchange Definitions published by ISDA.
(b) Limit on Number of Interest Periods. After giving effect to any
-----------------------------------
Notice of Borrowing or Notice of Conversion/Continuation, there shall not be
more than four different Interest Periods in effect at any one time under this
Agreement.
SECTION 3. OTHER CREDIT TERMS
3.1 Payments.
--------
(a) Full Payment Required. All payments of interest, fees, expenses
---------------------
and principal hereunder will be made by
- 14 -
<PAGE>
the Company to the Bank without setoff or counterclaim in freely transferable
and immediately available funds not later than 11:00 a.m. California time on the
date due at the Bank's Payment Office. In the event that the Bank does not
receive any such payment by 11:00 a.m. California time or such payment is
received in other than freely transferable and immediately available funds, the
Company will pay interest thereon until such funds are received by the Bank or
become freely transferable and immediately available, as the case may be, not
later than 11:00 a.m. California time on a Business Day.
(b) Payments due on Holidays. Any payment due under this Agreement
------------------------
on a day other than a Business Day, shall, except as provided in Section 2.9 be
due and payable on the next succeeding Business Day.
(c) Application of Payments. All payments, including prepayments,
-----------------------
will be applied first to accrued and unpaid fees and charges, then to interest,
and then to principal.
3.2 Funding. Bank will be entitled to fund all or any portion of the
-------
Loans in any manner it may determine in its sole discretion including, without
limitation, in the Grand Cayman interbank market, the London interbank market
and within the United States, but all calculations and transactions hereunder
will be conducted as though the Bank had actually funded its Eurodollar Loans
through the purchase in London of offshore Dollar deposits in the amount of its
relevant Eurodollar Loans and having maturities corresponding to such Interest
Period.
3.3 Change of Lending Office. Bank agrees that upon the occurrence
------------------------
of any event giving rise to the operation of Section 4.4, or Section 4.5, it
will, if so requested by the Company, use its best efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Lending Office for any Loans affected by such event with the object of avoiding
the consequence of the event giving rise to the operation of such Section;
provided, however, that such designation would not, in the reasonable judgment
- -------- -------
of the Bank, be otherwise disadvantageous to the Bank. Nothing in this Section
shall affect or postpone any of the obligations of the Company or the rights of
the Bank provided in Section 4.4 or Section 4.5.
3.4 Alternative Interest Rate.
-------------------------
(a) Circumstances of Unavailability. Anything herein to the contrary
-------------------------------
notwithstanding, if (A) the Dollar LIBO Rate is not available, or (B) the Bank
shall determine that the Dollar LIBO rate does not accurately reflect the cost
to the Bank of making or maintaining Eurodollar Loans, as the case may be, then
the Bank shall give the Company prompt notice thereof, and
- 15 -
<PAGE>
the London Interbank Rate shall replace the Dollar LIBO Rate for purposes of
interest rate determinations hereunder for Eurodollar Loans and for Interest
Periods, of the specified duration until the Bank notifies the Company that the
condition specified in clause (A) or (B) above has ceased to be in effect.
(b) Determination of Alternate Rate. In the event that the Bank
-------------------------------
shall give a notice of the type referred to in clause (a) immediately above,
and, thereafter, the Bank shall determine that the London Interbank Rate does
not accurately reflect the cost of making or maintaining Eurodollar Loans, (i)
the obligations of the Bank hereunder to make Eurodollar Loans shall forthwith
be cancelled, (ii) Loans which would otherwise be made by the Bank as Eurodollar
Loans shall be made instead as Reference Rate Loans, and (iii) the Company shall
pay in full the then outstanding principal amount of all Eurodollar Loans made
by the Bank together with accrued interest on the last day of the then current
Interest Period. Unless the Company notifies the Bank to the contrary within
two (2) Business Days after receiving a notice from the Bank pursuant to this
Section, the Company shall, concurrently with repaying the Eurodollar Loans
pursuant to this subsection, be deemed to have requested and received Reference
Rate Loans in an equal principal amount from the Bank.
3.5 Prepayment of Loans.
-------------------
(a) Voluntary. The Company may voluntarily prepay the Loans in
---------
amounts not less than ONE MILLION DOLLARS ($1,000,000) in whole or in part
without premium or penalty providing that all interest accrued to date of
prepayment is paid on the amount prepaid on the date of prepayment.
(b) Mandatory Prepayment. The Company shall prepay the Loans in the
--------------------
amount of all proceeds received by the Company, net of reasonable commissions,
related costs of sale and related taxes from: (i) the sale of any of its shares
of the common stock of MGM Grand or of Chrysler Corporation, or of any Control
Stock, or of any Subsidiary or from the sale of any securities (other than
Permitted Investments), whether or not such securities are Margin Stock or
Control Stock, and (ii) the sale of any Acceptable Aircraft. All prepayments
required under this Section shall be made promptly upon receipt by the Company
of the proceeds of sale. Upon the sale or disposition of any Margin Stock, the
Company shall (i) simultaneously provide to the Bank such documentation and
information requested by the Bank in order for the Bank to make the
determinations required by Section 6.2(d) after giving effect to such sale or
disposition, and (ii) make a mandatory prepayment of the Loans in such amount as
may be necessary so that the aggregate principal amount of the A Credit
outstanding does not exceed the amount permitted by the Margin Regulations.
- 16 -
<PAGE>
(c) Mandatory Prepayment or Delivery of Security. If at any time the
--------------------------------------------
outstanding principal amount of Loans hereunder exceed $50,000,000 and the
Aggregate Market Value of the Collateral is less than TWO HUNDRED PERCENT (200%)
of the aggregate principal amount of Loans outstanding under this Agreement, the
Company shall promptly either (i) prepay the Loans in an amount by which the
aggregate principal amount of the Loans outstanding hereunder exceeds such
Aggregate Market Value or (ii) grant to the Bank a first priority security
interest in Eligible Collateral as more specifically described in Section 7.10.
(d) Terms of Prepayment. The Company will make any mandatory or
-------------------
optional prepayments upon the following terms and conditions: (i) the Company
will, in the case of a prepayment of Eurodollar Loans give the Bank at least
four Business Days' prior written notice or, in the case of prepayment of
Reference Rate Loans, give the Bank at least one Business Day's prior written
notice of its intent to prepay the Loan, specifying the amount of such
prepayment, which Loans and what Types of Loans are to be prepaid; (ii) each
prepayment of Eurodollar Loans will be in an aggregate principal amount of not
less than $1,000,000 and each prepayment of Reference Rate Loans will be in an
aggregate principal amount of not less than $100,000 (or the amount then
remaining outstanding in respect of any Loan); (iii) Company shall prepay
Eurodollar Loans in full rather than in part, if, after any proposed partial
prepayment the principal amount of the Eurodollar Loan remaining outstanding
after partial prepayment would be less than $1,000,000; (iv) at the time of any
prepayment, the Company will pay all interest accrued on the principal amount of
such prepayment; and (v) if the Company prepays a Eurodollar Loan on other than
the expiration date of an Interest Period, therefor, the Company will make the
payment required under Section 4.6.
(e) Effect of Prepayment. No amount prepaid pursuant to subsection
--------------------
(b) above may be reborrowed and if any prepayment pursuant to subsection (b) is
made before the last day of the Availability Period, the Commitment shall be
reduced by the amount of such prepayment, as and to the extent provided in
Section 2.7.
3.6 Determination of Interest Rates. As soon as practicable after
-------------------------------
9:00 a.m. California time on each Interest Determination Date, the Bank will
determine (which determination will, absent manifest error, be binding upon all
parties hereto) the Eurodollar Rate, which will be applicable to the Eurodollar
Loans to be made on the first day of the applicable Interest Period and will as
soon as practicable give notice thereof (in writing or by telephone, confirmed
in writing) to the Company.
3.7 Illegality; Termination of Commitment. Notwithstanding any other
-------------------------------------
provisions herein, if, after the date
- 17 -
<PAGE>
of this Agreement, the introduction of or any change in any applicable law, rule
or regulation or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration thereof
or compliance by the Bank with any request or directive (whether or not having
the force of law) of any such Governmental Authority shall make it unlawful or
impracticable, in the reasonable judgment of the Bank, for the Bank to make,
maintain or fund Eurodollar Loans as contemplated by this Agreement, (a) the
obligations of the Bank hereunder to make Eurodollar Loans shall forthwith be
cancelled, (b) Loans which would otherwise be made by the Bank as Eurodollar
Loans shall be made instead as Reference Rate Loans, and (c) the Company shall
pay in full the then outstanding principal amount of all Eurodollar Loans
together with accrued interest, either (x) on the last day of the then current
Interest Period if the Bank may lawfully continue to fund and maintain such
Eurodollar Loans to such day or (y) immediately if the Bank may not lawfully
continue to fund and maintain such Eurodollar Loans to such day and in such case
the Company shall not be required to reimburse the Bank for cash provided for in
Section 4.6. Unless the Company notifies the Bank to the contrary within two
(2) Business Days after receiving a notice from the Bank pursuant to this
Section, the Company shall, concurrently with repaying the Eurodollar Loans
pursuant to this subsection, be deemed to have requested and received Reference
Rate Loans in an equal principal amount.
3.8 Compliance with Regulation U.
----------------------------
(a) Treatment of Loans for Purposes of Regulation U. The Loans shall
-----------------------------------------------
at all times be treated for purposes of Regulation U as two separate series of
loans (the "A Credit" and the "B Credit"), as follows:
-------- --------
(i) The principal amount of the A Credit shall be an amount
equal to (A) the aggregate of all Purpose Credits made hereunder (or
such lesser amount as may be agreed to by the Bank and the Company to
satisfy the requirements of Regulation U) minus (B) all payments and
-----
prepayments applied thereto in accordance with Section 3.8(e).
(ii) The principal amount of the B Credit shall be an
amount equal to the aggregate of all Non-Purpose Credits made
hereunder minus all payments and prepayments applied thereto in
-----
accordance with Section 3.8(e).
(b) Allocation of Benefits of Security; Margin Stock. The benefits
------------------------------------------------
of (i) the provisions of Sections 3.5, 8.1, 8.2, 8.3, 8.4 and 8.5, to the extent
that such provisions relate to Margin Stock owned by the Company or the proceeds
thereof, and
- 18 -
<PAGE>
(ii) any Collateral Agreement, if delivered pursuant to the requirements of
Section 7.10 shall be allocated first to the benefit and security of the payment
of the principal of and interest on the A Credit and of all other amounts
payable by the Company under this Agreement in connection with such A Credit
(the "A Credit Amounts"), and only after the payment in full of the A Credit
Amounts, to the benefit and security of the payment of principal of and interest
on the B Credit and of all other amounts payable by the Company under this
Agreement in connection with such B Credit (the "B Credit Amounts").
(c) Allocation of Benefits of Security; Assets Other Than Margin
----------------------------------- ------------------------
Stock. The benefits of (i) the provisions of Sections 8.1, 8.2, 8.3, 8.4 and
- -----
8.5, to the extent that such provisions relate to assets other than Margin Stock
owned by the Company or the proceeds thereof, shall be allocated first to the
benefit and security of the payment of the B Credit Amounts and, only after the
payment in full of all such B Credit Amounts, to the benefit and security of the
payment of the A Credit Amounts.
(d) Record Keeping. The Bank will mark its records to identify the A
--------------
Credit with the benefits and security described in Section 3.8(b) and the B
Credit with the benefits and security described in Section 3.8(c) and, solely
for the purposes of complying with Regulation U, such A and B Credits shall be
treated as separate loans. If at any time the status under Regulation U of any
Margin Stock owned by the Company shall change to non-Margin Stock, Bank shall
mark its records to reflect a reduction in the A Credit by an amount equal to
the maximum loan value of such Margin Stock as determined by the Bank at the
time of such marking (or such lesser amount as shall be permitted by Regulation
U) and to reflect a corresponding increase in the B Credit of by such amount (or
such lesser amount). If at any time the status under Regulation U of any non-
Margin Stock owned by the Company shall change to Margin Stock, Bank shall mark
its records to reflect an increase in the A Credit by an amount equal to the
maximum loan value of such Margin Stock as determined by Bank at the time of
such marking (or such lesser amount as shall be permitted by Regulation U) and
to reflect a corresponding reduction in the amount of the B Credit by such
amount (or such lesser amount). Each such reduction (or increase) in the A
Credit shall be accomplished by a proportionate reduction (or increase) in the
Purpose Credit of Bank. If there is any change in status referred to in this
Section 3.8(d) which is known to the Company, the Company shall within five days
of obtaining knowledge thereof give notice of such change to the Bank. The
Company shall furnish to the Bank from time to time such information and
documentation as it may require to comply with this Section 3.8(d).
(e) Payments and Prepayments. Except as otherwise specifically
------------------------
provided herein (but in any event subject
- 19 -
<PAGE>
to the requirements of Regulation U), each payment and prepayment by the Company
of any Loans made with funds derived from assets, other than Margin Stock, which
are referred to in Section 3.8(c) shall be applied, first, to the payment or
-----
prepayment of the B Credit Amounts and, second, to the payment or prepayment of
------
the A Credit Amounts, and each such payment and prepayments made with funds
derived from assets consisting of Margin Stock or proceeds thereof referred to
in Section 3.8(b) shall be applied, first, to the payment or prepayment of the
-----
A Credit Amounts and, second, to the prepayment of the B Credit Amounts. The
------
Company shall furnish to the Bank from time to time such information and
documentation as it may require to comply with this Section 3.8(e).
SECTION 4. FEES AND OTHER AMOUNTS PAYABLE
4.1 Commitment Fee. The Company agrees to pay to the Bank a
--------------
Commitment fee from the date hereof through the Maturity Date computed at the
rate of THREE EIGHTHS percent (3/8%) per annum, on the average daily unutilized
portion of the Commitment. Commitment fees are payable in arrears on the last
Business Day of each calendar quarter.
4.2 Interest After Default. During the continuation of any Event of
----------------------
Default, the Company shall pay interest (after as well as before judgment to the
extent permitted by law) on the principal amount of all Loans outstanding, at a
rate per annum which is determined by increasing the applicable Reference Margin
or Eurodollar Margin then in effect by adding thereto the rate of ONE AND ONE-
HALF percent (1 1/2%) per annum; provided, however, that, on and after the
-------- -------
expiration of the Interest Period applicable to any Eurodollar Loan on the date
of occurrence of such Event of Default, such Eurodollar Loan shall be converted
to a Reference Rate Loan and shall bear interest at the rate per annum
applicable to Reference Rate Loans hereunder. Interest shall also be paid on
the amount of any interest, fees or commissions not paid when due at a rate per
annum equal to the Reference Rate plus the Reference Margin increased as
provided above.
4.3 Computation of Fees and Interest.
--------------------------------
(a) Method of Computation. All computations of fees and
---------------------
commissions and all interest on Reference Rate Loans and Term Loans shall be
made on the basis of a year of three hundred sixty-five (365) days or three
hundred sixty-six (366) days, as the case may be, and actual days elapsed. All
other computations of interest under this Agreement shall be made on the basis
of a year of three hundred sixty (360) days and actual days elapsed. Interest
and fees shall accrue during each period during which interest or such fees and
commissions are computed from and
- 20 -
<PAGE>
including the first day thereof to but excluding the last day thereof.
(b) Determination Binding. Each determination of an interest rate by
---------------------
the Bank pursuant to any provision of this Agreement shall be binding in the
absence of manifest error.
4.4 Increased Costs.
---------------
(a) Costs Incurred Due to Governmental Requirements. If (i) the
-----------------------------------------------
provisions of Regulation D as in effect on the date of this Agreement or (ii)
after the date hereof, the adoption of a Governmental Requirement or (iii)
compliance by the Bank (or its Lending Office) with any request or directive of
any Governmental Authority whether or not having the force of law imposes,
modifies or deems applicable with respect to Eurodollar Loans any reserve
(including, without limitation, any reserve imposed by the Federal Reserve
Board), special deposit, compulsory loan or similar requirements against assets,
commitments, or deposits or other liabilities with, of or for the account of, or
credit extended by, or any acquisition of funds by or for the account of the
Bank or its Lending Office or any other condition affecting its obligations to
make Eurodollar Loans; and the result of any of the foregoing (without double
counting) is to increase the cost to, impose a cost on the Bank of making or
maintaining any Eurodollar Loan or Commitment to make Eurodollar Loans or to
reduce the amount of any sum received or receivable by the Bank under the
Agreement with respect to Eurodollar Loans, then, within 15 days after written
request by the Bank, the Company shall pay to the Bank such additional amount or
amounts as will compensate the Bank for such increased cost or reduction but
only with respect to the 90-day period immediately preceding the making of each
such demand.
(b) Reserves on "Eurocurrency Liabilities". Without limiting the
--------------------------------------
effect of the foregoing, the Company will pay to the Bank upon 15 days written
request for compensation under this provision, on the last day of each Interest
Period with respect to each Eurodollar Loan held by the Bank, so long as the
Bank shall be required to maintain reserves against "Eurocurrency Liabilities"
under Regulation D (or, so long as the Bank may be required, by reason of any
Governmental Requirement, to maintain reserves against any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or against any
category of extensions of credit or other assets of the Bank which includes any
Eurodollar Loans) an additional amount (determined by the Bank using reasonable
averaging or attribution methods and notified to the Company) equal to the
product of the following for each day during the Interest Period (but not to
exceed the 90-day period immediately preceding the making of each such request):
- 21 -
<PAGE>
(i) the principal amount outstanding on any the day of such
Eurodollar Loans held by the Bank; and
(ii) the remainder of (x) a fraction the numerator of which is
the rate (expressed as a decimal) at which interest accrues on such
Eurodollar Loans for such Interest Period as provided in this Agreement
(less the Eurodollar Margin) and the denominator of which is one minus
the rate (expressed as a decimal) at which such reserve requirements are
imposed on the Bank on such date minus (y) such numerator; and
(iii) 1/360.
The Bank agrees to give prompt notice to the Company should said compensation no
longer be requested or required. A certificate of the Bank setting forth the
basis for determining any additional amount or amounts necessary to compensate
the Bank will be supported by a reasonably detailed explanation of the reasons
for and the amount of such cost and will be final and conclusive and binding
upon all parties hereto absent manifest error.
4.5. Capital Adequacy. In the event that the Bank shall determine that
----------------
the compliance with any law, rule or regulation regarding capital adequacy, or
any change therein or in the interpretation or application thereof or compliance
by the Bank or any corporation controlling the Bank with any request or
directive regarding capital adequacy (whether or not having the force of law)
from any central bank or other Governmental Authority, affects or would affect
the amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and the Bank (taking into consideration the
Bank's or such corporation's policies with respect to capital adequacy and the
Bank's desired return on capital) determines that the amount of such capital is
to be increased as a consequence of the Bank's obligation under this Agreement
then from time to time, upon demand of the Bank (with a copy of such demand to
the Bank), the Company shall be liable for, and shall pay to the Bank, as
specified by the Bank, additional amounts sufficient to compensate the Bank for
such increase; provided, however, that the Company shall not be obligated to
-------- -------
pay any such amount or amounts in excess of 10 basis points per annum unless the
Bank shall have given the Company at least 30 days advance written notice of its
intent to seek compensation under this Section in excess of 10 basis points per
annum from the Company. A certificate of the Bank setting forth the basis for
determining any additional amount or amounts necessary to compensate the Bank
will be final and conclusive and binding upon all parties hereto absent manifest
error.
- 22 -
<PAGE>
4. Funding Losses. The Company shall pay to the Bank, upon the request
--------------
of the Bank (setting forth in reasonable detail the basis for an amounts of
such request), such amount or amounts as shall compensate the Bank for any
reasonable losses, costs or expenses incurred by the Bank as a result of:
(a) any payment or prepayment of a Eurodollar Loan (including
payments made after acceleration), or the conversion of any Eurodollar Loan, to
the Company held by the Bank on a date other than the last day of an Interest
Period for such Eurodollar Loan, or
(b) any failure by the Company to borrow or prepay a Eurodollar Loan
held or to be held by the Bank on the date for such Loan or prepayment specified
in the relevant Notice of Borrowing or Notice of Conversion/Continuation or
prepayment, such compensation to include an amount equal to the excess, if any,
of (x) the amount of interest which would have accrued on the amount so paid or
prepaid, or not borrowed, continued, converted or prepaid, for the period from
the date of such payment or prepayment or failure to borrow, continue, convert
or prepay to the last day of such Interest Period (or, in the case of a failure
to borrow or prepay, the Interest Period for such Eurodollar Loan which would
have commenced on the date of such failure to borrow or prepay) at the
applicable rate of interest for such Eurodollar Loan provided for herein
(excluding, however, the Eurodollar Margin) over (y) the amount of interest (as
reasonably determined by the Bank) which would have accrued to the Bank on such
amount by placing such amount on deposit for a comparable period with leading
banks in the London interbank market.
SECTION 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and to make the
Loans, the Company hereby represents and warrants to the Bank that on the date
hereof the following are true and correct:
5.1 Corporate Existence. The Company is duly organized, validly
-------------------
existing and is good standing under the laws of the State of Nevada, has the
corporate power to own its assets and to transact the business in which it is
now engaged and is duly qualified as a foreign corporation and in good standing
under the laws of each jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification except for failures to
be so qualified that would not in the aggregate have a material adverse effect
on the business, operations, assets or financial conditions of this Company.
- 23 -
<PAGE>
5 Corporate Power; Authorization; Enforceable Obligations. The Company
-------------------------------------------------------
has the corporate power, authority and legal right to execute, deliver and
perform this Agreement, the Master Note and all other certificates and documents
required hereunder and has taken all necessary corporate action to authorize its
borrowings hereunder on the terms and conditions hereof and its execution,
delivery and performance of this Agreement, the Master Note and all related
certificates and documents. No consent of any other person (including, without
limitation, stockholders and creditors of the Company), and no license, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority is required
in connection with the borrowings hereunder or the execution, delivery,
performance, validity or enforceability of this Agreement, and the Master Note.
This Agreement has been, and the Master Note will be, executed and delivered by
a duly authorized officer of the Company, and this Agreement constitutes, and
the Master Note when executed and delivered hereunder will constitute, the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms (except as limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally).
5.3 No Legal Bar to Loans. The execution, delivery and performance of
---------------------
this Agreement, and the Master Note, and the use of the proceeds of the
borrowings hereunder, will not violate any provision of any existing law or
regulation, of any order, judgment, award or decree of any court, arbitrator or
governmental authority, of the certificate of incorporation or by-laws of, or
any securities issued by the Company or of any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which the Company is a
party or by which the Company or any of its assets may be bound, and will not
result in, or require, the creation or imposition of any Lien on any of its
property, assets or revenues pursuant to the provisions of any such mortgage,
indenture, lease, contract or other agreement, instrument or undertaking. No
approval, consent or other action by, or notice to or filing with, any
Governmental Authority with regulatory authority over the Company is necessary
in connection with the execution, delivery, performance or enforcement of this
Agreement or any instrument or agreement required hereunder, except as may have
been obtained and certified copies of which have been delivered to the Bank.
5.4 No Material Litigation. No litigation, investigation or
----------------------
administrative proceeding of or before any court, arbitrator or governmental
authority is pending or, to the Company's knowledge, threatened against the
Company or any of its assets (a) with respect to this Agreement, and the Master
Note or any of the transactions contemplated hereby or (b) the results of which,
in the opinion of the Company and its counsel are likely
- 24 -
<PAGE>
to have a material adverse effect on the business, operations, or financial
condition of the Company taken as a whole.
5.5 No Default. The Company is not in default in any material
----------
respect in the payment or performance of any of its obligations or in the
performance of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which it is a party or by which it or any of its
assets may be bound, and no Default or Event of Default has occurred and is
continuing. The Company is not in default under any order, judgment, award or
decree of any court, arbitrator or governmental authority binding upon or
affecting it or by which any of its assets may be bound or affected, and no such
order, judgment, award or decree materially adversely affects the ability of the
Company to carry on its business as now conducted or the Company's ability to
perform its obligations under this Agreement and the Master Note.
5.6 Ownership of Property; Liens. Except as set forth on Exhibit D,
---------------------------- ---------
the Company has good and marketable title to or valid leasehold interests in all
its property, real and personal, and none of such property is subject to any
Lien of any nature whatsoever except as permitted by subsection 8.1 and except
for covenants, restrictions, rights, easements and minor irregularities in title
which do not interfere with the occupation, use and enjoyment by the Company of
property material to the operation of the Company's normal course of business as
presently conducted or which do not materially impair the value of the Company,
its assets or its business. All stock of MGM Grand registered in the Company's
name and all Margin Stock beneficially owned by the Company, have been duly
issued, are fully paid and non-assessable, there are no outstanding warrants,
options or securities convertible into such stock, and all such stock and the
Permitted Investments are free and clear of all Liens.
5.7 Taxes. The Company has filed or caused to be filed all tax returns
-----
that to the Company's knowledge are required to be filed and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it (other than those being contested in good faith by appropriate proceedings
for which adequate reserves have been provided on the books of the Company), and
no tax liens have been filed and, to the best of the Company's knowledge, no
claims are being asserted with respect to any taxes other than those taxes that
are not material to the financial condition of the Company.
5.8 ERISA. The Company neither sponsors nor maintains a Plan.
-----
5.9 Financial Condition. All financial statements, copies of which
-------------------
have heretofore been furnished to the Bank,
- 25 -
<PAGE>
present fairly the position of the Company as of the statement dates and the
results of operations for the fiscal periods then ended. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistently maintained throughout the period involved, except: (a) the
value of MGM Grand was stated at Aggregate Market Value, and (b) as noted in
said financial statements. The Company has no material contingent obligation,
liability for taxes, long-term leases or unusual forward or long-term commitment
that is not reflected in the foregoing statements (or the related notes
thereto). Since the date of the financial statement dated March 31, 1991
delivered to the Bank by the Company, there has been no material adverse change
in the business, operations, assets or financial or other conditions of the
Company, except for changes that occurred between March 31, 1991 and the date of
this Agreement in the Aggregate Market Value of securities held by the Company.
