<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
-----------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
------------------- -----------------------
Commission file number 1-9161
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CHRYSLER CORPORATION
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 38-2673623
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Chrysler Drive, Auburn Hills, Michigan 48326-2766
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(248) 576-5741
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The registrant had 674,471,107 shares of common stock outstanding as of June
30, 1997.
<PAGE> 2
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements 1-5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-11
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12-13
Item 5. Other Information 14-16
Item 6. Exhibits and Reports on Form 8-K 17
Signature Page 18
Exhibit Index 19
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (unaudited)
For the Three and Six Months Ended June 30, 1997 and 1996
(In millions of dollars)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- ---------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales of manufactured products $13,393 $14,858 $28,549 $28,902
Finance and insurance revenues 400 431 810 880
Other revenues 595 550 1,145 1,013
------- ------- ------- -------
TOTAL REVENUES 14,388 15,839 30,504 30,795
------- ------- ------- -------
Costs, other than items below 11,092 11,740 23,060 22,745
Depreciation and special tools amortization 706 591 1,384 1,202
Selling and administrative expenses 1,214 1,220 2,421 2,307
Employee retirement benefits 311 306 636 617
Interest expense 254 262 488 534
------- ------- ------- -------
TOTAL EXPENSES 13,577 14,119 27,989 27,405
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES 811 1,720 2,515 3,390
Provision for income taxes 328 683 1,003 1,348
------- ------- ------- -------
NET EARNINGS $ 483 $ 1,037 $ 1,512 $ 2,042
Preferred stock dividends 1 1 1 2
------- ------- ------- -------
NET EARNINGS ON COMMON STOCK $ 482 $ 1,036 $ 1,511 $ 2,040
======= ======= ======= =======
(In dollars or millions of shares)
PRIMARY EARNINGS PER COMMON SHARE $ 0.70 $ 1.39 $ 2.17 $ 2.70
======= ======= ======= =======
Average common and dilutive equivalent
shares outstanding 685.7 747.7 695.8 754.4
FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.70 $ 1.38 $ 2.16 $ 2.68
======= ======= ======= =======
Average common and dilutive equivalent
shares outstanding 689.0 753.0 698.8 761.6
DIVIDENDS DECLARED PER COMMON SHARE $ 0.40 $ 0.35 $ 0.80 $ 0.65
See notes to consolidated financial statements.
</TABLE>
1
<PAGE> 4
Item 1. FINANCIAL STATEMENTS - CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In millions of dollars)
<TABLE>
<CAPTION>
1997 1996
---------- -------------------------
June 30 Dec. 31 June 30
---------- -------------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 5,623 $ 5,158 $5,635
Marketable securities 2,412 2,594 3,127
------- ------- ------
Total cash, cash equivalents and marketable securities 8,035 7,752 8,762
Accounts receivable - trade and other 2,021 2,126 2,610
Inventories 6,079 5,195 5,535
Prepaid employee benefits, taxes and other expenses 1,661 1,929 707
Finance receivables and retained interests in
sold receivables 14,421 12,339 12,914
Property and equipment 16,060 14,905 13,283
Special tools 4,144 3,924 3,492
Intangible assets 1,949 1,995 1,889
Other noncurrent assets 6,658 6,019 6,602
------- ------- -------
TOTAL ASSETS $61,028 $56,184 $55,794
======= ======= =======
LIABILITIES:
Accounts payable $ 9,564 $ 8,981 $ 9,155
Accrued liabilities and expenses 9,410 8,864 8,567
Short-term debt 3,903 3,214 1,667
Payments due within one year on long-term debt 3,538 2,998 2,388
Long-term debt 9,367 7,184 9,166
Accrued noncurrent employee benefits 9,729 9,431 9,390
Other noncurrent liabilities 3,957 3,941 4,039
------- ------- -------
TOTAL LIABILITIES 49,468 44,613 44,372
------- ------- -------
SHAREHOLDERS' EQUITY: (shares in millions)
Preferred stock - $1 per share par value; authorized
20.0 shares; Series A Convertible Preferred Stock;
issued and outstanding: 1997 - 0.02; 1996 - 0.04 and 0.06 shares,
respectively (aggregate liquidation preference 1997 - $8 million;
1996 - $21 million and $32 million, respectively) * * *
Common stock - $1 per share par value; authorized
1,000.0 shares; issued: 1997 - 823.1; 1996 - 821.6 shares
and 820.4 shares, respectively 823 822 820
Additional paid-in capital 5,169 5,129 5,117
Retained earnings 9,793 8,829 7,816
Treasury stock - at cost: 1997 - 148.6 shares;
1996 - 119.1 and 91.8 shares, respectively (4,225) (3,209) (2,331)
------- ------- -------
TOTAL SHAREHOLDERS' EQUITY 11,560 11,571 11,422
------- ------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $61,028 $56,184 $55,794
======= ======= =======
</TABLE>
* Less than $1 million
See notes to consolidated financial statements.
2
<PAGE> 5
Item 1. FINANCIAL STATEMENTS - CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
For the Six Months Ended June 30, 1997 and 1996
(In millions of dollars)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 3,376 $ 4,083
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (1,559) (1,946)
Sales and maturities of marketable securities 1,741 2,101
Finance receivables acquired (14,006) (12,454)
Finance receivables collected 4,276 3,843
Proceeds from sales of finance receivables 7,608 8,691
Expenditures for property and equipment (1,404) (1,273)
Expenditures for special tools (808) (473)
Purchases of vehicle operating leases (891) (340)
Proceeds from the sale of nonautomotive assets -- 476
Other 248 --
------- -------
NET CASH USED IN INVESTING ACTIVITIES (4,795) (1,375)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt 689 (1,137)
Proceeds from long-term borrowings 4,336 1,122
Payments on long-term borrowings (1,607) (1,075)
Repurchases of common stock (1,007) (1,110)
Dividends paid (560) (455)
Other 33 39
------- -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,884 (2,616)
------- -------
Change in cash and cash equivalents 465 92
Cash and cash equivalents at beginning of period 5,158 5,543
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,623 $ 5,635
======= =======
</TABLE>
During the first six months of 1996, Chrysler Financial Corporation acquired
$750 million of marketable securities in non-cash transactions related to the
securitization of retail receivables.
See notes to consolidated financial statements.
3
<PAGE> 6
Item 1. FINANCIAL STATEMENTS - CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. CONSOLIDATION AND FINANCIAL STATEMENT PRESENTATION
The unaudited consolidated financial statements of Chrysler Corporation and its
consolidated subsidiaries ("Chrysler") include the accounts of all significant
majority-owned subsidiaries and entities. Affiliates that are 20 percent to 50
percent owned and subsidiaries where control is expected to be temporary,
primarily investments in certain dealerships, are generally accounted for on an
equity basis. Intercompany accounts and transactions have been eliminated in
consolidation. The consolidated financial statements of Chrysler for the three
and six months ended June 30, 1997 and 1996 reflect all adjustments, consisting
of only normal and recurring items, which are, in the opinion of management,
necessary to present a fair statement of the results for the interim periods.
The operating results for the three and six months ended June 30, 1997 are not
necessarily indicative of the results of operations for the entire year.
Reference should be made to the consolidated financial statements included in
the Annual Report on Form 10-K for the year ended December 31, 1996. Certain
amounts for 1996 have been reclassified to conform with current period
classifications.
NOTE 2. INVENTORIES
Inventories, summarized by major classification, were as follows:
<TABLE>
<CAPTION>
1997 1996
------- ---------------------
June 30 Dec. 31 June 30
-------- ------- -------
(In millions of dollars)
<S> <C> <C> <C>
Finished products, including service parts $1,770 $1,569 $1,561
Raw materials, finished production parts and supplies 1,423 1,540 1,374
Vehicles held for short-term lease 2,886 2,086 2,600
------- ------- -------
TOTAL $6,079 $5,195 $5,535
======= ======= =======
</TABLE>
NOTE 3. CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1997, Chrysler adopted Statement of Financial Accounting
Standards ("SFAS") No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." The adoption of this
accounting standard did not have a material impact on Chrysler's consolidated
financial statements.
Effective January 1, 1996, Chrysler adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
The initial adoption of this new accounting standard did not have a material
impact on Chrysler's consolidated financial statements. Also, see Note 6.
NOTE 4. COMMON STOCK REPURCHASES
During 1996, Chrysler's Board of Directors approved an increase in Chrysler's
planned 1997 common stock repurchases from $1 billion to $2 billion. These
common stock repurchases are subject to market and general economic conditions.
During the second quarter and first six months of 1997, Chrysler repurchased
13.5 million and 31.3 million shares, respectively, of its common stock at a
cost of $410 million and $997 million, respectively.
NOTE 5. SALE OF DEFENSE ELECTRONICS AND AIRBORNE SYSTEMS UNITS
During the second quarter of 1996, Chrysler completed the sale of Electrospace
Systems, Inc. ("ESI") and Chrysler Technologies Airborne Systems, Inc.
("CTAS "), for net proceeds of $476 million. The sale resulted in a pretax
gain of $101 million ($87 million after taxes) which is included in Costs,
other than items below in the consolidated statement of earnings.
4
<PAGE> 7
Item 1. FINANCIAL STATEMENTS - CONTINUED
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 6. LOSS ON ASSETS TO BE SOLD
During the second quarter of 1996, Chrysler committed to a plan of disposal for
Thrifty Rent-A-Car System, Inc. ("Thrifty"). Accordingly, a pretax loss of $65
million ($100 million after taxes) was recognized in the second quarter of 1996
to write down Thrifty's carrying value to estimated fair value less cost to
sell. Chrysler's estimate of the fair value of Thrifty is based principally
on an analysis of non-binding bids. The pretax loss is included in Costs,
other than items below in the consolidated statement of earnings. The
after-tax loss includes the effect of not being able to claim a tax deduction
for the capital loss on Chrysler's investment in Thrifty. Thrifty's assets and
liabilities at June 30, 1997, and its results of operations for the three and
six months ended June 30, 1997 were immaterial to Chrysler's consolidated
assets and liabilities and results of operations, respectively. Chrysler is
continuing with its efforts to sell Thrifty and is uncertain when the sale of
Thrifty may occur.
NOTE 7. NEW ACCOUNTING STANDARDS
In March 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings per Share." This Statement establishes standards for
computing and presenting earnings per share ("EPS") and applies to all entities
with publicly held common stock or potential common stock. This Statement
replaces the presentation of primary EPS and fully diluted EPS with a
presentation of basic EPS and diluted EPS, respectively. Basic EPS excludes
dilution and is computed by dividing earnings available to common stockholders
by the weighted-average number of common shares outstanding for the period.
Similar to fully diluted EPS, diluted EPS reflects the potential dilution of
securities that could share in the earnings. This Statement is not expected to
have a material effect on Chrysler's reported EPS amounts. Restatement of all
prior period EPS data presented is required. This Statement is effective for
Chrysler's consolidated financial statements for the year ended December 31,
1997.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
effective for fiscal years beginning after December 15, 1997. This Statement
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. This statement does not require a specific format for that
financial statement but requires that an entity display an amount representing
total comprehensive income for the period in that financial statement. This
statement requires that an entity classify items of other comprehensive income
by their nature in a financial statement. For example, other comprehensive
income may include foreign currency items, minimum pension liability
adjustments, and unrealized gains and losses on certain investments in debt and
equity securities. In addition, the accumulated balance of other comprehensive
income must be displayed separately from retained earnings and additional
paid-in capital in the equity section of a statement of financial position.
Reclassification of financial statements for earlier periods, provided for
comparative purposes, is required. Chrysler has not determined the impact that
the adoption of this new accounting standard will have on its consolidated
financial statements. Chrysler will adopt this accounting standard on January
1, 1998, as required.
NOTE 8. SUBSEQUENT EVENT
On July 3, 1997, Chrysler announced its intent to extinguish its $267 million
10.95% Debentures Due 2017 ("Debentures") and $245 million 10.40% Notes Due
1999 ("Notes"). The early extinguishment of the Debentures and Notes is
expected to occur in August 1997 and result in an immaterial loss. Chrysler
plans on refinancing the Debentures and Notes in the third quarter of 1997,
subject to market and general economic conditions.
5
<PAGE> 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and notes thereto.
FINANCIAL REVIEW
Chrysler reported earnings before income taxes of $811 million for the
second quarter of 1997, compared with $1,720 million for the second quarter of
1996. For the first six months of 1997, Chrysler reported earnings before
income taxes of $2,515 million, compared with $3,390 million for the first six
months of 1996. Net earnings for the second quarter of 1997 were $483
million, or $0.70 per common share, compared with $1,037 million, or $1.39 per
common share, for the second quarter of 1996. Net earnings for the first six
months of 1997 were $1,512 million, or $2.17 per common share, compared with
$2,042 million, or $2.70 per common share, for the first six months of 1996.
Earnings for the second quarter and first six months of 1997 included an
estimated unfavorable impact of approximately $730 million ($438 million after
taxes) related to a 29-day strike at an engine plant in Detroit, Michigan that
temporarily shut down seven of Chrysler's assembly plants and certain
automotive component operations. The strike resulted in an estimated loss of
vehicle production and shipments of approximately 89,000 units, net of
second-quarter recoveries. The strike estimate does not take into account the
effect of possible recoveries, if any, that may occur during the remainder of
1997. The estimate of the strike impact was based on Chrysler's second-quarter
production as planned at the time of the strike.
Earnings for the second quarter and first six months of 1996 included a
gain of $101 million ($87 million after taxes) from the sale of Electrospace
Systems, Inc. ("ESI") and Chrysler Technologies Airborne Systems, Inc.
("CTAS"), and a charge of $65 million ($100 million after taxes) related to a
write-down of Thrifty Rent-A-Car System, Inc. ("Thrifty").
Chrysler's worldwide vehicle shipments in the second quarter and first
six months of 1997 were 738,453 units and 1,519,692 units, respectively,
compared with 801,769 units and 1,554,945 units, respectively, in the second
quarter and first six months of 1996. Chrysler's vehicle shipments outside of
the U.S., Canada and Mexico in the second quarter and first six months of 1997
were 72,308 units and 125,160 units, respectively, compared with 55,909 units
and 103,254 units, respectively, in the second quarter and first six months of
1996. The decreases in worldwide shipments primarily reflect the unfavorable
impact of the strike.
In addition to the effect of the strike, pretax earnings in the second
quarter and first six months of 1997 as compared with the second quarter and
first six months of 1996 reflect an increase in average sales incentives per
vehicle and increased warranty costs, partially offset by vehicle pricing
actions and lower profit-based employee compensation costs. The increase in
average sales incentives per vehicle was attributable to an increasingly
competitive market environment. The increase in warranty costs was primarily
related to several voluntary customer service actions and recalls initiated in
the second quarter of 1997, partially offset by the effect of lower average
warranty conditions on current model year vehicles.
Chrysler's revenues and results of operations are principally derived from
the U.S. and Canada automotive marketplaces. In the second quarter of 1997,
retail industry sales (including fleet) of new cars and trucks in the U.S. and
Canada, on a Seasonally Adjusted Annual Rate basis, were 16.2 million units,
compared with 16.7 million units for the second quarter of 1996, a decrease of
3 percent.
6
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
FINANCIAL REVIEW - CONTINUED
Chrysler's U.S. and combined U.S. and Canada retail sales and market share
data for the second quarter and first six months of 1997 and 1996 were as
follows:
<TABLE>
<CAPTION>
Second Quarter Six Months
----------------------------- ---------------------------------
Increase/ Increase/
1997 1996 (Decrease) 1997 1996 (Decrease)
-------- -------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Retail Market (1):
Car sales 215,338 256,119 (40,781) 418,315 471,266 (52,951)
Car market share 9.7% 10.6% (0.9)% 9.9% 10.5% (0.6)%
Truck sales (including minivans) 413,152 448,467 (35,315) 782,830 824,626 (41,796)
Truck market share 21.8% 24.1% (2.3)% 21.8% 23.5% (1.7)%
Combined car and truck sales 628,490 704,586 (76,096) 1,201,145 1,295,892 (94,747)
Combined car and truck
market share 15.3% 16.4% (1.1)% 15.4% 16.2% (0.8)%
U.S. and Canada Retail Market (1):
Combined car and truck sales 702,210 773,017 (70,807) 1,329,054 1,417,695 (88,641)
Combined car and truck
market share 15.5% 16.7% (1.2)% 15.6% 16.5% (0.9)%
(1) All retail sale and market share data include fleet sales.
</TABLE>
Chrysler's U.S. car market share for the second quarter and first six
months of 1997 decreased compared with the second quarter and first six months
of 1996 primarily as a result of decreased sales of its Neon vehicles and Dodge
Intrepid, Chrysler Concorde, and Eagle Vision sedans. Chrysler's U.S. truck
market share for the second quarter and first six months of 1997 decreased
compared with the second quarter and first six months of 1996 primarily as a
result of decreased sales of its Dodge Ram pickup trucks and Jeep(R) Grand
Cherokees, which primarily reflects the effect of the strike. In addition to
the effect of the strike, these decreases reflect an increasingly competitive
environment resulting primarily from new product offerings from competitors.
Japanese manufacturers have also benefited from currency exchange rate changes
between the Japanese yen and U.S. dollar which have given them greater
flexibility in vehicle pricing. This increased competitive environment
resulted in Chrysler increasing average sales incentives per vehicle in the
first half of 1997 and lowering total-year 1997 planned production.
Chrysler Financial Corporation ("CFC") reported earnings before income
taxes of $156 million for the second quarter of 1997 compared with $155 million
for the second quarter of 1996. For the first six months of 1997, CFC reported
earnings before income taxes of $297 million compared with $309 million for the
first six months of 1996. CFC's net earnings for the second quarter and first
six months of 1997 were $103 million and $196 million, respectively, compared
with $101 million and $199 million for the second quarter and first six months
of 1996.
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES
Chrysler's total revenues for the second quarter and first six months of
1997 and 1996 were as follows:
<TABLE>
<CAPTION>
Second Quarter Six Months
-------------------------------- ------------------------------
Increase/ Increase/
(In millions of dollars) 1997 1996 (Decrease) 1997 1996 (Decrease)
-------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales of manufactured products $ 13,393 $ 14,858 (10)% $ 28,549 $ 28,902 (1)%
Finance and insurance revenues 400 431 (7)% 810 880 (8)%
Other revenues 595 550 8 % 1,145 1,013 13 %
-------- -------- -------- --------
Total revenues $ 14,388 $ 15,839 (9)% $ 30,504 $ 30,795 (1)%
======== ======== ======== ========
</TABLE>
7
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES - CONTINUED
The decrease in sales of manufactured products in the second quarter of
1997 compared with the second quarter of 1996 primarily reflects an 8 percent
decrease in vehicle shipments and a decrease in average revenue per unit, net
of sales incentives, from $18,649 in the second quarter of 1996 to $18,465 in
the second quarter of 1997. The decrease in sales of manufactured products in
the first six months of 1997 compared with the first six months of 1996
primarily reflects a 2 percent decrease in vehicle shipments, partially offset
by an increase in average revenue per unit, net of sales incentives, from
$18,604 in the first six months of 1996 to $18,963 in the first six months of
1997. The decrease in average revenue per unit in the second quarter primarily
reflects higher average sales incentives per vehicle, and lower shipments of
Jeep Grand Cherokees and Dodge Ram pickup trucks resulting primarily from the
strike, partially offset by vehicle pricing actions. The increase in average
revenue per unit in the first six months of 1997 was principally due to vehicle
pricing actions partially offset by higher average sales incentives per
vehicle.
The decrease in finance and insurance revenues in the second quarter and
first six months of 1997 compared with the corresponding 1996 periods was
primarily attributable to the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." Prior to 1997, income
from sold wholesale receivables was included in Finance and insurance revenues.
Effective January 1, 1997, gains from sales of wholesale receivables are
reported in Other revenues.
The increase in other revenues for the second quarter and first six months
of 1997 compared with the corresponding 1996 periods was primarily attributable
to higher gains from sales of receivables at CFC and higher revenues by Car
Rental Operations.
Chrysler's total expenses for the second quarter and first six months of
1997 and 1996 were as follows:
<TABLE>
<CAPTION>
Second Quarter Six Months
---------------------------- ------------------------------
Increase/ Increase/
1997 1996 (Decrease) 1997 1996 (Decrease)
-------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
(In millions of dollars)
Costs, other than items below $ 11,092 $ 11,740 (6)% $ 23,060 $ 22,745 1 %
Depreciation and special tools
amortization 706 591 19 % 1,384 1,202 15 %
Selling and administrative expenses 1,214 1,220 -- % 2,421 2,307 5 %
Employee retirement benefits 311 306 2 % 636 617 3 %
Interest expense 254 262 (3)% 488 534 (9)%
-------- -------- -------- --------
Total expenses $ 13,577 $ 14,119 (4)% $ 27,989 $ 27,405 2 %
======== ======== ======== ========
</TABLE>
Costs, other than items below decreased in the second quarter of 1997
compared with the second quarter of 1996, primarily as a result of an 8 percent
decrease in vehicle shipments, partially offset by increased vehicle content.
Costs, other than items below were 83 percent and 81 percent of sales of
manufactured products for the second quarter and first six months of 1997,
respectively, compared with 79 percent for both the second quarter and first
six months of 1996.
Depreciation and special tools amortization for the second quarter and
first six months of 1997 increased compared with the corresponding 1996 periods
primarily as a result of higher levels of property and equipment and tooling in
use, including increased depreciation related to vehicles under purchased
operating leases.
Selling and administrative expenses for the first six months of 1997
increased compared with the corresponding 1996 period primarily as a result of
increased advertising expenses and increased expenses associated with
Chrysler's expanding international operations, partially offset by lower
profit-based employee compensation costs.
Interest expense for the second quarter and first six months of 1997
decreased compared with the corresponding 1996 periods primarily as a result of
lower average effective cost of borrowings at CFC. The decline in CFC's
average effective cost of borrowings primarily reflects lower market interest
rates in the U.S. and Canada.
8
<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
COMPARISON OF SELECTED ELEMENTS OF REVENUES AND EXPENSES - CONTINUED
During the second quarter of 1996, Chrysler completed the sale of ESI and
CTAS for net proceeds of $476 million. The sale resulted in a pretax gain of
$101 million ($87 million after taxes) which is included in Costs, other than
items below in the consolidated statement of earnings.
During the second quarter of 1996, Chrysler committed to a plan of
disposal for Thrifty. Accordingly, a pretax loss of $65 million ($100 million
after taxes) was recognized in the second quarter of 1996 to write down
Thrifty's carrying value to estimated fair value less cost to sell. Chrysler's
estimate of the fair value of Thrifty is based principally on an analysis of
non-binding bids. The pretax loss is included in Costs, other than items below
in the consolidated statement of earnings. The after-tax loss includes the
effect of not being able to claim a tax deduction for the capital loss on
Chrysler's investment in Thrifty. Thrifty's assets and liabilities at June 30,
1997, and its results of operations for the three and six months ended June 30,
1997 were immaterial to Chrysler's consolidated assets and liabilities and
results of operations, respectively. Chrysler is continuing with its efforts
to sell Thrifty and is uncertain when the sale of Thrifty may occur.
LIQUIDITY AND CAPITAL RESOURCES
Chrysler's consolidated combined cash, cash equivalents and marketable
securities totaled $8,035 million at June 30, 1997 (including $994 million held
by CFC and Car Rental Operations), compared with $7,752 million at December
31, 1996 (including $797 million held by CFC and Car Rental Operations). The
increase in Chrysler's combined cash, cash equivalents and marketable
securities in the first six months of 1997 was primarily the result of cash
generated by operating activities and cash provided by a net increase in total
debt, partially offset by capital expenditures, net finance receivables
acquired, common stock repurchases and dividend payments.
During 1996, Chrysler's Board of Directors approved an increase in
Chrysler's planned 1997 common stock repurchases from $1 billion to $2 billion.
These common stock repurchases are subject to market and general economic
conditions. During the second quarter and the first six months of 1997,
Chrysler repurchased 13.5 million and 31.3 million shares, respectively, of its
common stock at a cost of $410 million and $997 million, respectively.
In February 1997, Chrysler sold $500 million of 7.45% Debentures due 2097
and $600 million of 7.45% Debentures due 2027 for net proceeds of $485 million
and $592 million, respectively.
