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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
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
(AMENDMENT NO. 3)
_________________
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, Address 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, CHRISTENSEN, WHITE, MILLER,
SHRIVER & JACOBSON FINK & JACOBS
ONE NEW YORK PLAZA 2121 AVENUE OF THE STARS
NEW YORK, NY 10004 EIGHTEENTH FLOOR
(212) 859-8000 LOS ANGELES, CA 90067
(310) 553-3000
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This Amendment No. 3 amends and supplements the Tender Offer Statement
on Schedule 14D-1 (the "Schedule 14D-1") filed on June 26, 1995, relating 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) of Chrysler
<PAGE>
Corporation, a Delaware corporation, 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 (the "Offer to Purchase"),
and the related Letter of Transmittal (which collectively constitute the
"Offer"), copies of which are filed as Exhibits (a)(12) and (a)(13) hereto,
respectively, and which are incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in Exhibits (c) (5), (6) and (7) is
incorporated herein by this reference.
ITEM 10. ADDITIONAL INFORMATION.
(b), (e) and (f) The information set forth in the "Introduction"
and in Section 14 ("Certain Regulatory and Legal Matters") of the Offer to
Purchase (as supplemented) and attached hereto as Exhibit (a)(12) is
incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended by adding thereto the following exhibits:
(a)(12) - Offer to Purchase, dated June 27, 1995 (as supplemented
on June 28, 1995).
(a)(13) - Form of Letter of Transmittal (in form to be distributed
to security holders).
(a)(14) - Form of Letter from Wasserstein Perella & Co., Inc., as
Dealer Manager, to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees (in form to be
distributed to security holders).
(a)(15) - Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees to Clients (in form
to be distributed to security holders).
(a)(16) - Notice of Guaranteed Delivery (in form to be distributed
to security holders).
(a)(17) - Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 (in form to be distributed
to security holders).
(c)(5) - Consulting Agreement, dated June 24, 1995, between the
Offeror and Alfred Boyer (as restated).
(c)(6) - Value Sharing Agreement, dated June 24, 1995, between the
Offeror and Lee Iacocca (as restated).
(c)(7) - Value Sharing Agreement, dated June 24, 1995, between the
Offeror and Alfred Boyer (as restated).
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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 30, 1995
TRACINDA CORPORATION
By: /s/ Anthony L. Mandekic
-----------------------
Name: Anthony L. Mandekic
TITLE: Secretary/Treasurer
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
(a)(12) - Offer to Purchase, dated June 27, 1995 (as supplemented on
June 28, 1995).
(a)(13) - Form of Letter of Transmittal (in form to be distributed
to security holders).
(a)(14) - Form of Letter from Wasserstein Perella & Co., Inc., as
Dealer Manager, to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees (in form to be
distributed to security holders).
(a)(15) - Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees to Clients (in form to
be distributed to security holders).
(a)(16) - Notice of Guaranteed Delivery (in form to be distributed
to security holders).
(a)(17) - Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 (in form to be distributed
to security holders).
(c)(5) - Consulting Agreement, dated June 24, 1995, between the
Offeror and Alfred Boyer (as restated).
(c)(6) - Value Sharing Agreement, dated June 24, 1995, between the
Offeror and Lee Iacocca (as restated).
(c)(7) - Value Sharing Agreement, dated June 24, 1995, between the
Offeror and Alfred Boyer (as restated).
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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
(as supplemented on June 28, 1995)
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION............................................................ 1
1.Terms of the Offer; Proration........................................ 3
2.Acceptance for Payment and Payment for Shares........................ 4
3.Procedure for Tendering Shares....................................... 5
4.Withdrawal Rights.................................................... 8
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.................................................... 35
16.Miscellaneous........................................................ 36
</TABLE>
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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 675,236 Shares and
exercisable options to purchase an additional 1,624,090 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 Holding Company Act (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 and petitioned the commissioner of the Michigan Insurance
Bureau for a disclaimer of affiliation from the Company for purposes of the
Michigan Insurance Code on the grounds that the Offeror would not control the
Company or the Insurance Subsidiaries by its acquisition
<PAGE>
of an additional 14,000,000 Shares pursuant to the Offer. 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. On June 27, 1995, the commissioner of the
Michigan Insurance Bureau approved the petition for disclaimer of affiliation,
subject to certain conditions with which the Offeror has complied (including
dismissing without prejudice the federal litigation discussed above and making
certain undertakings with respect to its future conduct with the Insurance
Subsidiaries). The continuing existence of the disclaimer of affiliation
relieves the Offeror from any obligation to obtain the approval of the
Michigan Insurance Bureau in connection with the Offer and would satisfy the
Insurance Condition. See Section 14.