5.10 Federal Reserve Regulations. The Company is not engaged in the
---------------------------
business of extending credit for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation U. No part of the proceeds of the
Loans will be used, directly or indirectly, for a purpose which violates any
law, rule or regulation of any Governmental Authority, including, without
limitation, the provisions of Regulations G, T, U, or X of the Federal Reserve
Board, as amended.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions of First Loans. The obligation of the Bank to make the
-------------------------
first Loan hereunder shall be subject to the fulfillment on the date of such
Loan of the following conditions precedent or concurrent:
(a) Master Note. The Bank shall have received the Master Note,
-----------
conforming to the requirements of subsection 2.2, all executed by a duly
authorized officer of the Company;
(b) Corporate Proceedings. The Bank shall have received a copy (in
---------------------
form and substance reasonably satisfactory to the Bank) of the resolutions of
the Board of Directors of the Company authorizing its borrowings herein provided
for, delivery and performance of this Agreement, and the Master Note, certified
by the Secretary of the Company that such resolutions have not been amended,
modified, revoked or rescinded;
(c) Incumbency Certificate. The Bank shall have received a
----------------------
certificate of the Secretary of the Company, dated the date of such Loans, as to
the incumbency and signatures of the
- 26 -
<PAGE>
officers of the Company authorized to sign this Agreement, and the Master Note;
(d) Legal Opinions. The Bank shall have received the opinion of
--------------
counsel to the Company in form and substance reasonably satisfactory to the Bank
with respect to the matters set forth in Sections 5.1 through and including 5.4;
(e) Questionnaire. The Bank shall have received a completed
-------------
questionnaire substantially in the form of Exhibit I hereto covering all MGM
---------
Grand stock; and
(f) Form U-1. The Bank shall have received a Federal Reserve Form U-1
--------
dated the date hereof duly completed and executed, the statements made in which
shall be such, in the opinion of such Bank, as to permit the transactions
contemplated hereby in accordance with Regulation U.
(g) Additional Information. The Bank shall have received such
----------------------
additional information it requests to determine compliance with the Margin
Regulations and Rule 144.
6.2 Conditions of All Loans. The obligation of the Bank to make any
-----------------------
Loan, including the first Loan, to permit any conversion of any Loan into a
Eurodollar Loan, or to continue any Loan as a Eurodollar Loan, shall be subject
to the fulfillment on the date of such Loan, such conversion or such
continuation, as the case may be, the following conditions precedent or
concurrent:
(a) Representations and Warranties. The Bank shall have received a
------------------------------
certificate stating that:
(i) the representations and warranties made by the Company herein,
or in any certificate, document, opinion or financial or other statement
furnished at any time under or in connection herewith are true and correct in
all material respects to the best of signer's knowledge and belief on and as of
such date as if made on and as of such date;
(ii) no Default or Event of Default shall have occurred and be
continuing on such date after giving effect to the Loans to be made on such
date; and
(b) Value of Stock. The Aggregate Market Value of all shares of the
--------------
common stock of MGM Grand, and of all shares of Margin Stock owned beneficially
by the Company is not less than 200% of the A Credit outstanding as of the
borrowing date of any such Loan and immediately following the borrowing then
being requested.
- 27 -
<PAGE>
(c) Value of Stock and Permitted Investments. The Company has
----------------------------------------
delivered to the Bank such Collateral Agreements as are requested pursuant to
Section 7.10, and the provisions of the Collateral Agreement grant to the Bank a
valid, binding and enforceable security interest in the Collateral and no
further action is necessary in order to establish and perfect the Bank's
security interest of first priority in or first lien on all Collateral, which
security interest constitutes a perfected security interest in all right, title
and interest of the Company in such Collateral, prior in right to any other
security interests therein created under the Uniform Commercial Code.
(d) Compliance With Margin Regulations.
----------------------------------
(i) The Bank shall have determined that after giving effect
to the making of such Loan (A) the good faith value of the Company's
assets other than Margin Stock shall at least equal the sum of the B
Credit, (B) such Loan shall otherwise be in compliance with the Margin
Regulations and (C) the procedures set forth herein relating to
compliance with the Margin Regulations shall, if complied with, ensure
compliance with the Margin Regulations;
(ii) the Bank shall have received from the Company such
documentation and information (certified in a manner acceptable to
such Bank by an officer of the Company) and such approvals and
opinions of counsel as the Bank may in good faith request in order for
it to (i) distinguish between Purpose Credits and Non-Purpose Credits
and (ii) make the determinations required by clause (i) above; and
(iii) if the Notice of Borrowing relating to such borrowing
specifies that any portion of the proceeds thereof will be used to
acquire Margin Stock, the Bank shall have received a certificate from
an officer of the Company setting forth the Aggregate Cost for the
Margin Stock being acquired.
(e) Additional Evidence. The Bank shall have received such other
-------------------
approvals, legal opinions, certificates or other documents as it may reasonably
request.
(f) Security Interest. If the Company has delivered to the Bank any
-----------------
Collateral Agreement pursuant to the provisions of Section 2 or 7.10 (and the
Bank has not released the Collateral hypothecated thereunder in accord with
Section 7.11), the Bank shall have a valid and enforceable perfected security
interest of first priority in and first lien on all Collateral and the Company
shall have provided to the Bank such evidence as the Bank may reasonably require
that the Aggregate
- 28 -
<PAGE>
Market Value of the Collateral is not less than TWO HUNDRED PERCENT (200%) of
the aggregate principal amount of Loans outstanding hereunder after giving
effect to such Loan.
SECTION 7. AFFIRMATIVE COVENANTS
The Company covenants and agrees that from the date of this Agreement
and until the full and final payment of all indebtedness incurred hereunder,
unless the Bank waives compliance in writing:
7.1 Use of Proceeds of Loans. It will use the proceeds of the Loans
------------------------
made hereunder for working capital purposes of the Company, and subject to the
provisions of Section 2.4(d), acquisitions of assets or equity interests in
other Persons; provided, however, that, without Bank approval, no portion of the
proceeds of any Loan hereunder shall be used: (a) to acquire any equity in a
Person formed, incorporated or domiciled outside the U.S. or (b) other than
funding acquisition of the Desert Inn, to fund any portion of any development,
construction, operation or any other aspect of any hotel, casino, theme park,
entertainment facility or similar entity, operation or business in Nevada
(however nothing in this subsection (b) shall be construed to prevent the
Company from using Loan proceeds to make additional equity investments in MGM
Grand if otherwise permissible under this Agreement).
7.2 Payment of Obligations. It will, and it will cause each of its
----------------------
Subsidiaries to, pay its obligations when due and prior to the date on which
penalties attach thereto, except where such payment is contested in good faith
by the Company or its Subsidiaries, or where the failure to pay such liability
would not materially and adversely affect the Company's financial position.
7.3 Notice. It will, and it will cause each of its Subsidiaries to,
------
give prompt written notice to the Bank of all Events of Default under any of the
terms or provisions of this Agreement, the resignation or withdrawal of Kirk
Kerkorian as the Company's Chief Executive Officer, or any other matter which
has resulted in, or is expected to result in, a materially adverse change in the
Company's financial condition or operations.
7.4 Records. It will, and it will cause each of its Subsidiaries to,
-------
keep and maintain full and accurate accounts and records in all material
respects of its operations on an accrual basis and will permit the Bank, and its
designated officers, employees, agents and representatives, to have access
thereto and to make examination thereof at all reasonable times, to make audits,
and to inspect and otherwise check its properties, real, personal and mixed.
- 29 -
<PAGE>
7.5 Information Furnished. It will, and it will cause each of its
---------------------
Subsidiaries to, furnish to the Bank:
(a) Within 15 days after the close of each fiscal quarter, its
consolidated balance sheet as of the close of such quarter, its consolidated
profit and loss statement for that quarter and for that portion of the fiscal
year ending with such quarter, all prepared on an accrual basis which shall
include the MGM Grand investment and all other equity investments and Permitted
Investments at Aggregate Market Value consistent with that of the previous year,
and all warranted as correct in all material respects by its Secretary-
Treasurer.
(b) Within 60 days after the close of each of the first three
fiscal quarters of MGM Grand, and of the issuer of any Control Stock, copies of
10-Qs of such issuer as filed with the Securities and Exchange Commission and
within 105 days after the close of such issuer's fiscal year end, a copy of its
10-K as filed with the Securities and Exchange Commission.
(c) Within 10 days after the close of each calendar month, a
certificate of the Secretary-Treasurer of the Company certifying as of the last
day of such calendar month as to the Aggregate Market Value of the stock of each
of MGM Grand, Chrysler Corporation, each issuer of Control Stock and of Non-
Control Stock and each Margin Stock and Permissible Investment and of each
Acceptable Aircraft owned by the Company as of the last day of such month
showing all relevant calculations and sources of data and certifying the
Tangible Net Worth of the Company computed for purposes of Section 7.7,
certifying the ratio of such Aggregate Market Value to aggregate principal
amount of Loans outstanding, and certifying as to the Company's compliance with
the provisions of Section 7.10, using in each case the Aggregate Market Value of
the stock of each MGM Grand, Chrysler Corporation, each issuer of Control Stock
and of Non-control Stock and each Margin Stock and Permissible Investment and of
each Acceptable Aircraft on the last day of such month and the principal amount
of Loans outstanding on the last day of such month (but otherwise using all
other financial information in computing Tangible Net Worth as of the last
fiscal quarter for which a report to the Bank was required under Section
7.5(a)).
(d) Acquisitions of Stock. Upon the acquisition of any
---------------------
securities, a certificate of an officer of the Company describing such
acquisitions, which certificate shall include such information as the Bank may
request with respect thereto, including without limitation the Aggregate Market
Value thereof and such other information as may be deemed necessary by the Bank
to assure compliance with the Margin Regulations.
- 30 -
<PAGE>
(e) Such other information concerning its affairs as the Bank may
reasonably request.
7.6 Maintenance of Corporate Existence. It will, and it will cause each
-----------------------------------
of its Subsidiaries to, maintain and preserve its corporate existence and all
rights, permits, privileges and franchises presently existing and required in
the conduct of its business (provided, however that the Company shall not be
required to maintain or preserve the corporate existence of any Subsidiary), and
the Company and its Subsidiaries shall not be required to maintain or preserve
any such right, permit, privilege or franchise, if the loss thereof does not
have a material adverse effect on the Company; will conduct its business in an
orderly, efficient and customary manner; and will keep and maintain all of its
properties in reasonably good working order and condition, ordinary wear and
tear excepted (provided, however, nothing shall prevent the Company or its
Subsidiaries from discontinuing the maintenance of any such properties if such
discontinuance does not have a material adverse effect on the Company).
7.7 Tangible Net Worth. The Company will at all times maintain a Tangible
-------------------
Net Worth of not less than FOUR HUNDRED TWENTY-FIVE MILLION DOLLARS
($425,000,000).
7.8 Insurance. It will maintain insurance with responsible insurance
----------
companies in such amounts and against such risks as is customarily carried by
owners of similar businesses and property.
7.9 Margin regulation Compliance. Take such action from time to time
-----------------------------
as shall be necessary to ensure that neither any borrowing nor any other
transaction hereby shall violate or be inconsistent with any Margin Regulations.
7.10 Delivery of Security. If at any time the aggregate principal amount
---------------------
of all Loans outstanding hereunder is, or would be after giving effect to any
Notice of Borrowing delivered to the Bank by the Company, be greater than
$50,000,000, the Company shall promptly either (i) prepay the Loans as provided
in Section 3.5 or (ii) grant to the Bank a first priority security interest
Eligible Collateral with an Aggregate Market Value of not less than TWO HUNDRED
PERCENT (200%) of the aggregate principal amount of Loans outstanding hereunder
(after giving effect to any Notice of Borrowing delivered to the Bank by the
Company) and in connection therewith. In meeting its obligation hereunder as of
any date the Company shall grant to the Bank security interests in Eligible
Collateral in the following order:
first, a first priority security interest in all Permitted Investments
of the Company (and shall move
- 31 -
<PAGE>
custody of such Permitted Investments to the custody of the Bank to
the extent necessary to give effect to provisions hereof),
second, a first priority security interest in all Chrysler Corporation
common stock,
third, a first priority security interest in all Non-Control Stock,
fourth, a first priority security interest in all MGM Grand common
stock,
fifth, a first priority security interest in all Control Stock,
finally, a first priority security interest in Acceptable Aircraft of
the Company.
In connection therewith the Company shall promptly deliver to the Bank: (x) a
duly executed Collateral Agreement relating to type of Collateral being
hypothecated (or an appropriate amendment to such Collateral Agreement in a form
acceptable to the Bank, if additional Collateral is being given pursuant to the
terms of a Collateral Agreement previously delivered to the Bank by the Company)
together with all documents, agreements and supporting documentation required
thereunder or that may be reasonably requested by the Bank in connection
therewith, (y) if an equity security is being pledged, a correctly completed
questionnaire substantially in the form of Exhibit E with respect to each such
security together with any additional information the Bank may from time to time
reasonably request in order to determine the applicability of Rule 144 or any
other rule or regulation governing issuance or transfer of securities to the
Collateral or to any transfer or disposition thereof and (z) such duly executed
forms UCC-1 and other instruments and documents as the Bank may reasonably
request in order to obtain and maintain a first priority perfected security
interest in the Collateral.
7.11 Release of Collateral. If at any time after the Company has
-----------------------
granted and security interest to the Bank pursuant to the provisions of Section
7.10, the aggregate principal amount of Loans outstanding hereunder is reduced
to an amount of $50,000,000 or less, the Bank shall, upon request of the Company
release the Collateral; provided that no Default or Event of Default has
occurred and been cured with the One Hundred Eighty (180) days immediately
preceding such request by the Company or release of Collateral by the Bank.
- 32 -
<PAGE>
SECTION 8. NEGATIVE COVENANTS
The Company convenants and agrees that from the date of this Agreement and
until the full and final payment of all indebtedness incurred hereunder, unless
the Bank waives compliance in writing:
8.1 Encumbrances and Liens. Other than as set forth in Exhibit C, it will
----------------------
not, nor will it permit any of its Subsidiaries to, create, assume or suffer to
exist, any Liens on any or all of its property, real, personal or mixed, whether
now owned or hereafter acquired (it being understood that nothing herein shall
be construed as prohibiting the Company from subsequently creating Liens by the
refinancing of obligations which were previously secured by Liens permitted
hereunder); except:
(a) liens for current taxed, assessments or other governmental
charges which are not delinquent or which remain payable without penalty, or the
validity of which is contested in good faith by appropriate proceedings.
(b) liens, deposits or pledges made to secure statutory obligations,
surety or appeal bonds, construction or materialmen's liens relating to
aircraft, or bonds for the release of attachments or for stay of execution, or
to secure the performance of bids, tenders, contracts other than for the payment
of borrowed money, leases, or for purposes of like general nature in the
ordinary course of its business.
(c) liens to secure, and financing statements relating to, any
indebtedness outstanding hereunder or any other indebtedness owing, or which may
be owing, by the Company to the Bank.
(d) liens, not otherwise exempted herein, including purchase money
liens, on property other than Margin Stock, which shall at any one time not
exceed in the aggregate the sum of FIVE MILLION DOLLARS ($5,000,000).
(e) liens existing on property (or on any shares to stock of any
corporation other than on Margin Stock), at the time it is acquired provided
such liens do not exceed the value of property or stock acquired.
8.2 Borrowings. It will not incur or create any indebtedness, direct or
-----------
indirect, other than (a) indebtedness evidenced by the Master Note and (b) other
indebtedness in an aggregate principal amount not to exceed FIVE MILLION DOLLARS
($5,000,000) at any one time outstanding.
- 33 -
<PAGE>
8.3 Liquidation or Merger. It will not, nor will it permit any of its
----------------------
Subsidiaries to, liquidate, dissolve, or enter into any consolidation, merger,
partnership, joint venture or other combination, or sell, lease or dispose of
its business or assets as a whole or such as in the opinion of the Bank
constitutes a substantial portion thereof; provided, however, that any
Subsidiary may merge into, consolidate with or transfer its business to the
Company or another Subsidiary.
8.4 Loans and Guaranties. It will not, nor will it permit any of its
---------------------
Subsidiaries to, make any loans or advances or become a guarantor or surety, or
pledge its credit in any manner, directly or indirectly, or extend credit;
provided, however, the Company may make loans or advances, guaranty, pledge or
extend credit with the foregoing not exceeding in the aggregate in principal
amount FIFTY MILLION DOLLARS ($50,000,000); provided that such amount shall be
reduced as follows: (a) upon repayment by MGM Grand to the Company of any of the
remaining principal amount of loans made by the Company to MGM Grand, then, the
aggregate principal amount of loans, advances, guaranties, pledges and
extensions of credit that the Company is permitted to make hereunder shall be
reduced by Fifty Percent (50%) of the amount of such repayments, and (b) upon
repayment to the Company of any of the remaining principal amount outstanding on
that certain loan in an original principal amount of TWENTY-FIVE MILLION DOLLARS
made by the Company to MGM/UA Communications Co. (now known as MGM-Pathe
Communications, Inc.) in November 1990 in order to assist that entity with the
payment of a settlement of certain shareholder litigation, at which time the
aggregate principal amount of loans, advances, guaranties, pledges and
extensions of credit that the Company is permitted to make hereunder shall be
reduced by Sixty Percent (60%) of the amount of such repayments.
8.5 Disposal of Assets. It will not, nor will it permit any of its
-------------------
Subsidiaries to, dispose of any of its assets except for fair and reasonable
consideration.
8.6 Retirement of Stock. It will not, nor will it permit any of its
--------------------
Subsidiaries to, acquire or retire any shares of its capital stock for value.
8.7 Payment of Dividends. It will not declare or pay any cash dividends
---------------------
upon its shares of stock now or hereafter outstanding except for dividends
which, if they had not been declared or paid, would be undistributed personal
holding company income (as defined in Section 545 of the Internal Revenue Code
(the "Code")). In the event such a dividend is declared or paid and at the time
of such declaration or payment the Tangible Net Worth of the Company is less
than FOUR HUNDRED TWENTY-FIVE MILLION DOLLARS ($425,000,000), an equity
investment must be made in the Company promptly in an amount equal to the excess
of the
- 34 -
<PAGE>
dividend over the tax that would have otherwise been payable pursuant to
Section 541 of the Code had such dividend not been paid.
8.8 Default Under Other Agreements or Contracts. It will not, commit or
--------------------------------------------
do any act or thing which would constitute an event of default, which would be
material to the Company's financial position under any of the terms or
provisions of any other (a) agreement, (b) contract, (c) indenture, (d) document
or (e) instrument executed, or which may be executed by it.
8.9 ERISA Plans. It will not, nor will it permit any of its Subsidiaries
------------
to, sponsor or maintain a Plan.
SECTION 9. EVENTS OF DEFAULT
If one or more of the following described Events of Default should occur:
9.1 Failure to Pay. The Company should default in the due and punctual
---------------
payment of the principal of or the interest on any loan made hereunder or in
the due and punctual payment of any fee or other amount payable by the Company
under this Agreement; or
9.2 Performance under Agreements. The Company, or any of its
-----------------------------
Subsidiaries, should fail to perform or observe any of the terms, provisions,
convenants, conditions, agreements or obligations contained herein (other than
Section 7.3, 7.7, 7.10 and 8.1 through 8.8) or, except as provided in Section
9.3, in any other material (a) agreement, (b) contract, (c) indenture, (d)
document or (e) instrument executed, or to be executed by it and where such
default in (a) through (e) hereinabove shall be material to the Company's
financial position and such failure should continue for more than 30 days; or
9.3 Performance under Sections 7.3, 7.7, 7.10, and 8.1 through 8.8. The
---------------------------------------------------------------
Company, or any of its Subsidiaries, should fail to perform or observe any of
the terms, provisions, convenants, conditions, agreements, or obligations
contained in Sections 7.3, 7.7, 7.10 and 8.1 through 8.8, and such failure shall
continue for more than 5 days; or
9.4 Insolvency. The Company, or any of its Subsidiairies, should become
----------
insolvent; or should admit in writing its inability to pay its debts as they
mature, or generally not pay its debts as such debts become due; or should make
an assignment for the benefit of creditors or to an agent authorized to
liquidate any substantial amount of its properties or assets; or if bankruptcy,
dissolution, insolvency, reorganization, winding-up or liquidation proceedings
or other cases or
- 35 -
<PAGE>
proceedings of or relief under Title 11 of the United States Code, as the same
may from time to time be amended, or under any other bankruptcy, insolvency,
dissolution, reorganization, winding-up or liquidation law, shall be instituted
by or against the Company or any Subsidiary, (provided that if such case or
proceeding is instituted by a Person other that the Company, a Subsidiary or a
shareholder of the Company and such case or proceeding is dismissed or withdrawn
within 30 days of filing the Bank will waive any Event of Default under this
Section if, assuming there had not been any such case or proceeding filed, there
would be no other Default or Event of Default under this Agreement as of the
date of such withdrawal or dismissal); or any order for relief, order, judgment
or decree shall be entered against the Company or any Subsidiary decreeing its
dissolution, winding-up, liquidation, reorganization or division, or Kirk
Kerkorian shall authorize the commencement of any of the foregoing; or should
apply for or consent to the appointment of or the consent that an order be made
appointing any receiver or trustee, for itself or for its properties, assets, or
business; or if a receiver or a trustee should be appointed otherwise than upon
its own application or consent for all or a substantial part of its properties,
assets or business and any such receiver or trustee so appointed is not
discharged with 30 days after the date of such appointment; or
9.5 Representation and Warranties. Any representation or warranty made by
------------------------------
the Company herein or in any certificate or financial or other statement
heretofore or hereafter furnished by the Company or any of its officers to the
Bank hereunder proves to be in any material respect false or misleading as of
the date made; or
9.6 Legal Process. Any judgment, writ of execution, attachment or
--------------
garnishment or any lien by legal process, or any other legal process, be issued
for an amount in excess of $250,000 against any of the property of the Company
or any of its Subsidiaries which is not discharged, paid, stayed or appealed
within 60 days; or
9.7 Appropriation of Property. All, or substantially all, of the property
--------------------------
of the Company should be condemned, seized or otherwise appropriated; or
9.8 Stock Ownership. Kirk Kerkorian should cease to own 100% of all
----------------
outstanding shares of stock issued by the Company; or
9.9 Violation of Margin Regulations. Any violation of the Margin
--------------------------------
Regulations shall occur as a result of the transactions contemplated hereby
(other than through the failure of the Bank to take any action to be taken by it
pursuant to the provisions of Section 3.8 or Section 6.2); or
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<PAGE>
9.10 Security Interest. At any time following delivery of the Collateral
------------------
Agreements and related documents as provided for in Section 7.10, the Bank shall
fail to have a valid and enforceable perfected security interest of first
priority in and first lien on any Collateral or any Collateral shall become
subject to any Lien other than in favor of the Bank;
THEN, and in any such event, the Bank may in its sole discretion, (x)
declare the Commitment to be terminated forthwith, whereupon the Commitment and
such obligations shall immediately terminate and/or (y) declare the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement and
the Master Note to be due and payable, forthwith, whereupon the same shall
immediately become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Master Note to the contrary notwithstanding.
SECTION 10. MISCELLANEOUS
10.1 Notices. All notices, requests and demands to or upon the respective
--------
parties hereto shall be in writing and shall be sent by first class mail,
postage prepaid, or sent by telex or rapifax and shall be deemed to have been
duly given or made when received. All such notices, requests and demands shall
be sent to the relevant party addressed as follows or to such other address as
may hereafter be designated in writing by the respective parties hereto:
The Company: TRACINDA CORPORATION
9333 Wilshire Blvd., Suite 301
Beverly Hills, California 90210
Attn: Mr. James Aljian
The Bank: BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
Payment Services Office #5693
1850 Gateway Blvd.
Concord, California 94520
Attn: Roberta Day
Telex: 034346, BANKAMER SFO
Rapifax: (415) 675-7531
- 37 -
<PAGE>
with a copy to:
10.2 No Waiver; Cumulative Remedies. No failure to exercise and no delay
-------------------------------
in exercising, on the part of the Bank, any right, power or privilege hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
10.3 Survival of Representations and Warranties. All representations and
-------------------------------------------
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto shall survive the execution and delivery of this
Agreement and the Master Note.
10.4 Payment of Expenses. The Company agrees to pay or reimburse to the
--------------------
Bank on demand all reasonable costs, expenses and attorneys' fees (including
allocated costs for in-house legal services) incurred by the Bank in connection
with the enforcement of, or the preservation of, any rights under this Agreement
and the Master Note, whether in the nature of a waiver, "workout",
"restructuring", bankruptcy or insolvency proceeding or otherwise, including the
reasonable fees and expenses of counsel (including allocated costs of in-house
counsel). The agreements in this Section 10.4 shall survive payment of the
Master Note and termination of this Agreement.
10.5 Successors and Assigns. This Agreement shall be binding upon and
-----------------------
inure to the benefit of the Company, and the Bank and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights hereunder without the prior written consent of the Bank.
10.6 Participations and Assignments.
-------------------------------
(a) Assignments. The Bank may assign any of its rights or
------------
obligations hereunder or under the Master Note with the prior written consent of
the Company, which consent will not be unreasonably withheld, (except that
assignments to a financial institution or entity controlled by, controlling or
under common control with the Bank or assignments pursuant to a merger or
consolidation of the Bank with another entity or a similar
- 38 -
<PAGE>
transaction involving the Bank, may be made without the consent of the Company).