On July 3, 1997, Chrysler announced its intent to extinguish its $267
million 10.95% Debentures Due 2017 ("Debentures") and $245 million 10.40% Notes
Due 1999 ("Notes"). The early extinguishment of the Debentures and Notes is
expected to occur in August 1997 and result in an immaterial loss. Chrysler
plans on refinancing the Debentures and Notes in the third quarter of 1997,
subject to market and general economic conditions.
At June 30, 1997, Chrysler (excluding CFC) had debt maturities totaling
$1.0 billion through 1999. During the second quarter of 1997, Chrysler
replaced its existing $2.4 billion revolving credit agreement, which was to
expire in April 2001, with a new $2.6 billion revolving credit agreement
expiring in April 2002. There were no amounts outstanding under either
revolving credit agreement during the second quarter of 1997. Chrysler
believes that cash from operations and its cash position will be sufficient to
meet its capital expenditure, debt maturity, common stock repurchase, dividend
payment and other funding requirements.
Receivable sales continued to be a significant source of funding for CFC,
which realized $3.2 billion of net proceeds from the sale of automotive retail
receivables in the first six months of 1997 compared with $4.7 billion of net
proceeds in the first six months of 1996. In addition, securitization of
revolving wholesale account balances provided funding for CFC which aggregated
$6.8 billion and $6.6 billion at June 30, 1997 and 1996, respectively.
9
<PAGE> 12
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
LIQUIDITY AND CAPITAL RESOURCES - CONTINUED
At June 30, 1997, CFC had contractual debt maturities of $5.0 billion for
the remainder of 1997 (including $3.2 billion of short-term notes), $2.6
billion in 1998 and $3.0 billion in 1999. During the second quarter of 1997,
CFC entered into new revolving credit facilities which replaced its existing
U.S. and Canadian revolving credit facilities. The new facilities, which total
$8 billion, consist of a $2 billion facility expiring in April 1998 and a $6
billion facility expiring in April 2002. There were no amounts outstanding
under any of the revolving credit facilities during the second quarter of
1997. CFC believes that cash provided by operations, receivable sales,
securitizations, and the issuance of term debt and commercial paper will
provide sufficient liquidity to meet its debt maturity and other funding
requirements.
OUTLOOK
The statements contained in this Outlook section are based on management's
current expectations. With the exception of the historical information
contained herein, the statements presented in this Outlook section are
forward-looking statements that involve numerous risks and uncertainties.
Actual results may differ materially.
During the second quarter of 1997, Chrysler faced an increasingly
competitive environment resulting primarily from new product offerings from
competitors. Japanese manufacturers have also benefited from currency exchange
rate changes between the Japanese yen and U.S. dollar which have given them
greater flexibility in vehicle pricing. This increased competitive environment
resulted in Chrysler increasing average sales incentives per vehicle in the
first half of 1997 and lowering total-year 1997 planned production. This
increasingly competitive environment could result in additional similar actions
during the second half of 1997.
Chrysler's worldwide vehicle production in the second quarter of 1997
was 704,938 units, a decrease of 113,062 units or 14 percent, compared with our
planned second quarter 1997 production of 818,000 (as estimated at the end of
the first quarter of 1997). The decrease was primarily attributable to the
strike. Worldwide vehicle production for the third quarter of 1997 is expected
to be approximately 586,000 units, a decrease of 45,000 units compared with the
third quarter of 1996. This expected production level is heavily dependent on
Chrysler's ability to maintain its competitive position, continued favorable
economic conditions in the U.S. and Canada, where Chrysler's sales are
concentrated, and the avoidance of work stoppages by represented employees.
Chrysler projects that full-year 1997 retail (including fleet) industry
sales for the U.S. will range from 15.0 million to 15.5 million units and that
full-year 1997 retail (including fleet) industry sales for Canada will range
from 1.2 million to 1.4 million units. Full-year 1996 retail (including fleet)
industry sales were 15.4 million units and 1.2 million units in the U.S. and
Canada, respectively. Actual levels of industry retail (including fleet) sales
will depend on, among other things, economic conditions in the U.S. and Canada.
Accordingly, there can be no assurance that Chrysler's estimates will be
accurate.
In addition, Chrysler wishes to caution readers that several factors, as
well as those factors described elsewhere in this discussion or in other
Securities and Exchange Commission filings, in some cases have affected, and in
the future could affect, Chrysler's actual results, and could cause Chrysler's
actual results to differ materially from those expressed in any forward-looking
statement made by, or on behalf of, Chrysler. Those factors include: business
conditions and growth in the automotive industry and general economy; changes
in gasoline and oil prices; changes in consumer debt levels and interest rates;
changes in consumer preferences away from pickup trucks, sport-utility vehicles
and minivans; competitive factors, such as domestic and foreign rival car and
truck offerings, sales incentives, acceptance of new products and price
pressures; excess or shortage of manufacturing capacity; risks and
uncertainties associated with Chrysler's expansion into international markets;
and changes in foreign currency exchange rates and the resulting impact on
pricing strategies of major foreign competitors. Additionally, several of
Chrysler's competitors have larger worldwide sales volumes and greater
financial resources, which may, over time, place Chrysler at a competitive
disadvantage in responding to its competitors' offerings, substantial changes
in consumer preferences, government regulations, or adverse economic conditions
in the U.S. and Canada. Finally, the automotive industry historically has been
highly cyclical and the duration of these cycles has been difficult to predict.
10
<PAGE> 13
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
NEW ACCOUNTING STANDARDS
In March 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings per Share." This Statement establishes standards for
computing and presenting earnings per share ("EPS") and applies to all
entities with publicly held common stock or potential common stock. This
Statement replaces the presentation of primary EPS and fully diluted EPS with a
presentation of basic EPS and diluted EPS, respectively. Basic EPS excludes
dilution and is computed by dividing earnings available to common stockholders
by the weighted-average number of common shares outstanding for the period.
Similar to fully diluted EPS, diluted EPS reflects the potential dilution of
securities that could share in the earnings. This Statement is not expected to
have a material effect on Chrysler's reported EPS amounts. Restatement of all
prior period EPS data presented is required. This Statement is effective for
Chrysler's financial statements for the year ended December 31, 1997.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," effective for fiscal years beginning after December 15, 1997. This
Statement requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. This statement does not require a specific format for
that financial statement but requires that an entity display an amount
representing total comprehensive income for the period in that financial
statement. This statement requires that an entity classify items of other
comprehensive income by their nature in a financial statement. For example,
other comprehensive income may include foreign currency items, minimum pension
liability adjustments, and unrealized gains and losses on certain investments
in debt and equity securities. In addition, the accumulated balance of other
comprehensive income must be displayed separately from retained earnings and
additional paid-in capital in the equity section of a statement of financial
position. Reclassification of financial statements for earlier periods,
provided for comparative purposes, is required. Chrysler has not determined
the impact that the adoption of this new accounting standard will have on its
consolidated financial statements. Chrysler will adopt this accounting
standard on January 1, 1998, as required.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," effective for fiscal years beginning
after December 15, 1997. This Statement establishes standards for reporting
information about operating segments in annual financial statements and
requires selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance. This Statement requires reporting segment profit or
loss, certain specific revenue and expense items and segment assets. It also
requires reconciliations of total segment revenues, total segment profit or
loss, total segment assets, and other amounts disclosed for segments to
corresponding amounts reported in the consolidated financial statements.
Restatement of comparative information for earlier periods presented is
required in the initial year of application. Interim information is not
required until the second year of application, at which time comparative
information is required. Chrysler has not determined the impact that the
adoption of this new accounting standard will have on its consolidated
financial statement disclosures. Chrysler will adopt this accounting standard
on January 1, 1998, as required.
REVIEW BY INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP, Chrysler's independent public accountants,
performed a review of the financial statements for the three and six months
ended June 30, 1997 and 1996 in accordance with the standards for such reviews
established by the American Institute of Certified Public Accountants. The
review did not constitute an audit, and accordingly, Deloitte & Touche LLP did
not express an opinion on the aforementioned data. Refer to the Independent
Accountants' Report included at Exhibit 15A.
11
<PAGE> 14
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of Chrysler Corporation was held on May
15, 1997.
(c) The following matters were submitted to a vote at the meeting:
(1) the election of the following nominees as directors of Chrysler
Corporation. The vote with respect to each nominee was as follows:
<TABLE>
<CAPTION>
NOMINEE FOR WITHHELD
----------------------- ----------- ---------
<S> <C> <C>
Lilyan H. Affinito 619,769,380 4,661,247
James D. Aljian 619,746,373 4,684,254
Robert E. Allen 619,621,998 4,808,629
Joseph A. Califano, Jr. 619,653,089 4,777,538
Thomas G. Denomme 619,977,224 4,453,403
Robert J. Eaton 619,993,038 4,437,589
Earl G. Graves 619,815,625 4,615,002
Kent Kresa 620,114,232 4,316,395
Robert J. Lanigan 619,933,144 4,497,483
Robert A. Lutz 619,814,066 4,616,561
Peter A. Magowan 620,056,244 4,374,383
John B. Neff 620,064,652 4,365,975
Lynton R. Wilson 619,960,391 4,470,236
</TABLE>
(2) a recommendation of the Board of Directors that the stockholders
appoint the firm of Deloitte & Touche LLP as independent accountants to
audit the books, records and accounts of Chrysler Corporation for the
year 1997. The vote on this matter was as follows:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
----------- --------- --------- ---------
621,399,700 1,391,933 1,638,994 -0-
(3) a recommendation of the Board of Directors that the stockholders
approve amendments to the Chrysler Corporation Incentive Compensation
Plan and Long-Term Incentive Plan to make certain changes in order to
preserve Chrysler's federal income tax deduction with respect to
performance based compensation paid under the Plans in future years.
The vote on this matter was as follows:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
----------- ----------- --------- ---------
601,485,771 19,142,952 3,801,904 -0-
(4) a recommendation of the Board of Directors that the stockholders
approve amendments to the Chrysler Corporation 1991 Stock Compensation
Plan and a related performance plan to increase the number of shares of
Chrysler common stock available thereunder by 30 million shares and to
make certain other changes in order to preserve Chrysler's federal
income tax deduction with respect to performance based compensation paid
under the Plan in future years. The vote on this matter was as follows:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
----------- ----------- --------- ---------
539,115,208 80,837,509 4,477,910 -0-
12
<PAGE> 15
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - CONTINUED
(5) a stockholder proposal related to cumulative voting in the election
of directors. The vote on this matter was as follows:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
----------- ----------- ---------- ----------
113,148,660 391,036,515 32,221,050 88,024,402
(6) a stockholder proposal requesting that Chrysler Corporation endorse
the coalition for Environmentally Responsible Economies ("CERES")
Principles for corporate environmental accountability. The vote on this
matter was as follows:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
----------- ----------- ---------- ----------
39,414,980 454,134,594 42,856,651 88,024,402
13
<PAGE> 16
Item 5. OTHER INFORMATION SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
STATEMENT OF EARNINGS (unaudited)
For the Three and Six Months Ended June 30, 1997 and 1996
(In millions of dollars)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- --------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales of manufactured products $13,671 $15,103 $28,932 $29,277
Equity in earnings of unconsolidated
subsidiaries and affiliates 176 97 309 257
Interest income and other revenues 206 202 407 374
------- ------- ------- -------
TOTAL REVENUES 14,053 15,402 29,648 29,908
------- ------- ------- -------
Costs, other than items below 11,197 11,737 23,063 22,708
Depreciation and special tools amortization 659 558 1,300 1,141
Selling and administrative expenses 1,016 1,033 2,015 1,945
Employee retirement benefits 304 299 626 605
Interest expense 66 55 129 119
------- ------- ------- -------
TOTAL EXPENSES 13,242 13,682 27,133 26,518
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES 811 1,720 2,515 3,390
Provision for income taxes 328 683 1,003 1,348
------- ------- ------- -------
NET EARNINGS $ 483 $ 1,037 $ 1,512 $ 2,042
======= ======= ======= =======
</TABLE>
This Supplemental Information does not present the results of operations of
Chrysler in accordance with generally accepted accounting principles. This
Supplemental Information reflects the results of operations of Chrysler with
its investments in Chrysler Financial Corporation ("CFC") and short-term
vehicle rental subsidiaries (the "Car Rental Operations") accounted for on an
equity basis rather than as consolidated subsidiaries and, therefore, does not
comply with Statement of Financial Accounting Standards ("SFAS") No. 94,
"Consolidation of All Majority-Owned Subsidiaries." Because the operations of
CFC and the Car Rental Operations are different in nature from Chrysler's
manufacturing operations, management believes that this disaggregated financial
data enhances an understanding of the consolidated financial statements.
14
<PAGE> 17
Item 5. OTHER INFORMATION - CONTINUED
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
BALANCE SHEET (unaudited)
(In millions of dollars)
<TABLE>
<CAPTION>
1997 1996
--------- ---------------------------
June 30 Dec. 31 June 30
--------- -------- --------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 5,013 $ 4,825 $ 5,327
Marketable securities 2,027 2,122 2,216
-------- -------- --------
Total cash, cash equivalents and marketable securities 7,040 6,947 7,543
Accounts receivable - trade and other 1,103 630 2,156
Inventories 5,053 4,364 4,640
Prepaid employee benefits, taxes and other expenses 1,627 1,893 670
Property and equipment 14,429 13,877 12,178
Special tools 4,144 3,924 3,492
Investments in and advances from/to unconsolidated subsidiaries
and affiliated companies 2,873 2,874 3,699
Intangible assets 1,596 1,627 1,518
Deferred tax assets 1,727 1,624 1,749
Other noncurrent assets 5,930 5,448 5,658
-------- -------- --------
TOTAL ASSETS $ 45,522 $ 43,208 $ 43,303
======== ======== ========
LIABILITIES:
Accounts payable $ 8,444 $ 8,238 $ 8,133
Accrued liabilities and expenses 9,076 8,525 8,203
Short-term debt 357 346 344
Payments due within one year on long-term debt 533 22 47
Long-term debt 1,766 1,206 1,747
Accrued noncurrent employee benefits 9,666 9,365 9,327
Other noncurrent liabilities 4,120 3,935 4,080
-------- -------- --------
TOTAL LIABILITIES 33,962 31,637 31,881
-------- -------- --------
SHAREHOLDERS' EQUITY: (shares in millions)
Preferred stock - $1 per share par value; authorized
20.0 shares; Series A Convertible Preferred Stock;
issued and outstanding: 1997 - 0.02; 1996 - 0.04 and 0.06 shares,
respectively (aggregate liquidation preference 1997 - $8 million;
1996 - $21 million and $32 million, respectively) * * *
Common stock - $1 per share par value; authorized
1,000.0 shares; issued: 1997 - 823.1; 1996 - 821.6 shares
and 820.4 shares, respectively 823 822 820
Additional paid-in capital 5,169 5,129 5,117
Retained earnings 9,793 8,829 7,816
Treasury stock - at cost: 1997 - 148.6 shares;
1996 - 119.1 and 91.8 shares, respectively (4,225) (3,209) (2,331)
-------- -------- --------
TOTAL SHAREHOLDERS' EQUITY 11,560 11,571 11,422
-------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 45,522 $ 43,208 43,303
======== ======== ========
</TABLE>
* Less than $1 million
This Supplemental Information does not present the financial position of
Chrysler in accordance with generally accepted accounting principles. This
Supplemental Information reflects the financial position of Chrysler with its
investments in CFC and the Car Rental Operations accounted for on an equity
basis rather than as consolidated subsidiaries and, therefore, does not comply
with SFAS No. 94, "Consolidation of All Majority-Owned Subsidiaries." The
financial covenant contained in Chrysler's revolving credit facility is based
on this Supplemental Information. In addition, because the operations of CFC
and the Car Rental Operations are different in nature from Chrysler's
manufacturing operations, management believes that this disaggregated financial
data enhances an understanding of the consolidated financial statements.
15
<PAGE> 18
Item 5. OTHER INFORMATION - CONTINUED
SUPPLEMENTAL INFORMATION
CHRYSLER (WITH CFC AND CAR RENTAL OPERATIONS ON AN EQUITY BASIS)
CONDENSED STATEMENT OF CASH FLOWS (unaudited)
For the Six Months Ended June 30, 1997 and 1996
(In millions of dollars)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 2,662 $ 3,347
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (390) (1,451)
Sales and maturities of marketable securities 481 1,112
Expenditures for property and equipment (1,354) (1,255)
Expenditures for special tools (808) (473)
Purchases of vehicle operating leases (131) (8)
Proceeds from sale of nonautomotive assets -- 476
Other 127 56
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (2,075) (1,543)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt 11 74
Proceeds from long-term borrowings 1,088 14
Payments on long-term borrowings (11) (18)
Change in advances from CFC 47 --
Repurchases of common stock (1,007) (1,110)
Dividends paid (560) (455)
Other 33 38
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (399) (1,457)
-------- --------
Change in cash and cash equivalents 188 347
Cash and cash equivalents at beginning of period 4,825 4,980
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,013 $ 5,327
======== ========
</TABLE>
This Supplemental Information does not present the cash flows of Chrysler in
accordance with generally accepted accounting principles. This Supplemental
Information reflects the cash flows of Chrysler with its investments in CFC
and the Car Rental Operations accounted for on an equity basis rather than as
consolidated subsidiaries and, therefore, does not comply with SFAS No. 94,
"Consolidation of All Majority-Owned Subsidiaries." Because the operations of
CFC and the Car Rental Operations are different in nature from Chrysler's
manufacturing operations, management believes that this disaggregated financial
data enhances an understanding of the consolidated financial statements.
16
<PAGE> 19
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits filed with this Report are listed in the Exhibit Index
which immediately precedes such exhibits.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three months ended
June 30, 1997.
17
<PAGE> 20
CONFORMED
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHRYSLER CORPORATION
------------------------------
(Registrant)
Date: July 11, 1997 By J. D. Donlon, III
-------------------------
J. D. Donlon, III
Vice President and Controller
(Principal Accounting Officer)
18
<PAGE> 21
EXHIBIT INDEX
For Quarterly Report on Form 10-Q for the
Quarterly Period Ended June 30, 1997
EXHIBIT
4-E Copy of $2,550,000,000 Revolving Credit Agreement, dated as of April 24,
1997, among Chrysler Corporation, Chrysler Canada Ltd., the several
Banks party to the Agreement, Royal Bank of Canada, as Canadian
Administrative Agent, and The Chase Manhattan Bank, as Administrative
Agent for the Banks. (Filed with this report.)
10-A-12 Copy of Chrysler Corporation 1991 Stock Compensation Plan, as amended
on May 15, 1997. (Filed with this report.)
10-B-6 Copy of Chrysler Corporation Incentive Compensation Plan, as amended
on May 15, 1997. (Filed with this report.)
10-B-7 Copy of Chrysler Corporation Long-Term Incentive Plan, as amended on
May 15, 1997. (Filed with this report.)
10-B-8 Copy of Chrysler Corporation Long-Term Performance Plan, as amended on
May 15, 1997. (Filed with this report.)
11 Statement regarding computation of earnings per common share. (Filed
with this report.)
15A Letter, dated July 11, 1997, re unaudited interim information. (Filed
with this report.)
15B Letter, dated July 11, 1997, re unaudited interim information. (Filed
with this report.)
27 Financial Data Schedule for the six months ended June 30, 1997. (Filed
with this report.)
19
<PAGE> 1
EXHIBIT 4E
EXECUTION COPY
================================================================================
$2,550,000,000
REVOLVING
CREDIT AGREEMENT
Dated as of April 24, 1997
______________
CHRYSLER CORPORATION and
CHRYSLER CANADA LTD.,
as BORROWERS
ROYAL BANK OF CANADA,
as CANADIAN ADMINISTRATIVE AGENT
THE CHASE MANHATTAN BANK,
as ADMINISTRATIVE AGENT
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . 18
SECTION 2. THE U.S. COMMITMENTS . . . . . . . . . . . . . . . . . . . 18
2.1 The U.S. Commitments . . . . . . . . . . . . . . . . . . 18
2.2 Procedure for U.S. Loan Borrowing . . . . . . . . . . . . 18
2.3 Conversion and Continuation Options . . . . . . . . . . . 19
2.4 Certain Matters Relating to Eurodollar Loans . . . . . . 19
SECTION 3. THE CANADIAN COMMITMENTS . . . . . . . . . . . . . . . . . 21
3.1 The Canadian Commitments . . . . . . . . . . . . . . . . 21
3.2 Procedure for C$ Prime Loan Borrowing . . . . . . . . . . 21
3.3 Bankers' Acceptances . . . . . . . . . . . . . . . . . . 21
3.4 Conversion Option . . . . . . . . . . . . . . . . . . . . 24
3.5 Currency Fluctuations, etc . . . . . . . . . . . . . . . 24
SECTION 4. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . 25
4.1 Repayment of Loans; Evidence of Debt . . . . . . . . . . 25
4.2 Interest Rate and Payment Dates . . . . . . . . . . . . . 26
4.3 Facility Fees . . . . . . . . . . . . . . . . . . . . . . 27
4.4 Lending Procedures . . . . . . . . . . . . . . . . . . . 27
4.5 Termination or Reduction of Commitments . . . . . . . . . 28
4.6 Optional Prepayments . . . . . . . . . . . . . . . . . . 28
4.7 Computation of Interest and Fees . . . . . . . . . . . . 29
4.8 Pro Rata Treatment and Payments . . . . . . . . . . . . . 30
4.9 Increased Costs . . . . . . . . . . . . . . . . . . . . . 31
4.10 Capital Adequacy . . . . . . . . . . . . . . . . . . . . 31
4.11 Indemnity . . . . . . . . . . . . . . . . . . . . . . . 32
4.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . 33
4.13 Replacement of Banks . . . . . . . . . . . . . . . . . . 33
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 33
5.1 Financial Condition . . . . . . . . . . . . . . . . . . . 34
5.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . 34
5.3 Corporate Existence . . . . . . . . . . . . . . . . . . . 34
5.4 Corporate Authorization; No Violation . . . . . . . . . . 34
5.5 Government Authorization . . . . . . . . . . . . . . . . 34
5.6 Federal Regulations . . . . . . . . . . . . . . . . . . . 34
5.7 Enforceable Obligations . . . . . . . . . . . . . . . . . 35
5.8 No Material Litigation . . . . . . . . . . . . . . . . . 35
SECTION 6. CONDITIONS PRECEDENT TO LOANS . . . . . . . . . . . . . . . 35
6.1 Conditions of Effectiveness . . . . . . . . . . . . . . . 35
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
6.2 Conditions to All Facility Loans . . . . . . . . . . . 36
SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 37
7.1 Financial Statements . . . . . . . . . . . . . . . . . 37
7.2 Certificates; Other Information . . . . . . . . . . . . 38
7.3 Maintenance of Corporate Existence; Compliance with
Applicable Law . . . . . . . . . . . . . . . . . . . . 38
7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 39
8.1 Indebtedness to Total Capitalization . . . . . . . . . 39
8.2 Limitation on Liens . . . . . . . . . . . . . . . . . . 39
8.3 Limitation on Sales and Leasebacks . . . . . . . . . . 40
8.4 Limitation on Fundamental Changes . . . . . . . . . . . 41
SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 41
SECTION 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . 43
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . 43
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . 44
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . 44
10.4 Reliance by Agents . . . . . . . . . . . . . . . . . . 44
10.5 Notice of Default . . . . . . . . . . . . . . . . . . 44
10.6 Non-Reliance on Agents and other Banks . . . . . . . . 45
10.7 Indemnification . . . . . . . . . . . . . . . . . . . 45
10.8 Agents in their Individual Capacity . . . . . . . . . 45
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . 46
SECTION 11. FOREIGN CURRENCY SUBFACILITIES . . . . . . . . . . . . . 46
11.1 Terms of Foreign Currency Subfacilities . . . . . . . 46
11.2 Currency Fluctuations, etc . . . . . . . . . . . . . . 48
SECTION 12. GUARANTEE . . . . . . . . . . . . . . 49
12.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . 49
12.2 No Subrogation, Contribution, Reimbursement or
Indemnity . . . . . . . . . . . . . . . . . . . . . . 49
12.3 Amendments, etc. with respect to the Subsidiary
Borrower Obligations . . . . . . . . . . . . . . . . 50
12.4 Guarantee Absolute and Unconditional . . . . . . . . . 50
12.5 Reinstatement . . . . . . . . . . . . . . . . . . . . 51
12.6 Payments . . . . . . . . . . . . . . . . . . . . . . . 51
12.7 Judgments Relating to Guarantee . . . . . . . . . . . 52
12.8 Independent Obligations . . . . . . . . . . . . . . . 52
SECTION 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 53
13.1 Amendments and Waivers . . . . . . . . . . . . . . . . 53
13.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 53
13.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . 54
13.4 Survival of Representations and Warranties . . . . . . 55
13.5 Payment of Expenses and Taxes . . . . . . . . . . . . 55
13.6 Successors and Assigns; Participations and
Assignments . . . . . . . . . . . . . . . . . . . . . 55
13.7 Right of Set-off . . . . . . . . . . . . . . . . . . . 58
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
13.8 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
13.9 New Banks; Commitment Increases; Commitment Reallocations. 58
13.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . 60
13.11 Judgments Relating to Chrysler Canada . . . . . . . . . . 60
13.12 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . 60
13.13 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 60
13.14 Integration . . . . . . . . . . . . . . . . . . . . . . . 61
13.15 Information . . . . . . . . . . . . . . . . . . . . . . . 61
SCHEDULES
Schedule I - Commitments
Schedule II - Liens Permitted Under Subsection 8.2(a)
EXHIBITS
Exhibit A - Form of New Bank Supplement
Exhibit B - Form of Commitment Increase Supplement
Exhibit C - Form of Opinion of Simpson Thacher & Bartlett
Exhibit D-1 - Form of Opinion of General Counsel to Chrysler
Exhibit D-2 - Form of Opinion of Fasken Campbell Godfrey, Canadian Counsel to Chrysler Canada
Exhibit E-1 - Form of Assignment and Acceptance
Exhibit E-2 - Form of Commitment Reallocation Supplement
Exhibit F-1 - Form of Addendum
Exhibit F-2 - Form of Foreign Currency Subfacility Addendum
Exhibit G - Form of Closing Certificate
Exhibit H - Form of Promissory Note
</TABLE>
<PAGE> 5
REVOLVING CREDIT AGREEMENT dated as of April 24, 1997 among
CHRYSLER CORPORATION, a Delaware corporation ("Chrysler"), CHRYSLER CANADA
LTD., a Canadian corporation ("Chrysler Canada"), the several commercial banks
from time to time parties to this Agreement (as more specifically defined
below, the"Banks"), ROYAL BANK OF CANADA, a Canadian chartered bank ("Royal"),
as Canadian administrative agent for the C$ Banks (as defined below) hereunder,
and THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as
administrative agent for the Banks hereunder.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms
defined in the caption to this Agreement shall have the meanings set forth
therein, and the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Acceptance Fee": the fee payable in C$ to each C$ Bank in
respect of Bankers' Acceptances computed in accordance with subsection
3.3.