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.
2
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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 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
3
<PAGE>
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
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.
A request has been made to the Company pursuant to 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
theretofore 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
4
<PAGE>
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 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
5
<PAGE>
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 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.
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.
6
<PAGE>
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.
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.
7
<PAGE>
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 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.
8
<PAGE>
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
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 27, 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. The Offeror 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. The Offeror 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.
11
<PAGE>
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."
12
<PAGE>
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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<PAGE>
$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 of the Company. The Offeror was subsequently advised
that the third party had also contacted the Company.
14
<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.
15
<PAGE>
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.
16
<PAGE>
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.
17
<PAGE>
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."
18
<PAGE>
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.
19
<PAGE>
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
21
<PAGE>
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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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
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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, if 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
28
<PAGE>
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
29
<PAGE>
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 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. After a petition for disclaimer of affiliation is filed with and
approved by the commissioner of the Michigan Insurance Bureau, the insurer is
relieved of any duty to register or report under the Michigan Insurance Code
that may arise out of the insurer's relationship with the person unless the
commissioner subsequently disallows the disclaimer. The commissioner may
disallow a disclaimer that has been previously approved only after (x)
furnishing all parties in interest with notice and opportunity to be heard and
(y) making specific findings of fact to support the disallowance. 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. On the same date, the Offeror petitioned the
commissioner of the Michigan Insurance Bureau for a disclaimer of affiliation
from the Company for purposes of the Michigan Insurance Code on the grounds
that the Offeror would not control the Company or the Insurance Subsidiaries
by its acquisition of 14,000,000 additional Shares pursuant to the Offer. On
June 27, 1995, the
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commissioner of the Michigan Insurance Bureau approved the petition for
disclaimer of affiliation. As a condition to approving the petition, the
Offeror agreed not to take any of the following actions with respect to the
Insurance Subsidiaries without first obtaining the consent of the
commissioner: (i) change management personnel or otherwise be involved with
the Insurance Subsidiaries; (ii) seek any extraordinary dividends or
distributions; or (iii) pledge the assets or stock. In addition, the Offeror
agreed to dismiss without prejudice the federal lawsuit (described below) in
its entirety.
The commissioner stated that the Offeror met its burden of proof for
establishing that it is not affiliated with the Company for the following
principal reasons: (i) under the Company's certificate of incorporation and
bylaws, in most cases the taking of any action by stockholders requires the
approval of a majority of the Shares present and voting; (ii) the Company has
resisted the Offeror's attempts to purchase a majority of the Shares; (iii)
the Company itself does not believe that the Offeror will obtain control by
attaining 13.5% of the outstanding Shares based upon the increase of the
trigger under the Rights Agreement from 10% to 15% on December 1, 1994 (see
"Rights Plan" below); (iv) approximately five times the number of Shares held
by the Offeror are owned by independent financial institutions and investment
funds (based upon the Offeror's representation that it has no control over how
the institutions and funds vote their Shares and does not have any arrangement
with any of the institutions or funds with respect to their Shares); and (v)
the Offeror has no officers or directors on the boards of the Company or the
Insurance Subsidiaries.
The commissioner of the Michigan Insurance Bureau stated that the scope of
the disclaimer of affiliation granted to the Offeror is limited to the
Offeror's proposed acquisition of 14,000,000 additional Shares pursuant to the
Offer and does not apply to any other future activity the Offeror may choose
to pursue with respect to the Company, including the purchase of additional
Shares or undertaking a proxy or consent solicitation in which the Offeror
would name a slate of candidates for the Company's board.