(b) Participations. The Bank may at any time sell, grant
---------------
participations in, or otherwise transfer to any other financial institution (a
"Participant") all or part of the obligations of the Company under this
Agreement. The Company agrees that each such disposition will give rise to a
direct obligation of the Company to the Participant, effective upon notice to
the Company of such sale, grant or transfer, which notice shall identify the
extent of the interest transferred. Any agreement pursuant to which the Bank
grants a participation may provide, among other things, that the Bank will not
agree to any modification, amendment or waiver of this Agreement without the
consent of the Participant if such modification, amendment or waiver would (a)
change the Commitment, (b) reduce interest, principal or commitment fee owing
hereunder, (c) extend the date on which any sum is due hereunder, or (d) release
any collateral. No Participant shall have any rights under the Credit Agreement
or the Master Note to receive payments other than: (A) to receive payment of
that portion of the principal of, and interest on the Loans, and of the
commitment fees otherwise payable to the Bank as the Bank and the Participant
shall agree and of such other amounts as the Bank is entitled to receive
pursuant to Section 4.4, Section 4.5, and Section 4.6; provided, however
-------- -------
such recipients shall be entitled to receive pursuant to Section 4.4(a), and
Section 4.5 only the lesser of (x) the amount that the Bank would have received
had the Bank not transferred an interest in its Master Note (and the Loans
represented thereby) to such recipient and (y) the additional costs actually
incurred by the Participant, and (B) when an Event of Default has occurred and
is continuing, to pursue the remedies available to the Bank for collection of
such amounts and reimbursement of expenses related thereto pursuant to Section
10.4.
(c) Company and Participant. The Company may, for all purposes of
------------------------
this Agreement, treat the Bank as the holder of the Master Note (and owner of
the Loans evidenced thereby) until written notice of assignment of transfer
shall have been received by the Company which advises that the Bank's interest
in the Master Note (and the Loans evidenced thereby) has been transferred to
such recipient. The Company authorizes each Participant, upon the occurrence of
an Event of Default, to proceed directly by right of setoff, banker's lien, or
otherwise, against any assets of the Company which may be in the hands of the
Participant.
(d) Disclosure Required. The Company authorizes the Bank to disclose
--------------------
to any prospective assignee or prospective Participant and to any assignee or
any Participant any and all information in the Bank's possession concerning the
Company and this Agreement.
- 39 -
<PAGE>
10.7 Counterparts. This Agreement may be executed by one or more of the
-------------
parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
10.8 Governing Law. This Agreement, the Master Note and the rights and
--------------
obligations of the parties hereunder and thereunder shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
California.
10.9 Headings. The headings hereinabove set forth are solely for the
---------
purpose of identification and shall not be construed as a part of the sections
or subsections which they head.
10.10 Indemnity. The Company agrees to indemnify, defend, reimburse and
----------
hold harmless the Bank and each of its affiliates, and all the directors,
officers, employees, agents and advisors of the Bank (each, an "Indemnified
Party") from and against all claims, actions, proceedings, suits, damages,
losses, liabilities, costs and expenses, including the reasonable fees and out-
of-pocket expenses of counsel (including the allocated cost of in-house counsel)
which may be incurred by or asserted against any Indemnified Party in connection
with, or arising out of, or relating to (a) any transaction or proposed
transaction (whether or not consummated) financed or to be financed, in whole or
in part, directly or indirectly, with the proceeds of any borrowing under this
Agreement; and (b) any investigation, litigation, suit, action or proceeding
(regardless of whether an Indemnified Party is a party thereto) which relates
to the foregoing, unless and to the extent such claim, action, proceeding, suit,
damage, loss, liability, cost or expense was attributable to such Indemnified
Party's negligence or willful misconduct as determined by a final judgment of a
court of competent jurisdiction. The Company at the request of the Bank shall
have the obligation to defend against such investigation, litigation, suit,
action or proceeding or requested remedial or response action, and the Bank, in
any event, may participate in the defense thereof with legal counsel of the
Bank's choice. No action taken by legal counsel chosen by the Bank in defending
against any such investigation, litigation, suit, action or proceeding or
requested remedial or response action shall vitiate
- 40 -
<PAGE>
EXHIBIT A TO CREDIT AGREEMENT
MASTER NOTE
Los Angeles, California
June __, 1991
$175,000,000
The undersigned, FOR VALUED RECEIVED, promises to pay to the order of
Bank of America National Trust and Savings Association (the "Bank"), Payment
Service Office #5693, 1850 Gateway Boulevard, Concord, CA 94520, ONE HUNDRED
SEVENTY-FIVE MILLION DOLLARS ($175,000,000) or, if less, the aggregate unpaid
principal amount of all Loans made by the Bank to the undersigned pursuant to
the Credit Agreement (as hereinafter defined) with the last payment to be made
on or before the Maturity Date as defined in the Credit Agreement.
The undersigned also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rate per annum specified in the Credit Agreement, said interest to be payable at
such times as are specified in the Credit Agreement and at maturity (whether by
acceleration or otherwise) and, after maturity, on demand.
Payments of both principal and interest are to be made in immediately
available funds, in lawful money of the United States of America.
This Master Note is described in, and is subject to the terms and
provisions of, the Credit Agreement dated as of June 27, 1991 (herein, as the
same may at any time be amended, restated, extended or otherwise modified from
time to time and in effect, called the "Credit Agreement"), between the
undersigned and the Bank. Reference is hereby made to the Credit Agreement for a
statement of its terms and provisions, including those under which this Master
Note may be paid prior to its due date or its due date accelerated.
All Loans evidenced by this Master Note and all payments and
prepayments of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the Bank (or other holder hereof) on the schedule
attached hereto and made a part hereof, or on a continuation thereof which shall
be attached hereto and made a part hereof, or otherwise recorded by the Bank (or
other holder hereof) in its
EXHIBIT A
-1-
<PAGE>
internal records; provided, however, that the failure of the Bank (or other
holder hereof) to make such a notation or any error in such a notation shall not
affect the obligations of the undersigned under this Master Note.
This Master Note has been delivered in Los Angeles, California, and
shall be deemed to be a contract made under the laws of the State of California
and for all purposes shall be governed by and construed in accordance with the
laws of the State of California, without regard to principles of conflicts of
law.
In addition to and not in limitation of the foregoing and the provisions
of the Credit Agreement, the undersigned further agrees, subject only to any
limitation imposed by applicable law, to pay all reasonable expenses, including
reasonable attorneys' fees and legal expenses, incurred by the Bank (or other
holder) of this Master Note in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.
All parties hereto, whether as makers, endorsers or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
Unless otherwise defined herein, the terms used in this Master Note
shall have the same meanings as in the Credit Agreement.
TRACINDA CORPORATION
By
-------------------------
Anthony Mandekic
Secretary-Treasurer
Address:
9333 Wilshire Blvd., Suite 301
Beverly Hills, CA 90210
EXHIBIT A
-2-
<PAGE>
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment To Credit Agreement ("First Amendment") is entered
into as of the 12th day of May, 1992 between TRACINDA CORPORATION, a Nevada
corporation (the "Company") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Bank").
RECITALS
--------
A. The Company and the Bank are parties to a Credit Agreement entered
into as of June 27, 1991 (the "Agreement").
B. The Company has requested the Bank, and the Bank is willing, to
amend certain provisions of the Agreement to provide for the issuance of a
letter of credit, on the terms and conditions set forth herein.
1. Terms. All terms use herein shall have the same meaning as in the
-----
Agreement unless otherwise defined herein. All references to the Agreement shall
mean the Agreement as hereby amended.
2. Amendatory Provisions to Agreement. The parties hereto agree that
----------------------------------
the Agreement is amended as follows:
2.1 Section 1.1 of the Agreement is hereby amended by inserting the
following definitions in the proper alphabetical order:
"Letter of Credit Office" means office, located at 1850 Gateway
Blvd. Concord, California 94520, or such other address as shall from
time to time designate in a written notice to the Company.
"Extension of Credit" means each of the making of any Loan or
the opening of the Letter of Credit.
"Face Amount" means, with respect to the Letter of Credit, the
sum of the undrawn maximum face amount of the Letter of Credit, which
has an initial Face Amount of one hundred million dollars
($100,000,000).
"Letter of Credit" means a standby letter of credit
substantially in the form attached hereto as Exhibit J issued for the
account of the Company pursuant to Section 2.10.
EXHIBIT B
- 1-
<PAGE>
"Letter of Credit Application" has the meaning assigned to that
term in section 2.10(a) hereof.
"MGM Finance Credit Agreement" means that certain credit
agreement dated on or about May 13, 1992 among MGM Grand Hotel Finance
Corp., MGM Grand Hotel, Inc., the financial institutions party thereto
(including Bank) and Bank as agent for said financial institutions.
"Payment Account" means any deposit account or similar account
required to be maintained pursuant to the terms of this Agreement for
funds prepaid in respect of the Letter of Credit.
"Total Outstanding Revolving Credit" means an amount equal to
the sum of (a) the aggregate principal amount of all outstanding
Revolving Loans, plus (b) the Face Amount of the outstanding Letter of
----
Credit."
"Unreimbursed Drawings" means the amount of any drawing under
the Letter of Credit honored by the Bank, and not reimbursed by the
Company whether from the proceeds of a Loan or from any other source.
2.2 Section 2.1 is amended to read in its entirety as follows:
"2.1 The Commitment. Subject to all of the terms of this
--------------
Agreement, the Bank will issue the Letter of Credit and will make
available to the Company during the Availability Period, Loans pursuant
to this Section 2; provided, however, at no time shall (a) the Total
-------- -------
Outstanding Revolving Credit exceed the lesser of ONE HUNDRED SEVENTY-
FIVE MILLION DOLLARS ($175,000,000) and the Borrowing Base. All Loans
made under this credit facility are Loans which may be repaid and
reborrowed at any time during the Availability Period subject to the
provisions of this Agreement."
2.3 Section 2.4(a) is amended by inserting following the word "borrow"
in the first sentence with "Loans".
2.4 Section 2.7(c) is amended to read in its entirety as follows:
(c) Effect of Termination or Reduction. Any termination in
----------------------------------
full of the Commitment will be accompanied by prepayment in full of the
unpaid principal amount of the Loans then outstanding
- 2 -
<PAGE>
thereunder, together with the payment of any accrued and unpaid interest
or fees, or both, on the amount prepaid, and the prepayment in full of
the Face Amount of the Letter of Credit then outstanding. Any reduction
of the Commitment will be accompanied by the prepayment of the Loans and
the Face Amount of Letter of Credit to the extent, if any, that the
aggregate unpaid principal amount of the Loans plus the Face Amount of
Letter of Credit exceeds the Commitment as then reduced. Once terminated
or reduced Revolving Commitments cannot be reinstated."
2.5 New Sections 2.10 through 2.16 are inserted immediately following
Section 2.9 as follows:
"2.10 Letter of Credit Applications.
-----------------------------
"(a) On or before the closing date of the MGM Grand Hotel
Finance Corp. Credit Agreement, the Company will deliver to Bank's
Letter of Credit Office (i) a duly completed application on the Bank's
standard form (or on such other form specified from time to time by the
Bank's Letter of Credit Office) (a "Letter of Credit Application") and
(ii) the most recent Borrowing Base Certificate delivered or required to
be delivered pursuant to Section 2.4(a). The Letter of Credit
Application shall specify, among other things: (A) the proposed date of
issuance or amendment (which shall be a Business Day); (B) the date of
expiration of the Letter of Credit which shall be March 1, 1993; (C) the
name and address of the beneficiary thereof; (D) the documents to be
presented by the beneficiary of the Letter of Credit in case of any
drawing thereunder which shall be as set forth in Exhibit J; and (E) the
terms of any amendment to the Letter of Credit.
"(b) Notwithstanding any provision of the Letter of Credit
Application to the contrary, it is understood that in the event of any
conflict between the terms of the Letter of Credit Application and
the terms of this Agreement, the terms of this Agreement shall control
with respect to events of default, representations and warranties, and
covenants, except that the Letter of Credit Application may provide for
further warranties relating specifically to the transaction or affairs
underlying such Letter of Credit.
- 3 -
<PAGE>
"2.11 Drawing.
-------
"(a) If request for drawing is made under the Letter of Credit,
the Bank shall notify the Company of the date on which payment is to be
made; provided that the failure of the Bank to give such notice shall
--------
not affect the Company's obligations hereunder which remain absolute,
unconditional and irrevocable. The Letter of Credit shall provide that
the Bank shall have not less than three (3) Business Days following a
drawing in which to pay under the Letter of Credit.
"(b) The Bank shall determine whether to pay the draft presented
under the Letter of Credit. In so doing, the Bank will be responsible
only to determine that the documents to be delivered under the Letter of
Credit have been delivered and comply on their face with the
requirements of such Letter of Credit. The Bank will pay the draft
properly presented under the Letter of Credit.
"2.12 Repayments.
----------
"(a) In the event of a drawing under the Letter of Credit, the
Company shall reimburse the Bank on or before the day on which such
drawing is paid (the "Reimbursement Date") in an amount in same day
funds equal to the amount of the drawing (the "Disbursement Amount") and
hereby authorizes the Bank to effect such reimbursement by charging the
Payment Account or other account maintained with the Bank for such
Disbursement Amount in the event that: (i) a Default or Event of Default
has occurred and is continuing at the time of such drawing or (ii) the
Company shall fail by 11:00 a.m. California time one Business Day prior
to the Reimbursement Date to have delivered to the Bank immediately
available funds equal to the Disbursement Amount with duly executed
instructions to apply such funds payment of the drawing under the
Letter of Credit or (iii) the Company shall fail by 11:00 a.m.
California time one Business Day prior to the Reimbursement Date to have
delivered to the Bank a Notice of Borrowing and Borrowing Base
Certificate, and otherwise have complied with the provisions of this
Agreement, requesting the Bank to make a Reference Rate Loan on such
Reimbursement Date in a principal amount equal to the Disbursement
Amount of the drawing.
"2.13 Letter of Credit Reserves. The Company agrees to the
-------------------------
provisions of the Letter of Credit Application providing for
reimbursement or payment to
- 4 -
<PAGE>
the Bank in the event of the imposition or implementation of, or
increase in, any reserve, deposit or similar requirement in respect of
the Letter of Credit relating thereto, subject to Section 4.5.
"2.14 Obligations of the Company. The obligations of the Company
--------------------------
under this Agreement with respect to the Letter of Credit issued
hereunder shall be absolute, unconditional and irrevocable and shall be
performed strictly in accordance with the terms of this Agreement and of
the Application for Letter of Credit, including without limitation the
following circumstances:
"(a) any lack of validity or enforceability of the Letter of
Credit, this Agreement, the Application for Letter of Credit or any
other agreement or instrument relating to any of the foregoing;
"(b) the existence of any claim, setoff, defense or other
rights that the Company may have at any time against any beneficiary or
transferee of the Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting) the Bank or any other
Person, whether in connection with this Agreement or any unrelated
transaction;
"(c) any breach of contract or other dispute between the
Company and any beneficiary or transferee of the Letter of Credit (or
any Person for whom any such beneficiary or any such transferee may be
acting), the Bank or any other Person;
"(d) any demand, statement, tested telex or any other document
presented under the Letter of Credit which on its face appears to
conform with the terms and conditions of the Letter of Credit but proves
to have been invalid or insufficient for its intended business purpose
or to have been forged or fraudulent in any respect or to contain any
statement therein which is untrue or inaccurate in any respect
whatsoever; or
"(e) any delay, extension of time, renewal, waiver, compromise
or other indulgence or modification granted or agreed to by the Bank,
with or without notice to or approval by the Company, in respect to the
Letter of Credit; provided that the Bank will use its best efforts to
notify the Company of any material indulgence or modification but
failure of the Bank to give such notice will not affect the obligations
of the
- 5 -
<PAGE>
Company hereunder or otherwise in respect of the Letter of Credit.
"provided that, notwithstanding anything in the preceding clauses to the
--------
contrary, the Company shall not be obligated due to any circumstance or
happening which is the result of the gross negligence or willful
misconduct of the Bank.
"2.15 Obligations and Liability of the Bank.
-------------------------------------
Neither the Bank, nor any of its officers or directors shall be liable
or responsible for:
(a) the use that may be made of the Letter of Credit or for any
acts or omissions of the beneficiary or any transferee of the Letter of
Credit in connection therewith;
(b) the validity, sufficiency for their intended business
purpose or genuineness of documents, or of any endorsements thereon
which on their face appear to conform to the terms and conditions of the
Letter of Credit, even if such documents should prove to be in any or
all respect invalid, insufficient for their intended business purpose,
fraudulent or forged; or
(c) acceptance of documents that appear on their face to
conform to the terms and conditions of the Letter of Credit, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
"provided that, notwithstanding anything in the preceding clauses to the
--------
contrary, the Company shall have a claim against the Bank, and the Bank
shall be liable to the Company, to the extent, but only to the extent,
of any direct, as opposed to consequential, damages suffered by the
Company that the Company proves were caused by (i) the Bank's failure to
pay under the Letter of Credit after the presentation to it by the
beneficiary or transferee of the Letter of Credit of documents strictly
complying with the terms and conditions of the Letter of Credit or (ii)
the Bank's willful misconduct or gross negligence in paying the Letter
of Credit.
"2.16 Any prepayment made with respect to the Letter of Credit
will be held by the Bank in an interest-bearing account as cash
collateral for the Company's obligations to reimburse the Bank for the
- 6 -
<PAGE>
drawing under the Letter of Credit. Subject to Section 9, to the extent
any cash collateral is not applied to the drawing, or to the extent the
Face Amount of the Letter of Credit is reduced, such cash collateral
will be returned to the Company promptly upon the Letter of Credit
having expired, become void or otherwise become unavailable for drawing,
or the Face Amount thereof being reduced, as the case may be. Interest
with respect to such cash collateral will accrue for the benefit of the
Company and will be paid out to the Company so long as no Event of
Default has occurred and will be paid to the Company promptly upon the
Letter of Credit having expired, become void or otherwise become
unavailable for drawing. Upon occurrence of any Event of Default,
interest will continue to accrue but no payment in respect thereof will
be made to the Company. The commission payable with respect to the
Letter of Credit will continue to accrue during any period that a
prepayment has been made."
2.6 Section 3.5(b) is amended by inserting after the words "prepay
the Loans" the words "and the Letter of Credit".
2.7 Section 3.5(c) is amended to read in its entirety as follows:
"(c) Mandatory Prepayment or Delivery of Security. If at any
--------------------------------------------
time the outstanding principal amount of Loans hereunder exceed
$50,000,000 and the Aggregate Market Value of the Collateral is less
than TWO HUNDRED PERCENT (200%) of the sum of the aggregate principal
amount of Loans outstanding under this Agreement plus the Face Amount of
the Letter of Credit, the Company shall promptly either (i) prepay the
Loans and the Letter of Credit in an amount by which the sum of the
aggregate principal amount of the Loans outstanding hereunder plus the
Face Amount of the Letter of Credit exceeds such Aggregate Market Value
or (ii) grant to the Bank a first priority security interest in Eligible
Collateral as more specifically described in Section 7.10."
2.8 Section 4.1 is hereby amended by adding a new Section 4.1 (b)
to read in its entirety as follows and renumbering present Section 4.1 as
4.1(a):
(b) Letter of Credit Fees. The Company shall pay a Letter of
---------------------
Credit fee to the Bank at a rate of 1 1/4% per annum. Such fee shall be
calculated on the basis of a 365 day year and shall be payable
- 7 -
<PAGE>
quarterly in advance on the first Business Day of each calendar quarter
and calculated to the last Business Day of such quarter; provided that,
upon issuance of the Letter of Credit the Company shall pay the Letter
of Credit fee commencing as of the date of issuance through September
30, 1992, and thereafter on the first Business Day of each calendar
quarter. With respect to any amendment, transfer, or other occurrence
relating to the Letter of Credit, the Company will pay the Bank
documentary and processing charges in accordance with the standard
schedule for such charges in effect the Bank's Letter of Credit Office
at the time of such amendment, transfer or other occurrence."
2.9 Section 4.3 is amended by deleting the words "and the Terms
Loans" in the first sentence thereof.
2.10 The introduction of Section 5 is amended by inserting after
the words, "to make the Loans" the words "or to issue the Letter of Credit".
2.11 The introduction of Section 6.2 is amended by inserting after
the words, "to fund or continue any Loan as a Eurodollar Loan," the words "and
to issue the Letter of Credit".
2.12 Section 6.2(a)(ii) is amended by inserting after the words,
"giving effect to the Loans" the words "or issuance of the Letter of Credit".
2.13 Section 8.2 is amended by inserting after the words "Master
Note" the words "and the Letter of Credit".
2.14 Section 8.4 is amended by inserting the words "Except for the
obligations of the Company in respect of the Letter of Credit" immediately
before the words "It will not".
2.15 Section 9.1 is amended by inserting after the words "the
interest on any Loan" the words "or the payment of any Disbursement Amount in
respect of the Letter of Credit".
2.16 The last paragraph of Section 9 is amended by inserting
following the words "payable, forthwith" the words "(z) require immediate
prepayment of the Face Amount of the Letter of Credit."
2.17 The Agreement is amended by adding thereto an new Exhibit J -
Form of Letter of Credit, which Exhibit shall be in the form attached hereto as
Attachment 1.
3. Representations and Warranties. The Company hereby represents and
------------------------------
warrants to the Bank that:
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<PAGE>
3.1 Authority. The Company has all necessary power and has taken
---------
all corporate action necessary to make this First Amendment, the Agreement, and
all other Loan Documents, the valid and enforceable obligations they purport to
be.
3.2 No Legal Obstacle to Agreement. Neither the execution of this
------------------------------
First Amendment, the making by the Company of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Company is a party, or the violation of any law, judgement, decree or
governmental order, rule or regulation applicable to Company, or result in the
creation under any agreement or instrument of any security interest, lien,
charge, or encumbrance upon any of the assets of the Company. No approval or
authorization of any governmental authority is required to permit the execution,
delivery or performance by the Company of this First Amendment, the Agreement,
or the transactions contemplated hereby or thereby, or the making of any
borrowing by Company under the Agreement.
3.3 Incorporation of Certain Representations. The representations
----------------------------------------
and warrants set forth in Section 8 of the Agreement are true and correct in all
respects on and as of the date hereof as though made on and as of the date
hereof.
3.4 Default. No Default or Event of Default under the Agreement
-------
has occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness of this First Amendment
-------------------------
and the obligations of Bank of America to issue any Letters of Credit and the
Bank to make any Borrowings pursuant to the Agreement shall be subject to the
compliance by Company with its agreements herein and therein contained, and to
the delivery of the following to the Agent in form and substance satisfactory to
the Agent:
4.1 Corporate Resolution. A copy of a resolution or resolutions
--------------------
passed by the Board of Directors of Company, certified by the Secretary or an
Assistant Secretary of Company as being in full force and effect on the
effective date of this First Amendment, authorizing the amendments to the
Agreement herein provided for and the execution, delivery and performance of
this First Amendment and any note or other instrument or agreement required
hereunder.
4.2 Authorized Signatories. A certificate, signed by the Secretary
----------------------
or an Assistant Secretary of Company and dated the date of this First Amendment,
as to the incumbency of the person or persons authorized to execute and deliver
this
- 9 -
<PAGE>
First Amendment and any instrument or agreement required hereunder on behalf of
Company.
4.3 Other Evidence. Such other evidence with respect to Company or
--------------
any other person as any Bank may reasonably request to establish the
consummation of the transactions contemplated hereby, the taking of all
corporate proceedings in connection with this First Amendment and the Agreement
and the compliance with the conditions set forth herein.
5. Miscellaneous.
-------------
5.1 Effectiveness of the Agreement. Except as hereby amended, the
-----------------------------
Agreement shall remain in full force and effect.
5.2 Waivers. This First Amendment is specific in time and in
-------
intent and does not constitute, nor should it be construed as, a waiver of any
other right, power or privilege under the Agreement, or under any agreement,
contract, indenture, document or instrument mentioned in the Agreement; nor does
it preclude other or further exercise hereof or the exercise of any other right,
power or privilege, nor shall any waiver of any right, power, privilege or
default hereunder, or under any agreement, contract, indenture, document or
instrument mentioned in the Agreement, constitute a waiver of any other default
of the same or of any other term or provision.
5.3 Counterparts. This First Amendment may be executed in any
------------
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This First Amendment shall not
become effective until the Company, and the Bank shall have signed a copy
hereof, whether the same or counterparts, and the same shall have been delivered
to the Bank, at which time this First Amendment shall be effective as of the
date first written above.
- 10 -
<PAGE>
5.4 Jurisdiction. This First Amendment, and any instrument or
------------
agreement required hereunder, shall be governed by and construed under the laws
of the State of California.
TRACINDA CORPORATION
By: ANTHONY MANDEKIC
----------------------
Title: SECRETARY/TREASURER
-------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
----------------------
Title: VICE PRESIDENT
-------------------
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<PAGE>
EXHIBIT E TO CREDIT AGREEMENT
STOCK COLLATERAL PLEDGE AGREEMENT
KNOW ALL PERSONS BY THESE PRESENTS THAT: The undersigned, TRACINDA
CORPORATION, a Nevada corporation (the "Pledgor"), does hereby deposit and
pledge with BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the
"Pledgee"), as collateral security for the due and punctual payment and
performance, of all indebtedness and obligations of the Pledgor to the Pledgee
arising under the Credit Agreement (the "Credit Agreement") dated as of June 27,
1991 between Pledgor and Pledgee and the Master Note (the "Note") issued
pursuant to the Credit Agreement or any amendments, modifications, extensions or
renewals or any agreement(s) entered into in substitution thereof, whether now
or hereafter existing and whether due or to become due (collectively, the
"Obligations") including, without limitation, the due and punctual payment of
the principal of and interest, fees, expenses and premium (if any) on the Note
and hereby grants to the Pledgee a security interest in, the securities of
certain corporations described in Schedule A and all supplements thereto annexed
hereto as being pledged hereunder (collectively, together with all certificates,
options, rights, or other distributions issued as an addition to, in
substitution or exchange for, or on account of any such shares, and all proceeds
of all of the foregoing, and any shares or other securities referred to in
Section 4 hereof, whether now owned or hereafter acquired, the "Stock
Collateral"). For the purposes of this Stock Collateral Pledge Agreement ("this
Agreement"), the term "Issuer" shall be defined as any of those entities listed
in Schedule A annexed hereto, as the issuers of the Stock Collateral.