"Addendum": an addendum substantially in the form of Exhibit
F-1.
"Administrative Agent": Chase and its affiliates, as the
arranger of the Commitments and as the agent for the Banks under this
Agreement, together with any of its or their successors.
"Agents": the collective reference to the Administrative
Agent and the Canadian Administrative Agent.
"Aggregate Canadian Extensions of Credit": with respect to
any C$ Bank, at any time, the aggregate principal amount of all C$
Loans (US$ Equivalent) made by such Bank then outstanding.
"Aggregate Foreign Extensions of Credit": with respect to any
US$ Bank, at any time, the sum of (a) the aggregate Foreign Currency
Subfacility Maximum Borrowing Amounts with respect to such Bank under
any Foreign Committed Subfacility to which it is a party and (b) the
aggregate outstanding principal amount of all Foreign Currency Loans
(US$ Equivalent) made by such Bank under any Foreign Uncommitted
Subfacility to which it is a party.
"Aggregate U.S. Extensions of Credit": with respect to any
US$ Bank, at any time, the aggregate principal amount of all U.S.
Loans made by such Bank then outstanding.
"Aggregate U.S./Foreign Extensions of Credit": with respect
to any US$ Bank, at any time, the sum of the Aggregate Foreign
Extensions of Credit of such Bank and the Aggregate U.S. Extensions of
Credit of such Bank at such time.
"Agreement": this Revolving Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"Applicable BA Discount Rate":
<PAGE> 6
2
(a) with respect to any Schedule I C$ Bank, as applicable to
a Bankers' Acceptance being purchased by such Schedule I C$ Bank on
any day, the average (as determined by the Canadian Administrative
Agent) of the respective percentage discount rates (expressed to two
decimal places and rounded upward, if necessary, to the nearest
1/100th of 1%) quoted to the Canadian Administrative Agent by each
Schedule I C$ Reference Bank as the percentage discount rate at which
such Schedule I C$ Reference Bank would, in accordance with its normal
practices, at or about 10:00 A.M., Toronto time, on such day, be
prepared to purchase bankers' acceptances accepted by such Schedule I
Reference C$ Bank having a maturity date comparable to the maturity
date of such Bankers' Acceptance; and
(b) with respect to any Schedule II C$ Bank, as applicable to
a Bankers' Acceptance being purchased by such Schedule II C$ Bank on
any day, the average (as determined by the Canadian Administrative
Agent) of the respective percentage discount rates (expressed to two
decimal places and rounded upward, if necessary, to the nearest
1/100th of 1%) quoted to the Canadian Administrative Agent by each
Schedule II C$ Reference Bank as the percentage discount rate at which
such Schedule II C$ Reference Bank would, in accordance with its
normal practices, at or about 10:00 A.M., Toronto time, on such day,
be prepared to purchase bankers' acceptances accepted by such Schedule
II Reference C$ Bank having a maturity date comparable to the maturity
date of such Bankers' Acceptance.
"Applicable Margin": with respect to each Eurodollar Loan or
Bankers' Acceptance at any date, the applicable percentage per annum
set forth below based upon the Status and U.S. Utilization or Canadian
Utilization, as applicable, on such date (provided that if the
Commitments have been terminated prior to such date, the U.S.
Utilization and Canadian Utilization for such date shall be deemed to
be greater than 50%):
<TABLE>
<CAPTION>
Level I Level II Level III Level IV Level V
U.S./Canadian Utilization Status Status Status Status Status
------------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Less than or equal to
50%: 0.1300% 0.1450% 0.2150% 0.2500% 0.4250%
Greater than 50%: 0.2550% 0.2700% 0.3400% 0.3750% 0.5500%
</TABLE>
"Assignee": as defined in subsection 13.6(c).
"Available Canadian Commitment": as to any C$ Bank, at a
particular time, an amount equal to the excess, if any, of (a) the
amount of such Bank's Canadian Commitment at such time over (b) the
Aggregate Canadian Extensions of Credit of such Bank at such time.
"Available U.S. Commitment": as to any US$ Bank, at a
particular time, an amount equal to the excess, if any, of (a) the
amount of such Bank's U.S. Commitment at such time over (b) the
Aggregate U.S./Foreign Extensions of Credit of such Bank at such time.
"BA Discount Proceeds": in respect of any Bankers' Acceptance
to be purchased by a C$ Bank on any day under subsection 3.3, an
amount (rounded to the nearest whole Canadian cent, and with one-half
of one Canadian cent being rounded up) calculated on such day by
dividing:
<PAGE> 7
3
(i) the face amount of such Bankers' Acceptance; by
(ii) the sum of one plus the product of:
(1) the Applicable BA Discount Rate (expressed as a
decimal) applicable to such Bankers'
Acceptance; and
(2) a fraction, the numerator of which is the
number of days remaining in the term of such
Bankers' Acceptance and the denominator of
which is 365;
with such product being rounded up or
down to the fifth decimal place and .000005
being rounded up.
"Bankers' Acceptance": a bill of exchange denominated in C$
drawn by Chrysler Canada and accepted by a C$ Bank pursuant to
subsection 3.3.
"Banking Day": in respect of any city, any day on which
commercial banks are open for business (including dealings in foreign
exchange and foreign currency deposits) in that city.
"Bank Rate": the upper limit of the Bank of Canada operating
band for overnight loans as announced from time to time.
"Banks": as defined in the caption to this Agreement;
provided, that (a) each reference herein to any Bank shall be deemed
to be a reference to each US$ Bank and to each C$ Bank unless the
context otherwise requires (in which case such reference shall be
deemed to be a reference only to each US$ Bank or to each C$ Bank, as
applicable) and (b) each reference herein to any Bank shall, to the
extent applicable, be deemed to be a reference to any subsidiary,
affiliate, branch or agency of any Bank which is a party to a Foreign
Currency Subfacility.
"Base Rate": at a particular date, the higher of (a) the rate
of interest publicly announced by Chase in New York City from time to
time as its prime rate and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof "Federal Funds
Effective Rate" shall mean, for any day, the weighted average of the
rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published
on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it. The prime rate
is not intended to be the lowest rate of interest charged by Chase in
connection with extensions of credit to debtors.
"Base Rate Loans": U.S. Loans at such time as they are made
and/or being maintained at a rate of interest equal to or based upon
the Base Rate.
<PAGE> 8
4
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2, 3.2 or 3.3 as a date on which a Facility
Borrower requests the Banks to make Facility Loans.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close, provided, that (a) when used in connection
with a Eurodollar Loan with respect to which the Eurodollar Rate is
determined based upon the Telerate screen in accordance with the
definition of Eurodollar Rate, "Business Day" shall mean any Business
Day on which dealings in foreign currencies and exchange between banks
may be carried on in London, England and New York City and (b) when
used in connection with a C$ Loan, "Business Day" shall mean a day on
which banks are open for business in Toronto, Ontario, Canada but
excludes Saturday, Sunday and any other day which is a legal holiday
in Toronto, Ontario, Canada.
"C$ Bank": each Bank designated as a "C$ Bank" on Schedule I,
as such Schedule may be modified from time to time pursuant to
subsection 13.6 or 13.9.
"C$ Commitment Percentage": as to any C$ Bank at any time,
the percentage of the aggregate Canadian Commitments then constituted
by such Bank's Canadian Commitment.
"C$ Loans": the collective reference to C$ Prime Loans and
Bankers' Acceptances. For the purposes of this Agreement, the
principal amount of any C$ Loan constituting a Bankers' Acceptance
shall be deemed to be the face amount of such Bankers' Acceptance.
"C$ Prime Loans": C$ Loans at such time as they bear interest
at a rate based upon the Canadian Prime Rate.
"CAFE": Corporate Average Fuel Economy Standards promulgated
by the United States Department of Transportation.
"Canadian Administrative Agent": Royal, in its capacity as
Canadian administrative agent for the C$ Banks under this Agreement,
together with any of its successors.
"Canadian Calculation Date": the Business Day immediately
preceding the Effective Date and the last Business Day of each
calendar month.
"Canadian Commitment": as to any C$ Bank, its obligation to
make C$ Loans and purchase Bankers' Acceptances, to or from Chrysler
Canada hereunder in an aggregate principal amount (US$ Equivalent) at
any one time outstanding not to exceed the amount (expressed in
Dollars) set forth opposite such Bank's name on Schedule I, as such
amount may be changed from time to time as provided herein.
"Canadian Dollars" or "C$": lawful currency of Canada.
"Canadian Exchange Rate": on a particular date, the rate at
which C$ may be exchanged into Dollars, determined by reference to the
Bank of Canada noon rate as published on the Reuters Screen page BOFC.
In the event that such rate does not appear on such Reuters page, the
"Canadian Exchange Rate" shall be determined by reference to any other
means (as
<PAGE> 9
5
selected by the Canadian Administrative Agent) by which such rate is quoted or
published from time to time by the Bank of Canada; provided, that if at the
time of any such determination, for any reason, no such exchange rate is being
quoted or published, the Canadian Administrative Agent may use any reasonable
method as it deems applicable to determine such rate, and such determination
shall be conclusive absent manifest error.
"Canadian Facility Fee": as defined in subsection 4.3(b).
"Canadian Prime Rate": with respect to a C$ Prime Loan, on
any day, the greater of (a) the annual rate of interest announced from
time to time by Royal as its reference rate then in effect for
determining interest rates on C$ denominated commercial loans in
Canada and (b) the annual rate of interest equal to the sum of (i) the
CDOR Rate and (ii) 0.75% per annum.
"Canadian Register": as defined in subsection 13.6(d).
"Canadian Reset Date": as defined in subsection 3.5(a).
"Canadian Utilization": with respect to any Utilization
Period, the percentage equivalent of a fraction (a) the numerator of
which is the average daily principal amount of C$ Loans (US$
Equivalent) outstanding during such Utilization Period and (b) the
denominator of which is the average daily amount of the aggregate
Canadian Commitments of all C$ Banks during such Utilization Period.
"Capital Lease Obligations": of any Person at a particular
time, the obligations of such Person to pay rent and other amounts
under any lease of (or other arrangement conveying the right to use)
real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases on a
balance sheet of such Person under GAAP.
"Car Rental Operations": collectively, (i) each corporation
substantially all of the assets of which constitute motor vehicles in
daily rental service and (ii) Pentastar.
"CDOR Rate": on any day, the annual rate of interest which is
the rate based on an average 30 day rate applicable to C$ bankers'
acceptances appearing on the "Reuters Screen CDOR Page" (as defined in
the International Swap Dealer Association, Inc. definitions, as
modified and amended from time to time) as of 10:00 A.M., Toronto
time, on such day, or if such day is not a Business Day, then on the
immediately preceding Business Day; provided, however, if such rate
does not appear on the Reuters Screen CDOR Page as contemplated, then
the CDOR Rate on any day shall be calculated as the arithmetic mean of
the 30 day rates applicable to C$ bankers' acceptances quoted by the
Schedule I C$ Reference Banks as of 10:00 A.M., Toronto time, on such
day, or if such day is not a Business Day, then on the immediately
preceding Business Day. If less than all of the Schedule I C$
Reference Banks quote the aforementioned rate on the days and at the
times described above, the "CDOR Rate" shall be such other rate or
rates as the Canadian Administrative Agent and Chrysler Canada may
agree.
<PAGE> 10
6
"CFC": Chrysler Financial Corporation, a Michigan
corporation.
"Chartered Bank": a bank named on Schedule I or Schedule II
to the Bank Act (Canada).
"Chrysler Mexican Subsidiary": any Subsidiary of Chrysler
organized under the laws of Mexico.
"Chrysler Technologies": Chrysler Technologies Corporation, a
Michigan corporation.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commercial Bank": (a) with respect to the U.S. Commitments
and the U.S. Loans thereunder, any Person (i) licensed to engage in
commercial banking business and (ii) which on the date it becomes a
Bank (or purchases a participation) hereunder (x) is entitled to
receive payments under this Agreement without deduction or withholding
of any United States federal income taxes and (y) is entitled to an
exemption from, or is not subject to, United States backup withholding
tax and (b) with respect to the Canadian Commitments and the C$ Loans
thereunder, any Chartered Bank which (except in the case of
participations) has a Related US$ Bank.
"Commitment": as to any Bank, the sum of such Bank's U.S.
Commitment and Canadian Commitment.
"Commitment Percentage": as to any Bank at a particular time,
the percentage of the aggregate Commitments then constituted by such
Bank's Commitment.
"Commitment Period": as to the Commitment of any Bank, the
period from and including the Effective Date (or, in the case of any
Assignee which is not already a Bank and any New Bank, from the date
that such Assignee or New Bank becomes a party to this Agreement as
provided in subsection 13.6(c) or 13.9, as the case may be) to but not
including the Termination Date or such earlier date as such Commitment
shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with Chrysler within the
meaning of Section 414(b) or (c) of the Code.
"Company Car Program": the program (or any substantially
similar successor program) in existence on the Effective Date pursuant
to which Chrysler makes motor vehicles available for lease to certain
current and former employees of Chrysler and its subsidiaries.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of
its property is bound.
"D&P": Duff & Phelps Credit Rating Company or its successors.
<PAGE> 11
7
"D&P Bond Rating": for any day, the rating of Chrysler's
senior long-term unsecured debt by D&P in effect at 9:00 A.M., New
York City time, on such day. If D&P shall have changed its system of
classifications after the date hereof, the D&P Bond Rating shall be
considered to be at or above a specified level if it is at or above
the new rating which most closely corresponds to the specified level
under the old rating system.
"Default": except as otherwise provided in Section 9(c), any
of the events specified in Section 9, whether or not any requirement
for the giving of notice, the lapse of time, or both, or the happening
of any other condition, has been satisfied.
"Defease" or "Defeasance": with respect to any Bankers'
Acceptance accepted by a C$ Bank, the payment by Chrysler Canada to
such C$ Bank of an amount equal to the aggregate face amount of
Chrysler Canada's obligations pursuant to such Bankers' Acceptance
which amount shall be (a) held by such C$ Bank for application, at the
maturity of such Bankers' Acceptance, to the payment of such C$ Bank's
obligations with respect to such Bankers' Acceptance and (b) invested
by such C$ Bank in bankers' acceptances or cash equivalents reasonably
acceptable to such C$ Bank as directed by Chrysler Canada, provided
that in the case of investments in bankers' acceptances, (i) such
investments shall be available to such C$ Bank on customary terms and
(ii) the amounts and maturities thereof shall be no greater or longer
than the amount and maturity of such Bankers' Acceptance. Each of
Chrysler Canada and each C$ Bank hereby agrees that, upon Chrysler
Canada effecting the Defeasance of any Bankers' Acceptance accepted by
such C$ Bank, Chrysler Canada shall be released from all obligations
to such C$ Bank in any way relating to such Bankers' Acceptance. In
addition, each such C$ Bank agrees that it will, at the maturity of
the applicable Bankers' Acceptance, pay to Chrysler Canada an amount
equal to the income earned by such C$ Bank on any investments made
pursuant to clause (b) of this definition.
"Designated Canadian Commitment Amount": with respect to each
C$ Bank at a particular time, the Designated Canadian Percentage of
such C$ Bank's Canadian Commitment then in effect; provided, that in
the event that C$ Loans shall be outstanding after the Canadian
Commitments shall have been terminated, the "Designated Canadian
Commitment Amount" of such C$ Bank, on any day, shall be deemed to
equal the Designated Canadian Percentage of the aggregate principal
amount of the C$ Loans (US$ Equivalent) made by such C$ Bank
outstanding on such day.
"Designated Canadian Percentage": a percentage which may be
specified by each C$ Bank, and may be changed from time to time, by
written notice to each Facility Borrower and each Agent; provided,
that if no such percentage has been so specified, such percentage
shall be deemed to be zero. Each such notice shall, unless otherwise
agreed by each Facility Borrower, be furnished within a 30-day period
commencing on the Effective Date or commencing on an anniversary of
the Effective Date.
"Dollars" or "$": lawful currency of the United States.
"E-Mail Bank": any Bank that has authorized use of an
electronic mail address as its notice address for the purposes of this
Agreement, as specified in an administrative questionnaire (or other
written notice) delivered to the Administrative Agent and Chrysler,
<PAGE> 12
8
provided that such authorization has not subsequently been rescinded pursuant
to a written notice submitted by such Bank to the Administrative Agent and
Chrysler.
"Effective Date": subject to satisfaction of the conditions
set forth in subsection 6.1, April 24, 1997.
"Environmental Laws": any and all Federal, foreign, state,
provincial, local and municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees and requirements of any
Governmental Authority regulating, relating to or imposing liability
or standards of conduct concerning environmental protection matters,
including, without limitation, Hazardous Materials, as now or may at
any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurodollar Loans": U.S. Loans at such time as they are made
and/or being maintained at a rate of interest based upon the
Eurodollar Rate.
"Eurodollar Rate": in the case of any Eurodollar Loan, with
respect to each day during each Interest Period pertaining to such
Eurodollar Loan, the rate of interest determined on the basis of the
rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing
on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period,
provided, that in the event that such rate does not appear on Page
3750 of the Telerate Service (or otherwise on such service), the "
Eurodollar Rate" shall be determined by reference to such other
publicly available service for displaying eurodollar rates as
may be agreed upon by the Administrative Agent and Chrysler. In the
absence of such agreement, the "Eurodollar Rate" shall instead be the
rate per annum equal to the average (rounded upward, if necessary, to
the nearest 1/100th of 1%) of the respective rates notified to the
Administrative Agent by each of the Eurodollar Reference Banks as the
rate at which such Eurodollar Reference Bank is offered Dollar deposits
at or about 10:00 A.M., New York City time, two Business Days prior to
the beginning of the relevant Interest Period, in the interbank
eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its Eurodollar Loans are then being
conducted for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the
amount of its Eurodollar Loan to be outstanding during such Interest
Period.
"Eurodollar Reference Banks": Chase, Royal and Credit Suisse
First Boston or such successor bank as shall be chosen in accordance
with subsection 4.7(c).
"Eurodollar Tranche": the collective reference to Eurodollar
Loans whose Interest Periods begin on the same date and end on the
same later date (whether or not such Eurodollar Loans originally were
made on the same day).
"Eurostar": Eurostar Automobilwerk Gesellschaft mbH & Co.
K-G, an Austrian corporation.
<PAGE> 13
9
"Event of Default": except as otherwise provided in Section
9(c), any of the events specified in Section 9, provided that any
requirement for the giving of notice, the lapse of time, or both, or
the happening of any other condition, has been satisfied.
"Excess U.S. Utilization Period": any Utilization Period with
respect to which the U.S. Utilization exceeds 50%.
"Excluded Subsidiaries": Chrysler Technologies, each of its
subsidiaries, CFC, each of its subsidiaries, each Receivable Finance
Company and the Car Rental Operations.
"Existing Credit Agreement": the Revolving Credit Agreement
dated as of April 26, 1996 among Chrysler, Chrysler Canada, the banks
parties thereto, Royal, as Canadian administrative agent and Chase, as
administrative agent.
"Facility Borrowers": the collective reference to Chrysler
and Chrysler Canada.
"Facility Fee": any U.S. Facility Fee or Canadian Facility
Fee.
"Facility Fee Rate": for any day, the rate per annum set
forth below opposite the Status in effect on such day:
Facility Fee
Status Rate
------ ------------
Level I Status 0.0700%
Level II Status 0.0800%
Level III Status 0.1100%
Level IV Status 0.1500%
Level V Status 0.2000%
"Facility Loans": the collective reference to the U.S. Loans
and the C$ Loans.
"Federal Funds Effective Rate": as defined in the definition
of Base Rate.
"Final Date": the later of (a) the Termination Date and (b)
the date on which all of the Loans shall have been paid in full.
"Fitch": Fitch Investors Service, Inc. or its successors.
"Fitch Bond Rating": for any day, the rating of Chrysler's
senior long-term unsecured debt by Fitch in effect at 9:00 A.M., New
York City time, on such day. If Fitch shall have changed its system
of classifications after the date hereof, the Fitch Bond Rating shall
be
<PAGE> 14
10
considered to be at or above a specified level if it is at or
above the new rating which most closely corresponds to the specified
level under the old rating system.
"Foreign Borrowers": the collective reference to (a) the
Foreign Subsidiary Borrowers and (b) if applicable, Chrysler in its
capacity as a borrower under any Foreign Currency Subfacility.
"Foreign Calculation Date": the last Business Day of each
calendar month.
"Foreign Committed Subfacility": any Foreign Currency
Subfacility designated as a "Foreign Committed Subfacility" pursuant
to the relevant Foreign Currency Subfacility Addendum.
"Foreign Currency": Dollars and any currency other than
Dollars as to which a Foreign Exchange Rate may be calculated.
"Foreign Currency Loans": any loan made pursuant to a Foreign
Currency Subfacility.
"Foreign Currency Subfacility": any credit facility providing
for borrowings in a Foreign Currency which has been designated as a
"Foreign Currency Subfacility" pursuant to a Foreign Currency
Subfacility Addendum.
"Foreign Currency Subfacility Addendum": a Foreign Currency
Subfacility Addendum substantially in the form of Exhibit F-2 and
conforming to the requirements of Section 11.
"Foreign Currency Subfacility Maximum Borrowing Amount": as
defined in subsection 11.1(b).