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 the Michigan Insurance Bureau
and the Company, seeking to have the relevant provisions of the Michigan
Insurance Code declared inapplicable to the Offer. As a condition to being
granted the disclaimer of affiliation described above, the Offeror dismissed
without prejudice the federal litigation in its entirety. In this connection,
the commissioner agreed to give the Offeror ten calendar days' notice of its
intent to file any lawsuit in state court against the Offeror to enforce
provisions of the Michigan Insurance Code and further agreed that if such a
lawsuit is filed he will not oppose its removal to federal court. The
commissioner also agreed that he will not raise federal constitutional issues
in any lawsuit filed in state court with respect to the Offeror or contend
that the federal constitutional issues should be litigated in state court.
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
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 continuing existence of the disclaimer of affiliation relieves
the Offeror from any obligation to obtain the approval of the Michigan
Insurance Bureau in connection with the Offer and would satisfy the Insurance
Condition.
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
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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, 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
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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 has 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 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
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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.
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 in connection with the
Offer. 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 or within 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 the consummation of certain transactions at any time
during the period of WP&Co.'s engagement or within 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 the
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 the 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 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 or within
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
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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, an affiliate of 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 and the Information Agent
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, as
amended, 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
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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
Bank of America Illinois Institutions:
Corporate Trust Depositary (312) 923-0271
P.O. Box 805857 To confirm fax only:
Chicago, IL 60680-4120 (800) 962-9324
Bank of America Illinois
231 LaSalle Street
19th Floor Window (Clark Street side)
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
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:
(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 TUESDAY, JULY 25, 1995, UNLESS THE OFFER IS
EXTENDED.
THE DEPOSITARY:
BANK OF AMERICA ILLINOIS
By Hand or Overnight Courier:
By Facsimile Transmission:
By Mail:
(312) 923-0271 Bank of America Illinois 231
Bank of America Illinois LaSalle St. 19th Floor Window
Corporate Trust (Clark Street side) Chicago,
Depositary P.O. Box IL 60697 Attn: Corporate Trust
805857 Chicago, IL 60680- Operations Window
4120
To Confirm:
(800) 962-9324
or
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.
<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.
<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.
<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.
<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).
<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 Depositary for the Offer is:
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 231
Corporate Trust LaSalle St. 19th Floor Window
Depositary P.O. Box To Confirm: (Clark Street side) Chicago,
805857 Chicago, IL 60680- (800) 962-9324 IL 60697 Attn: Corporate Trust
4120 Operations Window
or
BANKAMERICA National Trust
Company One World Trade
Center, 18th Floor New York,
NY 10048-1191 Attn: Corporate
Trust Operations Window
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
<PAGE>
WASSERSTEIN PERELLA & CO., INC.
31 WEST 52ND STREET
NEW YORK, NY 10019
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.
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 WILL 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 TUESDAY, 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).
_____________________________________
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, dated June 27, 1995 (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.
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 To Confirm: 231 LaSalle Street
P.O. Box 805857
19th Floor Window (Clark
Chicago, IL 60680-4120 (800) 962-9324 Street side)
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
therein. 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: ____________________________
_____________________________________ _____________________________________
(Zip Code)
If Securities will be tendered by Area Code and Telephone No.:
book-entry transfer: _____________________________________
Signature(s): _______________________
Name of Tendering Institution: _____________________________________
_____________________________________
Account No.: _____________________ at
[_]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 Agents 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>
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 (including out-of-pocket expenses in connection
with testifying as a witness) 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
1
<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 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
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;
PROVIDED, that in no event shall the amount payable by Boyer after such
contribution exceed the total aggregate amounts paid or payable to Boyer under
this Agreement and the Value Sharing Agreement of even date herewith between
Tracinda and Boyer. 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
1
<PAGE>
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.
(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
2
<PAGE>
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 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
3
<PAGE>
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 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.
4
<PAGE>
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 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.
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
1
<PAGE>
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.
(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
2
<PAGE>
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 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
3
<PAGE>
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 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.
4
<PAGE>
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
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.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
TRACINDA CORPORATION
By:__________________________
Name:
Title:
_____________________________
Alfred Boyer
6