1. The Pledgor represents and warrants that: (i) the Stock Collateral
is duly and validly issued, fully paid and nonassessable and duly and validly
pledged with the Pledgee in accordance with law, and the Pledgor agrees to
defend the Pledgee's right, title and interest in and to the Stock Collateral
against the claims and demands of all persons whomsoever; (ii) it has good title
to all of the Stock Collateral, free and clear of all claims, security
interests, mortgages, pledges, liens and other encumbrances of every nature
whatsoever except to or in favor of the Pledgee and that it has the right to
pledge the Stock Collateral as herein provided; (iii) each certificate
evidencing the Stock Collateral is issued in the name of Pledgor; and (iv) each
such certificate has attached thereto a stock power duly signed in blank by an
appropriate officer of Pledgor.
2. At any time and from time to time, following the occurrence of any
Event of Default under the Credit Agreement, the Pledgee may cause all or any
of the Stock Collateral to be transferred into its name or into the name of its
nominee or nominees.
3. So long as no Event of Default shall exist under the Credit
Agreement, the Pledgor shall be entitled to vote the Stock Collateral as it sees
fit and may receive cash dividends on the Stock Collateral without regard to
this Agreement (but subject to the provisions of the Credit Agreement). In case,
but only so long as, there shall exist an Event of Default, the Pledgee shall be
entitled to exercise the voting power with respect to the Stock Collateral and
to receive and retain, as collateral security for the Obligations, any and all
dividends at any time and from time to time paid or declared upon any of the
Stock Collateral. Notwithstanding anything contained herein, in any applicable
Articles of Incorporation or Articles of Association of any Issuer, the Credit
Agreement, or in any law, rule or regulation (federal, state, local or foreign)
having applicability to the Stock Collateral to the contrary, Pledgor hereby
agrees that upon the occurrence and continuance of an Event of Default, the
Pledgor shall not exercise any voting
EXHIBIT E
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<PAGE>
rights with respect to the Stock Collateral except pursuant to the direction and
instruction of the Pledgee. Pledgor consents to Pledgee's seeking equitable
relief including, without limitation, specific performance, to enforce the
provisions of the preceding sentence in addition to all other rights and
remedies available to Pledgee.
4. In the event of the dissolution or liquidation (in whole or in part)
of an Issuer of any of the Stock Collateral, any sum paid upon or with respect
to the Stock Collateral, shall be paid over to the Pledgee, to be held by the
Pledgee as collateral security for the Obligations. In case any stock dividend
shall be declared on any of the Stock Collateral, or any shares of stock or
fractions thereof shall be issued pursuant to any stock split involving any of
the Stock Collateral, or any distribution of capital shall be made on any of the
Stock Collateral other than out of earned surplus, or any property shall be
distributed upon or with respect to the Stock Collateral pursuant to
recapitalization or reclassification of the capital of the Issuer or pursuant to
the reorganization of the Issuer, the shares or other property so distributed
shall be delivered to the Pledgee to be held by it as collateral security for
the Obligations. In case any of the Stock Collateral are exchanged for
securities registered in the name of Pledgor or are converted into or exchanged
for or exercised with respect to any other securities of the Issuer, then
immediately thereafter such other securities shall be delivered to the Pledgee
to be held by it as collateral security for the Obligations.
5. In the event that there shall exist any Event of Default, the
Pledgee, without obligation to resort to other collateral, shall have all rights
and remedies available to a secured party under the Uniform Commerical Code
including the right at any time and from time to time to sell, resell, assign
and deliver, in its discretion, all or any of the Stock Collateral, in one or
more parcels at the same or different times, and all right, title and interest,
claim and demand therein and right of redemption thereof, on any securities
exchange on which the Stock Collateral or any of them may be listed, or at
public or private sale, for cash, upon credit or for future delivery, and at
such price or prices and on such terms as the Pledgee may determine, the Pledgor
hereby agreeing that upon any such sale, any and all equity or right of
redemption shall be automatically waived and released without any further action
on the part of the Pledgor, and in connection therewith the Pledgee may grant
options, all without either demand, advertisement or notice, all of which are
hereby expressly waived. In the event of any such sale, the Pledgee shall, at
least 5 days before the sale, give the Pledgor notice of its intention to sell.
Upon each such sale, the Pledgee may purchase all or any of the Stock Collateral
being sold, free from any equity or right of redemption, which is hereby waived
and released. The proceeds of each sale shall be applied in the following order
of priority: (a) to the reasonable expenses of taking, holding, preparing for
sale, selling and the like, and the reasonable attorneys' fees and legal
expenses incurred by Pledgee, (b) to the costs and expenses incurred by the
Pledgee in the collection of the Note or the enforcement of the Pledgor's
obligations under the Credit Agreement, including reasonable attorneys' fees and
legal expenses incurred by Pledgee, (c) to payment of the remaining obligations,
and (d) the surplus if any to the person or persons entitled thereto. The
Pledgor will continue to be liable for any deficiency.
6. In the event the Pledgee is permitted to sell any of the Stock
Collateral pursuant to Section 5 hereof, upon the written request of the
Pledgee, the Pledgor (a) unless in the opinion of counsel for the Pledgee such
registration is not required, will use its best efforts to cause to become
effective under the Securities Act of 1933, as amended and as from time to time
in effect and the rules and regulations thereunder (the "Securities Act"), a
registration statement or statements relating to any or all of the
EXHIBIT E
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<PAGE>
Stock Collateral and will use its best efforts to keep effective each such
registration and cause to be filed such post-effective amendment or amendments
to each such registration statement (including any amended or supplemented
prospectuses required by the Securities Act) as may be appropriate to permit the
sale or other disposition of any of the Stock Collateral pursuant to this
Agreement at such time and on such terms as the Pledgee may determine; (b) will
cause to be furnished to the Pledgee such number of copies as the Pledgee may
reasonably request of each preliminary prospectus and prospectus, will promptly
notify the Pledgee of the happening of any event as a result of which any then
effective prospectus includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of then existing circumstances
and will cause the Pledgee to be furnished with such number of copies as the
Pledgee may reasonably request of such supplement to or amendment of such
prospectus as is necessary to eliminate such untrue statement or supply such
omission; (c) will cause each Issuer to and will itself to the extent permitted
by law, indemnify, defend and hold harmless the Pledgee from and against all
losses, liabilities, expenses or claims (including legal expenses and the
reasonable costs of investigation) which the Pledgee may incur, under the
Securities Act or otherwise, insofar as such losses, liabilities, expenses or
claims arise out of or are based upon any alleged untrue statement of a material
fact contained in such registration statement (or any amendment thereto) or in
any preliminary prospectus or prospectus (or any amendment or supplement
thereto), or arise out of or are based upon any alleged omission to state a
material fact required to be stated therein or necessary to make the statements
in any thereof not misleading, except to the extent that any such losses,
liabilities, expenses or claims arise solely out of or are based upon any such
alleged untrue statement made or such alleged omission to state a material fact
with respect to information furnished by the Pledgee and included in any such
document on the written authority of the Pledgee; (d) will use its best efforts
to have qualified, filed or registered any of the Stock Collateral under the
"Blue Sky" or other securities laws of such jurisdictions as may be reasonably
requested by the Pledgee and will cause to be kept effective all such
qualifications, filings and registrations; (e) will, if the offering pursuant to
any registration statement is, at the written request of the Pledgee, to be made
through underwriters, itself, if requested by such underwriters, enter, and
cause the Issuer to enter, into an underwriting agreement in customary form with
such underwriters and to indemnify such underwriters, their officers and
directors and each person who controls such underwriters within the meaning of
the Securities Act to the same extent as hereinbefore provided with respect to
the indemnification of the Pledgee; (f) will provide (if available) at its
expense, provided such insurance is available at commercially reasonable rates,
a policy or policies of such insurer or insurers satisfactory to the Pledgee, in
substance indemnifying and holding harmless to the extent of 100% of the
contemplated aggregate public offering price of the Stock Collateral, the
Pledgee, each underwriter who may be participating in such sale, and each other
person referred to as being insured under such policy or policies, from and
against any and all losses, liabilities, claims, damages and expenses, joint or
several, to which any of the assured may become subject under the Securities
Act, or any other statute or common law, arising out of or based on the ground
that any preliminary prospectus, prospectus or registration statement relating
to such sale includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (q) will take or cause to be taken all requisite action
in connection with any declaration of, registration with, or approval of any
other governmental official or authority (in addition to that provided for
above) before such Stock Collateral may be transferred or sold by the Pledgee;
(h) will cause the Pledgee to be kept advised in writing as to the progress of
each registration, qualification or compliance pursuant to clauses (a), (d) or
(g) above and as to the completion
EXHIBIT E
- 3 -
<PAGE>
thereof; (i) will comply with the Nevada Gaming Control Act and the regulations
thereunder, to the extent applicable, and to the extent necessary or advisable
to enable Pledgee to consummate any proposed sale or other disposition of any of
the Stock Collateral pursuant to this Agreement, and (j) will do any and all
other acts and things which may be reasonably necessary or advisable to enable
the Pledgee to consummate any proposed sale or other disposition of any of the
Stock Collateral pursuant to this Agreement; and (k) will bear all costs and
expenses of carrying out its obligations hereunder. Pledgor agrees that
promptly upon the written request of the Pledgee it will use its best efforts to
cause to be withdrawn from registration or, if the registration statement has
been declared effective, to be deregistered any of the Stock Collateral the
Pledgee requests be withdrawn or deregistered.
Pledgor agrees that the Pledgee shall have the right, at any time when
in the Pledgee's sole and exclusive judgment exercised in good faith, the
Pledgee is, or might be deemed to be, a controlling person of the Issuer (a) to
participate in the preparation of such registration statement and to require the
insertion therein of material which in its judgment, as aforesaid, should be
included; (b) at Pledgor's expense, to retain counsel and/or independent public
accountants to assist them in such participation; and (c) at Pledgor's expense,
to receive an opinion or opinion of counsel and a letter or letters from
independent public accountants, addressed to the Pledgee, to the same effect as
any such opinion and letter delivered to the Pledgor, the Issuer or any
underwriter in connection with such registration and sale. If any such
registration statement refers to the Pledgee by name or otherwise, then, the
Pledgee shall have the right to require (i) the insertion therein of language,
in form and substance satisfactory to it, to the effect that its relationship to
the Pledgor or the Issuer is not to be construed as a recommendation by the
Pledgee of the investment quality of the Issuer's securities covered thereby and
does not imply that they will assist in meeting any future financial
requirements of the Pledgor or the Issuer, or (ii) in the event that such
reference to it by name or otherwise is not required by the Securities Act or
any similar federal statute then in force, the deletion of the reference to it.
Pledgor agrees that it will give the Pledgee prompt written notification
of (i) the filing of any registration statement pursuant to Section 12 of the
1934 Act (a "1934 Act Registration Statement") relating to any class of equity
securities of any Issuer, and (ii) the effectiveness of such Registration
Statement and the number of shares of such class of equity securities
outstanding at the time such Registration Statement becomes effective, in order
that the Pledgee may be in a position to file any required statements under the
1934 Act or the Securities Act. Pledgor further agrees that it will (a) at its
expense, upon Pledgee's written request, cause the issuer to file a 1934 Act
Registration Statement relating to any class of equity securities of the Issuer
then held by Pledgee; (b) cause the Issuer to file all reports required by
Section 13 of the 1934 Act within the time periods specified therein or any
extension thereof granted by the Securities and Exchange Commission pursuant to
Rule 12b-25 or any other comparable rule under the 1934 Act; and (c) cause the
Issuer to furnish to Pledgee any information which Pledgee may reasonably
require for the purpose of completing Form 144, or any other comparable form, in
connection with any proposed sale by Pledgee pursuant to Rule 144 under the
Securities Act, as then in effect, or any other comparable rule, of any of the
Stock Collateral.
In the event that any action required to be taken by Pledgor under
clause (a), (b), (d), (f), (g) or (i) of the first paragraph of this Section 6,
or under clause (a), (b) or (c) of the second paragraph of this Section 6 or
under clause (a) of the third paragraph of this Section 6 involves the
incurring of costs and expenses by any Issuer it is understood and agreed that
Pledgor shall not be required to take such action unless it shall have
EXHIBIT E
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<PAGE>
available to it funds in amounts sufficient to reimburse the Issuer for such
costs and expenses to be incurred by the Issuer. Funds shall be deemed
available to Pledgor for the foregoing purposes if the Pledgee is willing to
advance funds to Pledgor for such purposes on substantially the same terms and
conditions as the loans evidenced by the Note; provided, however, the provisions
of this paragraph shall not in any way constitute a commitment on the part of
Pledgee to provide such funds.
If at any time when the Pledgee shall determine to exercise its rights
to sell all or any part of the Stock Collateral pursuant to Section 5 hereof,
such Stock Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities Act, the Pledgee in
its sole and absolute discretion is hereby expressly authorized to sell such
Stock Collateral or such part thereof by private sale in such manner and under
such circumstances as the Pledgee may deem necessary or advisable in order that
such sale may legally be affected without such registration. Without limiting
the generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion (a) may proceed to make such private sale notwithstanding
that a registration statement for the purposes of registering such Stock
Collateral or such part thereof shall have been filed under such Securities Act,
(b) may approach and negotiate with a restricted number of potential purchasers
to effect such sale and (c) may restrict such sale to purchasers as to their
number, nature of business and investment intention including, without
limitation, to purchasers each of whom will represent and agree to the
satisfaction of the Pledgee that such purchaser is purchasing for its own
account, for investment, and not with a view to the distribution or sale of such
Stock Collateral or any part thereof, it being understood that the Pledgee may
require the Pledgor, and the Pledgor hereby agrees upon the written request of
the Pledgee, to cause: (i) a legend or legends to be placed on the certificates
to be delivered to such purchasers to the effect that the Stock Collateral
represented thereby have not been registered under the Securities Act and
setting forth or referring to restrictions on the transferability of such
securities; (ii) the issuance of stop transfer instructions to the Issuer's
transfer agent, if any, with respect to the Stock Collateral, or, if the Issuer
transfers its own securities, a notation in the appropriate records of the
Issuer; and (iii) to be obtained from the purchasers a signed written agreement
that the Stock Collateral will not be sold without registration or other
compliance with the requirements of the Securities Act. In the event of any
such sale, the Pledgor does hereby consent and agree that the Pledgee shall
incur no responsibility or liability for selling all or any part of the Stock
Collateral at a price which the Pledgee, in its sole and absolute discretion,
may deem reasonable under the circumstances, notwithstanding the possibility
that a substantially higher price might be realized if the sale were public and
deferred until after registration as aforesaid.
7. The rights, powers and remedies provided herein in favor of the
Pledgee shall not be deemed exclusive, but shall be cumulative, and shall be in
addition to all other rights and remedies in favor of the Pledgee existing at
law or in equity including, without limitation, all of the rights, powers and
remedies available to a bank under the provisions of the Uniform Commercial Code
as adopted in any appropriate jurisdiction. The Pledgor shall indemnify and
save harmless the Pledgee from and against any liability or damage which it may
incur in the exercise and performance of any of its rights, powers and remedies
set forth herein.
8. Upon the occurrence of an Event of Default, the Pledgee shall have
the right, for and in the name, place and stead of the Pledgor, to execute
endorsements, assignments or other instruments of conveyance or transfer with
respect to all or any of the Stock Collateral.
EXHIBIT E
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<PAGE>
9. No delay on the part of the Pledgee in exercising any of its
options, powers or rights, or partial or single exercise thereof, shall
constitute a waiver thereof. None of the terms and conditions of this Agreement
may be changed, waived, modified or varied in any manner whatsoever unless in
writing duly signed by the Pledgee and the Pledgor.
10. The Obligations of the Pledgor hereunder shall remain in full force
and effect without regard to, and shall not be impaired by: (a) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of the Pledgor or the Issuer; (b) any exercise or non-exercise, or
any waiver, by the Pledgee of any rights, remedy, power or privilege under or in
respect of the Obligations, the Credit Agreement or the Note, or any security
for any of the Obligations (other than this Agreement); or (c) any amendment to
or modification of the Obligations, the Credit Agreement or the Note or any
security for any of the Obligations (other than this Agreement); whether or not
the Pledgor shall have notice or knowledge of any of the foregoing.
11. After the payment in full of all of the Obligations, Pledgee shall
promptly return to Pledgor all of the Stock Collateral and all other property
and cash which have not been used or applied toward the payment in full of the
Obligations.
12. Any communications between the parties hereto or notices, requests
or demands to or upon the respective parties hereto shall be in writing and
shall be sent by first class mail, postage prepaid, or sent by telex or rapifax
and shall be deemed to have been duly given or made when received. All such
notices, requests and demands shall be sent to the relevant party addressed as
follows or to such other address as may hereafter be designated in writing by
the respective parties hereto:
The Pledgor: TRACINDA CORPORATION
9333 Wilshire Blvd., Suite 301
Beverly Hills, California 90210
Attention: Mr. James Aljian
The Pledgee: BANK OF AMEICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Payment Services Office #5693
1850 Gateway Blvd.
Concord, California 94520
Attention: Roberta Day
Telex: 034346, BANKAMER SFO
Rapifax: (415) 675-7531
with a copy to: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
555 S. Flower Street, 49th Floor
Los Angeles, California 90071
Rapifax: (213) 623-1959
Attention: Head, Entertainment
Section #5144
EXHIBIT E
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<PAGE>
13. This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the laws of
the State of California.
14. The Pledgor hereby agrees, at its own expense, to execute and
deliver, from time to time, any and all further, or other, instruments, and to
perform such acts, as the Pledgee may reasonably request to effect the purposes
of this Agreement and to secure the Pledgee the benefits of all rights,
authorities and remedies conferred upon the Pledgee by the terms of this
Agreement. In the event that at any time hereafter, due to any change in
circumstances including, without limitation, any change in any applicable law,
or any decision hereafter made by a court construing any applicable law, it is,
in the opinion of counsel for the Pledgee, necessary or desirable to file or
record this Agreement or any financing statement or other instrument or document
respecting this Agreement or the pledge made hereunder, the Pledgor agrees to
pay all fees, costs and expenses of such recording or filing and to execute and
deliver any instruments that may be necessary or appropriate to make such filing
or recording effective.
15. Pledgee shall be under no obligation to exercise or to give Pledgor
notice of any subscription rights or privileges, any rights to exchange, convert
or redeem or any other rights or privileges relating to any of the Stock
Collateral.
16. Pledgor shall reimburse Pledgee for all costs, expenses or
disbursements (including reasonable attorneys' fees) incurred in exercise of any
right, power or remedy conferred by this Agreement or in the enforcement hereof
and such costs, expenses and disbursements shall be included in the Obligations
secured hereunder.
17. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the Pledgor and the Pledgee have duly executed and
delivered this Agreement as of _____________________.
BANK OF AMERICA NATIONAL TRACINDA CORPORATION,
TRUST AND SAVINGS ASSOCIATION, as Pledgor
as Pledgee
By:____________________________ By:____________________________
Title:_________________________ Title:_________________________
EXHIBIT E
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<PAGE>
6.5 Jurisdiction. This Fourth Amendment, and any instrument or
------------
agreement required hereunder, shall be governed by and construed under the laws
of the State of California.
TRACINDA CORPORATION
By: ANTHONY MANDEKIC
----------------------------
Title: SEC./TREAS.
-------------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
----------------------------
Title:
-------------------------
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<PAGE>
SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment To Credit Agreement ("Second Amendment") is
entered into as of the 1st day of October, 1992 between TRACINDA CORPORATION, a
Nevada corporation (the "Company") and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION (the "Bank").
RECITALS
--------
A. The Company and the Bank are parties to a Credit Agreement entered
into as of June 27, 1991 as amended by a First Amendment dated as of May 12,
1992 (the "Agreement").
B. The Company has requested the Bank, and the Bank is willing, to
amend certain provisions of the Agreement to, among other things permit the
Company to extend credit to one of its Subsidiaries, on the terms and conditions
set forth herein.
1. Terms. All terms used herein shall have the same meaning as in the
-----
Agreement unless otherwise defined herein. All references to the Agreement
shall mean the Agreement as hereby amended.
2. Amendatory Provisions to Agreement. The parties hereto agree that
----------------------------------
the Agreement is amended as follows:
2.1 Section 8.4 of the Agreement is hereby amended to read in its
entirety as follows:
"8.4 Loans and Guaranties. Except for the obligations of the Company
--------------------
in respect of the Letter of Credit, the Company will not, nor will it
permit any of its Subsidiaries to, make any loans or advances or become
a guarantor or surety, or pledge its credit in any manner, directly or
indirectly, or extend credit; provided, however, that:
-----------------
(a) the Company may continue to have outstanding that certain
loan made by the Company to Stars Desert Inn Hotel and Country
Club, Inc. in an aggregate principal amount of approximately
$142,000,000 in connection with the purchase of The Desert Inn,
and
(b) the Company may make loans or advances, guaranty, pledge or
extend credit in an amount not exceeding in the aggregate in
principal amount TWENTY-FIVE MILLION DOLLARS ($25,000,000)."
3. Representations and Warranties. The Company hereby represents and
------------------------------
warrants to the Bank that:
- 1 -
<PAGE>
3.1 Authority. The Company has all necessary power and has taken
---------
all corporate action necessary to make this Second Amendment, the Agreement, and
all other Loan Documents, the valid and enforceable obligations they purport to
be.
3.2 No Legal Obstacle to Agreement. Neither the execution of this
------------------------------
Second Amendment, the making by the Company of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Company is a party, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to Company, or result in the
creation under any agreement or instrument of any security interest, lien,
charge, or encumbrance upon any of the assets of the Company. No approval or
authorization of any governmental authority is required to permit the execution,
delivery or performance by the Company of this Second Amendment, the Agreement,
or the transactions contemplated hereby or thereby, or the making of any
borrowing by Company under the Agreement.
3.3 Incorporation of Certain Representations. The representations
----------------------------------------
and warranties set forth in Section 3 of the Agreement are true and correct in
all respects on and as of the date hereof as though made on and as of the date
hereof.
3.4 Default. No Default or Event of Default under the Agreement
-------
has occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness of this Second
-------------------------
Amendment and the obligations of Bank of America to issue any Letters of Credit
and the Bank to make any Borrowings pursuant to the Agreement shall be subject
to the compliance by Company with its agreements herein and therein contained,
and to the delivery of the following to the Agent in form and substance
satisfactory to the Agent:
4.1 Corporate Resolution. A copy of a resolution or resolutions
--------------------
passed by the Board of Directors of Company, certified by the Secretary or an
Assistant Secretary of Company as being in full force and effect on the
effective date of this Second Amendment, authorizing the amendments to the
Agreement herein provided for and the execution, delivery and performance of
this Second Amendment and any note or other instrument or agreement required
hereunder.
4.2 Authorized Signatories. A certificate, signed by the
----------------------
Secretary or an Assistant Secretary of Company and dated the date of this Second
Amendment, as to the incumbency of the person or persons authorized to execute
and deliver this Second Amendment and any instrument or agreement required
hereunder on behalf of Company.
- 2 -
<PAGE>
4.3 Other Evidence. Such other evidence with respect to Company
--------------
or any other person as any Bank may reasonably request to establish the
consummation of the transactions contemplated hereby, the taking of all
corporate proceedings in connection with this Second Amendment and the Agreement
and the compliance with the conditions set forth herein.
5. Miscellaneous
-------------
5.1 Effectiveness of the Agreement. Except as hereby amended,
------------------------------
the Agreement shall remain in full force and effect.
5.2 Waivers. This Second Amendment is specific in time and in
-------
intent and does not constitute, nor should it be construed as, a waiver of any
other right, power or privilege under the Agreement, or under any agreement,
contract, indenture, document or instrument mentioned in the Agreement; nor does
it preclude other or further exercise hereof or the exercise of any other right,
power or privilege, nor shall any waiver of any right, power, privilege or
default hereunder, or under any agreement, contract, indenture, document or
instrument mentioned in the Agreement, constitute a waiver of any other default
of the same or of any other term or provision.
5.3 Counterparts. This Second Amendment may be executed in any
------------
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This Second Amendment shall
not become effective until the Company, and the Bank shall have signed a copy
hereof, whether the same or counterparts, and the same shall have been delivered
to the Bank, at which time this Second Amendment shall be effective as of the
date first written above.
5.4 Jurisdiction. This Second Amendment, and any instrument or
------------
agreement required hereunder, shall be governed by and construed under the laws
of the State of California.
TRACINDA CORPORATION
By: Anthony Mandekic
-----------------------------
Title: Secretary/Treasurer
--------------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
-----------------------------
Title:
--------------------------
- 3 -
<PAGE>
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment To Credit Agreement ("Third Amendment") is entered
into as of the 17th day of December, 1992 between TRACINDA CORPORATION, a Nevada
corporation (the "Company") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Bank").
RECITALS
--------
A. The Company and the Bank are parties to a Credit Agreement entered
into as of June 27, 1991 as amended by a First Amendment dated as of May 12,
1992 and a Second Amendment dated as of October 1, 1992 (the "Agreement").
B. The Company has requested the Bank, and the Bank is willing, to amend
certain provisions of the Agreement to provide for the issuance of a letter of
credit in favor of Danjaq, Inc., on the terms and conditions set forth herein.
1. Terms. All terms used herein shall have the same meaning as in the
-----
Agreement unless otherwise defined herein. All references to the Agreement
shall mean the Agreement as hereby amended.
2. Amendatory Provisions to Agreement. The parties hereto agree
----------------------------------
that the Agreement is amended as follows:
2.1 The definition of "Extension of Credit" in Section 1.1 of the
Agreement is hereby amended to read as follows:
"'Extension of Credit' means each of the making of any Loan or
the opening of any Letter of Credit."