"Foreign Exchange Rate": with respect to any Foreign Currency
(other than Dollars) on a particular date, the rate at which such
Foreign Currency may be exchanged into Dollars, equal to the average
(rounded upward, if necessary, to the nearest 1/100th of 1%) of the
respective rates notified to the Administrative Agent by each of the
Foreign Exchange Reference Banks as the spot rate of exchange in the
interbank market where its foreign currency exchange operations in
respect of such Foreign Currency are then being conducted, at or about
12:00 noon, local time, at such date for the purchase of Dollars with
such Foreign Currency, for delivery two Banking Days later; provided,
that if at the time of any such determination, for any reason, no such
spot rate is being quoted by the Foreign Exchange Reference Banks, the
Administrative Agent may use any reasonable method as it deems
applicable to determine such rate, and such determination shall be
conclusive absent manifest error.
"Foreign Exchange Reference Banks": the collective reference
to Chase, Royal and Credit Suisse First Boston or such successor bank
as shall be chosen in accordance with subsection 4.7(c).
"Foreign Reset Date": as defined in subsection 11.2(a).
<PAGE> 15
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"Foreign Subsidiary": any Subsidiary that (a) is organized
under the laws of any jurisdiction outside the United States of
America, Puerto Rico and Canada, or (b) conducts the major portion of
its business outside the United States of America, Puerto Rico and
Canada.
"Foreign Subsidiary Borrower": any Subsidiary which is a
borrower under a Foreign Currency Subfacility.
"Foreign Uncommitted Subfacility": any Foreign Currency
Subfacility designated as a "Foreign Uncommitted Subfacility" pursuant
to the relevant Foreign Currency Subfacility Addendum.
"GAAP": generally accepted accounting principles in the
United States of America and, to the extent applicable, Canada, in
effect from time to time, except that for purposes of determining
compliance with the covenants set forth in subsections 8.1 and 8.2(n),
"GAAP" shall mean generally accepted accounting principles in the
United States of America ("U.S. GAAP") and, to the extent applicable,
Canada, in effect on December 31, 1996 applied, in the case of U.S.
GAAP, consistently with those used in compiling the audited financial
statements referred to in subsection 5.1.
"Governmental Authority": any nation or government, any
state, province or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranty": any guaranty by any Person of Indebtedness or
other obligations of any other Person or any assurance with respect to
the financial condition of any other Person (including, without
limitation, any purchase or repurchase agreement, any indemnity or any
keep-well, take-or-pay, through-put or other arrangement having the
effect of assuring or holding harmless any third Person against loss
with respect to any Indebtedness or other obligation of such other
Person) except indorsements of negotiable instruments for collection
in the ordinary course of business.
"Hazardous Materials": any hazardous materials, hazardous
wastes, hazardous constituents, hazardous or toxic substances,
petroleum products (including crude oil or any fraction thereof),
defined or regulated as such in or under any Environmental Law.
"Indebtedness": as applied to any Person, without
duplication: (a) any indebtedness of such Person or any of its
Subsidiaries for borrowed money or for the deferred purchase price of
property or services, (b) any withdrawal obligation of such Person or
any of its Subsidiaries to a Multiemployer Plan, (c) all Capital Lease
Obligations of such Person and its Subsidiaries, (d) all liabilities
of the types described in clauses (a) through (c) of this definition
entitled to the benefits of any Guaranty by such Person or any of its
Subsidiaries and (e) all liabilities secured by any Lien on any
property owned by such Person or any of its Subsidiaries even though
such Person or such Subsidiary has not assumed or otherwise become
liable for the payment thereof, in each case to be determined on a
consolidated basis in accordance with GAAP; provided, however, that
the term "Indebtedness" shall not include short-term obligations
(including Guaranties in respect thereof) payable to suppliers
incurred in the ordinary course of business; and provided,
further, that for purposes of subsection 8.1, "Indebtedness" shall
include
<PAGE> 16
12
obligations of the types described in clauses (a) through (e) of
this definition of Chrysler Technologies and its subsidiaries.
"Initial Offered Canadian Commitment Amount": with respect to
each C$ Bank, the amount specified opposite such Bank's name on
Schedule I in the column captioned "Initial Offered Canadian
Commitment Amount", which amount shall equal the commitment amount
offered by such Bank in connection with the initial syndication of the
Canadian Commitments.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three or six months thereafter,
as selected by Chrysler in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six months thereafter,
as selected by Chrysler by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the last day of the
then current Interest Period with respect thereto;
provided, that the foregoing provisions are subject to the following:
(A) if any Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(B) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
(C) any Interest Period that would otherwise extend
beyond the Termination Date shall end on the Termination Date.
"Level": any of Level I, Level II, Level III, Level IV or
Level V.
"Level I": (i) an S&P Bond Rating of A or better, (ii) a
Moody's Bond Rating of A2 or better, (iii) a D&P Bond Rating of A or
better and (iv) a Fitch Bond Rating of A or better.
"Level II": (i) an S&P Bond Rating of A-, (ii) a Moody's Bond
Rating of A3, (iii) a D&P Bond Rating of A- and (iv) a Fitch Bond
Rating of A-.
<PAGE> 17
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"Level III": (i) an S&P Bond Rating of BBB+ or BBB, (ii) a
Moody's Bond Rating of Baa1 or Baa2, (iii) a D&P Bond Rating of BBB+
or BBB and (iv) a Fitch Bond Rating of BBB+ or BBB.
"Level IV": (i) an S&P Bond Rating of BBB-, (ii) a Moody's
Bond Rating of Baa3, (iii) a D&P Bond Rating of BBB- and (iv) a Fitch
Bond Rating of BBB-.
"Level V": (i) an S&P Bond Rating of BB+ (or lower ) or
unrated, (ii) a Moody's Bond Rating of Ba1 (or lower) or unrated,
(iii) a D&P Bond Rating of BB+ (or lower) or unrated and (iv) a Fitch
Bond Rating of BB+ (or lower) or unrated.
"Lien": (a) any judgment lien or execution, attachment, levy,
distraint or similar legal process or (b) any mortgage, pledge,
hypothecation, assignment, lien, charge, encumbrance or other security
interest of any kind or nature whatsoever (including, without
limitation, the interest of the lessor under any capital lease and the
interest of the seller under any conditional sale or other title
retention agreement), which secures or purports to secure any
Indebtedness or other indebtedness or obligations.
"Loans": the collective reference to the Facility Loans and the
Foreign Currency Loans.
"Moody's": Moody's Investors Service, Inc. or its successors.
"Moody's Bond Rating": for any day, the rating of Chrysler's
senior long-term unsecured debt by Moody's in effect at 9:00 A.M., New
York City time, on such day. If Moody's shall have changed its system
of classifications after the date hereof, the Moody's Bond Rating
shall be considered to be at or above a specified level if it is at or
above the new rating which most closely corresponds to the specified
level under the old rating system.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"New Bank": as defined in subsection 13.9.
"New Venture Gear": New Venture Gear, Inc., a Delaware
corporation.
"Other Taxes": as defined in the definition of "Taxes".
"Pentastar": Pentastar Transportation Group, Inc., an
Oklahoma corporation.
"Permitted Encumbrances": (a) Liens for taxes not yet due or
which are being contested in good faith by appropriate actions,
provided that adequate reserves with respect thereto are maintained on
the books of Chrysler in conformity with GAAP, (b) landlords',
carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate actions and (c) easements,
rights-of-way, restrictions and other similar encumbrances incurred in
the ordinary course of business
<PAGE> 18
14
which, in the aggregate, are not substantial in amount in
relation to the value of the property subject thereto and which do not
in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the
business of Chrysler.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which Chrysler or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
such term is defined in Section 3(5) of ERISA.
"Rating Agencies": the collective reference to D&P, Fitch,
Moody's and S&P.
"Receivable Finance Company": any corporation substantially
all of the assets of which constitute receivables arising out of the
making of loans to Persons to finance the acquisition of tangible
property.
"Reference Banks": the collective reference to the Eurodollar
Reference Banks, the Foreign Exchange Reference Banks, the Schedule I
C$ Reference Banks and the Schedule II C$ Reference Banks.
"Registers": the collective reference to the U.S. Register and
the Canadian Register.
"Regulation G": Regulation G of the Board of Governors of the
Federal Reserve System, as from time to time in effect.
"Regulation T": Regulation T of the Board of Governors of the
Federal Reserve System, as from time to time in effect.
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System, as from time to time in effect.
"Regulation X": Regulation X of the Board of Governors of the
Federal Reserve System, as from time to time in effect.
"Related C$ Bank": as defined in the definition of "US$ Bank
Combined Commitment".
"Related US$ Bank": as defined in the definition of "US$ Bank
Combined Commitment".
"Required Banks": at a particular time, Banks having at least
51% of the aggregate amount of the Commitments at such time or, if the
Commitments have expired or been terminated or for purposes of
determining whether to accelerate the Loans pursuant to Section
<PAGE> 19
15
9, Banks holding at least 51% of the outstanding principal
amount of the Loans (US$ Equivalent).
"Required Canadian Banks": at any date, C$ Banks having at
least 51% of the aggregate amount of the Canadian Commitments at such
date.
"Required U.S. Banks": at any date, US$ Banks having at least
51% of the aggregate amount of the U.S. Commitments at such date.
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Responsible Officer": at a particular time, the Chief
Financial Officer, the Treasurer or the Controller of Chrysler or
Chrysler Canada, as the case may be. Each certificate furnished by a
Responsible Officer hereunder shall be treated as a certificate on
behalf of the relevant Facility Borrower and no Responsible Officer
shall have any personal liability in connection therewith.
"S&P": Standard & Poor's Ratings Services or its successors.
"S&P Bond Rating": for any day, the rating of Chrysler's
senior long-term unsecured debt by S&P in effect at 9:00 A.M., New
York City time, on such day. If S&P shall have changed its system of
classifications after the date hereof, the S&P Bond Rating shall be
considered to be at or above a specified level if it is at or above
the new rating which most closely corresponds to the specified level
under the old rating system.
"Schedule I C$ Bank": any C$ Bank named on Schedule I to the
Bank Act (Canada).
"Schedule I Reference C$ Banks": the collective reference to
Royal, The Bank of Nova Scotia and Canadian Imperial Bank of Commerce.
"Schedule II C$ Bank": any C$ Bank named on Schedule II to
the Bank Act (Canada).
"Schedule II Reference C$ Banks": the collective reference to
The Chase Manhattan Bank of Canada, ABN Amro Bank Canada and Morgan
Bank of Canada.
"Status": as to Chrysler, the existence of Level I, Level II,
Level III, Level IV or Level V, as the case may be. For the purposes
of this definition, "Status" will be set at the lowest Level
assigned to Chrysler by any Rating Agency, unless only one Rating
Agency has assigned such Level to Chrysler, in which case the Status
will be set at the second lowest Level assigned to Chrysler by any
Rating Agency. Level I shall be deemed to be the highest Level and
Level V shall be deemed to be the lowest Level.
<PAGE> 20
16
"Subsidiary": at a particular time, any corporation that
would then be required to be included as a consolidated subsidiary of
Chrysler in the financial statements contained in an annual report
prepared by Chrysler on Form 10-K pursuant to the Securities Exchange
Act of 1934, as amended, provided that no Excluded Subsidiary shall be
or, for any reason, become a Subsidiary for purposes of this
Agreement. "Significant Subsidiary" shall mean, at a particular time,
Chrysler Canada, Chrysler de Mexico, S.A. and any other Subsidiary the
assets of which then constitute at least 10% of the consolidated
assets of Chrysler and its Subsidiaries. "Wholly-owned Subsidiary"
shall mean any Subsidiary at least 90% of whose capital stock having
ordinary voting power for the election of directors is owned, directly
or indirectly, by Chrysler.
"Subsidiary Borrowers": the collective reference to Chrysler
Canada and the Foreign Subsidiary Borrowers.
"Subsidiary Borrower Obligations": with respect to each
Subsidiary Borrower, the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans made to such Subsidiary Borrower and interest accruing
after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to such
Subsidiary Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Loans made
to such Subsidiary Borrower and all other obligations and liabilities
of such Subsidiary Borrower to any Agent or to any Bank, whether
direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or
in connection with, this Agreement, any Foreign Currency Subfacility
or any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees, charges and disbursements of counsel to any
Agent or to any Bank that are required to be paid by such Subsidiary
Borrower pursuant to this Agreement or any Foreign Currency
Subfacility) or otherwise.
"Taxes": all net income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, imposed,
levied, collected, withheld or assessed by any country (or by any
political subdivision or taxing authority thereof or therein),
excluding, with respect to any Bank, net income taxes, franchise taxes
imposed in lieu of net income taxes, and Canadian capital and large
corporations taxes, in each case imposed by any country (or any
political subdivision or taxing authority thereof or therein) where
such Bank is organized or, in respect of such Bank's Eurodollar Loans,
by the country (or any political subdivision or tax authority thereof
or therein) where such Bank's Eurodollar Loans are booked and, in
respect of such Bank's Base Rate Loans, by the country (or any
political subdivision or tax authority thereof or therein) where such
Bank's Base Rate Loans are booked (such excluded taxes, "Other
Taxes").
"Termination Date": April 24, 2002, or such earlier date as
the Commitments shall terminate as provided herein.
"Total Capitalization": the sum of Indebtedness and Total
Shareholders' Equity.
<PAGE> 21
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"Total Shareholders' Equity": the sum of (i) the par value
(or stated value on the books of Chrysler) of the capital stock of
Chrysler, (ii) the par value (or stated value on the books of
Chrysler) of the preferred stock of Chrysler, (iii) the aggregate
amount of additional paid-in capital of Chrysler and (iv) retained
earnings (or minus accumulated deficit) of Chrysler less (v) treasury
stock (at cost) of Chrysler, each of clauses (i) through (v) of this
definition determined in accordance with GAAP and, to the extent not
inconsistent with GAAP, in accordance with Chrysler's past practices.
"Type": as to any U.S. Loan, its nature as a Base Rate Loan
or a Eurodollar Loan.
"US$ Bank": each Bank designated as a "US$ Bank" on Schedule
I, as such Schedule may be modified from time to time pursuant to
subsection 13.6 or 13.9.
"US$ Bank Combined Commitment": as to any US$ Bank, the sum
of (a) such Bank's U.S. Commitment and (b) if such Bank has a Related
C$ Bank, such Related C$ Bank's Canadian Commitment; provided, that in
the event that Loans shall be outstanding after the Commitments shall
have been terminated, the "US$ Bank Combined Commitment" of each US$
Bank, on any day, shall be deemed to equal the aggregate principal
amount of the Loans (US$ Equivalent) made by such Bank (or, if
applicable, such Bank's Related C$ Bank) outstanding on such day. For
the purposes of this Agreement, (i) " Related C$ Bank" means, with
respect to any US$ Bank, as applicable, either (x) such Bank in
its capacity as a C$ Bank or (y) any subsidiary, affiliate, branch or
agency of such Bank which is a C$ Bank and (ii) "Related US$ Bank"
means, with respect to any C$ Bank, as applicable, either (x) such Bank
in its capacity as a US$ Bank or (y) any subsidiary, affiliate, branch
or agency of such Bank which is a US$ Bank. The entry by any US$ Bank
into any Foreign Currency Subfacility shall have no effect on the
amount of the US$ Bank Combined Commitment of such Bank.
"US$ Bank Net Combined Commitment": with respect to each US$
Bank, an amount equal to such US$ Bank's US$ Bank Combined Commitment
minus, in the case of each US$ Bank that has a Related C$ Bank, such
Related C$ Bank's Designated Canadian Commitment Amount.
"US$ Equivalent": on any date of determination, with respect
to any amount in Canadian Dollars or any Foreign Currency, the
equivalent in Dollars of such amount, determined by the relevant Agent
using the Canadian Exchange Rate or the Foreign Exchange Rate, as
applicable, then in effect with respect thereto as determined pursuant
to subsection 3.5 or Section 11, respectively.
"U.S. Commitment": as to any US$ Bank, its obligation to make
U.S. Loans in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Bank's
name on Schedule I, as such amount may be reduced or increased as
provided herein.
"U.S. Commitment Percentage": as to any US$ Bank at any time,
the percentage of the aggregate U.S. Commitments then constituted by
such Bank's U.S. Commitment.
"U.S. Facility Fee": as defined in subsection 4.3(a).
<PAGE> 22
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"U.S. Net Commitment": at any date, with respect to any US$
Bank, the excess of (a) the U.S. Commitment of such Bank on such date
over (b) the Aggregate Foreign Extensions of Credit of such Bank on
such date.
"U.S. Loans": as defined in subsection 2.1(a).
"U.S. Register": as defined in subsection 13.6(d).
"U.S. Utilization": for any Utilization Period, with respect
to the U.S. Commitments, the percentage equivalent of a fraction (a)
the numerator of which is the average daily principal amount of U.S.
Loans outstanding during such Utilization Period and (b) the
denominator of which is the average daily amount of the aggregate U.S.
Net Commitments of all US$ Banks during such Utilization Period.
"Utilization Period": (a) each fiscal quarter of Chrysler and
(b) any portion of a fiscal quarter of Chrysler ending on the Final
Date.
1.2 Other Definitional Provisions. (a) All terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto, accounting terms relating to Chrysler and
its subsidiaries not defined in subsection 1.1, and accounting terms partly
defined in subsection 1.1 to the extent not defined, shall have the respective
meanings given to them under GAAP. The covenant contained in subsection 5.1
that the financial statements furnished to the Banks for the first three
quarterly periods of each fiscal year of Chrysler be prepared in accordance
with GAAP shall not be construed to mean that the technical presentation of
such financial statements need be in accordance with GAAP, so long as the
presentation (with respect to such matters as the presence or absence of
footnotes, captions and the like) of such financial statements is in accordance
with the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
SECTION 2. THE U.S. COMMITMENTS
2.1 The U.S. Commitments. (a) Subject to the terms and
conditions hereof, each US$ Bank severally agrees to make revolving credit
loans ("U.S. Loans") to Chrysler from time to time during the Commitment
Period. During the Commitment Period, Chrysler may use the U.S. Commitment of
each US$ Bank by borrowing, prepaying or repaying the U.S. Loans of such Bank
in whole or in part and reborrowing, all in accordance with the terms and
conditions hereof. Notwithstanding anything to the contrary contained in this
Agreement, in no event may U.S. Loans be borrowed under this subsection 2.1 if,
after giving effect thereto and the application of the proceeds
<PAGE> 23
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thereof, the aggregate principal amount of U.S. Loans made by any US$ Bank then
outstanding would exceed such Bank's U.S. Net Commitment.
(b) U.S. Loans may be Base Rate Loans or Eurodollar Loans, or
any combination thereof, as determined by Chrysler and notified to the
Administrative Agent in accordance with subsection 2.3, provided that no
Eurodollar Loans shall be made during any period commencing with the day
following the day that is one month prior to the Termination Date and ending on
the Termination Date.
2.2 Procedure for U.S. Loan Borrowing. Chrysler may
borrow under the U.S. Commitments during the Commitment Period on any Business
Day, provided, that Chrysler shall give the Administrative Agent irrevocable
notice (which notice must be received by the Administrative Agent prior to
10:00 A.M., New York City time, (i) three Business Days prior to the requested
Borrowing Date, in the case of Eurodollar Loans and (ii) two Business Days
prior to the requested Borrowing Date, in the case of Base Rate Loans)
specifying (A) the amount to be borrowed, (B) the requested Borrowing Date, (C)
whether the borrowing is to be of Eurodollar Loans or Base Rate Loans and (D)
if the borrowing is to be of Eurodollar Loans, the duration of the Interest
Period with respect thereto. Upon receipt of such notice the Administrative
Agent shall promptly notify each US$ Bank thereof. Not later than 12:00 noon,
New York City time, on the Borrowing Date specified in such notice, each US$
Bank shall make an amount equal to the amount of the U.S. Loan to be made by
such Bank available to the Administrative Agent for the account of Chrysler at
the office of the Administrative Agent specified in subsection 13.2 in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to Chrysler by the Administrative Agent crediting the account of
Chrysler on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the US$ Banks and in like funds as
received by the Administrative Agent. Each borrowing of Base Rate Loans shall
be in an aggregate principal amount not less than the lesser of (i) $25,000,000
and (ii) the then aggregate Available U.S. Commitments. Each borrowing of
Eurodollar Loans shall be in an aggregate principal amount not less than
$25,000,000.
2.3 Conversion and Continuation Options. (a) Chrysler
may elect from time to time to convert Eurodollar Loans to Base Rate Loans by
giving the Administrative Agent at least two Business Days' prior irrevocable
notice of such election, provided that any such conversion of Eurodollar Loans
may only be made on the last day of an Interest Period with respect thereto.
Chrysler may elect from time to time to convert Base Rate Loans to Eurodollar
Loans by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election. Any such notice of conversion to
Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each US$ Bank thereof. All or any part of
outstanding Eurodollar Loans and/or Base Rate Loans may be converted as
provided herein, provided that (i) no Base Rate Loan may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and
the Administrative Agent has or the Required US$ Banks have determined in its
or their sole discretion not to permit such a conversion and (ii) no Base Rate
Loan may be converted into a Eurodollar Loan after the date that is one month
prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by Chrysler
giving irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection
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1.1, of the length of the next Interest Period to be applicable to such
Eurodollar Loans, provided that no Eurodollar Loan may be continued as such (i)
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Required US$ Banks have determined in its or their sole
discretion not to permit such a continuation or (ii) after the date that is one
month prior to the Termination Date and provided, further, that if Chrysler
shall fail to give such notice or if such continuation is not permitted such
Eurodollar Loans shall be automatically converted to Base Rate Loans on the
last day of such then expiring Interest Period. Upon receipt of any notice
from Chrysler pursuant to this paragraph (b), the Administrative Agent shall
promptly notify each US$ Bank thereof.
(c) Notwithstanding anything to the contrary in this
subsection 2.3, all continuations and conversions hereunder shall be in such
amounts so that, after giving effect thereto, the aggregate principal amount of
the Eurodollar Loans comprising any Eurodollar Tranche shall not be less than
$25,000,000.
2.4 Certain Matters Relating to Eurodollar Loans. (a)
In the event that (i) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon Chrysler) that by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate applicable pursuant to
subsection 4.2(a) or (ii) the Required U.S. Banks shall have determined (which
determination shall be conclusive and binding upon Chrysler) and shall notify
the Administrative Agent that the Eurodollar Rate applicable pursuant to
subsection 4.2(a) does not adequately cover the cost to the US$ Banks of making
or maintaining Eurodollar Loans, the Administrative Agent shall forthwith give
telecopy notice of such determination to Chrysler and the US$ Banks at least
one Business Day prior to the first day of the proposed Interest Period for
such Eurodollar Loans. If such notice is given (x) any Eurodollar Loans
requested to be made or continued on the first day of such Interest Period
shall be made as or converted into Base Rate Loans and (y) any US$ Loans that
were to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be continued as Base Rate Loans. Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans shall
be made or continued as such, nor shall Chrysler have the right to convert Base
Rate Loans to Eurodollar Loans.
(b) Upon notice from any Affected Bank (as hereinafter
defined), Chrysler shall pay to the Administrative Agent for the account of
such Affected Bank an additional amount for each Eurodollar Loan of such
Affected Bank, payable on the last day of the Interest Period with respect
thereto, equal to
P X [[R / (1.00 - r)] - R] X [T / 360]
Where P = the principal amount of such Eurodollar Loan of such Bank;
R = the Eurodollar Rate (expressed as a decimal) for such
Interest Period;
T = the number of days in such Interest Period during
which such Bank was an "Affected Bank"; and
r = the aggregate of rates (expressed as a decimal) of
reserve requirements ("Reserve Requirements") current
on the date two Business Days prior to the beginning
of such Interest Period (including, without
limitation, basic,
<PAGE> 25
21
supplemental, marginal and emergency reserves)
under any regulations of the Federal Reserve Board or
other Governmental Authority having jurisdiction with
respect thereto, as now and from time to time
hereafter in effect, dealing with reserve requirements
prescribed for eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in
Regulation D of the Federal Reserve Board) maintained
by a member bank of the Federal Reserve System.
The term "Affected Bank" shall mean any US$ Bank party to this
Agreement that (i) is (x) organized under the laws of the United States or any
State thereof or (y) a bank organized under laws other than those of the United
States of America or a State thereof that is funding its Eurodollar Loans
through a branch or agency located in the United States of America and (ii) is
subject to actual Reserve Requirements in respect of its Eurodollar Loans.
Each US$ Bank agrees to notify the Administrative Agent promptly upon becoming
an Affected Bank, and of any subsequent change of status, disclosing the
effective date of such change.
(c) Upon the occurrence of any of the events specified in
subsection 2.4(a), each US$ Bank whose Eurodollar Loans are affected by any
such event agrees that it will transfer its Eurodollar Loans affected by any
such event to another branch office (or, if such Bank so elects, to an
affiliate) of such Bank, provided that such transfer shall be made only if such
Bank shall have determined in good faith (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) that, (i) on
the basis of existing circumstances, such transfer will avoid such events and
will not result in any additional costs, liabilities or expenses to such Bank
or to Chrysler and (ii) such transfer is otherwise consistent with the
interests of such Bank.
SECTION 3. THE CANADIAN COMMITMENTS
3.1 The Canadian Commitments. (a) Subject to the terms and
conditions hereof, each C$ Bank severally agrees to make revolving credit loans
(which shall be C$ Prime Loans) to, and to accept Bankers' Acceptances from,
Chrysler Canada from time to time during the Commitment Period. During the
Commitment Period, Chrysler Canada may use the Canadian Commitment of each C$
Bank by borrowing, prepaying or repaying the C$ Prime Loans or Bankers'
Acceptances of such Bank, in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof. Notwithstanding anything to
the contrary contained in this Agreement, in no event may C$ Prime Loans or
Bankers' Acceptances be borrowed or issued under this subsection 3.1 if, after
giving effect thereto and the application of the proceeds thereof, the
Aggregate Canadian Extensions of Credit of any C$ Bank then outstanding would
exceed such C$ Bank's Canadian Commitment.
3.2 Procedure for C$ Prime Loan Borrowing. Chrysler Canada
may borrow C$ Prime Loans during the Commitment Period on any Business Day,
provided that Chrysler Canada shall give the Canadian Administrative Agent
irrevocable notice (which notice must be received by the Canadian
Administrative Agent prior to 10:30 A.M., Toronto time, one Business Day prior
to the requested Borrowing Date, specifying (a) the amount to be borrowed and
(b) the requested Borrowing Date. Upon receipt of such notice, the Canadian
Administrative Agent shall promptly notify each C$ Bank thereof. Not later
than 10:30 A.M., Toronto time, on the Borrowing Date specified in such notice,
each C$ Bank shall make the amount of its share of such borrowing available to
the Canadian Administrative Agent for the account of Chrysler Canada at the
office of the Canadian Administrative Agent specified in subsection 13.2 and in
funds immediately available to the Canadian Administrative
<PAGE> 26
22
Agent. Each borrowing pursuant to this subsection 3.2 shall be in an aggregate
principal amount of the lesser of (i) C$5,000,000 or an integral multiple of
C$100,000 in excess thereof or (ii) the amount in C$ which has a US$ Equivalent
equal to the then aggregate Available Canadian Commitments.
3.3 Bankers' Acceptances. (a) Chrysler Canada may issue
Bankers' Acceptances denominated in C$, for purchase by the C$ Banks, each in
accordance with the provisions of this subsection 3.3.
(b) Procedures.
(1) Notice. Chrysler Canada shall notify the Canadian
Administrative Agent by irrevocable written notice by 10:00 A.M.,
Toronto time, one Business Day prior to the Borrowing Date in respect
of any borrowing by way of Bankers' Acceptances.
(2) Minimum Borrowing Amount. Each borrowing by way of
Bankers' Acceptances shall be in a minimum aggregate face amount of
C$10,000,000.
(3) Face Amounts. The face amount of each Bankers'
Acceptance shall be C$100,000 or any integral multiple thereof.
(4) Term. Bankers' Acceptances shall be issued and shall
mature on a Business Day. Each Bankers' Acceptance shall have a term
of at least 30 days and not more than 365 days excluding days of grace
and shall mature on or before the Termination Date and shall be in
form and substance reasonably satisfactory to each C$ Bank.
(5) Bankers' Acceptances in Blank. To facilitate the
acceptance of Bankers' Acceptances under this Agreement, Chrysler
Canada shall, upon execution of this Agreement and from time to time
as required, provide to the Canadian Administrative Agent drafts, in
form satisfactory to the Canadian Administrative Agent, duly executed
and endorsed in blank by Chrysler Canada in quantities sufficient for
each C$ Bank to fulfill its obligations hereunder. In addition,
Chrysler Canada hereby appoints each C$ Bank as its attorney to sign
and endorse on its behalf, in handwriting or by facsimile or
mechanical signature as and when deemed necessary by such C$ Bank,
blank forms of Bankers' Acceptances. Chrysler Canada recognizes and
agrees that all Bankers' Acceptances signed and/or endorsed on its
behalf by a C$ Bank shall bind Chrysler Canada as fully and
effectually as if signed in the handwriting of and duly issued by the
proper signing officers of Chrysler Canada. Each C$ Bank is hereby
authorized to issue such Bankers' Acceptances endorsed in blank in
such face amounts as may be determined by such Bank provided that the
aggregate amount thereof is equal to the aggregate amount of Bankers'
Acceptances required to be accepted by such Bank. No C$ Bank shall be
responsible or liable for its failure to accept a Bankers' Acceptance
if the cause of such failure is, in whole or in part, due to the
failure of Chrysler Canada to provide duly executed and endorsed
drafts to the Canadian Administrative Agent on a timely basis nor
shall any C$ Bank be liable for any damage, loss or other claim
arising by reason of any loss or improper use of any such instrument
except loss or improper use arising by reason of the gross negligence
or willful misconduct of such Bank, its officers, employees, agents or
representatives. Each C$ Bank shall maintain a record with respect to
Bankers' Acceptances (i) received by it from the Canadian
Administrative Agent in blank hereunder, (ii) voided by it for
<PAGE> 27
23
any reason, (iii) accepted by it hereunder, (iv) purchased by it
hereunder and (v) cancelled at their respective maturities. Each C$
Bank further agrees to retain such records in the manner and for the
statutory periods provided in the various Canadian provincial or
federal statutes and regulations which apply to such Bank.
(6) Execution of Bankers' Acceptances. Drafts of Chrysler
Canada to be accepted as Bankers' Acceptances hereunder shall be duly
executed on behalf of Chrysler Canada. Notwithstanding that any
person whose signature appears on any Bankers' Acceptance as a
signatory for Chrysler Canada may no longer be an authorized signatory
for Chrysler Canada at the date of issuance of a Bankers' Acceptance,
such signature shall nevertheless be valid and sufficient for all
purposes as if such authority had remained in force at the time of
such issuance and any such Bankers' Acceptance so signed shall be
binding on Chrysler Canada.
(7) Issuance of Bankers' Acceptances. Promptly following
receipt of a notice of borrowing by way of Bankers' Acceptances, the
Canadian Administrative Agent shall so advise the C$ Banks and shall
advise each C$ Bank of the face amount of each Bankers' Acceptance to
be accepted by it and the term thereof. The aggregate face amount of
Bankers' Acceptances to be accepted by a C$ Bank shall be determined
by the Canadian Administrative Agent by reference to the respective
Canadian Commitments of the C$ Banks, except that, if the face amount
of a Bankers' Acceptance, which would otherwise be accepted by a C$
Bank, would not be C$100,000 or an integral multiple thereof, such
face amount shall be increased or reduced by the Canadian
Administrative Agent in its sole and unfettered discretion to the
nearest integral multiple of C$100,000.
(8) Acceptance of Bankers' Acceptances. Each Bankers'
Acceptance to be accepted by a C$ Bank shall be accepted at such
Bank's office referred to in its Addendum.
(9) Purchase of Bankers' Acceptances. On the relevant
Borrowing Date, each C$ Bank shall purchase from Chrysler Canada, at
the Applicable BA Discount Rate, any Bankers' Acceptance accepted by
it and provide to the Canadian Administrative Agent the BA Discount
Proceeds for the account of Chrysler Canada. The Acceptance Fee
payable by Chrysler Canada to such Bank under subsection 3.3(d) in
respect of each Bankers' Acceptance accepted and purchased by such
Bank shall be set off against the BA Discount Proceeds payable by such
Bank under this subsection 3.3(b)(9).
(10) Sale of Bankers' Acceptances. Each C$ Bank may at any
time and from time to time hold, sell, rediscount or otherwise dispose
of any or all Bankers' Acceptances accepted and purchased by it.
(11) Waiver of Presentment and Other Conditions. Chrysler
Canada waives presentment for payment and any other defense to payment
of any amounts due to a C$ Bank in respect of a Bankers' Acceptance
accepted by it pursuant to this Agreement which might exist solely by
reason of such Bankers' Acceptance being held, at the maturity
thereof, by such Bank in its own right and Chrysler Canada agrees not
to claim any days of grace if such Bank as holder sues Chrysler Canada
on the Bankers' Acceptances for payment of the amount payable by
Chrysler Canada thereunder.
<PAGE> 28
24
(c) With respect to each Bankers' Acceptance, Chrysler
Canada shall give irrevocable telephone or written notice (or such other method
of notification as may be agreed upon between the Canadian Administrative Agent
and Chrysler Canada) to the Canadian Administrative Agent at or before 2:00
P.M., Toronto time, two Business Days prior to the maturity date of such
Bankers' Acceptance followed by written confirmation electronically transmitted
to the Canadian Administrative Agent on the same day, of Chrysler Canada's
intention to issue a Bankers' Acceptance on such maturity date (a "Refunding
Bankers' Acceptance") to provide for the payment of such maturing Bankers'
Acceptance (it being understood that payments by Chrysler Canada and fundings
by the C$ Banks in respect of each maturing Bankers' Acceptance and the related
Refunding Bankers' Acceptance shall be made on a net basis reflecting the
difference between the face amount of such maturing Bankers' Acceptance and the
BA Discount Proceeds (net of the applicable Acceptance Fee) of such Refunding
Bankers' Acceptance). Any repayment of Bankers' Acceptances must be made at or
before 12:00 noon, Toronto time, on the respective maturity dates of such
Bankers' Acceptances. If Chrysler Canada fails to give such notice, Chrysler
Canada shall be deemed to have repaid such maturing Bankers' Acceptances with
funds obtained by way of C$ Prime Loans commencing on the maturity date of such
maturing Bankers' Acceptances.
(d) An Acceptance Fee shall be payable by Chrysler Canada to
each C$ Bank in advance (in the manner specified in subsection 3.3(b)(9)) upon
the issuance of a Bankers' Acceptance to be accepted by such Bank calculated at
the rate per annum equal to the Applicable Margin, such Acceptance Fee to be
calculated on the face amount of such Bankers' Acceptance and to be computed on
the basis of the number of days in the term of such Bankers' Acceptance.
Subject to the additional amounts payable under subsection 3.3(e), the amount
of Acceptance Fees to be paid as specified above shall be the amount which
would be due and payable if the Canadian Utilization for the term of the
relevant Bankers' Acceptance was less than 50%.
(e) On the first Business Day following the last day of each
Utilization Period, Chrysler Canada shall pay to the Canadian Administrative
Agent, for the ratable benefit of the C$ Banks an additional amount on account
of Acceptance Fees in respect of each Bankers' Acceptance outstanding during
such Utilization Period equal to an amount calculated by multiplying:
(i) a fraction, the numerator of which is the number of days in
the term of the Bankers' Acceptance in such Utilization Period
and the denominator of which is the number of days in the term
of the Bankers' Acceptance; by
(ii) the excess (if any) of (A) the amount of Acceptance Fees which
would have been payable in respect of such Bankers' Acceptance
had the Canadian Utilization at the time of the issuance of
such Bankers' Acceptance been the same as the actual Canadian
Utilization during such Utilization Period, over (B) the
amount of Acceptance Fees which actually were paid in respect
of such Bankers' Acceptance.
3.4 Conversion Option. Subject to the provisions of this
Agreement, Chrysler Canada may, prior to the Termination Date, effective on any
Business Day, convert, in whole or in part, C$ Prime Loans into Bankers'
Acceptances or vice versa upon giving to the Canadian Administrative Agent
prior irrevocable telephone or written notice within the notice period and in
the form which would be required to be given to the Canadian Administrative
Agent in respect of the category of C$ Prime Loan into which the outstanding C$
Prime Loan is to be converted in accordance with the
<PAGE> 29
25
provisions of subsection 3.2 or 3.3, as applicable, followed by written
confirmation on the same day, provided that:
(i) no C$ Prime Loan may be converted into a Bankers' Acceptance
when any Event of Default has occurred and is continuing and
the Canadian Administrative Agent has or the Required C$ Banks
have determined in its or their sole discretion that such
conversion is not appropriate;
(ii) each conversion to Bankers' Acceptances shall be for a minimum
aggregate amount of C$10,000,000 (and whole multiples of
C$100,000 in excess thereof) and each conversion to C$ Prime
Loans shall be in a minimum aggregate amount of C$5,000,000;
and
(iii) Bankers' Acceptances may be converted only on the maturity
date of such Bankers' Acceptances and, provided that, if less
than all Bankers' Acceptances are converted, then after such
conversion not less than C$10,000,000 (and whole multiples of
C$100,000 in excess thereof) shall remain as Bankers'
Acceptances.
3.5 Currency Fluctuations, etc. (a) No later than 2:00
P.M., Toronto time, on each Canadian Calculation Date, the Canadian
Administrative Agent shall (i) determine the Canadian Exchange Rate as of such
date and (ii) give notice thereof to Chrysler and Chrysler Canada. The
Canadian Exchange Rate so determined shall become effective on the first
Business Day immediately following the relevant Canadian Calculation Date (a
"Canadian Reset Date") and shall remain effective until the next succeeding
Canadian Reset Date.
(b) No later than 2:00 P.M., New York City time, on each
Canadian Reset Date and each Borrowing Date in respect of C$ Loans, the
Canadian Administrative Agent shall (i) determine the US$ Equivalent of the C$
Loans then outstanding (after giving effect to any C$ Loans to be made or
repaid on such date) and (ii) notify Chrysler and Chrysler Canada of the
results of such determination.
(c) If, on any Canadian Reset Date (after giving effect to
(i) any C$ Loans to be made or repaid on such date and (ii) any increase or
decrease in any Canadian Commitment pursuant to subsection 13.9 effective on
such date of which the Canadian Administrative Agent has received notice), the
Aggregate Canadian Extensions of Credit of any C$ Bank exceeds 105% of the
Canadian Commitment of such C$ Bank, then, within ten Business Days after
notice thereof from the Canadian Administrative Agent, (i) Chrysler Canada
shall reduce the aggregate C$ Loans (which reduction, in the case of Bankers'
Acceptances, may be effected by Defeasance thereof) and/or (ii) Chrysler shall
increase the Canadian Commitments pursuant to subsection 13.9 in an amount such
that, after giving effect thereto, the Aggregate Canadian Extensions of Credit
of each C$ Bank shall be equal to or less than the Canadian Commitment of such
Bank.
(d) The Canadian Administrative Agent shall promptly furnish
the Administrative Agent and each affected C$ Bank with a copy of any notice
delivered to Chrysler or Chrysler Canada pursuant to this subsection 3.5.
(e) Notwithstanding the foregoing provisions of this
subsection 3.5, after the initial Canadian Calculation Date, the Canadian
Administrative Agent may at its option suspend the resetting
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26
of the Canadian Exchange Rate pursuant to subsection 3.5(a) and the making of
the determinations referred to in subsections 3.5(b) and 3.5(c) during any
period when the sum of the Aggregate Canadian Extensions of Credit of all C$
Banks, calculated using the Canadian Exchange Rate effective as of the last
Canadian Reset Date prior to such suspension, is less than 50% of the aggregate
Canadian Commitments then in effect.
SECTION 4. GENERAL PROVISIONS
4.1 Repayment of Loans; Evidence of Debt. (a) The
relevant Facility Borrower shall repay to the relevant Agent for the account of
each relevant Bank all outstanding relevant Facility Loans (together with all
accrued unpaid interest thereon) on the Termination Date (or such earlier date
as may be established pursuant to Section 9) and shall pay interest on the
relevant unpaid principal amount of the Facility Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in subsection 4.2.
(b) (i) Each Bank shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Facility Borrower to
the appropriate lending office of such Bank resulting from each Facility Loan
made by such lending office of such Bank from time to time, including the
amounts of principal and interest payable and paid to such lending office of
such Bank from time to time under this Agreement.
(ii) The Administrative Agent shall maintain the U.S. Register
pursuant to subsection 13.6(d), and a subaccount for each US$ Bank, in which
Register and subaccounts (taken together) shall be recorded (A) the amount of
each U.S. Loan made hereunder, the Type of each U.S. Loan made and the
Interest Period (if any) applicable thereto, (B) the amount of any principal or
interest due and payable or to become due and payable from Chrysler to each US$
Bank hereunder and (C) the amount of any sum received by the Administrative
Agent hereunder from Chrysler and each US$ Bank's share thereof.
(iii) The Canadian Administrative Agent shall maintain the Canadian
Register pursuant to subsection 13.6(d), and a subaccount for each C$ Bank, in
which Register and subaccounts (taken together) shall be recorded (A) the
amount of each C$ Loan made hereunder, whether such Loan is a C$ Prime Loan or
a Bankers' Acceptance, (B) the amount of any principal or interest due and
payable or to become due and payable from Chrysler Canada to each C$ Bank
hereunder and (C) the amount of any sum received by the Canadian Administrative
Agent hereunder from Chrysler Canada and each C$ Bank's share thereof.
(iv) The entries made in the Registers and accounts maintained
pursuant to paragraphs (i), (ii) and (iii) of this subsection 4.1(b) shall, to
the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations of the relevant Facility Borrower
therein recorded; provided, however, that the failure of any Bank or either
Agent to maintain such account, such Register or such subaccount, as
applicable, or any error therein, shall not in any manner affect the obligation
of each Facility Borrower to repay the Facility Loans (and all other amounts
owing with respect thereto) made to such Facility Borrower in accordance with
the terms of this Agreement.
4.2 Interest Rate and Payment Dates. (a) The Eurodollar
Loans shall bear interest for each day during each Interest Period therefor on
the unpaid principal amount thereof at a rate per
<PAGE> 31
27
annum equal to the Eurodollar Rate determined for such Interest Period in
accordance with the terms hereof plus the Applicable Margin in effect on the
first day of such Interest Period.
(b) The Base Rate Loans shall bear interest on the unpaid
principal amount thereof, for each day from the date such Base Rate Loans are
made until the maturity thereof (whether at the stated maturity, by
acceleration or otherwise) at a rate per annum equal to the Base Rate for such
day.
(c) Each C$ Prime Loan shall bear interest on the unpaid
principal amount thereof, for each day from the date such C$ Prime Loans are
made until the maturity thereof (whether at the stated maturity, by
acceleration or otherwise), at a rate per annum equal to the Canadian Prime
Rate determined for such day.
(d) If all or a portion of (i) the principal amount of any
Facility Loan, (ii) any interest payable thereon or (iii) any Facility Fee,
Acceptance Fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise) such overdue
amount shall bear interest for each day from the date of such non-payment until
paid in full (both before and after judgment) at a rate per annum which is (x)
in the case of overdue principal, the rate that would otherwise be applicable
thereto pursuant to the foregoing provisions of this subsection 4.2 plus 2%,
or (y) in the case of any overdue interest, Facility Fee, Acceptance Fee or
other amount, the rate described in subsection 4.2(b) (in the case of amounts
payable in Dollars) or 4.2(c) (in the case of amounts payable in C$) plus 2%,
in each case from the date of such non-payment to (but excluding) the date on
which such amount is paid in full (as well after as before judgment).
(e) Interest shall be payable in arrears (i) with respect to
Eurodollar Loans having an Interest Period of three months or less, on the last
day of such Interest Period, (ii) with respect to Eurodollar Loans having an
Interest Period longer than three months, on each day which is three months, or
a whole multiple thereof, after the first day of such Interest Period and the
last day of such Interest Period, (iii) with respect to Base Rate Loans and C$
Prime Loans, on the last day of each March, June, September and December, and
(iv) with respect to all Facility Loans, upon each repayment, prepayment or
conversion thereof; provided that interest accruing pursuant to subsection
4.2(d) shall be payable on demand. Interest payable in respect of U.S. Loans
shall be payable in Dollars by Chrysler and interest payable in respect of C$
Loans shall be payable in C$ by Chrysler Canada (subject to Section 12).
(f) The amount of interest on any Eurodollar Loans to be paid
on any date as specified in paragraph (e) above shall in each case be
determined under the assumption that the U.S. Utilization for the Utilization
Period(s) during which such interest accrued was less than 50%. On the first
Business Day following the last day of each Excess U.S. Utilization Period,
Chrysler shall pay to the Administrative Agent, for the benefit of the US$
Banks, an additional amount of interest equal to the excess (if any) of (i) the
amount of interest which accrued during such U.S. Utilization Period after
giving effect to the actual U.S. Utilization for such Utilization Period
(whether or not such accrued interest was actually payable during such
Utilization Period) over (ii) the amount of interest which would have accrued
during such Utilization Period if the U.S. Utilization during such Utilization
Period had been less than 50%.
4.3 Facility Fees. (a) Chrysler agrees to pay to the
Administrative Agent, for the account of each US$ Bank, in Dollars, a facility
fee (the "U.S. Facility Fee") for each day from and
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including the Effective Date to but excluding the Final Date. Such fee shall
be payable quarterly in arrears on (i) the first Business Day of each January,
April, July and October (for the three-month period (or portion thereof) ended
on the last day of the immediately preceding month) and (ii) on the Final Date
(for the period ended on such date for which no payment has been received
pursuant to clause (i) above) and shall be computed for each day during such
period at a rate per annum equal to the Facility Fee Rate in effect on such day
on the US$ Bank Net Combined Commitment of such US$ Bank in effect on such day.
(b) Chrysler Canada agrees to pay to the Canadian
Administrative Agent, for the account of each relevant C$ Bank, in Dollars, a
facility fee (the "Canadian Facility Fee") for each day from and including the
Effective Date to but excluding the Final Date. Such fee shall be payable
quarterly in arrears on (i) the first Business Day of each January, April, July
and October (for the three-month period (or portion thereof) ended on the last
day of the immediately preceding month) and (ii) on the Final Date (for the
period ended on such date for which no payment has been received pursuant to
clause (i) above) and shall be computed for each day during such period at a
rate per annum equal to the Facility Fee Rate in effect on such day on the
Designated Canadian Commitment Amount of such C$ Bank in effect on such day.
4.4 Lending Procedures. (a) Unless the relevant Agent
shall have received notice from a Bank prior to a Borrowing Date that such Bank
will not make available to such Agent such Bank's ratable portion of the
relevant borrowing, such Agent may assume that such Bank has made such portion
available to such Agent on the date of such borrowing in accordance with
subsection 2.2, 3.2 or 3.3, and such Agent may, in reliance upon such
assumption, make available to the relevant Facility Borrower on such date a
corresponding amount. If such Agent does, in such circumstances, make
available to such Facility Borrower such amount, such Bank shall make such
ratable portion available to such Agent forthwith on demand, together with
interest thereon for each day from and including such Borrowing Date that such
ratable portion was not made available, at the Federal Funds Effective Rate in
the case of U.S. Loans) or at the then effective Bank Rate (in the case of C$
Loans). If such amount is so made available, such payment to such Agent shall
constitute such Bank's Loan on such Borrowing Date for all purposes of this
Agreement. If such amount is not so made available to such Agent, then such
Agent shall notify the relevant Facility Borrower of such failure, and on the
fourth Business Day following such Borrowing Date such Facility Borrower shall
pay to such Agent such ratable portion, together with interest thereon for each
day that such Facility Borrower had the use of such ratable portion, at the
Federal Funds Effective Rate (in the case of U.S. Loans) or at the then
effective Bank Rate (in the case of C$ Loans). Nothing contained in this
subsection 4.4 shall relieve any Bank which has failed to make available its
ratable portion of any borrowing hereunder from its obligation to do so in
accordance with the terms hereof.
(b) The failure of any Bank to make the Loan to be made by it
on any Borrowing Date shall not relieve any other Bank of its obligation, if
any, hereunder to make its Loan on such Borrowing Date, but no Bank shall be
responsible for the failure of any other Bank to make the Loan to be made by
such other Bank on such Borrowing Date.