2.2 The definition of "Face Amount" in Section 1.1 of the
Agreement is hereby amended to read as follows:
"'Face Amount' means, with respect to any Letter of Credit,
the sum of the undrawn maximum face amount of such Letter of Credit."
2.3 The definition of "Letter of Credit" in Section 1.1 of the
Agreement is hereby amended to read as follows:
"'Letters of Credit' means (a) that certain standby letter of
credit substantially in the form attached hereto as Exhibit J issued
for the account of the Company pursuant to Section 2.10 and with an
initial Face Amount of one hundred million dollars ($100,000,000) (the
"MGM Finance Letter of Credit") and
- 1 -
<PAGE>
(b) that certain standby letter of credit substantially in the form
attached hereto as Exhibit E issued for the amount of the Company
pursuant to Section 2.10 and with an initial Face Amount of six
million dollars ($6,000,000) (the "Danjag Letter of Credit"), (each a
"Letter of Credit")."
2.4 The definition of "Payment Account" in Section 1.1 of the
Agreement is hereby amended to read as follows:
"'Payment Account' means any deposit account or similar
account required to be maintained pursuant to the terms of this
Agreement for funds prepaid in respect of any Letter of Credit."
2.5 The definition of "Total Outstanding Revolving Credit" in
Section 1.1 of the Agreement is hereby amended to read as follows:
"'Total Outstanding Revolving Credit' means an amount equal to
the sum of (a) the aggregate principal amount of all outstanding
Revolving Loans, plus (b) the aggregate of the Face Amounts of the
----
outstanding Letters of Credit."
2.6 The definition of "Unreimbursed Drawings" in Section 1.1 of
the Agreement is hereby amended to read as follows:
"'Unreimbursed Drawings' means the amount of any drawing
under any of the Letters of Credit honored by the Bank, and not
reimbursed by the Company whether from the proceeds of a Loan or from
any other source."
2.7 Each of Section 2.1, Section 3.5(b), the introductory language
of Section 5, the introductory language of Section 6.2, Section 6.2(a)(ii),
Section 8.2, Section 8.4, and Section 9.1 is amended to delete the words "Letter
of Credit" in each place they appear and insert in lieu thereof the words
"Letters of Credit".
2.8 Section 2.7(c) is amended to read in its entirety as follows:
"(c) Effect of Termination or Reduction. Any termination
----------------------------------
in full of the Commitment will be accompanied by prepayment in full of
the unpaid principal amount of the Loans then outstanding thereunder,
together with the payment of any accrued and unpaid interest or fees,
or both, on the amount prepaid, and the prepayment in full of the
aggregate of the Face Amounts of the Letters of Credit then
- 2 -
<PAGE>
outstanding. Any reduction of the Commitment will be accompanied by
the prepayment of the Loans and the Face Amounts of Letters of Credit
to the extent, if any, that the aggregate unpaid principal amount of
the Loans plus the aggregate of the Face Amounts of Letters of Credit
exceeds the Commitment as then reduced. Once terminated or reduced
Revolving Commitments cannot be reinstated."
2.9 Section 2.10 is hereby amended to read as follows is added to
read as follows:
"2.10 Letter of Credit Applications.
-----------------------------
"(a) On or before the closing date of the MGM Grand Hotel
Finance Corp. Credit Agreement, the Company will deliver to Bank's
Letter of Credit Office (1) a duly completed application on the Bank's
standard form (or on such other form specified from time to time by
the Bank's Letter of Credit Office) (a "Letter of Credit Application")
relating to issuance of the MGM Finance Letter of Credit and (ii) the
most recent Borrowing Base Certificate delivered or required to be
delivered pursuant to Section 2.4(a). The Letter of Credit Application
shall specify, among other things: (A) the proposed date of issuance
or amendment (which shall be a Business Day); (B) the date of
expiration of the MGM Finance Letter of Credit which shall be March 1,
1993; (C) the name and address of the beneficiary thereof; (D) the
documents to be presented by the beneficiary of the MGM Finance
Letter of Credit in case of any drawing thereunder which shall be as
set forth in Exhibit J; and (E) the terms of any amendment to the MGM
Finance Letter of Credit.
"(b) On or before the proposed date of issuance of the Danjaq
Letter of Credit, the Company will deliver to Bank's Letter of Credit
Office (1) a duly completed Letter of Credit Application and (ii)
the most recent Borrowing Base Certificate delivered or required to be
delivered pursuant to Section 2.4(a). The Letter of Credit Application
shall specify, among other things: (A) the proposed date of issuance
or amendment (which shall be a Business Day); (B) the date of
expiration of the Letter of Credit which shall be on or about January
15, 1993; (C) the name and address of the beneficiary thereof; (D) the
documents to be presented by the beneficiary of the Danjaq Letter of
Credit in case of any drawing thereunder which shall be as set forth
in Exhibit K; and (E) the terms of any amendment to the Danjaq Letter
of Credit.
- 3 -
<PAGE>
"(c) Notwithstanding any provision of any Letter of Credit
Application to the contrary, it is understood that in the event of any
conflict between the terms of such Letter of Credit Application and
the terms of this Agreement, the terms of this Agreement shall control
with respect to events of default, representations and warranties, and
covenants, except that the Letter of Credit Application may provide
for further warranties relating specifically to the transaction or
affairs underlying such Letter of Credit."
2.10 Section 2.11 is hereby amended to read as follows:
"2.11 Drawing.
-------
"(a) If a request for drawing is made under any Letter
of Credit, the Bank shall notify the Company of the date on which
payment is to be made; provided that the failure of the Bank to give
--------
such notice shall not affect the Company's obligations hereunder which
remain absolute, unconditional and irrevocable. Each Letter of Credit
shall provide that the Bank shall have not less than three (3)
Business Days following a drawing in which to pay under the Letter of
Credit.
"(b) The Bank shall determine whether to pay the draft
presented under any Letter of Credit. In so doing, the Bank will be
responsible only to determine that the documents to be delivered under
such Letter of Credit have been delivered and comply on their face
with the requirements of such Letter of Credit. The Bank will pay the
draft properly presented under such Letter of Credit."
2.11 Each of Section 2.12, the introductory language to Section
2.14 and Section 2.15 are hereby amended to delete the words "the Letter of
Credit" in each place they appear and insert in lieu thereof the words "any
Letter of Credit".
2.12 Subsections 2.14(a), (b), (c), (d) and (e) are hereby amended
to delete the words "the Letter of Credit" in each place they appear and insert
in lieu thereof the words "such Letter of Credit".
2.13 Section 2.16 is hereby amended to read as follows:
"2.16 Prepayments of Letters of Credit. Any prepayment made with
--------------------------------
respect to any Letter of Credit will be held by the Bank in an interest-
bearing account as cash collateral for the Company's obligations to
- 4 -
<PAGE>
reimburse the Bank for the drawing under such Letter of Credit. Subject to
Section 9, to the extent any cash collateral is not applied to the drawing,
or to the extent the Face Amount of such Letter of Credit is reduced, such
cash collateral will be returned to the Company promptly upon such Letter
of Credit having expired, become void or otherwise become unavailable for
drawing, or the Face Amount thereof being reduced, as the case may be.
Interest with respect to such cash collateral will accrue for the benefit
of the Company and will be paid out to the Company so long as no Event of
Default has occurred and will be paid to the Company promptly upon such
Letter of Credit having expired, become void or otherwise become
unavailable for drawing. Upon occurrence of any Event of Default, interest
will continue to accrue but no payment in respect thereof will be made to
the Company. The commission payable with respect to any Letter of Credit
with respect to which a prepayment has been made will continue to accrue
during any period that a prepayment has been made."
2.14 Section 3.5(b) is amended by inserting after the words
"prepay the Loans" the words "and the Letter of Credit".
2.15 Section 3.5(c) is amended to read in its entirety as follows:
"(c) Mandatory Prepayment or Delivery of Security. If at
--------------------------------------------
any time the outstanding principal amount of Loans hereunder exceed
$50,000,000 and the Aggregate Market Value of the Collateral is less
than TWO HUNDRED PERCENT (200%) of the sum of the aggregate principal
amount of Loans outstanding under this Agreement plus the aggregate of
the Face Amounts of the Letters of Credit, the Company shall promptly
either (1) prepay the Loans and the Letters of Credit in an amount by
which the sum of the aggregate principal amount of the Loans
outstanding hereunder plus the aggregate of the Face Amounts of the
Letters of Credit exceeds such Aggregate Market Value or (ii) grant to
the Bank a first priority security interest in Eligible Collateral as
more specifically described in Section 7.10."
2.16 Section 4.1(b) is hereby amended to read as follows:
(b) Letter of Credit Fees. For each Letter of Credit
---------------------
the Company shall pay a Letter of Credit fee to the Bank at a rate of
1 1/4% per annum. Such fee shall be calculated on the basis of a 365
day year and
- 5 -
<PAGE>
shall be payable quarterly in advance on the first Business Day of
each calendar quarter and calculated to the last Business Day of such
quarter; provided that, (i) upon issuance of the MGM Finance Letter of
Credit the Company shall pay the Letter of Credit fee for the period
commencing on the date of issuance and ending on September 30, 1992,
and thereafter on the first Business Day of each calendar quarter and
(ii) upon issuance of the Danjaq Letter of Credit the Company shall
pay the applicable Letter of Credit fee for the period commencing on
the date of issuance and ending on the expiry date of the Danjaq
Letter of Credit. With respect to any amendment, transfer, or other
occurrence relating to any Letter of Credit, the Company will pay the
Bank documentary and processing charges in accordance with the
standard schedule for such charges in effect at the Bank's Letter of
Credit Office at the time of such amendment, transfer or other
occurrence."
2.17 Clause (z) in the last paragraph of Section 9 is amended to
read as follows:
"(z) require immediate prepayment of the Face Amounts of the
Letters of Credit,"
2.18 The Agreement is amended by adding thereto an new Exhibit K -
Form of Danjaq Letter of Credit, which Exhibit shall be in the form attached
hereto as Attachment 1 to Third Amendment.
3. Representations and Warranties The Company hereby represents
------------------------------
and warrants to the Bank that:
3.1 Authority. The Company has all necessary power and
---------
has taken all corporate action necessary to make this Third Amendment, the
Agreement, and all other Loan Documents, the valid and enforceable obligations
they purport to be.
3.2 No Legal Obstacle to Agreement. Neither the execution of this
------------------------------
Third Amendment, the making by the Company of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Company is a party, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to Company, or result in the
creation under any agreement or instrument of any security interest, lien,
charge, or encumbrance upon any of the assets of the Company. No approval or
authorization of any governmental authority is required to permit the execution,
delivery or performance by the Company of this Third Amendment, the Agreement,
or the transactions contemplated hereby or thereby, or the making of any
borrowing by Company under the Agreement.
- 6 -
<PAGE>
3.3 Incorporation of Certain Representations. The
----------------------------------------
representations and warranties set forth in Section 8 of the Agreement are true
and correct in all respects on and as of the date hereof as though made on and
as of the date hereof.
3.4 Default. No Default or Event of Default under the Agreement
-------
has occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness of this Third
-------------------------
Amendment and the obligations of Bank of America to issue any Letters of
Credit and the Bank to make any Borrowings pursuant to the Agreement shall be
subject to the compliance by Company with its agreements herein and therein
contained, and to the delivery of the following to the Agent in form and
substance satisfactory to the Agent:
4.1 Corporate Resolution. A copy of a resolution or resolutions
--------------------
passed by the Board of Directors of Company, certified by the Secretary or an
Assistant Secretary of Company as being in full force and effect on the
effective date of this Third Amendment, authorizing the amendments to the
Agreement herein provided for and the execution, delivery and performance of
this Third Amendment and any note or other instrument or agreement required
hereunder.
4.2 Authorized Signatories. A certificate, signed by the
----------------------
Secretary or an Assistant Secretary of Company and dated the date of this Third
Amendment, as to the incumbency of the person or persons authorized to execute
and deliver this Third Amendment and any instrument or agreement required
hereunder on behalf of Company.
4.3 Other Evidence. Such other evidence with respect to Company
--------------
or any other person as any Bank may reasonably request to establish the
consummation of the transactions contemplated hereby, the taking of all
corporate proceedings in connection with this Third Amendment and the Agreement
and the compliance with the conditions set forth herein.
5. Miscellaneous
-------------
5.1 Effectiveness of the Agreement. Except as hereby amended,
------------------------------
the Agreement shall remain in full force and effect.
5.2 Waivers. This Third Amendment is specific in time and in
-------
intent and does not constitute, nor should it be construed as, a waiver of any
other right, power or privilege under the Agreement, or under any agreement,
contract, indenture, document or instrument mentioned in the Agreement; nor does
it preclude other or further exercise hereof or the exercise of any other right,
power or privilege, nor shall any waiver of any right, power, privilege or
default hereunder, or under any
- 7 -
<PAGE>
agreement, contract, indenture, document or instrument mentioned in the
Agreement, constitute a waiver of any other default of the same or of any other
term or provision.
5.3 Counterparts. This Third Amendment may be executed in any
------------
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This Third Amendment shall
not become effective until the Company, and the Bank shall have signed a copy
hereof, whether the same or counterparts, and the same shall have been delivered
to the Bank, at which time this Third Amendment shall be effective as of the
date first written above.
5.4 Jurisdiction. This Third Amendment, and any instrument or
------------
agreement required hereunder, shall be governed by and construed under the laws
of the State of California.
TRACINDA CORPORATION
By: ANTHONY MANDEKIC
-------------------------
Title: SEC./TREAS.
----------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
-------------------------
Title: Vice President
----------------------
- 8 -
<PAGE>
FOURTH AMENDMENT TO CREDIT AGREEMENT
This Fourth Amendment To Credit Agreement ("Fourth Amendment") is entered
into as of the 3rd day of February, 1993 between TRACINDA CORPORATION, a Nevada
corporation (the "Company") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Bank").
RECITALS
--------
A. The Company and the Bank are parties to a Credit Agreement entered
into as of June 27, 1991 as amended by a First Amendment dated as of May 12,
1992, a Second Amendment to Credit Agreement dated as of October 1, 1992 and a
Third Amendment to Credit Agreement dated as of December 17, 1992 (the
"Agreement").
B. The Company has requested the Bank, and the Bank is willing, to
amend certain provisions of the Agreement to, among other things, increase the
amount, extend the credit, revise the borrowing base and certain of the
covenants, on the terms and conditions set forth herein.
TERMS AND CONDITIONS
--------------------
1. Defined Terms. All terms used herein shall have the same meaning as in the
-------------
Agreement unless otherwise defined herein. All references to the Agreement
shall mean the Agreement as hereby amended.
2. Amendatory Provisions to Agreement. The parties hereto agree that the
----------------------------------
Agreement is amended as follows:
2.1 The following definitions are added to Section 1.1 of the Agreement in
appropriate alphabetical order:
" 'Code' means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder."
" 'Controlled Group' means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company pursuant to Section 414(b), (c), (m) or (o) of the Code."
" 'ERISA Affiliate' means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary of
the Company within the
- 1 -
<PAGE>
meaning of Section 414(b), 414(c) or 414(m) of the Code."
" 'ERISA Event' means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by any member of the
Controlled Group from a Qualified Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer (as defined in
Section 4001 (a)(2) of ERISA); (c) a complete or partial withdrawal by any
member of the Controlled Group from a Multiemployer Plan; (d) the filing of
a notice of intent to terminate, the treatment of a plan amendment as a
termination under Section 4041 or 4041A of ERISA or the commencement of
proceedings by the PBGC to terminate a Qualified Plan or Multiemployer Plan
subject to Title IV of ERISA; (e) a failure to make required contributions
to a Qualified Plan or Multiemployer Plan; (f) an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Qualified Plan or Multiemployer Plan; (g) the imposition of
any liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon any member of the Controlled
Group; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to any
Qualified Plan; (i) any member of the Controlled Group engages in or
otherwise becomes liable for a non-exempt prohibited transaction; or (j) a
violation of the applicable requirements of Section 404 or 405 of ERISA or
the exclusive benefit rule under Section 401(a) of the Code by any
fiduciary with respect to any Qualified Plan for which the Company or any
of its Subsidiaries may be directly or indirectly liable."
" 'MGM Notes' means, any of the 11 3/4% First Mortgage Notes due 1999 and
the 12% First Mortgage Notes due 2002 issued in each case by MGM Grand
Hotel Finance Corp., a Nevada corporation."
" 'Multiemployer Plan' means a "multiemployer plan" (within the meaning
of Section 4001(a)(3) of ERISA) and to which any member of the Controlled
Group makes, is making, or is obligated to make contributions or has made,
or been obligated to make, contributions."
" 'PBGC' means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA."
- 2 -
<PAGE>
" 'Qualified Plan' means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and
which any member of the Controlled Group sponsors, maintains, or to which
it makes or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding period covering
at least five (5) plan years, but excluding any Multiemployer Plan."
" 'Reportable Event' means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, a withdrawal from a Plan described
in Section 4063 of ERISA, or a cessation of operations described in Section
4062(e) of ERISA."
2.2 The following definitions are deleted from Section 1.1 of the
Agreement: "Acceptable Aircraft" and "Aircraft Mortgage".
2.3 The definition of "Aggregate Market Value" in Section 1.1 of the
Agreement is hereby amended to read in its entirety as follows:
" 'Aggregate market Value' means (a) with respect to all shares of stock,
the sum of the market values (as computed below) of such stock, with the
market value of any such security being computed as the number of shares of
such stock times the closing price per share of such stock on the trading
day immediately preceding the date of determination, the closing price
being the last sale price regular way or, in case no such sale takes place
on such day, the average of the closing bid and asked prices regular way,
in either case on the New York Stock Exchange, or, if shares of such issue
or class are not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which the shares
are listed or admitted to trading, or if the shares are not so listed or
admitted to trading, the average of the highest reported bid and lowest
reported asked prices as furnished by the National Association of
Securities Dealers, Inc. through NASDAQ; (b) with respect to the Permitted
Investments, the principal amount originally expended by the Company in
acquiring such investment and (c) with respect to the MGM Notes the sum of
the market values (as computed below) of the MGM Notes, with such market
value being computed at the price for each such type of MGM Note on the
trading day immediately preceding the date of determination as reported in
The Wall Street Journal on the date of determination or if such price is
-----------------------
not so reported, the
- 3 -
<PAGE>
market value as reasonably determined by the Bank on the principal national
exchange on which the MGM Notes are listed or admitted to trading."
2.4 The definition of "Availability Period" in Section 1.1 of the Agreement
is hereby amended to read in its entirety as follows:
" 'Availability Period' shall mean a period of time beginning on the date
of this Agreement and ending on February 5, 1996."
2.5 The definition of "Borrowing Base" in Section 1.1 of the Agreement is
hereby amended to read in its entirety as follows:
" 'Borrowing Base' means, as of the date of any determination, an amount
equal to the sum of, without duplication:
(a) Fifty percent (50%) of the Aggregate Market Value of Permitted
Investments of the Company as at such times;
plus
----
(b) Fifty percent (50%) of the Aggregate Market Value of the common
stock of Chrysler Corporation owned by the Company as at such time;
plus
----
(c) Fifty percent (50%) of the Aggregate Market Value of all Non-
Control stock owned by the Company as at such time;
plus
----
(d) Twenty percent (20%) of the Aggregate Market Value of all MGM Notes
owned by the Company as at such time;
plus
----
(e) Twenty percent (20%) of the Aggregate Market Value of the common
stock of MGM Grand owned by the Company as at such time;
plus
----
- 4 -
<PAGE>
(f) Fifty percent (50%) of the Aggregate Market Value of all Control Stock
owned by the Company as at such time"
2.6 The definition of "Collateral Agreements" in Section 1.1 of the
Agreement is hereby amended by deleting the words, "the Aircraft Mortgage,".
2.7 The definition of "Eligible Collateral" in Section 1.1 of the Agreement
is hereby amended by deleting the words, "Acceptable Aircraft" and inserting in
lieu thereof the words "the MGM Notes".
2.8 Section 2.1 of the Agreement is hereby amended by deleting the words,
"ONE HUNDRED SEVENTY-FIVE MILLION DOLLARS ($175,000,000)" and inserting in lieu
thereof the words, "THREE HUNDRED MILLION DOLLARS ($300,000,000)".
2.9 Section 2.7(b) of the Agreement is hereby amended by deleting the
words, "or from the sale of any Acceptable Aircraft".
2.10 Section 3.5(b) of the Agreement is hereby amended by deleting the
words, "Acceptable Aircraft" and inserting in lieu thereof the words, "of the
MGM Notes".
2.11 Section 5.8 of the Agreement is hereby amended to read in its entirety
as follows:
"5.8 ERISA.
-----
"(a) The Company has delivered to the Bank a written description of each
Plan maintained or sponsored by the Company and each such description is true
and complete in all material respects.
"(b) Each Plan maintained or sponsored by the Company is in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other Federal or state law, including all requirements under the Code or ERISA
for filing reports (which are true and correct in all material respects as of
the date filed), and benefits have been paid in accordance with the provisions
of the Plan.
"(c) No plan maintained or sponsored by the Company provides medical or
other welfare benefits or extends coverage relating to such benefits beyond the
date of a participant's termination of employment with such person, except to
the extent required by Section 4980B of the Code and at the sole expense of the
participant or the beneficiary of the participant to the fullest extent
permissible under such Section of the Code. The Company has complied in all
material respects
- 5 -
<PAGE>
with the notice and continuation coverage requirements of Section 4980B of the
Code.
"(d) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan maintained or sponsored by the Company or to which the
Company is obligated to contribute."
2.12 Section 7.5(c) of the Agreement is hereby amended by deleting the
words, "each Acceptable Aircraft" and inserting in lieu thereof the words, "the
MGM Notes".
2.13 Section 7.5 of the Agreement is hereby amended by identifying present
clause (e) as clause (f) and inserting a new clause (e) which reads in its
entirety as follows:
"(e) Within 20 days of the occurrence of any such event, written notes
of any of the following ERISA events affecting the Company or any member of
its Controlled Group, together with a copy of any notice with respect to
such event that may be required to be filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Company or any
member of its Controlled Group with respect to such event: (i) an ERISA
Event; (ii) the adoption of any new Plan that is subject to Title IV of
ERISA or Section 412 of the Code by any member of the Controlled Group;
(iii) the adoption of any amendment to a Plan that is subject to Title IV
of ERISA or Section 412 of the Code, if such amendment results in a
material increase in benefits or unfunded liabilities; or (iv) the
commencement of contributions by any member of the Controlled Group to any
Plan that is subject to Title IV of ERISA or Section 412 of the Code."
2.14 The second sentence of Section 7.10 of the Agreement is hereby amended
to read in its entirety as follows:
"In meeting its obligation hereunder as of any date the Company shall grant
to the Bank security interests in Eligible Collateral in the following
order:
first, a first priority security interest in all Permissible Investments of
the Company (and shall move custody of such Permissible Investments to the
custody of the Bank to the extent necessary to give effect to provisions
hereof),
second, a first priority security interest in all Chrysler Corporation
common stock,
third, a first priority security interest in all Non-Control Stock,
- 6 -
<PAGE>
fourth, a first priority security interest in all MGM Notes,
fifth, a first priority security interest in all MGM Grand common stock,
finally, a first priority security interest in all Control Stock."
2.15 Section 8.4(a) of the Agreement is hereby amended by deleting the
amount, "$142,000,000" and inserting in lieu thereof the amount "$172,000,000".
2.16 Section 8.9 of the Agreement is hereby amended to read in its entirety
as follows:
"8.9 ERISA Plans. The Company shall not, and shall not suffer or permit any
-----------
of its Subsidiaries to, (i) terminate any Plan subject to Title IV of ERISA
so as to result in any material liability to the Company or any ERISA
Affiliate, (ii) permit to exist any ERISA Event or any other event or
condition, which presents the risk of a material liability to any member of
the Controlled Group, (iii) make a complete or partial withdrawal (within
the meaning of ERISA Section 4201) from any Multiemployer Plan so as to
result in any material liability to the Company or any ERISA Affiliate,
(iv) enter into any new Plan or modify any existing Plan so as to increase
its obligations thereunder which could result in any material liability to
any member of the Controlled Group, (v) permit the present value of all
nonforfeitable accrued benefits under any Plan (using the actuarial
assumptions utilized by the PBGC upon termination of a Plan) materially to
exceed the fair market value of Plan assets allocable to such benefits, all
determined as of the most recent valuation date for each such Plan or (vi)
sponsor or maintain a defined benefit Plan."
3. Representations and Warranties. The Company hereby represents and warrants
------------------------------
to the Bank that:
3.1 Authority. The Company has all necessary power and has taken all
---------
corporate action necessary to make this Fourth Amendment, the Agreement, and
all other Loan Documents, the valid and enforceable obligations they purport to
be.
3.2 No Legal Obstacle to Agreement. Neither the execution of this Fourth
------------------------------
Amendment, the making by the Company of any borrowings under the Agreement, nor
the performance of the Agreement has constituted or resulted in or will
constitute or result in a breach of the provisions of any contract to which the
- 7 -
<PAGE>
Company is a party, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to the Company, or result in
the creation under any agreement or instrument of any security interest, lien,
charge, or encumbrance upon any of the assets of the Company. No approval or
authorization of any governmental authority is required to permit the
execution, delivery or performance by the Company of this Fourth Amendment, the
Agreement, or the transactions contemplated hereby or thereby, or the making of
any borrowing by the Company under the Agreement.
3.3 Incorporation of Certain Representations. The representations and
----------------------------------------
warranties set forth in Section 8 of the Agreement are true and correct in all
respects on and as of the date hereof as though made on and as of the date
hereof.
3.4 Default. No Default or Event of Default under the Agreement has
-------
occurred and is continuing.