4.5 Termination or Reduction of Commitments. Chrysler
shall have the right, upon not less than five Business Days' notice to the
Administrative Agent, to terminate the U.S. Commitments or, from time to time,
reduce the amount of the U.S. Commitments; provided, that, after giving effect
thereto and any contemporaneous prepayment of the Loans, (a) the Aggregate U.S.
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Extensions of Credit of each US$ Bank shall be no greater than such Bank's U.S.
Net Commitment, (b) the Aggregate U.S./Foreign Extensions of Credit of each US$
Bank shall be no greater than such Bank's U.S. Commitment and (c) the aggregate
of all Foreign Currency Subfacility Maximum Borrowing Amounts in respect of
each US$ Bank shall not exceed 60% of such Bank's U.S. Commitment. Chrysler
Canada shall have the right, upon not less than five Business Days' notice to
the Administrative Agent, to terminate the Canadian Commitments or, from time
to time, reduce the amount of the Canadian Commitments; provided, that, after
giving effect thereto and any contemporaneous prepayment of the C$ Loans, the
Aggregate Canadian Extensions of Credit of each C$ Bank shall be no greater
than such Bank's Canadian Commitment. Upon receipt of such notice the
Administrative Agent shall promptly notify each relevant Bank thereof. Any
such reduction shall be in an amount equal to $25,000,000 or a multiple of
$1,000,000 in excess thereof (in the case of U.S. Commitments) and $10,000,000
or a multiple of $1,000,000 in excess thereof (in the case of Canadian
Commitments), and shall reduce permanently the amount of the affected
Commitments then in effect. Any termination of the Commitments shall be
accompanied by prepayment in full of the relevant Loans, together with accrued
interest thereon to the date of such prepayment, and the prepayment of any
unpaid fee then accrued hereunder and the payment of any other amounts due
pursuant to subsection 4.11.
4.6 Optional Prepayments. Each Facility Borrower may, at
its option at any time and from time to time, prepay the Loans made to it, in
whole or in part, without premium or penalty, subject to the provisions of
subsection 4.11, upon at least four Business Days' notice to the relevant Agent
specifying the date and amount of prepayment and the category or categories of
Facility Loan to be prepaid, provided that each partial prepayment shall be in
an aggregate amount equal to $25,000,000 or a multiple of $1,000,000 in excess
thereof (in the case of U.S. Loans) and C$5,000,000 or a multiple of
C$1,000,000 in excess thereof (in the case of C$ Prime Loans), and provided,
further, that after giving effect to any prepayment of Eurodollar Loans, the
aggregate principal amount of the Eurodollar Loans comprising any outstanding
Eurodollar Tranche shall not be less than $25,000,000. Upon receipt of such
notice, the relevant Agent shall promptly notify each relevant Bank thereof.
Such notice shall be irrevocable, and the payment amount specified in such
notice shall be due and payable on the date specified, together with accrued
interest to such date on the amount prepaid. Notwithstanding anything to the
contrary above, Facility Loans consisting of Bankers' Acceptances may not be
prepaid pursuant to this subsection 4.6.
4.7 Computation of Interest and Fees. (a) Interest
(other than interest calculated on the basis of the Prime Rate or the Canadian
Prime Rate) shall be calculated on the basis of a 360-day year for the actual
days elapsed. Facility Fees, Acceptance Fees and interest calculated on the
basis of the Prime Rate or the Canadian Prime Rate is expressed herein and
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The relevant Agent shall, as soon as
practicable, notify the relevant Facility Borrower and the relevant Banks of
each determination of the Eurodollar Rate or the Applicable BA Discount Rate.
Any change in the interest rate on a Facility Loan or in any Facility Fee or
Acceptance Fee resulting from a change in the Base Rate, the Canadian Prime
Rate, the Applicable Margin or Status shall become effective as of the opening
of business on the day on which such change in the Base Rate or Canadian Prime
Rate shall become effective, or the Applicable Margin or Status changes as
provided herein, as the case may be. Subject to subsection 4.2(f), the
Applicable Margin with respect to Eurodollar Loans or Bankers' Acceptances that
is in effect on the first day of any Interest Period with respect to such
Eurodollar Loans or Bankers' Acceptances shall remain in effect throughout such
Interest Period. The relevant
<PAGE> 34
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Agent shall notify the relevant Facility Borrower and the relevant Banks of the
effective date and the amount of each such change in the Base Rate or Canadian
Prime Rate.
(b) Each determination, pursuant to and in accordance with
any provision of this Agreement, of an interest rate applicable to a Eurodollar
Loan or Bankers' Acceptances for any Interest Period by the relevant Agent, and
each determination by a Reference Bank of a rate with respect to a Eurodollar
Loan or a Bankers' Acceptance for any Interest Period to be notified to the
relevant Agent pursuant to the definition of "Eurodollar Rate" or "Applicable
BA Discount Rate", as the case may be, shall be conclusive and binding on the
relevant Facility Borrower and the relevant Banks in the absence of manifest
error. The relevant Agent shall deliver to such Facility Borrower a statement
showing the quotations given by the relevant Reference Bank and the computation
used by the relevant Agent in determining any Eurodollar Rate or Applicable BA
Discount Rate.
(c) If any Reference Bank's relevant Commitment shall
terminate (otherwise than on termination of all the Commitments), or, as the
case may be, the relevant Facility Loans made by it are assigned, or prepaid or
repaid (otherwise than on the prepayment or repayment of the relevant Facility
Loans among the Banks) for any reason whatsoever, such Reference Bank shall
thereupon cease to be a Reference Bank, and, if as a result of the foregoing,
there shall only be one Reference Bank of a particular category remaining, then
the relevant Agent (after consultation with the relevant Facility Borrower and
the relevant Banks) shall, as soon as practicable thereafter, by notice to the
relevant Facility Borrower and the relevant Banks, designate another Bank that
is willing to act as a Reference Bank so that there shall at all times be at
least two Reference Banks of each category. In acting so to designate another
Bank to serve as a Eurodollar Reference Bank, the Administrative Agent will use
its best efforts to ensure that one Eurodollar Reference Bank will, at all
times, be a US$ Bank that has its headquarters office located outside the
United States.
(d) If any of the relevant Reference Banks shall be unable or
shall otherwise fail to provide notice of a rate to the relevant Agent with
respect to a Eurodollar Rate, an Applicable BA Discount Rate or a Foreign
Exchange Rate, such rate shall be determined on the basis of the rates provided
in notices of the remaining relevant Reference Banks.
4.8 Pro Rata Treatment and Payments. (a) Each borrowing
of U.S. Loans shall be made pro rata according to the then existing Available
U.S. Commitments of the US$ Banks and each borrowing of C$ Loans shall be made
pro rata according to the then existing Canadian Commitments of the C$ Banks.
Each payment (except for payments to a particular Bank pursuant to or as a
result of subsection 2.4(b), 4.9, 4.10 or 4.11 but otherwise including each
prepayment) by a Facility Borrower on account of principal of and interest on
any category of Facility Loan (other than Eurodollar Loans) shall be made on a
pro rata basis according to the amounts of the then outstanding Facility Loans
of such type of the relevant Banks. Each payment (including each prepayment)
by Chrysler on account of principal of and interest on Eurodollar Loans
designated by Chrysler to be applied to a particular Eurodollar Tranche shall
be made pro rata according to the respective outstanding principal amounts of
such Eurodollar Loans then held by the US$ Banks. Any reduction of the amount
of the Commitments of the Banks hereunder (except for a Commitment reduction or
termination pursuant to subsection 4.10), shall be made pro rata according to
the amounts of the then existing relevant Commitments. All payments (including
prepayments) by the relevant Facility Borrower hereunder shall be made without
set-off or counterclaim to the relevant Agent for the account of the relevant
Banks at the office of the relevant Agent referred to in subsection 13.2 in
Dollars or C$, as applicable, and in immediately
<PAGE> 35
31
available funds. The relevant Agent shall distribute such payments to each
relevant Bank promptly upon receipt in like funds as received. If any payment
hereunder (other than a payment in respect of a Eurodollar Loan) becomes due
and payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day, and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension. If any payment on a Eurodollar Loan becomes due and payable on
a day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day (and, with respect to payments of principal,
interest thereon will be payable at the then applicable rate during such
extension) unless the result of such extension would be to extend such payment
into another calendar month in which event such payment shall be made on the
immediately preceding Business Day. The provisions of the first four sentences
of this subsection 4.8(a) shall not apply to any borrowing or prepayment made
pursuant to subsection 13.9.
(b) Unless the relevant Agent shall have received notice from
the relevant Facility Borrower prior to the date on which any payment is due to
the relevant Banks hereunder that such Facility Borrower will not make such
payment in full, the relevant Agent may assume that such Facility Borrower has
made such payment in full to the relevant Agent on such date, and the relevant
Agent may, in reliance upon such assumption, cause to be distributed to each
relevant Bank on such due date an amount equal to the amount then due to such
Bank. If and to the extent a Facility Borrower shall not have so made such
payment in full to the relevant Agent, each relevant Bank shall repay to the
relevant Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from and including the date such
amount is distributed to such Bank to but excluding the date such Bank repays
such amount to the relevant Agent at the Federal Funds Effective Rate (in the
case of U.S. Loans) or the then effective Bank Rate (in the case of C$ Loans)
for each such day. Nothing contained in this subsection 4.8(b) shall relieve a
Facility Borrower from its obligations to make payments on all amounts due
hereunder in accordance with the terms hereof.
4.9 Increased Costs. In the event that any law, regulation,
treaty or directive or any change therein or in the interpretation or
application thereof or compliance by any Bank with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority enacted or made subsequent to the date hereof:
(a) shall subject any Bank to any Taxes with respect to this
Agreement, or any Loans, or change the basis on which such Taxes are
calculated; or
(b) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Bank; or
(c) does or shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining advances or extensions of credit hereunder to either
Facility Borrower or to reduce any amounts receivable hereunder from either
Facility Borrower (such increase in cost or reduction in amounts receivable,
"Increased Costs") then, in any such case, such Facility Borrower shall
promptly pay to the relevant Agent for the account of such Bank, upon the
written demand of such Bank to such Facility
<PAGE> 36
32
Borrower (with a copy to the relevant Agent), so long as such Increased Costs
are not otherwise included in the amounts required to be paid to such Bank
pursuant to subsection 2.4(b), 4.10 or 4.11, any additional amounts necessary
to compensate such Bank for such Increased Costs which such Bank deems to be
material as determined by such Bank with respect to its Eurodollar Loans or
Bankers' Acceptances, as the case may be. If a Bank becomes entitled to claim
any additional amounts pursuant to this subsection 4.9, it shall promptly (but
in any event within 90 days after becoming aware of such amounts) notify the
relevant Facility Borrower, through the relevant Agent, of the event by reason
of which it has become so entitled. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by a Bank, through the
relevant Agent, to the relevant Facility Borrower shall be conclusive in the
absence of manifest error. The agreements in this subsection shall survive the
termination of this Agreement, the termination of the Commitments and the
payment of the Loans and all other amounts payable hereunder.
4.10 Capital Adequacy. In the event the Board of
Governors of the Federal Reserve System, the Comptroller of the Currency or
other domestic or foreign Governmental Authority having jurisdiction with
respect to the matters referred to below shall, pursuant to any Capital
Adequacy Law (as hereinafter defined), in the opinion of counsel for any Bank
(which may, in the discretion of such Bank, be such Bank's internal counsel),
require (whether or not such requirement has the force of law) that the
Commitment of such Bank under this Agreement be treated as an asset or
otherwise be included for purposes of calculating the amount of capital to be
maintained by such Bank or any corporation controlling such Bank (such
requirement, a "Capital Adequacy Law"), and such Bank shall determine that, as
a result of any change in any Capital Adequacy Law subsequent to the Effective
Date, the cost to such Bank of maintaining its Commitment shall be increased by
an amount which such Bank determines to be material, such affected Bank shall
so notify Chrysler and the Administrative Agent within ninety (90) days of such
determination (the date of such determination, the "Determination Date"). At
the time of such notification such affected Bank shall provide Chrysler with a
written statement, certified by a senior officer of such affected Bank
responsible for assessing costs associated with its compliance with capital
adequacy requirements, setting forth the amount that would adequately
compensate such affected Bank for the costs associated with such change in
Capital Adequacy Law and setting forth in reasonable detail the assumptions
upon which such affected Bank calculated such amount, and a copy of the opinion
of counsel referred to in the preceding sentence, provided that such affected
Bank shall not be required to disclose information not made available to the
public. Chrysler and such affected Bank shall thereafter negotiate in good
faith an agreement to increase the Facility Fee payable to such affected Bank
under this Agreement, which, in the opinion of such affected Bank, will
adequately compensate such affected Bank for such costs so long as such change
in Capital Adequacy Law is in effect and continues to increase the costs to
such Bank of maintaining its Commitment. If such increase is approved in
writing by Chrysler within forty-five (45) days from the date of the notice to
Chrysler from such affected Bank, the Facility Fee payable by Chrysler under
this Agreement shall, effective from (i) the Determination Date or, if such
change in Capital Adequacy Law shall not become effective until a date which is
later than the Determination Date, from such later date or (ii) such other date
as shall be mutually agreed upon between Chrysler and such affected Bank,
include the amount of such agreed increase, and Chrysler will so notify the
Administrative Agent. If Chrysler and such affected Bank are unable to agree
on such an increase within forty-five (45) days from the date of the notice to
Chrysler from such affected Bank, Chrysler shall, by written notice to such
affected Bank within fifty (50) days from the date of the aforesaid notice to
Chrysler from such affected Bank, elect either to (a) terminate the Commitment
of such affected Bank concurrently with the execution by one or more New Banks
or Banks of supplements hereto,
<PAGE> 37
33
substantially in the form of Exhibit A or Exhibit B, as the case may be, and,
in the case of any New Bank, such New Bank becoming a party hereto pursuant to
subsection 13.9, and the sum of such New Banks' Commitments and Banks'
increases in their Commitments shall be in an aggregate amount at least equal
to the Commitment of such affected Bank immediately prior to its termination,
(b) increase the Facility Fee payable to such affected Bank by the amount and
for the time period requested by such affected Bank, or (c) extend the period
of negotiation for a further forty-five (45) day period to commence the
forty-sixth day after the date of notice from such affected Bank. At the end
of such second forty-five (45) day period Chrysler shall by written notice to
such affected Bank elect either clause (a) or clause (b) of the preceding
sentence, provided that if Chrysler elects clause (b) at such time it shall pay
to the affected Bank an increase in the Facility Fee by the amount requested by
such Bank and for the time period requested by such Bank. Without limiting the
foregoing if Chrysler elects to take the action described in clause (b) of the
second preceding sentence, it may simultaneously therewith reduce the
Commitment of such affected Bank by an amount chosen by Chrysler, provided that
concurrently therewith one or more New Banks or Banks shall have executed
supplements, substantially in the form of Exhibit A or Exhibit B, as the case
may be, and, in the case of any New Bank, become a party hereto pursuant to
subsection 13.9, and the sum of such New Banks' Commitments and Banks'
increases in their Commitments shall be in an aggregate amount at least equal
to such reduction in the Commitment of such affected Bank. If Chrysler fails
to provide notice to such affected Bank as described in the third preceding
sentence by such fiftieth day, Chrysler shall be deemed to have taken the
action described in clause (b) above. The agreements in this subsection shall
survive the termination of this Agreement, the termination of the Commitments
and the payment of the Loans and all other amounts payable hereunder.
4.11 Indemnity. Each Facility Borrower, as applicable,
agrees to indemnify each relevant Bank against and to hold each relevant Bank
harmless from any loss or reasonable expense which such Bank may sustain or
incur as a consequence of (a) default by such Facility Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans or Bankers'
Acceptances after such Facility Borrower has given a notice requesting the same
in accordance with the provisions of this Agreement, (b) default by such
Facility Borrower in making any prepayment after such Facility Borrower has
given a notice thereof in accordance with the provisions of this Agreement or
(c) the making of a prepayment or conversion of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. In the case of
Eurodollar Loans such indemnification may include an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
amount so prepaid or converted, or not so borrowed, converted or continued, for
the period from the date of such prepayment or conversion or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the amount
of interest (as reasonably determined by such Bank) which would have accrued to
such Bank on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market. This covenant
shall survive the termination of this Agreement, the termination of the
Commitments and the payment of the Facility Loans and all other amounts payable
hereunder.
4.12 Use of Proceeds. The proceeds of the Facility Loans
shall be used by each Facility Borrower for general corporate purposes
including, without limitation, the funding of acquisitions.
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4.13 Replacement of Banks. Chrysler shall be permitted to
replace any Bank which (a) requests reimbursement for amounts owing pursuant to
subsection 2.4, 4.9, 4.10, or 4.11, or (b) defaults in its obligation to make
Facility Loans, with a replacement Commercial Bank; provided that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) the relevant Facility Borrower or Foreign Subsidiary Borrower shall repay
(or the replacement Commercial Bank shall purchase, at par) all Loans (other
than Bankers' Acceptances) and other amounts (including accrued interest) owing
to such replaced Bank concurrently with such replacement, (iv) in the case of
any replaced C$ Banks, (x) Chrysler Canada shall Defease all Bankers'
Acceptances accepted by such replaced Bank and (y) Chrysler Canada shall give
the Canadian Administrative Agent notice of such Defeasance, (v) Chrysler shall
be liable to such replaced Bank under subsection 4.11 if any Eurodollar Loan
owing to such replaced Bank shall be prepaid (or purchased) other than on the
last day of the Interest Period relating thereto, (vi) the replacement
Commercial Bank, if not already a Bank, and the terms and conditions of such
replacement, shall be reasonably satisfactory to the Administrative Agent,
(vii) the replaced Bank shall be obligated to make such replacement in
accordance with the provisions of subsection 13.6 (provided that Chrysler shall
be obligated to pay the registration and processing fee referred to therein),
(viii) until such time as such replacement shall be consummated, the Facility
Borrowers shall pay all additional amounts (if any) required pursuant to
subsection 2.4, 4.9 or 4.10, as the case may be, and (ix) any such replacement
shall not be deemed to be a waiver of any rights which the Facility Borrowers,
the Foreign Subsidiary Borrowers, any Agent or any other Bank shall have
against the replaced Bank.
SECTION 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and
to make the Loans, Chrysler (and Chrysler Canada, in the case of each
representation and warranty which relates to Chrysler Canada or any of its
Subsidiaries) hereby represents and warrants to the Agents and to each Bank
that:
5.1 Financial Condition. The consolidated balance sheet
of Chrysler and its subsidiaries as at December 31, 1996 and the related
consolidated statements of income and changes in financial position for the
fiscal year ended on such date, reported on by Deloitte & Touche LLP, copies of
which, as contained in or incorporated by reference in Chrysler's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996, have heretofore been
furnished to each Bank, present fairly the consolidated financial position of
Chrysler and its subsidiaries as at such date, and the consolidated results of
their operations and changes in cash flow for the fiscal year then ended. The
unaudited consolidated balance sheet of Chrysler and its subsidiaries as at
March 31, 1997, and the related consolidated statements of income and changes
in financial position for the three-month period ended on such date, certified
by a Responsible Officer, copies of which have heretofore been delivered to
each Bank, present fairly the consolidated financial position of Chrysler and
its subsidiaries as at such date, and the consolidated results of their
operations and changes in cash flow for the three-month period then ended
(subject to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP. As at December 31, 1996, neither Chrysler nor any of its
subsidiaries had any asset, liability, contingent obligation, liability for
taxes, long-term lease or unusual forward or long-term commitment material to
the financial condition of Chrysler and its subsidiaries taken as a whole,
which was not reflected (i) in
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35
the foregoing statements or in the notes thereto or (ii) in Chrysler's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.
5.2 No Change. Between December 31, 1996 and the
Effective Date, there will have been no material adverse change in the
business, operations, property or financial condition of Chrysler and its
subsidiaries taken as a whole.
5.3 Corporate Existence. Chrysler and each of its
Significant Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
and duly qualified as a foreign corporation and in good standing under the laws
of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification except where the failure to
be so qualified would not have a material adverse effect on the business,
operations, property or financial condition of Chrysler and its Subsidiaries
taken as a whole.
5.4 Corporate Authorization; No Violation. The
execution, delivery and performance by each Facility Borrower of this Agreement
are within such Facility Borrower's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene any Requirement of Law
or Contractual Obligation of Chrysler or any of its Subsidiaries or result in
the creation of a Lien on any of their respective assets.
5.5 Government Authorization. No authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority is required to be obtained or made by either Facility Borrower for
the due execution, delivery and performance by such Facility Borrower of this
Agreement.
5.6 Federal Regulations. Neither Chrysler nor any of its
Subsidiaries is principally engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U, T, G or X), and no proceeds of any borrowing hereunder will be
used in violation of Regulation U or X. If requested by the Administrative
Agent or any Bank at any time, Chrysler will furnish to the Administrative
Agent and each Bank a statement in conformity with the requirements of FR Form
U-1 referred to in Regulation U.
5.7 Enforceable Obligations. This Agreement has been
duly executed and delivered on behalf of each Facility Borrower and constitutes
a legal, valid and binding obligation of each Facility Borrower enforceable
against such Facility Borrower in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
5.8 No Material Litigation. No litigation, investigation
or proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of either Facility Borrower, threatened by or against
Chrysler or any of its Subsidiaries or against any of its or their respective
properties or revenues (a) with respect to this Agreement or any of the
transactions contemplated hereby, or (b) which would reasonably be expected to
have a material adverse effect on the business, operations, property or
financial condition of Chrysler and its Subsidiaries taken as a whole.
SECTION 6. CONDITIONS PRECEDENT TO LOANS
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36
6.1 Conditions of Effectiveness. The effectiveness of
this Agreement is subject to the satisfaction of the following conditions
precedent:
(a) Execution of Agreement and Addenda. (i) This Agreement
shall have been executed and delivered by a duly authorized officer of
each Facility Borrower, each Bank and each Agent, (ii) the
Administrative Agent shall have received an executed Addendum (or a
copy thereof by facsimile transmission) from each Person listed on
Schedule I, provided, that, notwithstanding the foregoing, in the
event that an Addendum has not been duly executed and delivered by
each Person listed on Schedule I on the date (which shall be no
earlier than the date hereof) on which this Agreement shall have been
executed and delivered by each Facility Borrower and the
Administrative Agent, this Agreement shall, subject to satisfaction of
the other conditions precedent set forth in this subsection 6.1,
nevertheless become effective on such date with respect to those
Persons which have executed and delivered an Addendum on or before
such date if on such date Chrysler and the Administrative Agent shall
have designated one or more Commercial Banks (the " Designated Banks")
to assume, in the aggregate, all of the Commitments which would have
been held by the Persons listed on Schedule I (the "Non- Executing
Persons") which have not so executed an Addendum (subject to each such
Designated Bank's prior written consent in its sole discretion and its
execution of an Addendum). Schedule I shall automatically be deemed
to be amended to reflect the respective Commitments of the Designated
Banks and the omission of the Non-Executing Persons as Banks
hereunder. Each Facility Borrower acknowledges that each Person which
has executed an Addendum shall constitute a "Bank" for the purposes of
this Agreement.
(b) Closing Certificate. The Administrative Agent shall have
received a certificate of each Facility Borrower, dated the Effective
Date, substantially in the form of Exhibit G, with appropriate
insertions, satisfactory in form and substance to the Administrative
Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of each Facility Borrower, and
attaching the documents referred to in subsections 6.1(c) and (d).
(c) Corporate Proceedings of the Facility Borrowers. The
Administrative Agent shall have received a copy of the resolutions, in
form and substance satisfactory to the Administrative Agent, of the
Board of Directors of each Facility Borrower (or a duly authorized
committee thereof, in which case such resolutions shall be accompanied
by evidence of the authority of such committee to act in regard to
such matters) authorizing the execution, delivery and performance of
this Agreement.
(d) Corporate Documents. The Administrative Agent shall have
received true and complete copies of the certificate of incorporation
or amalgamation and by-laws of each Facility Borrower.
(e) Legal Opinions. The Administrative Agent shall have
received the following executed legal opinions, with a copy for each
Bank:
(i) the executed legal opinion of Simpson Thacher &
Bartlett, counsel to the Administrative Agent, substantially
in the form of Exhibit C;
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(ii) the executed legal opinion of William J.
O'Brien, General Counsel of Chrysler, substantially in the
form of Exhibit D-1; and
(iii) the executed legal opinion of Fasken Campbell
Godfrey, Canadian Counsel to Chrysler Canada, substantially in
the form of Exhibit D-2.
(f) Existing Credit Agreement. The Administrative Agent
shall have received satisfactory evidence that the Existing Credit
Agreement shall have been terminated pursuant to an irrevocable notice
of termination and that any amounts owing thereunder (including,
without limitation, any accrued unpaid fees thereunder through the
Effective Date) by Chrysler or Chrysler Canada, as the case may be,
shall have been (or shall upon the occurrence of the Effective Date
be) paid in full. Without affecting any terms of the Existing Credit
Agreement which expressly survive the termination of the Existing
Credit Agreement, each Bank party to the Existing Credit Agreement
hereby waives any requirement of advance notice of such termination
contained in the Existing Credit Agreement and hereby agrees that the
Existing Credit Agreement and the commitments thereunder (subject to
receipt of any other required consents of any other Person) shall
terminate simultaneously with the satisfaction of the conditions to
effectiveness set forth in this subsection 6.1.
The Administrative Agent shall notify the Banks of the Effective Date promptly
after the occurrence thereof, which notice shall be accompanied, if applicable,
by a copy of Schedule I revised to give effect to any deemed amendments thereto
made pursuant to subsection 6.1(a).
6.2 Conditions to All Facility Loans. The obligation of
each Bank to make any Facility Loan (including any Facility Loan on the
Effective Date but excluding any conversion or continuation of any Loan
pursuant to subsection 2.3 or 3.4) is subject to the satisfaction (or waiver by
the Required U.S. Banks (in the case of U.S. Loans) or the Required C$ Banks
(in the case of C$ Loans)) of the conditions precedent described in clauses
(a), (b) and (c) below:
(a) Representations and Warranties. The representations and
warranties made by Chrysler and, in the case of C$ Loans, Chrysler
Canada, herein (except for the representations and warranties set
forth in subsection 5.2) shall be true and correct in all material
respects on and as of the Borrowing Date for such Facility Loan as if
made on and as of such date.
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such Borrowing Date
or after giving effect to the Facility Loan to be made on such
Borrowing Date.
(c) Corporate Authority. The borrowing of such Facility Loan
shall have been duly authorized by all necessary corporate action on
the part of the relevant Facility Borrower and the relevant Agent
shall have received evidence of such corporate authority.
Each borrowing by either Facility Borrower hereunder shall constitute a
representation and warranty by such Facility Borrower hereunder as of the date
of each such borrowing that the conditions in clauses (a), (b) and (c) above
have been satisfied.
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SECTION 7. AFFIRMATIVE COVENANTS
From and after the Effective Date, so long as the Commitments
remain in effect, any Facility Loans remain outstanding and unpaid or any other
amount is owing hereunder to any Bank or either Agent:
7.1 Financial Statements. Each Facility Borrower will
furnish (a) in the case of Chrysler, to the Administrative Agent and each Bank
or (b) in the case of Chrysler Canada, to the Canadian Administrative Agent and
each C$ Bank:
(i) as soon as available, but in any event within 120 days
after the end of each fiscal year of such Facility Borrower, a copy of
the consolidated balance sheet of such Facility Borrower and its
subsidiaries as at the end of such year and the related consolidated
statements of income and cash flows for such year, setting forth in
each case in comparative form the figures as of the end of and for the
previous year, reported on without qualification or exception by
Deloitte & Touche LLP or other independent public accountants of
nationally recognized standing (other than a qualification or
exception relating to a change in the application of accounting
principles used by such Facility Borrower and its subsidiaries, which
change shall be concurred with by Deloitte & Touche LLP or such other
accountants, as the case may be); and
(ii) as soon as available, but in any event within 60 days
after the end of each of the first three quarterly periods of each
fiscal year of such Facility Borrower, a copy of the unaudited
consolidated balance sheet of such Facility Borrower and its
subsidiaries as at the end of each such quarter and the related
unaudited consolidated statements of income and cash flows of such
Facility Borrower and its subsidiaries for the portion of the fiscal
year through such date, setting forth in each case in comparative form
such figures as of the end of and for the previous year, certified by
a Responsible Officer;
all such financial statements shall present fairly the consolidated financial
condition and results of operations of such Facility Borrower and its
Subsidiaries for the period referred to therein (subject, in the case of
interim statements to normal year-end adjustment) and shall be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein (except for such changes in accounting principles
as may be approved by such Responsible Officer and concurred in by such
Facility Borrower's independent public accountants and disclosed therein). The
reports referred to in this subsection 7.1 may, at the option of the relevant
Facility Borrower, be delivered via electronic mail to any E-Mail Bank.
7.2 Certificates; Other Information. Each Facility
Borrower will furnish (a) in the case of Chrysler, to the Administrative Agent
and each Bank or (b) in the case of Chrysler Canada, to the Canadian
Administrative Agent and each C$ Bank:
(i) concurrently with each delivery of financial statements
pursuant to subsection 7.1, a certificate of a Responsible Officer (x)
stating that such officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate and (y) in
the case of Chrysler, showing in reasonable detail the calculations
supporting such statement in respect of subsection 8.1;
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39
(ii) promptly after the same are sent, copies of all
financial statements and reports which Chrysler sends to its common or
preferred stockholders as a class, and promptly after the same are
filed, copies of all regular or periodic reports which such Facility
Borrower may file with the Securities and Exchange Commission, the
Ontario Securities Commission, or any successor or analogous
Governmental Authority; and
(iii) promptly, such additional financial and other
information as the relevant Agent or any relevant Bank may from time
to time reasonably request.
7.3 Maintenance of Corporate Existence; Compliance with
Applicable Law. Chrysler will (a) maintain its corporate existence, rights and
franchises necessary to continue its business and the corporate existence,
rights and franchises necessary to continue the business of each Significant
Subsidiary, provided that the foregoing shall not be a limitation on the right
of Chrysler to discontinue any operations if in the opinion of Chrysler such
discontinuance is in the best interest of Chrysler and would not materially
adversely affect the ability of either Facility Borrower to pay its debts as
they become due; and (b) comply, and cause each Significant Subsidiary to
comply, with all provisions of any applicable law, ordinance or governmental
rule or regulation (including, without limitation, any Environmental Law or
ERISA) to which it is subject, the failure to comply with which would in the
aggregate materially and adversely affect the business, operations, property or
financial condition of Chrysler and its Subsidiaries taken as a whole.
7.4 Notices. Chrysler (and in the case of clause (a)(i)
below, Chrysler Canada, but only in the case of any Default or Event of Default
relating to it) will (a) promptly give notice in writing to the Administrative
Agent (which shall promptly notify each Bank) of (i) the occurrence of any
Default or Event of Default, or of the occurrence of any event that would be an
Event of Default under paragraph (c) of Section 9 but for the proviso therein
contained, or (ii) the commencement of (x) any material litigation or
proceedings affecting Chrysler or any Significant Subsidiary or (y) any dispute
between Chrysler or any Significant Subsidiary and any Governmental Authority
or any other party if such litigation, proceedings or dispute would reasonably
be expected to result in any material adverse change in the business,
operations, property or financial condition of Chrysler or any of its
Significant Subsidiaries; and (b) as soon as possible, deliver to the
Administrative Agent (which shall promptly notify each Bank) copies of any
notices received by Chrysler of any failure or alleged failure to meet CAFE,
emission or safety requirements that Chrysler reasonably deems to be material
to the business, operations, property or financial condition of Chrysler.
SECTION 8. NEGATIVE COVENANTS
From and after the Effective Date, so long as the Commitments
remain in effect, any Facility Loans remain outstanding and unpaid or any other
amount is owing hereunder to any Bank or either Agent:
8.1 Indebtedness to Total Capitalization. Chrysler will
not permit the ratio of Indebtedness to Total Capitalization as of the last day
of any quarterly period of any fiscal year of Chrysler to be greater than 0.60
to 1.0.
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40
8.2 Limitation on Liens. Chrysler will not, nor will it
permit any Subsidiary (other than Eurostar and New Venture Gear) to, create,
assume or incur or suffer to be created, assumed or incurred or to exist any
Lien on any of its properties or assets, whether now owned or hereafter
acquired, provided, however, that the foregoing restriction shall not apply to
the following:
(a) Liens existing on the Effective Date and described on
Schedule II hereto;
(b) Liens on property or assets of any corporation existing
at the time such corporation becomes a Subsidiary;
(c) Liens in favor of Chrysler or any Wholly-owned
Subsidiary;
(d) Liens in favor of any Governmental Authority to secure
progress, advance or other payments pursuant to any contract or
provision of any statute;
(e) Liens (including, without limitation, the interest of the
lessor under any capital lease) on property or assets (i) existing at
the time of the acquisition thereof (including acquisition through
merger or consolidation) or (ii) to secure the payment of all or any
part of the purchase price or construction cost thereof or to secure
any Indebtedness incurred prior to, at the time of, or within 150
consecutive days after, the acquisition or completion of such property
or assets for the purpose of financing all or any part of the purchase
price or construction cost thereof;
(f) any extension, renewal or replacement (or successive
extensions, renewals or replacements), as a whole or in part, of any
Lien referred to in the foregoing clauses (a) through (e), inclusive;
provided that (i) no such extension, renewal or replacement
shall result in an increase in the liabilities secured thereby and (ii)
such extension, renewal or replacement Lien shall be limited to all or
a part of the same property that secured the Lien so extended, renewed
or replaced (plus additions, accessions, replacements and improvements
to such property);
(g) Liens in respect of judgments or awards or in respect of
attachments (i) in an amount less than $25,000,000 for a period of 150
consecutive days after the same shall have been incurred or (ii) which
shall have been stayed pending appeal or bonded and which Chrysler or
any Subsidiary, as the case may be, shall, at the time, in good faith
be contesting in appropriate proceedings;
(h) Liens on properties acquired for use as dealerships and
incurred in the ordinary course of business by Chrysler or any
Subsidiary;
(i) Liens in the form of pledges by any Chrysler Mexican
Subsidiary to financial institutions of Dollar or Mexican peso
deposits or Dollar or Mexican peso certificates of deposit owned by
such Chrysler Mexican Subsidiary to secure Dollar or Mexican peso
borrowings from such financial institutions by such Chrysler Mexican
Subsidiary;
<PAGE> 45
41
(j) Liens on (i) motor vehicles leased to employees and (ii)
employee lease payments in connection with the Chrysler employee lease
program to secure the purchase price of such motor vehicles;
(k) Assignments of rights under letters of credit issued in
connection with export transactions;
(l) Transfers with or without recourse to financial
institutions of receivables arising from sales of vehicles and parts
in the ordinary course of business;
(m) Permitted Encumbrances;
(n) Liens (including, without limitation, the interest of the
lessor under any capital lease) on property or assets of Foreign
Subsidiaries to secure the payment of all or any part of the purchase
price or construction cost thereof or to secure any Indebtedness
incurred for the purpose of financing all or any part of the purchase
price or construction cost thereof, provided that the aggregate
principal amount of the liabilities secured by such Liens shall not
exceed at any one time outstanding 10% of Total Shareholders' Equity;
and
(o) Liens (other than those permitted by clauses (a) through
(n) above) securing liabilities of Chrysler or any of its Subsidiaries
incurred after the Effective Date in an aggregate principal amount not
to exceed at any one time outstanding 10% of Total Shareholders'
Equity (as of the last day of the most recent fiscal quarter of
Chrysler).
8.3 Limitation on Sales and Leasebacks. Chrysler will
not, nor will it permit any Subsidiary (other than Eurostar and New Venture
Gear) to, enter into any agreement with any Person (not including Chrysler or
any Subsidiary) providing for the leasing by Chrysler or a Subsidiary of any
real or personal property which has been owned and operated by Chrysler or any
such Subsidiary for more than 150 consecutive days and which has been or is to
be sold or transferred by Chrysler or such Subsidiary to such Person or to any
other Person to whom funds have been or are to be advanced by such Person on
the security of such real or personal property (herein referred to as a "sale
and leaseback transaction") unless Chrysler or such Subsidiary would be
permitted to create Indebtedness secured by a Lien pursuant to subsection 8.2
on the real or personal property to be leased in an amount equal to such
Indebtedness, if any, with respect to such sale and leaseback transaction;
provided, that, in addition to the foregoing, Chrysler and each of its
Subsidiaries may enter into sale and leaseback transactions so long as the
aggregate book value of the real or personal property leased with respect
thereto does not exceed at any one time outstanding $100,000,000 for Chrysler
and all such Subsidiaries. Notwithstanding the provisions of this subsection,
a sale of property and a leaseback thereof pursuant to an operating lease (that
is, a lease which under GAAP would not be capitalized on the books of the
lessee) thereof shall not be deemed to be a sale and leaseback transaction.
8.4 Limitation on Fundamental Changes. (a) Chrysler
will not (i) merge or consolidate with any other Person (unless (x) Chrysler
shall be the continuing corporation and (y) immediately before and immediately
after giving effect to such merger or consolidation, no Default or Event of
Default shall have occurred and be continuing) or (ii) sell or convey all or
substantially all of its assets to any Person.
<PAGE> 46
42
(b) Chrysler Canada will not (i) amalgamate with any other
Person (unless (x) the amalgamated Person shall, if requested by the Canadian
Administrative Agent, execute and deliver a confirmation that it is a resident
of Canada for purposes of the Income Tax Act (Canada), a ratification of any
outstanding C$ Loans and a confirmation of its assumption of the Subsidiary
Borrower Obligations owing by Chrysler Canada and (y) immediately before and
immediately after giving effect to such amalgamation, no Default or Event of
Default shall have occurred and be continuing) or (ii) sell or convey all or
substantially all of its assets to any Person (other than Chrysler).
SECTION 9. EVENTS OF DEFAULT
Upon the occurrence of any of the following events:
(a) Chrysler or any Subsidiary Borrower shall fail to pay any
principal of any Loan when due in accordance with the terms hereof or
of the relevant Foreign Currency Subfacility, as the case may be; or
fail to pay any interest on any Loan, or any other amount payable
hereunder or under any Foreign Currency Subfacility, within five
Business Days after any such amount becomes due in accordance with the
terms hereof or of the relevant Foreign Currency Subfacility, as the
case may be; or
(b) Any representation or warranty made or deemed made by
either Facility Borrower herein (or in any amendment hereto) or which
is contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this
Agreement shall prove to have been incorrect on or as of the date made
or deemed made in any respect which is materially adverse (i) in
relation to the business, operations, property or financial condition
of Chrysler and its Subsidiaries taken as a whole or (ii) to the
validity or enforceability of this Agreement or the rights and
remedies of the Administrative Agent or the Banks hereunder; or
(c) Chrysler shall default in the observance or performance
of any agreement contained in subsection 8.1 provided that so long as
no Facility Loans are outstanding hereunder while any such default is
continuing, such default shall not be a Default or become an Event of
Default hereunder until the earliest of (i) the date of furnishing
pursuant to subsection 7.1 of financial statements covering the fiscal
quarter next following the initial date as of which such default
occurred, which financial statements show that such default is
continuing as of the last day of such next following quarter, (ii) the
last day of the period (without regard to any grace period provided by
paragraph (e) of this Section 9) within which financial statements
covering the fiscal quarter next following the initial date of such
default are required to be furnished pursuant to subsection 7.1 if
such financial statements have not then been furnished, and (iii) the
close of business on the Business Day next preceding the date of
delivery by either Facility Borrower of a notice of intention to
borrow pursuant to subsection 2.2, 3.2 or 3.3 that is delivered after
the initial date as of which such default occurred and before the
delivery of financial statements covering the next following fiscal
quarter showing that such default has ceased to exist; or
(d) either Facility Borrower shall default in the observance
or performance of any agreement contained in subsections 8.2 through
8.4; or
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43
(e) either Facility Borrower shall default in the observance
or performance of any other agreement, covenant or term contained in
this Agreement, and such default shall continue unremedied for a
period of 30 days after receipt by such Facility Borrower of notice of
such default from either Agent or the Required Banks; or
(f) (i) Chrysler or any Significant Subsidiary shall default
in any payment or payments on any Indebtedness (other than the Loans),
which payment or payments at any one time aggregate more than
$25,000,000 (or its equivalent in another currency), beyond the period
of grace, if any, provided in the instrument or agreement under which
such Indebtedness was created or (ii) Chrysler or any Significant
Subsidiary shall default in the observance or performance of any
agreement or condition relating to any Indebtedness (other than the
Loans) in the principal amount of more than $25,000,000 (or its
equivalent in another currency) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist with respect to any such Indebtedness
(in each case with respect to this clause (ii), excluding a default in
any payment on any Indebtedness), and the effect of such default,
event or condition is to cause such Indebtedness to become due prior
to its stated maturity (or in the case of Indebtedness constituting a
Guaranty, to require payment thereof); provided, however, that no
default of the type described in clause (i) above shall be deemed to
have occurred with respect to any Chrysler Mexican Subsidiary solely
by reason of a default by such Chrysler Mexican Subsidiary in any
payment of any Indebtedness denominated in a currency other than
Mexican pesos or any guarantee thereof that occurs solely as a result
of the inability of such Chrysler Mexican Subsidiary to obtain such
other currency with Mexican pesos; or
(g) (i) Chrysler or any of its Significant Subsidiaries shall
commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or relating to winding-up,
liquidation, dissolution, composition or other relief with respect to
it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any
substantial part of its assets, or Chrysler or any of its Significant
Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Chrysler or any of
its Significant Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60
consecutive days; or (iii) there shall be commenced against Chrysler
or any of its Significant Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief
which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 consecutive days from the entry thereof; or
(iv) Chrysler or any of its Significant Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii) or
(iii) above; or (v) Chrysler or any of its Significant Subsidiaries
shall admit in writing its inability to pay its debts generally as
they become due; or
<PAGE> 48
44
(h) one or more final judgments or decrees not subject to
appeal shall be entered against Chrysler or any of its Subsidiaries
involving in the aggregate a liability (to the extent not paid or
covered by insurance) of $25,000,000 (or its equivalent in another
currency) or more and shall have been unpaid for a period of 30
consecutive days;
then, and in any such event, (a) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (g) above with respect to either
Facility Borrower, automatically (x) the Commitments shall immediately
terminate and (y) the Loans (including the face amount of all Bankers'
Acceptances accepted by any C$ Bank), with accrued interest thereon, and all
other amounts owing under this Agreement and the Foreign Currency Subfacilities
shall immediately become due and payable, and (b) if such event is any other
Event of Default, either or both of the following actions may be taken: (i)
with the consent of the Required Banks, the Administrative Agent may, or upon
the request of the Required Banks, the Administrative Agent shall, by notice to
each Facility Borrower, declare the Commitments to be terminated forthwith,
whereupon the Commitments shall immediately terminate; and (ii) with the
consent of the Required Banks, the Administrative Agent may, or upon the
request of the Required Banks, the Administrative Agent shall, by notice of
default to each Facility Borrower, declare the Loans (including the face amount
of all Bankers' Acceptances accepted by any C$ Bank), with accrued interest
thereon, and all other amounts owing under this Agreement and the Foreign
Currency Subfacilities to be due and payable forthwith, whereupon the same
shall immediately become due and payable. Except as expressly provided above
in this Section 9, presentment, demand, protest and all other notices of any
kind are hereby expressly waived.
SECTION 10. THE AGENTS
10.1 Appointment. Each Bank hereby irrevocably designates
and appoints the Administrative Agent as the administrative agent of such Bank
under this Agreement, and each such Bank irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and to exercise such powers and perform such
duties as are expressly delegated to the Administrative Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Each C$ Bank hereby irrevocably designates and appoints the Canadian
Administrative Agent as the Canadian administrative agent of such Bank under
this Agreement, and each C$ Bank hereby irrevocably authorizes the Canadian
Administrative Agent as Canadian administrative agent for such Bank to take
such action on its behalf under the provisions of this Agreement and to
exercise such powers and perform such duties as are expressly delegated to the
Canadian Administrative Agent by the terms of this Agreement, together with
such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, neither Agent shall have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any Foreign Currency Subfacility or otherwise exist against either
Agent.
10.2 Delegation of Duties. Each Agent may execute any of
its duties under this Agreement by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Neither Agent shall be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with reasonable
care.
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46
10.3 Exculpatory Provisions. Neither Agent nor any of
their respective officers, directors, employees, agents, attorneys- in-fact or
affiliates shall be (a) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement (except
for its or such Person's own gross negligence or willful misconduct) or (b)
responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by either Facility Borrower, any Foreign
Subsidiary Borrower or any Subsidiary or any officer thereof contained in this
Agreement, any Foreign Currency Subfacility or in any certificate, report,
statement or other document referred to or provided for in, or received by
either Agent under or in connection with, this Agreement or any Foreign
Currency Subfacility or for the sufficiency of this Agreement or any Foreign
Currency Subfacility or for any failure of either Facility Borrower, any
Foreign Subsidiary Borrower or any Subsidiary to perform its obligations
hereunder or thereunder. Neither Agent shall be under any obligation to any
Bank to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any Foreign
Currency Subfacility, or to inspect the properties, books or records of either
Facility Borrower, any Foreign Subsidiary Borrower or any Subsidiary.
10.4 Reliance by Agents. Each Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to Chrysler), independent accountants
and other experts selected by the relevant Agent. Each Agent shall be fully
justified in failing or refusing to take any action under this Agreement unless
it shall first receive such advice or concurrence of the Required Banks (or, if
so required by this Agreement, all of the Banks) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Required Banks (or, if so required by this
Agreement, all of the Banks), and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Banks.
10.5 Notice of Default. Neither Agent shall be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Bank or either Facility
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event
that either Agent receives such a notice, such Agent shall give notice thereof
to the Banks, and, if such notice is received from a Bank, such Agent shall
give notice thereof to each Facility Borrower. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks (or, if so required by this
Agreement, all of the Banks); provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Banks.
10.6 Non-Reliance on Agents and other Banks. Each Bank
expressly acknowledges that neither Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by either Agent hereafter taken, including
any review of the affairs of either Facility Borrower, shall be deemed to
constitute any representation
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46
or warranty by either Agent to any Bank. Each Bank represents to each Agent
that it has, independently and without reliance upon either Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of the Facility
Borrowers and any Foreign Subsidiary Borrower and made its own decision to make
its Loans and enter into this Agreement and any Foreign Currency Subfacility.
Each Bank also represents that it will, independently and without reliance upon
either Agent or any other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Agreement or any Foreign Currency Subfacility and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Facility Borrowers
and any Foreign Subsidiary Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Banks by the relevant Agent
hereunder, neither Agent shall have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of either Facility
Borrower or any Foreign Subsidiary Borrower which may come into the possession
of such Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
10.7 Indemnification. The Banks (or, in the case of the
indemnity in favor of the Canadian Administrative Agent, the C$ Banks) agree to
indemnify each Agent (to the extent not reimbursed by either Facility Borrower
and without limiting the obligation of each Facility Borrower to do so),
ratably according to the respective amounts of their Commitment Percentages
(or, in the case of the indemnity in favor of the Canadian Administrative
Agent, the C$ Banks' respective C$ Commitment Percentages) in effect on the
date on which indemnification is sought under this subsection 10.7 (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated, ratably in accordance with such Commitment Percentages (or C$
Commitment Percentages) immediately prior to such date), from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following the
payment of the Loans) be imposed on, incurred by or asserted against such Agent
in any way relating to or arising out of this Agreement or any Foreign Currency
Subfacility, or any documents contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing, provided that no Bank shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Agent's gross negligence or willful
misconduct. The agreements in this subsection 10.7 shall survive the
termination of this Agreement or any Foreign Currency Subfacility, the
termination of the Commitments and the payment of the Loans and all other
amounts payable hereunder or under any Foreign Currency Subfacility.
10.8 Agents in their Individual Capacity. Each Agent and
its affiliates may make loans to, accept deposits from and generally engage in
any kind of business with each Facility Borrower and any Foreign Subsidiary
Borrower as though such Agent was not an Agent hereunder. With respect to its
Loans made or renewed by it, each Agent shall have the same rights and powers
under this Agreement as any Bank and may exercise the same as though it were
not an Agent, and the terms "Bank" and "Banks" shall include each Agent in its
individual capacity.