4. Amendment Fee. In order to induce the Bank to enter into this Fourth
-------------
Amendment and to provide the additional credit availability set forth herein,
the Borrower agrees to pay to the Bank in immediately available funds a fee of
$600,000, which shall be payable in installments of (a) $220,000 due and
payable upon execution of this Fourth Amendment; (b) $190,000 on February 4,
1994 and (c) $190,000 on February 3, 1995. Each installment, once paid shall be
nonrefundable. However any installment not paid at the time all Commitments
under the Agreement are terminated in full and all amounts due and payable to
the Bank in respect of the Agreement have been paid in full shall be waived.
Unpaid installments of the fee shall be deemed obligations of the Company under
the Agreement and shall be secured under the Collateral Agreements from time to
time in effect.
5. Conditions, Effectiveness. The effectiveness of this Fourth Amendment
-------------------------
shall be subject to the compliance by the Company with its agreements herein
and therein contained, and to the delivery of the following to the Bank in form
and substance satisfactory to the Bank:
5.1 Corporate Resolution. A copy of a resolution or resolutions passed by
--------------------
the Board of Directors of the Company, certified by the Secretary or an
Assistant Secretary of the Company as being in full force and effect on the
effective date of this Fourth Amendment, authorizing the amendments to the
Agreement herein provided for and the execution, delivery and performance of
this Fourth Amendment and any note or other instrument or agreement required
hereunder.
5.2 Authorized Signatories. A certificate, signed by the Secretary or an
----------------------
Assistant Secretary of the Company and dated the date of this Fourth Amendment,
as to the incumbency
- 8 -
<PAGE>
of the person or persons authorized to execute and deliver this Fourth
Amendment and any instrument or agreement required hereunder on behalf of the
Company.
5.3 Amendment Fee. Payment to the Bank in immediately available funds of
-------------
$220,000 which is the initial installment of the Amendment Fee and which shall
be inclusive of all legal fees, costs and expenses (including the allocated
cost of inhouse counsel) incurred in connection with the negotiation and
preparation of this Fourth Amendment and payable by the Company pursuant to
Section 6.4 of this Fourth Amendment.
5.4 Other Evidence. Such other evidence with respect to the Company or any
--------------
other person as the Bank may reasonably request to establish the consummation
of the transactions contemplated hereby, the taking of all corporate
proceedings in connection with this Fourth Amendment and the Agreement and the
compliance with the conditions set forth herein.
6. Miscellaneous
-------------
6.1 Effectiveness of the Agreement. Except as hereby amended, the Agreement
------------------------------
shall remain in full force and effect.
6.2 Waivers. This Fourth Amendment is specific in time and in intent and
-------
does not constitute, nor should it be construed as, a waiver of any other
right, power or privilege under the Agreement, or under any agreement,
contract, indenture, document or instrument mentioned in the Agreement; nor
does it preclude other or further exercise hereof or the exercise of any other
right, power or privilege, nor shall any waiver of any right, power, privilege
or default hereunder, or under any agreement, contract, indenture, document or
instrument mentioned in the Agreement, constitute a waiver of any other default
of the same or of any other term or provision.
6.3 Counterparts. This Fourth Amendment may be executed in any number of
------------
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument. This Fourth Amendment shall not become
effective until the Company, and the Bank shall have signed a copy hereof,
whether the same or counterparts, and the same shall have been delivered to the
Bank, at which time this Fourth Amendment shall be effective as of the date
first written above.
6.4 Bank's Expenses. The Company agrees to pay to the Bank, on demand, all
---------------
legal fees, costs and expenses (including the allocated costs for in-house
legal services) incurred by Bank in connection with the preparation and
negotiation of this Fourth Amendment.
- 9 -
<PAGE>
FIFTH AMENDMENT TO CREDIT AGREEMENT
This Fifth Amendment to Credit Agreement ("Fifth Amendment") is entered
into as of the 12th day of August, 1993 between TRACINDA CORPORATION, a Nevada
corporation (the "Company") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Bank").
RECITALS
--------
A. The Company and the Bank are parties to a Credit Agreement entered into
as of June 27, 1991 as amended by a First Amendment dated as of May 12, 1992, a
Second Amendment dated as of October 1, 1992, a Third Amendment dated as of
December 17, 1992 and a Fourth Amendment dated as of February 3, 1993 (the
"Agreement").
B. The Company has requested the Bank to amend certain provisions of the
Agreement to, among other things, revise the covenant concerning guaranties that
may be issued by the Company and provide for the issuance by the Bank of standby
letters of credit from time to time for the account of the Company.
C. The Bank is willing to amend the Agreement on the terms and conditions
set forth herein.
1. Terms. All terms used herein shall have the same meaning as in the
-----
Agreement unless otherwise defined herein. All references to the Agreement
shall mean the Agreement as hereby amended.
2. Amendatory Provisions to Agreement. The parties hereto agree that the
----------------------------------
Agreement is amended as follows:
2.1 The definition of "Letter of Credit" in Section 1.1 of the
Agreement is hereby amended to read as follows:
"'Letters of Credit' means (a) that certain standby letter
of credit substantially in the form attached hereto as Exhibit J
issued for the account of the Company pursuant to Section 2.10 and
with an in initial Face Amount of one hundred million dollars
($100,000,000) (the "MGM Finance Letter of Credit"), (b) that certain
standby letter of credit substantially in the form attached hereto as
Exhibit K issued for the account of the Company pursuant to Section
2.10 and with an initial Face Amount of six million dollars
($6,000,000) (the "Danjaq Letter of Credit"), and (c) standby letters
of credit issued by the Bank for the
- 1 -
<PAGE>
account of the Company pursuant to Section 2.1 (each a "Letter of
Credit")."
2.2 The following new definitions are added to
Section 1.1 of the Agreement in appropriate alphabetical order:
"'DI Guaranty' means that certain Unconditional Guaranty of
Payment and Performance (Tracinda Corporation) dated as of June
26, 1993 issued by the Company pursuant to the DI Sale Agreement
for the benefit of Sheraton Gaming Corporation."
"'DI Sale Agreement' means that certain Agreement of Purchase and
Sale By and Between the Stars' Desert Inn Hotel and Country Club,
Inc. and Sheraton Gaming Corporation dated as of June 26, 1993."
2.3 Section 2.1 is hereby amended to read in its entirety as
follows:
"2.1 The Commitment. Subject to all of the terms of this
--------------
Agreement, during the Availability Period the Bank will issue the
Letters of Credit and will make Loans available to the Company
pursuant to this Section 2; provided, however, at no time shall (a)
--------
the Total Outstanding Revolving Credit exceed the lesser of THREE
HUNDRED MILLION DOLLARS ($300,000,000) and the Borrowing Base, and (b)
the aggregate of the sum of the Face Amount of all Letters of Credit
outstanding plus all Unreimbursed Drawings exceed TEN MILLION DOLLARS
($10,000,000); and provided further, that the Bank shall not be
----------------
obligated at any time (i) to issue any Letter of Credit in support of
workers' compensation obligations of any Person or (ii) to issue any
Letter of Credit that by its terms, has an expiration date that can be
extended upon notice to the Bank by any Person or that is
automatically extended if the Bank fails to notify any Person that the
Bank will not extend the expiration date of such Letter of Credit.
All Loans made under this credit facility are Loans which may be
repaid and reborrowed at any time during the Availability Period
subject to the provisions of this Agreement."
2.4 Section 2.7(c) is amended to delete the words "Revolving
Commitments" and insert in lieu thereof the words "the Commitment".
2.5 Section 2.10 is hereby amended to read in its entirety as
follows:
- 2 -
<PAGE>
"2.10 Letter of Credit Applications.
-----------------------------
"(a) On or before the closing date of the MGM Grand Hotel
Finance Corp. Credit Agreement, the Company will deliver to Bank's
Letter of Credit Office (i) a duly completed application on the Bank's
standard form (or on such other form specified from time to time by
the Bank's Letter of Credit Office) (a "Letter of Credit Application")
relating to issuance of the MGM Finance Letter of Credit and (ii) the
most recent Borrowing Base Certificate delivered or required to be
delivered pursuant to Section 2.4(a). The Letter of Credit Application
shall specify, among other things: (A) the proposed date of issuance
or amendment (which shall be a Business Day); (B) the date of
expiration of the MGM Finance Letter of Credit which shall be March 1,
1993; (C) the name and address of the beneficiary thereof; (D) the
documents to be presented by the beneficiary of the MGM Finance Letter
of Credit in case of any drawing thereunder which shall be as set
forth in Exhibit J; and (E) the terms of any amendment to the MGM
Finance Letter of Credit.
"(b) On or before the proposed date of issuance of the
Danjaq Letter of Credit, the Company will deliver to Bank's Letter of
Credit Office (i) a duly completed Letter of Credit Application and
(ii) the most recent Borrowing Base Certificate delivered or required
to be delivered pursuant to Section 2.4(a). The Letter of Credit
Application shall specify, among other things: (A) the proposed date
of issuance or amendment (which shall be a Business Day); (B) the date
of expiration of the Letter of Credit which shall be on or about
January 15, 1993; (C) the name and address of the beneficiary thereof;
(D) the documents to be presented by the beneficiary of the Danjaq
Letter of Credit in case of any drawing thereunder which shall be as
set forth in Exhibit K; and (E) the terms of any amendment to the
Danjaq Letter of Credit.
"(c) On or before the proposed date of issuance or
amendment of any other Letter of Credit, the Company will deliver to
Bank's Letter of Credit Office (i) a duly completed Letter of Credit
Application or, if applicable, a description of the amendment being
requested and (ii) the most recent Borrowing Base Certificate
delivered or required to be delivered pursuant to Section 2.4(a). The
Letter of Credit Application shall specify, among other things: (A)
the proposed date of issuance or amendment (which shall be a Business
Day); (B) the date of expiration of the Letter of Credit which shall
be a Business Day and shall be a date on or before the Maturity Date;
(C) the
- 3 -
<PAGE>
name and address of the beneficiary thereof; (D) the documents to be
presented by the beneficiary of the Letter of Credit in case of any
drawing thereunder which shall be in a form acceptable to Bank.
"(d) Notwithstanding any provision of any Letter of Credit
Application to the contrary, it is understood that in the event of any
conflict between the terms of such Letter of Credit Application and
the terms of this Agreement, the terms of this Agreement shall control
with respect to events of default, representations and warranties, and
covenants, except that the Letter of Credit Application may provide
for further warranties relating specifically to the transaction or
affairs underlying such Letter of Credit."
2.6 Section 4.1(b) is hereby amended to read in its entirety as
follows:
(b) Letter of Credit Fees. For each Letter of Credit the
---------------------
Company shall pay a Letter of Credit fee to the Bank at a rate of
1 1/4% per annum. Such fee shall be calculated on the basis of a 365
day year and shall be payable quarterly in advance on the first
Business Day of each calendar quarter and calculated to the last
Business Day of such quarter. With respect to any amendment,
transfer, or other occurrence relating to any Letter of Credit, the
Company will pay the Bank documentary and processing charges in
accordance with the standard schedule for such charges in effect at
the Bank's Letter of Credit Office at the time of such amendment,
transfer or other occurrence."
2.7 Section 8.4 is hereby amended to read in its entirety as
follows:
"8.4 Loans and Guaranties. Except for the obligations of
--------------------
the Company in respect of the Letters of Credit, the Company will
not, nor will it permit any of its Subsidiaries to, make any
loans or advances or become a guarantor or surety, or pledge its
credit in any manner, directly or indirectly, or extend credit;
provided, however, that:
(a) Until the closing of the DI Sale Agreement only, the
Company may continue to have outstanding that certain loan
made by the Company to Stars Desert Inn Hotel and Country
Club, Inc. in an aggregate principal amount of approximately
$172,000,000 in
- 4 -
<PAGE>
connection with the purchase of The Desert Inn, and
(b) the Company may make loans or advances, guaranty,
pledge or extend credit in an amount not exceeding in the
aggregate in principal amount TWENTY-FIVE MILLION DOLLARS
($25,000,000) and
(c) the Company may issue the DI Guaranty."
2.8 Section 9.9 is amended by deleting the word "or" at the end
thereof and Section 9.10 is amended by adding the word "or" at the end thereof.
2.9 There is hereby added to the Agreement a new Section 9.11 which
reads as follows:
"9.11 Demand Under DI Guaranty. Any demand is made upon the
------------------------
Company for payment under the DI Guaranty in an amount in excess
of, or which would cause the aggregate of amounts demanded under
the DI Guaranty to exceed, TWENTY FIVE MILLION DOLLARS
($25,000,000) and payment of such demand by the Company would not
be covered by title insurance or other insurance;"
3. Representations and Warranties The Company hereby represents and
------------------------------
warrants to the Bank that:
3.1 Authority. The Company has all necessary power and has
---------
taken all corporate action necessary to make this Fifth Amendment, the
Agreement, and all other Loan Documents, the valid and enforceable obligations
they purport to be.
3.2 No Legal Obstacle to Agreement. Neither the execution of
------------------------------
this Fifth Amendment, the making by the Company of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Company is a party, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to Company, or result in the
creation under any agreement or instrument of any security interest, lien,
charge, or encumbrance upon any of the assets of the Company. No approval or
authorization of any governmental authority is required to permit the execution,
delivery or performance by the Company of this Fifth Amendment, the Agreement,
or the transactions contemplated hereby or thereby, or the making of any
borrowing by Company under the Agreement.
3.3 Incorporation of Certain Representations. The
----------------------------------------
representations and warranties set forth in Section 8 of the
- 5 -
<PAGE>
Agreement are true and correct in all respects on and as of the date hereof as
though made on and as of the date hereof.
3.4 Default. No Default or Event of Default under the Agreement
-------
has occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness of this Fifth
-------------------------
Amendment and the obligations of Bank of America to issue any Letters of Credit
and the Bank to make any Borrowings pursuant to the Agreement shall be subject
to the compliance by Company with its agreements herein and therein contained,
and to the delivery of the following to the Agent in form and substance
satisfactory to the Agent:
4.1 Corporate Resolution. A copy of a resolution or resolutions
--------------------
passed by the Board of Directors of Company, certified by the Secretary or an
Assistant Secretary of Company as being in full force and effect on the
effective date of this Fifth Amendment, authorizing the amendments to the
Agreement herein provided for and the execution, delivery and performance of
this Fifth Amendment and any note or other instrument or agreement required
hereunder.
4.2 Authorized Signatories. A certificate, signed by the
----------------------
Secretary or an Assistant Secretary of Company and dated the date of this Fifth
Amendment, as to the incumbency of the person or persons authorized to execute
and deliver this Fifth Amendment and any instrument or agreement required
hereunder on behalf of Company.
4.3 Other Evidence. Such other evidence with respect to
--------------
Company or any other person as any Bank may reasonably request to establish the
consummation of the transactions contemplated hereby, the taking of all
corporate proceedings in connection with this Fifth Amendment and the Agreement
and the compliance with the conditions set forth herein.
5. Miscellaneous
-------------
5.1 Effectiveness of the Agreement. Except as hereby amended,
------------------------------
the Agreement shall remain in full force and effect.
5.2 Waivers. This Fifth Amendment is specific in time and in
-------
intent and does not constitute, nor should it be construed as, a waiver of any
other right, power or privilege under the Agreement, or under any agreement,
contract, indenture, document or instrument mentioned in the Agreement; nor does
it preclude other or further exercise hereof or the exercise of any other right,
power or privilege, nor shall any waiver of any right, power, privilege or
default hereunder, or under any
- 6 -
<PAGE>
agreement, contract, indenture, document or instrument mentioned in the
Agreement, constitute a waiver of any other default of the same or of any other
term or provision.
5.3 Counterparts. This Fifth Amendment may be executed in any
------------
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This Fifth Amendment shall not
become effective until the Company, and the Bank shall have signed a copy
hereof, whether the same or counterparts, and the same shall have been delivered
to the Bank, at which time this Fifth Amendment shall be effective as of the
date first written above.
5.4 Jurisdiction. This Fifth Amendment, and any
------------
instrument or agreement required hereunder, shall be governed by and construed
under the laws of the State of California.
TRACINDA CORPORATION
By: ANTHONY MANDEKIC
-------------------------
Title: SECRETARY/TREASURER
---------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
------------------------
Title:
---------------------
- 7 -
<PAGE>
SIXTH AMENDMENT
TO CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT ("Sixth Amendment") is entered
into as of June 1994 between TRACINDA CORPORATION, a Nevada corporation (the
--
"Company") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the
"Bank").
RECITALS
--------
A. The Company and the Bank are parties to a Credit Agreement entered
into as of June 27, 1991, as amended by a First Amendment dated as of May 12
1992, a Second Amendment dated as of October 1, 1992, a Third Amendment dated as
of December 17, 1992, a Fourth Amendment dated as of February 3, 1993 and a
Fifth Amendment dated as of August 2, 1993 (as so amended, the "Agreement").
B. The Company has requested that the Bank increase its Commitment to
$400,000,000, and the Bank is willing to amend the Agreement to increase its
commitment on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as
follows:
1. Terms. All terms used herein shall have the same meaning as in the
-----
Agreement unless otherwise defined herein. All references to the Agreement shall
mean the Agreement as hereby amended.
2. Amendatory Provision to Agreement. The parties hereto agree to
---------------------------------
amend Section 2.1 of the Agreement by deleting "THREE HUNDRED MILLION DOLLARS
($300,000,000)" and inserting "FOUR HUNDRED MILLION DOLLARS ($400,000,000)" in
lieu thereof.
3. Representations and Warranties. The Company hereby represents and
------------------------------
warrants to the Bank that:
3.1 Authority. The Company has all necessary power and has taken all
---------
corporate action necessary to make this Sixth Amendment, the Agreement, and all
other Loan Documents, the valid and enforceable obligations they purport to be.
- 1 -
<PAGE>
3.2 No Legal Obstacle to Agreement. Neither the execution of this
------------------------------
Sixth Amendment, the making by the Company of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Company is a party, or the violation of any law, judgement, decree or
governmental order, rule or regulation applicable to the Company, or result in
the creation under any agreement or instrument of any security interest, lien,
charge, or encumbrance upon any of the assets of the Company. No approval or
authorization of any governmental authority is required to permit the execution,
delivery or performance by the Company of this Sixth Amendment, the Agreement,
or the transactions contemplated hereby or thereby, or the making of any
borrowing by the Company under the Agreement.
3.3 Incorporation of Certain Representations. The representations and
----------------------------------------
warranties set forth in Section 8 of the Agreement are true and correct in all
respects on and as of the date hereof as though made on and as of the date
hereof.
3.4 Default. No Default or Event of Default under the Agreement has
-------
occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness of this Sixth
-------------------------
Amendment and the obligations of Bank to issue any Letters of credit and the
Bank to make any Borrowings pursuant to the Agreement shall be subject to the
compliance by the Company with its agreements herein and therein contained, and
to the delivery of the following to the Agent in form and substance satisfactory
to the Agent:
4.1 Corporate Resolution. A copy of a resolution or resolutions passed
--------------------
by the Board of Directors of the Company, certified by the Secretary or an
Assistant Secretary of the Company as being in full force and effect on the
effective date of this Sixth Amendment, authorizing the amendments to the
Agreement herein provided for and the execution, delivery and performance of
this sixth Amendment and any note or other instrument or agreement required
hereunder.
4.2 Authorized Signatories. A certificate, signed by the
----------------------
Secretary or an Assistant Secretary of the Company and dated the date of this
Sixth Amendment, as to the incumbency of the person or persons authorized to
execute and deliver this Sixth Amendment and any instrument or agreement
required hereunder on behalf of the Company.
4.3 Other Evidence. Such other evidence with respect to the Company
--------------
or any other person as any Bank may reasonably request to establish the
consummation of the transactions contemplated hereby, the taking of all
corporate proceedings in
- 2 -
<PAGE>
connection with this Sixth Amendment and the Agreement and the compliance with
the conditions set forth herein.
5. Miscellaneous
-------------
5.1 Effectiveness of the Agreement. Except as hereby amended, the
------------------------------
Agreement shall remain in full force and effect.
5.2 Waivers. This Sixth Amendment is specific in time and in intent and
-------
does not constitute, nor should it be construed as, a waiver of any other right,
power or privilege under the Agreement, or under any agreement, contract,
indenture, document or instrument mentioned in the Agreement; nor does it
preclude other or further exercise hereof or the exercise of any other right,
power or privilege, nor shall any waiver of any right, power, privilege or
default hereunder, or under any agreement, contract, indenture document or
instrument mentioned in the Agreement, constitute a waiver of any other default
of the same or of any other term or provision.
5.3 Counterparts. This Sixth Amendment may be executed in any number of
------------
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument. This Sixth Amendment shall not become
effective until the Company, and the Bank shall have signed a copy hereof,
whether the same or counterparts, and the same shall have been delivered to the
Bank, at which time this Sixth-Amendment shall be effective as of the date
first written above.
5.4 Jurisdiction. This Sixth Amendment, and any instrument or agreement
------------
required hereunder, shall be governed by and construed under the laws of the
State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment
to be duly executed and delivered as of the date first written above.
TRACINDA CORPORATION
By: ANTHONY MANDEKIC
---------------------------------
Title: SECRETARY/TREASURER
------------------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
---------------------------------
Title:
------------------------------
- 3 -
<PAGE>
SEVENTH AMENDMENT
TO CREDIT AGREEMENT
THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT ("Seventh Amendment") is
entered into as of August 26, 1994 between TRACINDA CORPORATION, a Nevada
corporation (the "Company") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Bank").
RECITALS
--------
A. The Company and the Bank are parties to a Credit Agreement entered
into as of June 27, 1991, as amended by a First Amendment dated as of May 12,
1992, a Second Amendment dated as of October 1, 1992, a Third Amendment dated as
of December 17, 1992 a Fourth Amendment dated as of February 3, 1993, a Fifth
Amendment dated as of August 2, l993 and a Sixth Amendment dated as of June 22,
l994 (as so amended, the "Agreement").
B. The Company has requested, and the Bank is willing, to amend the
Agreement to reduce the Eurodollar Margin on the terms and conditions set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Terms. All terms used herein shall have the same meaning as in the
-----
Agreement unless otherwise defined herein. All references to the Agreement shall
mean the Agreement as hereby amended.
2. Amendatory Provision to Agreement. The parties hereto agree that
---------------------------------
the Agreement is hereby amended as follows;
2.1 The definition of "Eurodollar Margin" in Section 1.1 of the
Agreement is amended and restated as follows:
"'Eurodollar Margin' means ONE AND ONE QUARTER percent (1-1/4%) per
annum."
2.2 The Agreement is amended by deleting all references to "Reference
Margin," including without limitation the definition thereof.
- 1 -
<PAGE>
3. Representations and Warranties. The Company hereby represents and
------------------------------
warrants to the Bank that:
3.1 Authority. The Company has all necessary power and has taken all
---------
corporate action necessary to make this Seventh Amendment, the Agreement, and
all other Loan Documents, the valid and enforceable obligations they purport to
be.
3.2 No Legal Obstacle to Agreement. Neither the execution of this
------------------------------
Seventh Amendment, the making by the Company of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Company is a party, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to the Company, or result in
the creation under any agreement or instrument of any security interest, lien,
charge, or encumbrance upon any of the assets of the Company. No approval or
authorization of any governmental authority is required to permit the execution,
delivery or performance by the Company of this Seventh Amendment, the Agreement,
or the transactions contemplated hereby or thereby, or the making of any
borrowing by the Company under the Agreement.
3.3 Incorporation of Certain Representations. The representations and
----------------------------------------
warranties set forth in Section 8 of the Agreement are true and correct in all
respects on and as of the date hereof as though made on and as of the date
hereof.
3.4 Default. No Default or Event of Default under the Agreement has
-------
occurred and is continuing.
4. Miscellaneous
-------------
4.1 Effectiveness of the Agreement. Except as hereby amended, the
------------------------------
Agreement shall remain in full force and effect.
4.2 Waivers. This Seventh Amendment is specific in time and in intent
-------
and does not constitute, nor should it be construed as, a waiver of any other
right, power or privilege under the Agreement, or under any agreement, contract
indenture, document or instrument mentioned in the Agreement; nor does it
preclude other or further exercise hereof or the exercise of any other right,
power or privilege, nor shall any waiver of any right, power, privilege or
default hereunder, or under any agreement, contract, indenture, document or
instrument mentioned in the Agreement constitute a waiver of any other default
of the same or of any other term or provision.
4.3 Counterparts. This Seventh Amendment may be executed in any number
------------
of counterparts and all of such counterparts taken together shall be deemed to
constitute one and
- 2 -
<PAGE>
the same instrument. This Seventh Amendment shall not become effective until the
Company, and the Bank shall have signed a copy hereof, whether the same or
counterparts, and the same shall have been delivered to the Bank, at which time
this Seventh Amendment shall be effective as of the date first written above.
4.4 Jurisdiction. This Seventh Amendment, and any instrument or
------------
agreement required hereunder, shall be governed by and construed under the laws
of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Seventh
Amendment to be duly executed and delivered as of the date first written above.
TRACINDA CORPORATION
By:
--------------------------
Title:
------------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
--------------------------
Title:
------------------------
- 3 -
<PAGE>
EIGHTH AMENDMENT
TO CREDIT AGREEMENT
THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT ("Eighth Amendment") is
entered into as of April 5, 1995 between TRACINDA CORPORATION, a Nevada
corporation (the "Company") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Bank").
RECITALS
--------
A. The Company and the Bank are parties to Credit Agreement entered
into as of June 27, 1991, as amended by a First Amendment dated as of May 12,
1992, a Second Amendment dated as of October 1, 1992, a Third Amendment dated as
of December 17, 1992, a Fourth Amendment dated as of February 3, 1993, a Fifth
Amendment dated as of August 2, 1993, a Sixth Amendment dated as of June 22,
1994 and a Seventh Amendment dated as of August 26, 1994 (as so amended, the
"Agreement").
B. The Company and the Bank desire to modify the Borrowing Base.
C. To accommodate changes from time to time in the Commitment, the
Company and the Bank desire to substitute loan accounts for the Master Note to
evidence outstandings under the Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Terms. All terms used herein shall have the same meaning as in the
-----
Agreement unless otherwise defined herein. All references to the Agreement shall
mean the Agreement as hereby amended.
2. Amendatory Provision to Agreement. The parties hereto agree that the
---------------------------------
Agreement is hereby amended as follows:
2.1 The definition of "Master Note" and all other references to the
Master Note are deleted, and Exhibit A to the Agreement is deleted. The
outstanding Master Note shall be deemed superseded by the loan accounts
maintained by the Bank pursuant to amended Section 2.2 below.
2.2 Clause (e) in the definition of "Borrowing Base" in Section 1.1 of
the Agreement is amended deleting "Twenty
- 1 -
<PAGE>
percent (20%)" and inserting "Fifty percent (50%)" in lieu thereof.
2.3 Section 2.2 of the Agreement is amended and restated in its
entirety as set forth below:
"2.2 Loan Accounts. The loans made by the Bank shall be evidenced
-------------
by one or more accounts or records maintained by the Bank in the
ordinary course of business. The accounts or records maintained by the
Bank shall be presumptive evidence of the amount of the Loans made by
the Bank to the Company, and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however, limit
or otherwise affect the obligation of the Company hereunder to pay any
amount owing with respect to the Loans."
2.4 Section 8.2 of the Agreement is amended by deleting "Master Note"
and inserting "Loans" in lieu thereof.
2.5 Section 10.4 of the Agreement is amended by deleting "Master Note"
where it appears in the next to last line and inserting "loans" in lieu thereof.
2.6 Section 10.6(c) of the Agreement is amended by deleting "Master
Note (and owner of the Loans evidenced thereby)" wherever it appears and
inserting "Loans" in lieu thereof.
2.7 Section I of Exhibit B-2 is amended and restated in its entirety as
follows:
"I. Borrowing Base
Borrowing
Aggregate Source of Base
Mkt. Val. Valuation Value
--------- --------- ---------
"A. Permitted Investments:
- ----------------------- ---------- ----------
- ----------------------- ---------- ----------
- ----------------------- ---------- ----------
- ----------------------- ---------- ----------
Sum of Values $ @50% $
---------- ----------
"B. Chrysler Corp. Stock:
Aggregate Market Value $
---------- ----------
@50% $
----------
- 2 -
<PAGE>
"C. Non Control Stock:
- ----------------------- ---------- ----------
- ----------------------- ---------- ----------
- ----------------------- ---------- ----------
- ----------------------- ---------- ----------
Sum of Values $ @50%$
---------- ----------
"D. MGM Notes:
- ----------------------- ---------- ----------
- ----------------------- ---------- ----------
- ----------------------- ---------- ----------
Sum of Values $ @20%$
---------- ----------
"E. MGM Grand Stock:
Aggregate Market Value $
---------- ----------
@50% $
----------
"F. Control Stock:
- ----------------------- ---------- ----------
- ----------------------- ---------- ----------
- ----------------------- ---------- ----------
Sum of Values $ @50% $
---------- ----------
"BORROWING BASE: (Sum of A-F) $
----------
3. Representations and Warranties The Company hereby represents and
------------------------------
warrants to the Bank that:
3.1 Authority. The Company has all necessary power and has taken all
---------
corporate action necessary to make this Eighth Amendment, the Agreement, and all
other Loan Documents, the valid and enforceable obligations they purport to be.
3.2 No Legal Obstacle to Agreement. Neither the execution of this
------------------------------
Eighth Amendment, the making by the Company of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Company is a party, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to the Company, or result in
the creation under any agreement or instrument of any security interest, lien,
charge, or emcumbrance upon any of the assets of the Company. No approval or
authorization of any governmental authority is required to permit
- 3 -
<PAGE>
the execution, delivery or performance by the Company of this Eighth Amendment,
the Agreement, or the transactions contemplated hereby or thereby, or the making
of any borrowing by the Company under the Agreement.
3.3 Incorporation of Certain Representations. The representations and
----------------------------------------
warranties set forth in Section 8 of the Agreement are true and correct in all
respects on and as of the date hereof as though made on and as of the date
hereof.
3.4 Default. No Default or Event of Default under the Agreement
-------
has occurred and is continuing.
4. Miscellaneous
-------------
4.1 Effectiveness of the Agreement. Except as hereby amended, the
------------------------------
Agreement shall remain in full force and effect.
4.2 Waivers. This Eighth Amendment is specific in time and in
-------
intent and does not constitute, nor should it be construed as, a waiver of any
other right, power or privilege under the Agreement, or under any agreement,
contract, indenture, document or instrument mentioned in the Agreement; nor does
it preclude other or further exercise hereof or the exercise of any other right,
power or privilege nor shall any waiver of any right, power, privilege or
default hereunder, or under any agreement, contract, indenture, document or
instrument mentioned in the Agreement, constitute a waiver of any other default
of the same or of any other term or provision.
4.3 Counterparts. This Eighth Amendment may be executed in any
------------
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This Eighth Amendment shall
not become effective until the Company, and the Bank shall have signed a copy
hereof, whether the same or counterparts, and the same shall have been delivered
to the Bank, at which time this Eighth Amendment shall be effective as of the
date first written above.
4.4 Jurisdiction. This Eighth Amendment, and any instrument or
------------
agreement required hereunder, shall be governed by
- 4 -
<PAGE>
and construed under the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Eighth Amendment
to be duly executed and delivered as of the date first written above.
TRACINDA CORPORATION
By: /s/ ANTHONY MANDEKIC
------------------------------------
Title: SECRETARY/TREASURER
--------------------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
------------------------------------
- 5 -
<PAGE>
NINTH AMENDMENT
TO CREDIT AGREEMENT
THIS NINTH AMENDMENT TO CREDIT AGREEMENT ("Ninth Amendment") is entered into as
of June 21, 1995 between TRACINDA CORPORATION, a Nevada corporation (the
"Company") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the
"Bank").
RECITALS
--------
A. The Company and the Bank are parties to a Credit Agreement entered into
as of June 27, 1991, as amended by a First Amendment dated as of May 12, 1992, a
Second Amendment dated as of October 1, 1992, a Third Amendment dated as of
December 17, 1992, a Fourth Amendment dated as of February 3, 1993, a Fifth
Amendment dated as of August 2, 1993, a Sixth Amendment dated as of June 22,
1994, a Seventh Amendment dated as of August 26, 1994 and an Eighth Amendment
dated as of April 5, 1995 (as so amended, the "Agreement").
B. The Company and the Bank desire to increase the Commitment and modify
certain other terms and provisions of the Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Terms. All terms used herein shall have the same meaning as in the
-----
Agreement unless otherwise defined herein. All references to the Agreement
shall mean the Agreement as hereby amended.
2. Amendatory Provision to Agreement. The parties hereto agree that the
---------------------------------
Agreement is hereby amended as follows:
2.1 The definition of "Availability Period in Section 1.1 of the Agreement
is amended by deleting "February 5, 1996" and inserting "June 30, 1998" in lieu
thereof.
2.2 Subsection (e) of the definition of "Borrowing Base" in Section 1.1 of
the Agreement is amended and restated in its entirety as follows:
- 1 -
<PAGE>
"(e) Forty percent (40%) of the Aggregate Market Value of the
common stock of MGM Grand owned by the Company as at such time;"
2.3 A new definition is inserted in Section 1.1. of the Agreement in
proper alphabetical order as follows:
"Pledged Borrowing Base" means an amount equal to the sum of the
Aggregate Market Value of all Eligible Collateral pledged to the Bank,
as such Aggregate Market Value is reduced by the advance rates for
such Eligible Collateral set forth in the definition of Borrowing
Base."
2.4 Section 2.1 of the Agreement is further amended by deleting "the
lesser of FOUR HUNDRED MILLION DOLLARS ($400,000,000) and the Borrowing Base"
and inserting "the lesser of (a) until June 30, 1997, $900,000,000 and
thereafter, $650,000,000 and (b) the Borrowing Base" in lieu thereof.
2.5 Section 3.5(c) of the Agreement is amended and restated in its
entirety as follows:
"(c) Mandatory Prepayment or Delivery of Security. If at
--------------------------------------------
any time the aggregate principal amount of Loans and aggregate of the
Face Amounts of the Letters of Credit outstanding hereunder exceeds
$50,000,000, and the sum of the aggregate principal amount of Loans
and the aggregate of the Face Amounts of the Letters of Credit
outstanding hereunder exceeds the Pledge Borrowing Base, the Company
shall promptly either (i) prepay the Loans and the Letters of Credit
in an amount by which the sum of the aggregate principal amount of the
Loans outstanding hereunder plus the aggregate of the Face Amounts of
the Letters of Credit exceeds the Pledged Borrowing Base or (ii)
grant to the Bank a first priority security interest in Eligible
Collateral as more specifically described in Section 7.10."
2.6 Section 2.7(c) of the Agreement is amended by inserting "under
Section 2.1, this Section 2.7 or otherwise under this Agreement" after the
words "Any reduction of the Commitment."
2.7 Section 2.7 of the Agreement is amended by inserting a new
subsection (d) as follows:
"(d) Additional Mandatory Reduction. Subject to no Default or
------------------------------
Event of Default having occurred under Section 9.8, upon the
disability (other than a physical disability) of Kirk Kerkorian or if
Kirk Kerkorian is
- 2 -
<PAGE>
no longer active in the management of the Company, the Commitment
shall automatically and immediately be reduced to the sum of (i) the
aggregate principal amount of Loans outstanding on such date, (ii) the
aggregate of the Face Amounts of Letters of Credit outstanding on such
date, and (iii) an amount equal to amounts payable by the Company
under written binding commitments in effect as of such date, the
Commitment shall no longer be revolving, and thereafter the Commitment
shall subsequently be reduced from time to time by the amount of any
prepayments or repayments of the Loans and drawings under any Letters
of Credit."
2.8 Section 6.2(f) of the Agreement is amended and restated in its
entirety as follows:
"(f) Security Interest. If the Company has delivered to the Bank any
-----------------
Collateral Agreement pursuant to the provisions of Section 2 or 7.10
(and the Bank has not released the Collateral hypothecated thereunder
in accord with Section 7.10), the Bank shall have a valid and
enforceable perfected security interest of first priority in and first
lien on all Collateral and the Company shall have provided to the Bank
such evidence as the Bank may reasonably require that the Pledge
Borrowing Base is not less than the aggregate principal amount of
Loans and the aggregate of the Face Amounts of Letters of Credit
outstanding hereunder after giving effect to such Loan or issuance of
such Letter of Credit."
2.9 The first paragraph and the clauses following such first
paragraph of Section 7.10 of the Agreement are amended and restated in their
entirety as follows:
"7.10 Delivery of Security. If at any time the aggregate
--------------------
principal amount of Loans and aggregate of the Face Amounts of the
Letters of Credit outstanding hereunder exceeds $50,000,000 is, or
would be after giving effect to any Notice of Borrowing delivered to
the Bank by the Company, be greater than $50,000,000, the Company
shall promptly either (i) prepay the Loans as provided in Section 3.5
or (ii) grant to the Bank a first priority security interest in all
Chrysler Corporation common stock and MGM Grand common stock now owned
or hereafter acquired by the Company and, if the aggregate principal
amount of Loans and aggregate of the Face Amounts of the Letters of
Credit outstanding hereunder still exceeds the Pledged Borrowing Base
(after giving effect to any Notice of Borrowing delivered to the Bank
by the Company), the Company
- 3 -
<PAGE>
shall grant to the Bank security interests in additional Eligible
Collateral in the following order:
"first, a first priority security interest in all Permissible
Investments of the Company (and shall move custody of such Permissible
Investments to the custody of the Bank to the extent necessary to give
effect to provisions hereof),
"second, a first priority security interest in all Non-Control Stock,
"third, a first priority security interest in all MGM Notes,
"finally, a first priority security interest in all Control Stock."
2.10 Section 8.1 of the Agreement is amended by inserting the
following at the end thereof:
"provided, however, that notwithstanding anything else contained in
-------- -------
this Agreement, the Company will not, nor will it permit any of its
Subsidiaries to, create, assume or suffer to exist, or enter into any
agreement contemplating or permitting, any Liens on any Chrysler
Corporation common stock or MGM Grand common stock now owned or
hereafter acquired by the Company or any Subsidiary."
2.11 A new Section 8.10 is inserted in the Agreement immediately
following Section 8.9 as follows:
"8.10 Hostile Acquisitions. The Company shall not, and shall not
--------------------
suffer or permit any of its Subsidiaries to, acquire any assets or
equity of any Person (with or without using the proceeds of any Loans
hereunder) if (a) the Company has previously used at any time, or
concurrently therewith is using, proceeds of the Loans hereunder to
purchase any equity of such Person, and (b) such acquisition either
(i) would result in effective control of such Person (whether or not a
majority of such Person's stock would be acquired) or (ii) has not
been approved or has been opposed by the Board of Directors (or other
equivalent governing body); provided, however, that notwithstanding
-------- -------
the foregoing, the Company shall be entitled to conduct one or more
consent solicitations or proxy solicitations for representation on, or
control of, the board of directors of any Person."
- 4 -
<PAGE>
2.12 Section 9.8 of the Agreement is amended and restated in its
entirety as follows:
"9.8 Stock Ownership. Kirk Kerkorian should cease to own 100%
---------------
of all outstanding shares of stock issued by the Company, or any
shares of the Company are owned by any estate, trust, trustee,
devisee, beneficiary, personal representative, heir, spouse, surviving
joint tenant or other successor in interest or any assignee of any
kind; or"
3. Representations and Warranties The Company hereby represents and
------------------------------
warrants to the Bank that:
3.1 Authority. The Company has all necessary power and has taken all
---------
corporate action necessary to make this Ninth Amendment, the Agreement, and all
other Loan Documents, the valid and enforceable obligations they purport to be.
3.2 No Legal Obstacle to Agreement. Neither the execution of this
------------------------------
Ninth Amendment, the making by the Company of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Company is a party, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to the Company, or result in
the creation under any agreement or instrument of any security interest, lien,
charge, or encumbrance upon any of the assets of the Company. No approval or
authorization of any governmental authority is required to permit the execution,
delivery or performance by the Company of this Ninth Amendment, the Agreement,
or the transactions contemplated hereby or thereby, or the making of any
borrowing by the Company under the Agreement.
3.3 Incorporation of Certain Representations. The representations
----------------------------------------
and warranties set forth in Section 8 of the Agreement are true and correct in
all respects on and as of the date hereof as though made on and as of the date
hereof.
3.4 Default. No Default or Event of Default under the Agreement has
-------
occurred and is continuing.
- 5 -
<PAGE>
4. Miscellaneous
-------------
4.1 Reg U Matters.
-------------
(a) If requested by the Bank, the Company shall execute and deliver a
completed questionnaire substantially in the form of Exhibit I to the Agreement
---------
relating to Chrysler Corporation common stock acquired by the Company.
(b) The Company shall promptly execute and deliver a Federal Reserve
Form U-1 relating to any Margin Stock acquired by the Company, the statements
made in which shall be such, in the opinion of such Bank, as to permit the
transactions contemplated by the Agreement and this Ninth Amendment in
accordance with Regulation U.
(c) The Company shall deliver to the Bank such additional information
as requested by the Bank to determine compliance with the Margin Regulations and
Rule 144.
4.2 Consent to Acquisition of Chrysler Stock. Notwithstanding
----------------------------------------
anything to the contrary contained in the Agreement, the Bank hereby consents to
the Company acquiring up to 15% of the common stock of Chrysler Corporation
utilizing the proceeds of Loans hereunder.
4.3 Effectiveness of the Agreement. Except as hereby amended, the
------------------------------
Agreement shall remain in full force and effect.
4.4 Waivers. This Ninth Amendment is specific in time and in intent
-------
and does not constitute, nor should it be construed as, a waiver of any other
right, power or privilege under the Agreement, or under any agreement, contract,
indenture, document or instrument mentioned in the Agreement; nor does it
preclude other or further exercise hereof or the exercise of any other right,
power or privilege, nor shall any waiver of any right, power, privilege or
default hereunder, or under any agreement, contract, indenture, document or
instrument mentioned in the Agreement, constitute a waiver of any other default
of the same or of any other term or provision.
4.5 Counterparts. This Ninth Amendment may be executed in any number
------------
of counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument. This Ninth Amendment shall not become
effective until the Company, and the Bank shall have signed a copy hereof,
whether the same or counterparts, and the same shall have been delivered to the
Bank, at which time this Ninth Amendment shall be effective as of the date first
written above.
- 6 -
<PAGE>
4.6 Jurisdiction. This Ninth Amendment, and any instrument or
------------
agreement required hereunder, shall be governed by and construed under the laws
of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Ninth
Amendment to be duly executed and delivered as of the date first written above.
TRACINDA CORPORATION
By: ANTHONY MANDEKIC
-----------------------
Title: SECRETARY/TREASURER
--------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
-----------------------
Title:
--------------------
- 7 -
<PAGE>
CONSULTING AGREEMENT
AGREEMENT made May 9, 1995 (this "Agreement") by and between Tracinda
Corporation, a Nevada corporation ("Tracinda") and Lee A. Iacocca ("Iacocca").
WHEREAS, prior to the date of this Agreement, Iacocca has consulted
with and performed certain services for Tracinda in connection with Tracinda's
investments; and
WHEREAS, Tracinda and Iacocca desire to set forth the terms and
conditions pursuant to which Iacocca will continue to render certain consulting
services to Tracinda and Iacocca will be indemnified by Tracinda.
NOW, THEREFORE, the parties hereto agree as follows:
1. Consulting Services. Iacocca hereby agrees to render such
-------------------
specific consulting and advisory services to Tracinda in connection with
Tracinda's investments as may be reasonably requested by Tracinda.
2. Compensation. As compensation for Iacocca's services under this
------------
Agreement, Tracinda will pay to Iacocca the sum of $41,666.67 per month.
3. Indemnity. Tracinda agrees to indemnify and hold Iacocca harmless
---------
from and against any and all damages, liabilities, reasonable costs or expenses,
including reasonable legal expenses, judgments, fines, penalties and amounts
paid in settlement, in connection with any threatened, pending or completed
claim, action, suit or proceeding, whether civil, criminal, administrative or
investigative arising out of, resulting from or relating to (i) Iacocca's
association with Tracinda prior to the date of this Agreement as it relates to
Tracinda's investments, (ii) Iacocca's performance of consulting and advisory
services to Tracinda after the date of this Agreement to the extent that such
services were specifically requested by Tracinda, or (iii) Iacocca's
participation as a member of a group with Tracinda relating to any investment by
Tracinda (provided that, in the case of clause (iii), such claim, action, suit
or proceeding does not arise out of, result from or relate to actions by Iacocca
after the date of this Agreement which were not specifically requested by
Tracinda), except to the extent, in the case of each of clauses (i), (ii) and
(iii), that such damages, liabilities, reasonable costs or expenses, judgments,
fines, penalties or amounts paid in settlement arise out of, result from or
relate to Iacocca's willful misconduct, gross negligence, breach of this
Agreement or violation of law, whether civil or criminal (other than, with
respect to any criminal action or proceeding, where Iacocca had no reasonable
cause to believe his conduct was unlawful). Iacocca will give Tracinda prompt
notice of the assertion or commencement of any claim, action, suit or proceeding
in respect of which indemnity may be sought hereunder; provided that failure to
give such notice shall not relieve Tracinda of its obligations hereunder except
to the extent Tracinda is materially prejudiced thereby. In the case of any
claim, action, suit or proceeding for which Iacocca is entitled to
indemnification hereunder, Tracinda will have the right, by notice in writing to
Iacocca within 30 days after receipt of notice from Iacocca of the assertion or
commencement of such claim, action, suit or proceeding, to assume and control
the defense thereof with counsel reasonably acceptable
<PAGE>
to Iacocca, in which case Tracinda shall pay all damages, liabilities,
reasonable costs or expenses, judgments, fines, penalties and amounts paid in
settlement in connection therewith; provided, however, that Iacocca will be
entitled to employ his own counsel and participate in the defense of such claim,
action, suit or proceeding, but the fees and expenses of such counsel incurred
after notice from Tracinda of its assumption of the defense thereof shall be at
Iacocca's expense unless (a) the employment of counsel has been authorized by
Tracinda, or (b) Iacocca shall have reasonably concluded, after consultation
with counsel, that there may be a conflict of interest in the conduct of any
such action between himself and Tracinda, in each of which cases the reasonable
fees and expenses of counsel shall be at the expense of Tracinda. Tracinda shall
not be entitled to assume the defense of any action, suit or proceeding as to
which Iacocca shall have made the conclusion provided for in clause (b) above.
If Tracinda shall have assumed the defense of any claim, action, suit or
proceeding, it shall not, without the prior written consent of Iacocca, consent
to a settlement of, or the entry of any judgment arising from, such claim,
action, suit or proceeding, which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to Iacocca of a complete release
from all liability in respect of such claim, action, suit or proceeding. If
Tracinda shall have offered to assume the defense of any claim, action, suit or
proceeding, but Iacocca shall have made the conclusion provided for in clause
(b) of the third preceding sentence, Iacocca shall not, without the prior
written consent of Tracinda, such consent not to be unreasonably withheld,
consent to a settlement of, or the entry of any judgment arising from, such
claim, action, suit or proceeding.
4. Contribution. If the indemnification provided in Section 3 is
------------
unavailable and may not be paid to Iacocca, then in respect of any threatened,
pending or completed claim, action, suit or proceeding in which Tracinda is or
is alleged to be jointly liable with Iacocca (or would be if joined in such
claim, action, suit or proceeding), Tracinda shall contribute to the amount of
reasonable expenses (including reasonable attorneys' fees), judgments, fines,
penalties and amounts paid in settlement paid or payable by Iacocca in such
proportion as is appropriate to reflect (i) the relative benefits received by
Tracinda on the one hand and Iacocca on the other hand from the transaction from
which such claim, action, suit or proceeding arose, and (ii) the relative fault
of Tracinda on the one hand and of Iacocca on the other in connection with the
events which resulted in such reasonable expenses, judgments, fines, penalties
or settlement amounts, as well as any other relevant equitable considerations.
The relative fault of Tracinda on the one hand and Iacocca on the other shall be
determined by reference to, among other things, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such reasonable expenses, judgments, fines, penalties
or settlement amounts. Tracinda agrees that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata
allocation or any other method of allocation which does not take account of the
foregoing equitable considerations.
5. Advancement of Expenses. In the event that Iacocca employs his
-----------------------
own counsel pursuant to clause (a) or (b) of the third sentence of Section 3
above, Tracinda shall advance to Iacocca, prior to any final disposition of any
threatened or pending action, claim, suit or proceeding, whether civil,
criminal, administrative or investigative, any and all reasonable costs and
expenses (including reasonable legal fees and expenses) incurred in
investigating or
2
<PAGE>
defending any such action, claim, suit or proceeding within ten (10) days after
receiving copies of invoices presented to Iacocca for such expenses.
6. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the internal laws of the State of New York.
7. Notices. Any notice hereunder shall be effective if in writing
-------
and delivered by confirmed facsimile transmission or by overnight courier (with
proof of delivery), as follows:
To Tracinda:
Tracinda Corporation
4835 Koval Lane
Las Vegas, Nevada 89109
Facsimile: (702) 737-1177
To Iacocca:
Lee A. Iacocca
75252 Pepperwood Drive
Vintage Club
Indian Wells, California
Facsimile: (619) 341-7332
or to such other address as may be specified by any party hereto in accordance
with this Section.
8. Term. Section 1 of this Agreement may be terminated at any time
----
by either of the parties hereto, upon 30 days' prior notice in writing to the
other party. Sections 2, 3, 4, 5 and 9 of this Agreement shall survive the
termination of Section 1 of this Agreement solely with respect to obligations
relating to periods prior to such termination. Sections 6, 7 and 8 shall
survive the termination of Section 1 of this Agreement.
9. Miscellaneous. Tracinda agrees to pay all reasonable legal fees
-------------
of counsel to Iacocca in connection with the negotiation and execution of this
Agreement and the review of any joint Schedule 13D filings of Tracinda and
Iacocca in connection with any of Tracinda's investments.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first written above.
TRACINDA CORPORATION
By:__________________________
Name:
Title:
_____________________________
Lee A. Iacocca
4
<PAGE>
CONSULTING AGREEMENT
AGREEMENT made as of June 24, 1995 (this "Agreement") by and between
Tracinda Corporation, a Nevada corporation ("Tracinda"), and Alfred Boyer
("Boyer").
WHEREAS, prior to the date of this Agreement, Boyer has consulted with
and performed certain services for Tracinda in connection with Tracinda's
investments; and
WHEREAS, Tracinda and Boyer desire to set forth the terms and
conditions pursuant to which Boyer will continue to render certain consulting
services to Tracinda and Boyer will be indemnified by Tracinda.
NOW, THEREFORE, the parties hereto agree as follows:
1. Consulting Services. Boyer hereby agrees to render such specific
-------------------
consulting and advisory services to Tracinda in connection with Tracinda's
investments as may be reasonably requested by Tracinda.
2. Compensation. As compensation for Boyer's services under this
------------
Agreement, Tracinda will pay to Boyer the sum of $250,000 upon the execution of
this Agreement.
3. Indemnity. Tracinda agrees to indemnify and hold Boyer harmless
---------
from and against any and all damages, liabilities, reasonable costs or expenses,
including reasonable legal expenses, judgments, fines, penalties and amounts
paid in settlement, in connection with any threatened, pending or completed
claim, action, suit or proceeding, whether civil, criminal, administrative or
investigative arising out of, resulting from or relating to (i) Boyer's
association with Tracinda prior to the date of this Agreement as it relates to
Tracinda's investments, (ii) Boyer's performance of consulting and advisory
services to Tracinda after the date of this Agreement to the extent that such
services were specifically requested by Tracinda, or (iii) Boyer's participation
as a member of a group with Tracinda relating to any investment by Tracinda
(provided that, in the case of clause (iii), such claim, action, suit or
proceeding does not arise out of, result from or relate to actions by Boyer
after the date of this Agreement which were not specifically requested by
Tracinda), except to the extent, in the case of each of clauses (i), (ii) and
(iii), that such damages, liabilities, reasonable costs or expenses, judgments,
fines, penalties or amounts paid in settlement arise out of, result from or
relate to Boyer's willful misconduct, gross negligence, breach of this Agreement
or violation of law, whether civil or criminal (other than, with respect to any
criminal action or proceeding, where Boyer had no reasonable
<PAGE>
cause to believe his conduct was unlawful). Boyer will give Tracinda prompt
notice of the assertion or commencement of any claim, action, suit or proceeding
in respect of which indemnity may be sought hereunder; provided that failure to
give such notice shall not relieve Tracinda of its obligations hereunder except
to the extent Tracinda is materially prejudiced thereby. In the case of any
claim, action, suit or proceeding for which Boyer is entitled to indemnification
hereunder, Tracinda will have the right, by notice in writing to Boyer within 30
days after receipt of notice from Boyer of the assertion or commencement of such
claim, action, suit or proceeding, to assume and control the defense thereof
with counsel reasonably acceptable to Boyer, in which case Tracinda shall pay
all damages, liabilities, reasonable costs or expenses, judgments, fines,
penalties and amounts paid in settlement in connection therewith; provided,
however, that Boyer will be entitled to employ his own counsel and participate
in the defense of such claim, action, suit or proceeding, but the fees and
expenses of such counsel incurred after notice from Tracinda of its assumption
of the defense thereof shall be at Boyer's expense unless (a) the employment of
counsel has been authorized by Tracinda, or (b) Boyer shall have reasonably
concluded, after consultation with counsel, that there may be a conflict of
interest in the conduct of any such action between himself and Tracinda, in each
of which cases the reasonable fees and expenses of counsel shall be at the
expense of Tracinda. Tracinda shall not be entitled to assume the defense of any
action, suit or proceeding as to which Boyer shall have made the conclusion
provided for in clause (b) above. If Tracinda shall have assumed the defense of
any claim, action, suit or proceeding, it shall not, without the prior written
consent of Boyer, consent to a settlement of, or the entry of any judgment
arising from, such claim, action, suit or proceeding, which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to Boyer
of a complete release from all liability in respect of such claim, action, suit
or proceeding. If Tracinda shall have offered to assume the defense of any
claim, action, suit or proceeding, but Boyer shall have made the conclusion
provided for in clause (b) of the third preceding sentence, Boyer shall not,
without the prior written consent of Tracinda, such consent not to be
unreasonably withheld, consent to a settlement of, or the entry of any judgment
arising from, such claim, action, suit or proceeding.
4. Contribution. If the indemnification provided in Section 3 is
------------
unavailable and may not be paid to Boyer, then in respect of any threatened,
pending or completed claim, action, suit or proceeding in which Tracinda is or
is alleged to be jointly liable with Boyer (or would be if joined in such claim,
action, suit or proceeding), Tracinda shall contribute to the amount of
reasonable expenses (including reasonable attorneys' fees), judgments, fines,
penalties and amounts paid in settlement paid or payable by Boyer in such
proportion as is appropriate to reflect (i) the relative benefits received by
Tracinda on the one hand and Boyer on the other hand from the transaction from
which such claim, action, suit or proceeding arose, and (ii) the relative fault
of
2
<PAGE>
Tracinda on the one hand and of Boyer on the other in connection with the events
which resulted in such reasonable expenses, judgments, fines, penalties or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of Tracinda on the one hand and Boyer on the other shall be
determined by reference to, among other things, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such reasonable expenses, judgments, fines, penalties
or settlement amounts. Tracinda agrees that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata
allocation or any other method of allocation which does not take account of the
foregoing equitable considerations.
5. Advancement of Expenses. In the event that Boyer employs his own
-----------------------
counsel pursuant to clause (a) or (b) of the third sentence of Section 3 above,
Tracinda shall advance to Boyer, prior to any final disposition of any
threatened or pending action, claim, suit or proceeding, whether civil,
criminal, administrative or investigative, any and all reasonable costs and
expenses (including reasonable legal fees and expenses) incurred in
investigating or defending any such action, claim, suit or proceeding within ten
(10) days after receiving copies of invoices presented to Boyer for such
expenses.
6. Sole Beneficiary. Boyer represents and warrants that no other
----------------
person or entity has any right to share or participate in any of the
compensation to be paid to Boyer hereunder.
7. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the internal laws of the State of New York.
8. Notices. Any notice hereunder shall be effective if in writing
-------
and delivered by confirmed facsimile transmission or by overnight courier (with
proof of delivery), as follows:
To Tracinda:
Tracinda Corporation
4835 Koval Lane
Las Vegas, Nevada 89109
Facsimile: (702) 737-1177
3
<PAGE>
To Boyer:
Alfred Boyer
9665 Wilshire Boulevard, Suite 200
Beverly Hills, CA 90212
Facsimile: (310) 379-2813
or to such other address as may be specified by any party hereto in accordance
with this Section.
9. Term. During the first year after the date hereof, Section 1 of
----
this Agreement may be terminated at any time by Tracinda, upon 30 days' prior
notice in writing to Boyer. After the first anniversary of the date hereof,
Section 1 may be terminated at any time by either party upon 30 days' prior
notice in writing to the other party. Sections 3, 4, 5 and 10 of this Agreement
shall survive the termination of Section 1 of this Agreement solely with respect
to obligations relating to periods prior to such termination. Sections 6, 7, 8
and 9 shall survive the termination of Section 1 of this Agreement.
10. Miscellaneous. Tracinda agrees to pay all reasonable legal fees
-------------
of counsel to Boyer in connection with the negotiation and execution of this
Agreement and the review of any joint Schedule 13D filings of Tracinda and Boyer
in connection with any of Tracinda's investments.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
TRACINDA CORPORATION
By:__________________________
Name:
Title:
_____________________________
Alfred Boyer
5
<PAGE>
VALUE SHARING AGREEMENT
AGREEMENT made as of June 24, 1995 (this "Agreement") by and between
Tracinda Corporation, a Nevada corporation ("Tracinda"), and Lee A. Iacocca
("Participant").
WHEREAS, in consideration of the consulting services being provided by
Participant to Tracinda as contemplated by the Consulting Agreement, dated May
9, 1995, between Tracinda and Participant (the "Consulting Agreement"), and in
addition to the consideration payable thereunder, Tracinda and Participant
desire to enter into an agreement pursuant to which Participant will share a
portion of the enhancement in the value of certain investments of Tracinda, as
more fully set forth herein and subject to the terms and conditions hereof;
NOW, THEREFORE, the parties hereto agree as follows:
1. Participation. (a) On the terms and subject to the conditions
-------------
hereof, Participant shall be entitled to receive four percent (4%) of the
Incremental Value (as defined below) with respect to an aggregate of 32,000,000
shares (the "Shares") of Common Stock, $1.00 par value (the "Common Stock"), of
Chrysler Corporation (the "Company") held by Tracinda, or, if the Shares (or any
portion thereof) are exchanged for any property other than cash ("Other
Property"), four percent (4%) of the Incremental Value with respect to such
Other Property.
(b) For purposes of this Agreement, "Incremental Value" means:
(i) (x) The excess, if any, of (A) the average of the Fair
Market Value (as defined below) of a Share (or of Other Property received per
Share) on each of the 20 trading days immediately preceding the fourth
anniversary of the date of this Agreement over (B) $47.00 (the "Base Price"),
multiplied by (y) 32,000,000 minus the number of Sold Shares (as defined below);
and
(ii) With respect to any of such 32,000,000 Shares (or Other
Property with respect thereto) that are sold by Tracinda for cash and such sale
is consummated while this Agreement remains in force and prior to the fourth
anniversary of the date of this Agreement, the excess, if any, of (x) the actual
net cash proceeds received by Tracinda upon the sale of such Shares or Other
Property over (y) (A) the Base Price, multiplied by (B) the number of Shares
covered by such sale (or, in the case of a sale of Other Property, the number of
Shares for which the Other Property covered by such sale was exchanged) (the
"Sold Shares"); provided, that if any sale occurs within six months from the
date hereof, clause (x) above shall instead be the Fair Market Value of an
equivalent number of Shares on the date that is six months and one day from the
date hereof, but in no event greater than the actual net proceeds received by
Tracinda upon the sale of such Shares.
<PAGE>
(c) In the event of any merger, consolidation, reorganization,
recapitalization, reclassification, stock split, reverse stock split or similar
transaction involving the Shares, the number of Shares and/or the Base Price (as
applicable) shall be appropriately adjusted.
(d) For all purposes of this Agreement, the Shares shall not be
segregated from other shares of Common Stock held by Tracinda, it being
understood that any sale of Common Stock consummated while this Agreement
remains in force and prior to the fourth anniversary of the date of this
Agreement, up to a maximum of 32,000,000 shares of Common Stock, shall be deemed
a sale of Shares for purposes of paragraph 1(b)(ii).
(e) Incremental Value shall not be reduced or offset by the amount, if
any, by which the actual net cash proceeds received by Tracinda for any sale of
Shares (or Other Property with respect thereto) is less than the Base Price
multiplied by the number of Shares covered by such sale (or, in the case of a
sale of Other Property, the number of Shares for which the Other Property
covered by such sale was exchanged), but any such Shares shall nonetheless be
considered Sold Shares for purposes of paragraph 1(b)(i).
(f) Any payment due to Participant pursuant to this paragraph shall be
paid to Participant, in the case of paragraph 1(b)(i), on the 30th day
after the fourth anniversary of the date hereof and, in the case of paragraph
1(b)(ii), on the 30th day after receipt by Tracinda of the net proceeds
of such sale (or, in the case of a sale within six months from the date hereof,
on the 30th day after the date that is six months and one day from the date
hereof.)
(g) "Fair Market Value" shall mean, for any date, the mean between the
high and low sales price on such date, or if no sales price is available for
such date, the mean between the closing bid and asked prices for such date, for
the Common Stock or Other Property (i) as reported by the principal national
securities exchange in the United States on which the Common Stock or Other
Property is then traded, or (ii) if not traded on any such national securities
exchange, as quoted on an automated quotation system sponsored by the National
Association of Securities Dealers. If the Common Stock or Other Property is not
regularly traded on a national securities exchange or any system sponsored by
the National Association of Securities Dealers, the Fair Market Value of the
Common Stock and/or Other Property shall be determined by a nationally
recognized, independent investment banking firm selected by Tracinda in its sole
discretion.
2. Control Over Shares. Participant expressly acknowledges that
-------------------
Tracinda retains the right, in its sole discretion, to make all investment and
other decisions with respect to the Shares, its investment in the Company, or
otherwise with respect to the Company, including without limitation the sole
right to determine whether
2
<PAGE>
and/or when to sell or otherwise dispose of any Shares and the consideration to
be received in any such sale or other disposition, whether to enter into, or to
approve or disapprove (including voting the Shares for or against) any merger,
consolidation, reorganization, recapitalization, reclassification, stock split,
reverse stock split or other extraordinary transaction involving Tracinda and/or
the Company. Participant further expressly acknowledges that Tracinda has no
obligation whatsoever to attempt to maximize Incremental Value as defined in
this Agreement, and may make all such investment and other decisions without
regard for the effect of such decisions under this Agreement. Without limiting
the foregoing, Tracinda may pledge, or otherwise create one or more liens or
encumbrances on, all or any portion of the Shares, with respect to new
borrowings, existing borrowings, or otherwise.
3. Term. The term of this Agreement will commence on the date
----
written above and continue through the last date on which any payment is due
hereunder, unless terminated sooner in accordance with paragraph 4. Following
the determination of the Incremental Value under paragraph 1(b)(i) and the
making of any required payment with respect thereto, Tracinda shall have no
further obligation to Participant with respect to the Shares or any sale or
other disposition thereof.
4. Termination. (a) This Agreement may be terminated by mutual
-----------
agreement of Tracinda and Participant.
(b) This Agreement may be terminated by Tracinda if Participant
(i) shall contact the Company or any person affiliated with or representing the
Company or shall take any other action with respect to or involving the Company
or Tracinda's investment in the Common Stock, other than as specifically
requested by Tracinda pursuant to the Consulting Agreement; provided, that (A)
--------
Participant may purchase or sell shares of Common Stock in compliance with
applicable securities laws so long as, after giving effect thereto, none of
Tracinda, Participant, any other person or entity that is or may be deemed a
member of a group with Tracinda (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934), nor any group of which any of the foregoing is
a member, shall be deemed an "Acquiring Person" within the meaning of the
Amended and Restated Rights Agreement, dated as of December 14, 1990 and amended
as of December 1, 1994, between the Company and First Chicago Trust Company of
New York, as Rights Agent (the "Rights Agreement"), or within the meaning of any
other similar agreement or plan adopted by or entered into by the Company and
(B) Participant may respond to contacts made by the Company solely with respect
to matters relating to his prior employment or consulting services with the
Company and may contact the Company with respect to matters relating to his
existing options to purchase Shares; or (ii) shall fail to notify Tracinda
promptly as to any facts or events within his control that would require an
amendment to the Schedule 13D filed by the Offeror, Participant and others with
respect to the Company. Participant may rely on public filings in order to
determine who is or
3
<PAGE>
may be deemed a member of a group with Tracinda. Participant expressly
acknowledges that, under the Rights Agreement as publicly disclosed as of the
date hereof, an "Acquiring Person" is generally defined as any Person who or
which, together with all Affiliates and Associates of such Person, is the
Beneficial Owner of 15% or more of the outstanding Common Stock of the Company
(with capitalized terms being as defined in the Rights Agreement).
(c) This Agreement may be terminated by Tracinda upon a material
breach by Participant of the Consulting Agreement. This Agreement may not be
terminated by Tracinda as a result of a termination of the Consulting Agreement
by Tracinda pursuant to paragraph 8 thereof (other than following a material
breach of the Consulting Agreement by Participant).
(d) Upon a termination of this Agreement pursuant to this paragraph
4, Tracinda shall have no further obligation to Participant with respect to the
Shares (or Other Property with respect thereto) or any sale or other disposition
of Shares (or Other Property with respect thereto).
(e) Participant's rights under this Agreement shall not terminate
if Participant dies prior to termination of this Agreement.
5. No Lien on Shares. The rights of Participant hereunder constitute
-----------------
an unsecured general obligation of Tracinda. Participant shall not have, and
this Agreement shall not be deemed to create, any security interest, lien or
other encumbrance of any kind whatsoever, or any legal or equitable interest of
any kind whatsoever, in or with respect to the Shares.
6. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the internal laws of the State of Nevada.
7. Notices. Any notice hereunder shall be effective if in writing
-------
and delivered by confirmed facsimile transmission or by overnight courier (with
proof of delivery), as follows:
To Tracinda:
Tracinda Corporation
4835 Koval Lane
Las Vegas, Nevada 89109
Facsimile: (702) 737-1177
4
<PAGE>
To Participant:
Lee A. Iacocca
30 Scenic Oaks Drive
South Bloomfield Hills, Michigan 48013
or to such other address as may be specified by any party hereto in accordance
with this paragraph.
8. Headings. The paragraph and other headings in this Agreement are
--------
inserted solely as a matter of convenience and for reference and are not a part
of this Agreement.
9. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10. Entire Agreement/Written Modification. The terms and provisions
-------------------------------------
of this Agreement and the Consulting Agreement constitute the entire agreement
between the parties and shall supersede all previous communications,
representations or agreements, either verbal or written, between the parties
hereto with respect to this subject matter. This Agreement may not be enlarged,
modified or altered except in writing signed by the parties.
11. Expenses. Tracinda agrees to pay all reasonable legal fees of
--------
counsel to Iacocca in connection with the negotiation, execution and performance
of this Agreement and the review of any joint Schedule 13D filings of Tracinda
and Iacocca, and the transactions contemplated hereby (other than as provided
under the Consulting Agreement).
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
TRACINDA CORPORATION
By:__________________________
Name:
Title:
_____________________________
Lee A. Iacocca
6
<PAGE>
VALUE SHARING AGREEMENT
AGREEMENT made as of June 24, 1995 (this "Agreement") by and between
Tracinda Corporation, a Nevada corporation ("Tracinda"), and Alfred Boyer
("Participant").
WHEREAS, in consideration of the consulting services being provided by
Participant to Tracinda as contemplated by the Consulting Agreement of even date
herewith, between Tracinda and Participant (the "Consulting Agreement"), and in
addition to the consideration payable thereunder, Tracinda and Participant
desire to enter into an agreement pursuant to which Participant will share a
portion of the enhancement in the value of certain investments of Tracinda, as
more fully set forth herein and subject to the terms and conditions hereof;
NOW, THEREFORE, the parties hereto agree as follows:
1. Participation. (a) On the terms and subject to the conditions
-------------
hereof, Participant shall be entitled to receive one percent (1%) of the
Incremental Value (as defined below) with respect to an aggregate of 32,000,000
shares (the "Shares") of Common Stock, $1.00 par value (the "Common Stock"), of
Chrysler Corporation (the "Company") held by Tracinda, or, if the Shares (or any
portion thereof) are exchanged for any property other than cash ("Other
Property"), one percent (1%) of the Incremental Value with respect to such Other
Property.
(b) For purposes of this Agreement, "Incremental Value" means:
(i) (x) The excess, if any, of (A) the average of the Fair
Market Value (as defined below) of a Share (or of Other Property received per
Share) on each of the 20 trading days immediately preceding the fourth
anniversary of the date of this Agreement over (B) $47.00 (the "Base Price"),
multiplied by (y) 32,000,000 minus the number of Sold Shares (as defined below);
and
(ii) With respect to any of such 32,000,000 Shares (or Other
Property with respect thereto) that are sold by Tracinda for cash and such sale
is consummated while this Agreement remains in force and prior to the fourth
anniversary of the date of this Agreement, the excess, if any, of (x) the actual
net cash proceeds received by Tracinda upon the sale of such Shares or Other
Property over (y) (A) the Base Price, multiplied by (B) the number of Shares
covered by such sale (or, in the case of a sale of Other Property, the number of
Shares for which the Other Property covered by such sale was exchanged) (the
"Sold Shares"), provided, that if any sale occurs within six months from the
date hereof, clause (x) above shall instead be the Fail Market Value of an
equivalent number of Shares on the date that is six months and one day from the
date hereof, but in no event greater than the actual net proceeds received by
Tracinda upon the sale of such Shares.
<PAGE>
(c) In the event of any merger, consolidation, reorganization,
recapitalization, reclassification, stock split, reverse stock split or similar
transaction involving the Shares, the number of Shares and/or the Base Price (as
applicable) shall be appropriately adjusted.
(d) For all purposes of this Agreement, the Shares shall not be
segregated from other shares of Common Stock held by Tracinda, it being
understood that any sale of Common Stock consummated while this Agreement
remains in force and prior to the fourth anniversary of the date of this
Agreement, up to a maximum of 32,000,000 shares of Common Stock, shall be deemed
a sale of Shares for purposes of paragraph 1(b)(ii).
(e) Incremental Value shall not be reduced or offset by the amount, if
any, by which the actual net cash proceeds received by Tracinda for any sale of
Shares (or Other Property with respect thereto) is less than the Base Price
multiplied by the number of Shares covered by such sale (or, in the case of a
sale of Other Property, the number of Shares for which the Other Property
covered by such sale was exchanged), but any such Shares shall nonetheless be
considered Sold Shares for purposes of paragraph 1(b)(i).
(f) Any payment due to Participant pursuant to this paragraph shall be
paid to Participant, in the case of paragraph 1(b)(i), on the 30th day after the
fourth anniversary of the date hereof and, in the case of paragraph 1(b)(ii), on
the 30th day after receipt by Tracinda of the net proceeds of such sale (or, in
the case of a sale within six months from the date hereof, on the 30th day after
the date that is six months and one day from the date hereof).
(g) "Fair Market Value" shall mean, for any date, the mean between the
high and low sales price on such date, or if no sales price is available for
such date, the mean between the closing bid and asked prices for such date, for
the Common Stock or Other Property (i) as reported by the principal national
securities exchange in the United States on which the Common Stock or Other
Property is then traded, or (ii) if not traded on any such national securities
exchange, as quoted on an automated quotation system sponsored by the National
Association of Securities Dealers. If the Common Stock or Other Property is not
readily tradable on a national securities exchange or any system sponsored by
the National Association of Securities Dealers, the Fair Market Value of the
Common Stock and/or Other Property shall be determined by a nationally
recognized, independent investment banking firm selected by Tracinda in its sole
discretion.
2. Control Over Shares. Participant expressly acknowledges that
-------------------
Tracinda retains the right, in its sole discretion, to make all investment and
other decisions with respect to the Shares, its investment in the Company, or
otherwise with respect to the Company, including without limitation the sole
right to determine whether
2
<PAGE>
and/or when to sell or otherwise dispose of any Shares and the consideration to
be received in any such sale or other disposition, whether to enter into, or to
approve or disapprove (including voting the Shares for or against) any merger,
consolidation, reorganization, recapitalization, reclassification, stock split,
reverse stock split or other extraordinary transaction involving Tracinda and/or
the Company. Participant further expressly acknowledges that Tracinda has no
obligation whatsoever to attempt to maximize Incremental Value as defined in
this Agreement, and may make all such investment and other decisions without
regard for the effect of such decisions under this Agreement. Without limiting
the foregoing, Tracinda may pledge, or otherwise create one or more liens or
encumbrances on, all or any portion of the Shares, with respect to new
borrowings, existing borrowings, or otherwise.
3. Term. The term of this Agreement will commence on the date
----
written above and continue through the last date on which any payment is due
hereunder, unless terminated sooner in accordance with paragraph 4. Following
the determination of the Incremental Value under paragraph 1(b)(i) and the
making of any required payment with respect thereto, Tracinda shall have no
further obligation to Participant with respect to the Shares or any sale or
other disposition thereof.
4. Termination. (a) This Agreement may be terminated by mutual
-----------
agreement of Tracinda and Participant.
(b) This Agreement may be terminated by Tracinda if Participant
(i) shall contact the Company or any person affiliated with or representing the
Company or shall take any other action with respect to or involving the Company
or Tracinda's investment in the Common Stock, other than as specifically
requested by Tracinda pursuant to the Consulting Agreement; provided, that
--------
Participant may purchase or sell shares of Common Stock in compliance with
applicable securities laws so long as, after giving effect thereto, none of
Tracinda, Participant, any other person or entity that is or may be deemed a
member of a group with Tracinda (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934), nor any group of which any of the foregoing is
a member, shall be deemed an "Acquiring Person" within the meaning of the
Amended and Restated Rights Agreement, dated as of December 14, 1990 and amended
as of December 1, 1994, between the Company and First Chicago Trust Company of
New York, as Rights Agent (the "Rights Agreement"), or within the meaning of any
other similar agreement or plan adopted by or entered into by the Company; or
(ii) shall fail to notify Tracinda promptly as to any facts or events within his
control that would require an amendment to the Schedule 13D filed by Tracinda,
Participant and others with respect to the Company. Participant expressly
acknowledges that, under the Rights Agreement as publicly disclosed as of the
date hereof, an "Acquiring Person" is generally defined as any Person who or
which, together with all Affiliates and Associates of such Person, is the
Beneficial
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Owner of 15% or more of the outstanding Common Stock of the Company (with
capitalized terms being as defined in the Rights Agreement).
(c) This Agreement may be terminated by Tracinda upon a material
breach by Participant of the Consulting Agreement. This Agreement may not be
terminated by Tracinda as a result of a termination of the Consulting Agreement
pursuant to paragraph 9 thereof (other than following a material breach of the
Consulting Agreement by Participant).
(d) Upon a termination of this Agreement pursuant to this
paragraph 4, Tracinda shall have no further obligation to Participant with
respect to the Shares (or Other Property with respect thereto) or any sale or
other disposition of Shares (or Other Property with respect thereto).
(e) Participant's rights under this Agreement shall not terminate
if Participant dies prior to termination of this Agreement.
5. No Lien on Shares. The rights of Participant hereunder constitute
-----------------
an unsecured general obligation of Tracinda. Participant shall not have, and
this Agreement shall not be deemed to create, any security interest, lien or
other encumbrance of any kind whatsoever, or any legal or equitable interest of
any kind whatsoever, in or with respect to the Shares.
6. Sole Beneficiary. Participant represents and warrants that no
----------------
other person or entity has any right to share or participate in any of the
amounts to be paid to Participant hereunder.
7. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the internal laws of the State of Nevada.
8. Notices. Any notice hereunder shall be effective if in writing
-------
and delivered by confirmed facsimile transmission or by overnight courier (with
proof of delivery), as follows:
To Tracinda:
Tracinda Corporation
4835 Koval Lane
Las Vegas, Nevada 89109
Facsimile: (702) 737-1177
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To Participant:
Alfred Boyer
9665 Wilshire Boulevard, Suite 200
Beverly Hills, CA 90212
Facsimile: (310) 379-2813
or to such other address as may be specified by any party hereto in accordance
with this paragraph.
9. Headings. The paragraph and other headings in this Agreement are
--------
inserted solely as a matter of convenience and for reference and are not a part
of this Agreement.
10. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11. Entire Agreement/Written Modification. The terms and provisions
-------------------------------------
of this Agreement and the Consulting Agreement constitute the entire agreement
between the parties and shall supersede all previous communications,
representations or agreements, either verbal or written, between the parties
hereto with respect to this subject matter. This Agreement may not be enlarged,
modified or altered except in writing signed by the parties.
12. Expenses. Tracinda agrees to pay all reasonable legal fees of
--------
counsel to Boyer in connection with the negotiation and execution of this
Agreement and the review of any joint Schedule 13D filings of Tracinda and Boyer
and the transactions contemplated hereby (other than as provided under the
Consulting Agreement).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
TRACINDA CORPORATION
By:__________________________
Name:
Title:
_____________________________
Alfred Boyer
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