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10.9 Successor Agents. Each Agent may resign as an Agent
upon 30 days' notice to the Banks and the Facility Borrowers and may be removed
at any time with or without cause by the Required Banks. If an Agent shall
resign or be removed as an Agent under this Agreement, then either (a) the
Required Banks shall appoint from among the Banks a successor administrative
agent or Canadian administrative agent, as applicable, for the Banks, which
successor agent shall be approved by Chrysler (unless an Event of Default shall
have occurred and be continuing), or (b) if a successor agent shall not have
been so appointed and approved within the thirty-day period following such
Agent's notice to the Banks or its removal as Agent, such Agent shall then
appoint a successor agent who shall serve as Administrative Agent or Canadian
Administrative Agent, as applicable, until such time, if any, as the Required
Banks appoint, and Chrysler approves (unless an Event of Default shall have
occurred and be continuing), a successor agent as provided in (a) above. Upon
its appointment pursuant to either clause (a) or (b) above, such successor
agent shall succeed to the rights, powers and duties of the Administrative
Agent or the Canadian Administrative Agent, as applicable, and the terms
"Administrative Agent", "Canadian Administrative Agent" and "Agent", as
applicable, shall mean such successor agent effective upon its appointment, and
the former Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or
any of the parties to this Agreement. After any retiring or removed Agent's
resignation or removal hereunder as Agent, the provisions of this Section 10
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
SECTION 11. FOREIGN CURRENCY SUBFACILITIES
11.1 Terms of Foreign Currency Subfacilities. (a) Subject
to the provisions of this Section 11, each Bank hereby agrees that Chrysler may
in its discretion from time to time designate any credit facility to which any
one or more Foreign Borrowers and any one or more Banks is a party as a
"Foreign Currency Subfacility", with the consent of each such Bank in its sole
discretion, and subject to confirmation by the Administrative Agent that such
facility complies with the requirements of this Section 11, by delivering a
Foreign Currency Subfacility Addendum to the Administrative Agent, executed by
Chrysler and any relevant Foreign Subsidiary Borrower and executed or
acknowledged in writing by each such Bank, provided, that on the effective date
of such designation (i) no Default or Event of Default shall have occurred and
be continuing and (ii) Chrysler shall have agreed in writing to pay to the
Administrative Agent an administration fee in respect of such Foreign Currency
Subfacility in an amount mutually acceptable to Chrysler and the Administrative
Agent. Each Foreign Currency Subfacility Addendum shall specify whether the
relevant Foreign Currency Subfacility is a Foreign Committed Subfacility or a
Foreign Uncommitted Subfacility. Except as otherwise provided in this Section
11, the terms and conditions of each Foreign Currency Subfacility shall be
determined by mutual agreement of the relevant Foreign Borrower(s) and Bank(s).
The documentation governing each Foreign Currency Subfacility shall contain an
express acknowledgement that such Foreign Currency Subfacility shall be subject
to the provisions of this Section 11. Each Bank party to a Foreign Currency
Subfacility must be a US$ Bank or a subsidiary, affiliate, branch or agency of
a US$ Bank, and each party hereto and, by agreeing to any Foreign Currency
Subfacility designation as contemplated hereby, any such subsidiary, affiliate,
branch or agency, acknowledges and agrees that each reference in this Agreement
to any Bank shall, to the extent applicable, be deemed to be a reference to
such subsidiary, affiliate, branch or agency. In the event of any
inconsistency between the terms of this Agreement and the terms of any Foreign
Currency Subfacility, the terms of this Agreement shall prevail. It is
understood that the provisions of subsections 4.9, 4.10 and 4.11 do not apply
to any Foreign Currency Subfacility or any Loans made thereunder.
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(b) The documentation governing each Foreign Currency
Subfacility shall set forth the maximum amount (expressed in Dollars) available
to be borrowed from each Bank thereunder (each, a "Foreign Currency Subfacility
Maximum Borrowing Amount"). In no event shall (i) the aggregate of all Foreign
Currency Subfacility Maximum Borrowing Amounts in respect of all Banks at any
time exceed $400,000,000, (ii) the aggregate of all Foreign Currency
Subfacility Maximum Borrowing Amounts in respect of any Bank at any time exceed
60% of such Bank's U.S. Commitment, or (iii) the Aggregate U.S./Foreign
Extensions of Credit of any Bank at any time exceed such Bank's U.S.
Commitment. The making of Foreign Currency Loans by a Bank under a Foreign
Currency Subfacility shall under no circumstances reduce the amount available
to be borrowed from such Bank under any other Foreign Currency Subfacility to
which such Bank is a party.
(c) Except as otherwise required by applicable law, in no
event shall the Banks party to a Foreign Currency Subfacility have the right to
accelerate the Foreign Currency Loans outstanding thereunder, or to terminate
their commitments (if any) to make such Loans prior to the stated termination
date in respect thereof, except, in each case, in connection with an
acceleration of the Loans or a termination of the Commitments pursuant to
Section 9 of this Agreement, provided, that nothing in this paragraph (c) shall
be deemed to require any Bank to make a Foreign Currency Loan if the applicable
conditions precedent to the making of such Foreign Currency Loan set forth in
the relevant Foreign Currency Subfacility have not been satisfied. No Foreign
Currency Loan may be made under a Foreign Currency Subfacility if a Default or
Event of Default shall have occurred and be continuing or would result
therefrom.
(d) The relevant Banks, or, if so specified in the relevant
Foreign Currency Subfacility, an agent acting on their behalf, shall furnish to
the Administrative Agent, immediately upon its request, a statement setting
forth the outstanding Foreign Currency Loans made under such Foreign Currency
Subfacility. The Administrative Agent shall be entitled to rely on any such
statement without further investigation.
(e) If any amendment, supplement or other modification to a
Foreign Currency Subfacility shall (i) add a Bank as a party thereto or (ii)
change the Foreign Currency Subfacility Maximum Borrowing Amount of any Bank
party thereto, Chrysler shall promptly furnish an appropriately revised Foreign
Currency Subfacility Addendum, executed by Chrysler, any relevant Foreign
Subsidiary Borrower and the affected Banks (or any agent acting on their
behalf), to the Administrative Agent.
(f) Chrysler may terminate its designation of a facility as a
Foreign Currency Subfacility, with the consent of each Bank party thereto in
its sole discretion, by written notice to the Administrative Agent, which
notice shall be executed by Chrysler, any relevant Foreign Subsidiary Borrower
and each Bank party to such Foreign Currency Subfacility (or any agent acting
on their behalf). Once notice of such termination is received by the
Administrative Agent, such Foreign Currency Subfacility and the loans and other
obligations outstanding thereunder shall immediately cease to be subject to the
terms of this Agreement (including the guarantee of Chrysler contained in
Section 12).
(g) Nothing in this Section 11 shall be deemed to limit the
ability of Chrysler or any of the Subsidiaries to enter into credit facilities
which do not constitute Foreign Currency Subfacilities.
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49
11.2 Currency Fluctuations, etc. (a) No later than 2:00
P.M., New York City time, on each Foreign Calculation Date, the Administrative
Agent shall (i) determine the Foreign Exchange Rate as of such Foreign
Calculation Date with respect to each Foreign Currency covered by a Foreign
Currency Subfacility and (ii) give notice thereof to the relevant Banks and
Chrysler. The Foreign Exchange Rates so determined shall become effective on
the first Business Day immediately following the relevant Foreign Calculation
Date (a "Foreign Reset Date") and shall remain effective until the next
succeeding Foreign Reset Date. If on any Foreign Calculation Date a Foreign
Exchange Rate cannot be determined with respect to any Foreign Currency, such
Foreign Exchange Rate shall remain at the applicable rate effective as of the
most recent Foreign Reset Date with respect to which such Foreign Exchange Rate
was available until such Foreign Exchange Rate can once again be determined.
(b) No later than 2:00 P.M., New York City time, on each
Foreign Reset Date and each Borrowing Date, the Administrative Agent shall (i)
determine the US$ Equivalent of the Foreign Currency Loans then outstanding
under each Foreign Currency Subfacility (after giving effect to any Foreign
Currency Loans to be made or repaid on such date) and (ii) notify the relevant
Banks and Chrysler of the results of such determination.
(c) If, on any Foreign Reset Date or any Borrowing Date
(after giving effect to (i) any Loans to be made or repaid on such date and
(ii) any amendment, supplement or other modification to any Foreign Currency
Subfacility effective on such date of which the Administrative Agent has
received notice), the Aggregate U.S./Foreign Extensions of Credit of any Bank
exceed 105% of the U.S. Commitment of such Bank, then, within ten Business Days
after notice thereof to Chrysler from the Administrative Agent, Chrysler shall
cause the relevant Foreign Borrower to reduce the Aggregate Foreign Extensions
of Credit of such Bank in an amount such that, after giving effect thereto, the
Aggregate U.S./Foreign Extensions of Credit of such Bank shall be equal to or
less than the U.S. Commitment of such Bank.
(d) If, on any Foreign Reset Date or any Borrowing Date
(after giving effect to (i) any Foreign Currency Loans to be made or repaid on
such date and (ii) any amendment, supplement or other modification to any
Foreign Currency Subfacility effective on such date of which the Administrative
Agent has received notice), the US$ Equivalent of the Foreign Currency Loans
made by any Bank outstanding under any Foreign Currency Subfacility to which
such Bank is a party exceeds 105% of the Foreign Currency Subfacility Maximum
Borrowing Amount of such Bank with respect thereto, then Chrysler shall cause
the relevant Foreign Borrower, within ten Business Days after notice thereof to
Chrysler from the Administrative Agent, to (i) increase the Foreign Currency
Subfacility Maximum Borrowing Amount of such Bank with respect to such Foreign
Currency Subfacility (subject to the approval of such Bank) in accordance with
subsection 11.1(e) and/or (ii) prepay such Foreign Currency Loans in accordance
with the terms of such Foreign Currency Subfacility in an aggregate amount such
that, after giving effect thereto, the US$ Equivalent of such Foreign Currency
Loans shall be equal to or less than such Bank's Foreign Currency Subfacility
Maximum Borrowing Amount with respect to such Foreign Currency Subfacility.
(e) The Administrative Agent shall promptly furnish each
affected Bank with a copy of any notice described in subsection 11.2(c) or
11.2(d) which has been delivered to Chrysler by the Administrative Agent.
SECTION 12. GUARANTEE
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12.1 Guarantee. In order to induce the Agents and the Banks
to execute and deliver this Agreement, to become a party to any Foreign
Currency Subfacility and to make or maintain the Loans, and in consideration
thereof, Chrysler hereby unconditionally and irrevocably guarantees, as primary
obligor and not merely as surety, to the Administrative Agent, for the ratable
benefit of the Agents and the Banks, the prompt and complete payment and
performance by each Subsidiary Borrower when due (whether at stated maturity,
by acceleration or otherwise) of the Subsidiary Borrower Obligations. The
guarantee contained in this Section 12, subject to subsection 12.5, shall
remain in full force and effect until the Subsidiary Borrower Obligations are
paid in full and the Commitments are terminated, notwithstanding that from time
to time prior thereto any Subsidiary Borrower may be free from any Subsidiary
Borrower Obligations.
Chrysler agrees that whenever, at any time, or from time to
time, it shall make any payment to either Agent or any Bank on account of its
liability under this Section 12, it will notify the Administrative Agent (and,
in the cases of payments to it, the Canadian Administrative Agent) and such
Bank in writing that such payment is made under the guarantee contained in this
Section 12 for such purpose. No payment or payments made by any Subsidiary
Borrower or any other Person or received or collected by either Agent or any
Bank from any Subsidiary Borrower or any other Person by virtue of any action
or proceeding or any setoff or appropriation or application, at any time or
from time to time, in reduction of or in payment of the Subsidiary Borrower
Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of Chrysler under this Section 12 which, notwithstanding any such
payment or payments, shall remain liable for the unpaid and outstanding
Subsidiary Borrower Obligations until, subject to subsection 12.5, the
Subsidiary Borrower Obligations are paid in full and the Commitments are
terminated.
12.2 No Subrogation, Contribution, Reimbursement or
Indemnity. Notwithstanding anything to the contrary in this Section 12,
Chrysler hereby irrevocably waives (a) all rights which may have arisen in
connection with the guarantee contained in this Section 12 to be subrogated to
any of the rights (whether contractual, under the Bankruptcy Code, including
Section 509 thereof, under common law or otherwise) of either Agent or any Bank
against any Subsidiary Borrower or against either Agent or any Bank for the
payment of the Subsidiary Borrower Obligations and (b) all contractual, common
law, statutory and other rights of reimbursement, contribution, exoneration or
indemnity (or any similar right) from or against any Subsidiary Borrower or any
other Person which may have arisen in connection with the guarantee of the
Subsidiary Borrower Obligations contained in this Section 12, in each case
until all Subsidiary Borrower Obligations of such Subsidiary Borrower have been
paid in full. So long as the Subsidiary Borrower Obligations remain
outstanding, if any amount shall be paid by or on behalf of any Subsidiary
Borrower or any other Person to Chrysler on account of any of the rights waived
in this subsection 12.2, such amount shall be held by Chrysler in trust,
segregated from other funds of Chrysler, and shall, forthwith upon receipt by
Chrysler, be turned over to the Administrative Agent in the exact form received
by Chrysler (duly indorsed by Chrysler to the Administrative Agent, if
required), to be applied against the Subsidiary Borrower Obligations, whether
matured or unmatured, in such order as the Administrative Agent may determine.
The provisions of this subsection 12.2 shall survive the term of the guarantee
contained in this Section 12 and the payment in full of the Subsidiary Borrower
Obligations and the termination of the Commitments.
12.3 Amendments, etc. with respect to the Subsidiary Borrower
Obligations. Chrysler shall remain obligated under this Section 12
notwithstanding that, without any reservation of rights against Chrysler, and
without notice to or further assent by Chrysler, any demand for payment of or
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51
reduction in the principal amount of any of the Subsidiary Borrower Obligations
made by either Agent or any Bank may be rescinded by such Agent or such Bank,
and any of the Subsidiary Borrower Obligations continued, and the Subsidiary
Borrower Obligations, or the liability of any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by either Agent or any Bank, and this Agreement and any other
documents executed and delivered in connection herewith or in connection with
any Foreign Currency Subfacility may be amended, modified, supplemented or
terminated, in whole or in part, as may be deemed advisable from time to time,
and any collateral security, guarantee or right of offset at any time held by
either Agent or any Bank for the payment of the Subsidiary Borrower Obligations
may be sold, exchanged, waived, surrendered or released. No Agent or Bank
shall have any obligation to protect, secure, perfect or insure any lien at any
time held by it as security for the Subsidiary Borrower Obligations or for the
guarantee contained in this Section 12 or any property subject thereto.
12.4 Guarantee Absolute and Unconditional. Chrysler waives
any and all notice of the creation, renewal, extension or accrual of any of the
Subsidiary Borrower Obligations and notice of or proof of reliance by either
Agent or any Bank upon the guarantee contained in this Section 12 or acceptance
of the guarantee contained in this Section 12; the Subsidiary Borrower
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 12; and all dealings
between Chrysler or the Subsidiary Borrowers, on the one hand, and the Agents
and the Banks, on the other, shall likewise be conclusively presumed to have
been had or consummated in reliance upon the guarantee contained in this
Section 12. Chrysler waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon Chrysler or any
Subsidiary Borrower with respect to the Subsidiary Borrower Obligations. The
guarantee contained in this Section 12 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of this Agreement, any Foreign Currency Subfacility,
any of the Subsidiary Borrower Obligations or any collateral security therefor
or guarantee or right of offset with respect thereto at any time or from time
to time held by either Agent or any Bank, (b) the legality under applicable
Requirements of Law of repayment by the relevant Subsidiary Borrower of any
Subsidiary Borrower Obligations or the adoption of any Requirement of Law
purporting to render any Subsidiary Borrower Obligations null and void, (c) any
defense, setoff or counterclaim (other than a defense of payment or performance
by the applicable Subsidiary Borrower) which may at any time be available to or
be asserted by Chrysler or any Subsidiary Borrower against either Agent or any
Bank, or (d) any other circumstance whatsoever (with or without notice to or
knowledge of Chrysler or any Subsidiary Borrower) which constitutes, or might
be construed to constitute, an equitable or legal discharge of any Subsidiary
Borrower for any Subsidiary Borrower Obligations, or of Chrysler under the
guarantee contained in this Section 12, in bankruptcy or in any other instance.
When either Agent or any Bank is pursuing its rights and remedies under this
Section 12 against Chrysler, such Agent or Bank may, but shall be under no
obligation to, pursue such rights and remedies as it may have against any
Subsidiary Borrower or any other Person or against any collateral security or
guarantee for the Subsidiary Borrower Obligations or any right of offset with
respect thereto, and any failure by either Agent or any Bank to pursue such
other rights or remedies or to collect any payments from any Subsidiary
Borrower or any such other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release
of any Subsidiary Borrower or any such other Person or of any such collateral
security, guarantee or right of
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52
offset, shall not relieve Chrysler of any liability under this Section 12, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Agents and the Banks against Chrysler.
12.5 Reinstatement. The guarantee contained in this Section
12 shall continue to be effective, or be reinstated, as the case may be, if at
any time payment, or any part thereof, of any of the Subsidiary Borrower
Obligations is rescinded or must otherwise be restored or returned by either
Agent or any Bank upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Subsidiary Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any Subsidiary Borrower or any substantial part of its property,
or otherwise, all as though such payments had not been made.
12.6 Payments. (a) Chrysler hereby agrees that any payments
in respect of the Subsidiary Borrower Obligations pursuant to this Section 12
will be paid without setoff or counterclaim in C$ (in the case of Subsidiary
Borrower Obligations arising under this Agreement) or, at the option of the
relevant Bank(s), in Dollars or in the relevant Foreign Currency (in the case
of Subsidiary Borrower Obligations arising under any Foreign Currency
Subfacility), to (unless otherwise specified by the Administrative Agent): (a)
the Canadian Administrative Agent at the office of the Canadian Administrative
Agent specified in subsection 13.2 (in the case of Subsidiary Borrower
Obligations arising under this Agreement) or (b) the relevant Bank(s) (or an
agent acting on their behalf) at the office specified for payments under the
relevant Foreign Currency Subfacility or such other office as shall have been
specified by the relevant Bank(s) in each case to the extent permitted by
applicable law (in the case of Subsidiary Borrower Obligations arising under
any Foreign Currency Subfacility).
(b) In the event that any law, regulation, treaty or
directive (whether or not in effect on the date hereof), shall require any
Taxes to be withheld or deducted from any amount payable to any Bank under the
guarantee contained in this Section 12, upon notice by such Bank to Chrysler
(with a copy to the Administrative Agent) to the effect that as a result of
such law, rule, regulation, treaty or directive, Taxes are being withheld or
deducted from amounts payable to such Bank under the guarantee contained in
this Section 12, Chrysler will pay to such Bank (or, if applicable, the
relevant Agent or any other agent acting on such Bank's behalf) additional
amounts (in the relevant currency) so that such additional amounts, together
with amounts otherwise payable under the guarantee contained in this Section
12, will yield to such Bank, after deduction from such increased amount of all
Taxes required to be withheld or deducted therefrom, an amount that would be
equal to the amount that such Bank would have received under the guarantee
contained in this Section 12 had no such withholding or deduction been required
calculated after taking into account all applicable Taxes and Other Taxes. If
Chrysler fails to pay any Taxes when due following notification by any Bank as
provided above, Chrysler shall indemnify such Bank for any incremental taxes,
interest or penalties that may become payable by any Bank as a result of any
such failure by Chrysler to make such payment. Within 30 days after the
payment by Chrysler of any Taxes withheld or deducted from any amount payable
to any Bank under the guarantee contained in this Section 12, Chrysler will
furnish to such Bank (with a copy to the Administrative Agent), the original or
a certified copy of a receipt evidencing payment thereof.
(c) If a payment made by Chrysler has been increased by an
amount referred to in subsection 12.6(b), and a Bank or any subsidiary, parent
or other affiliate of such Bank is able to apply for or otherwise take
advantage of any tax credit, deduction in computing income or similar benefit
(a "Tax Credit") by reason of any withholding or deduction made by Chrysler in
respect of the amount of
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53
the increase, then, subject to subsection 12.6(d), such Bank will
use reasonable efforts to obtain, or cause such affiliate to obtain, the Tax
Credit and such Bank, when it or its affiliate realizes such Tax Credit
(whether by way of reducing taxes payable, receiving a tax refund, or
otherwise), shall, subject to subsection 12.6(d), repay to Chrysler such
amount, if any (not exceeding the amount of the increase) as is reasonably
determined in the absolute and uncontrolled discretion of such Bank to be equal
to the net after-tax value to such Bank and its affiliate, as the case may be,
of such part of the Tax Credit as is reasonably attributable to such
withholding or deduction, having regard to all dealings giving rise to similar
credits, deductions or benefits in relation to the same tax period and to the
cost of obtaining the same. Any such reimbursement shall be conclusive
evidence, absent manifest error, of the amount due to Chrysler and shall be
accepted by it in full and final settlement of its rights of reimbursement
hereunder.
(d) Notwithstanding subsection 12.6(c), (i) nothing therein
contained shall interfere with the right of a Bank to arrange its tax affairs
in whatever manner it deems fit and, in particular, no Bank shall be under any
obligation to claim relief from its corporate profits or similar tax liability
in respect of any such deduction or withholding in priority to any other
reliefs, claims, credits or deductions available to it and (ii) a Bank shall
not be obligated to disclose to Chrysler any information regarding its tax
affairs or tax computations.
12.7 Judgments Relating to Guarantee. (a) If, for the
purpose of obtaining judgment in any court, it is necessary to convert a sum
due under the guarantee contained in this Section 12 in one currency into
another currency, Chrysler agrees, to the fullest extent that it may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures in the relevant jurisdiction the
relevant Bank (or agent acting on its behalf) could purchase the first currency
with such other currency for the first currency on the Banking Day immediately
preceding the day on which final judgment is given.
(b) The obligations of Chrysler in respect of any sum due
under the guarantee contained in this Section 12 shall, notwithstanding any
judgment in a currency (the "Judgment Currency") other than that in which such
sum is denominated in accordance with this Section 12 (the "Agreement
Currency"), be discharged only to the extent that, on the Banking Day following
receipt by any Bank (or agent acting on its behalf) (the "Applicable Creditor")
of any sum adjudged to be so due in the Judgment Currency, the Applicable
Creditor may in accordance with normal banking procedures in the relevant
jurisdiction purchase the Agreement Currency with the Judgment Currency; if the
amount of the Agreement Currency so purchased is less than the sum originally
due to the Applicable Creditor in the Agreement Currency, Chrysler agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss, provided, that if the amount of the
Agreement Currency so purchased exceeds the sum originally due to the
Applicable Creditor, the Applicable Creditor agrees to remit such excess to
Chrysler. The obligations of Chrysler contained in this subsection 12.7 shall
survive the termination of the guarantee contained in this Section 12 and the
payment of all amounts owing hereunder.
12.8 Independent Obligations. The obligations of Chrysler
under the guarantee contained in this Section 12 are independent of the
obligations of each Subsidiary Borrower, and a separate action or actions may
be brought and prosecuted against Chrysler whether or not the relevant
Subsidiary Borrower be joined in any such action or actions. Chrysler waives,
to the full extent
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54
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers. With the written consent of
the Required Banks, the Administrative Agent and the Facility Borrowers may,
from time to time, enter into written amendments, supplements or modifications
hereto for the purpose of adding any provisions to this Agreement or changing
in any manner the rights of the Banks or of either Facility Borrower hereunder
or thereunder, and with the consent of the Required Banks the Administrative
Agent on behalf of the Banks may execute and deliver to the Facility Borrowers
a written instrument waiving, on such terms and conditions as the
Administrative Agent may specify in such instrument, any of the requirements of
this Agreement or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (a) extend the maturity of any Facility Loan, or reduce the
rate or extend the time of payment of interest thereon, or reduce or forgive
the principal amount thereof, or reduce the rate of payment of any Facility Fee
or Acceptance Fee payable hereunder or increase the amount or extend the term
of any Bank's Commitment or amend, modify or waive any provision of this
subsection 13.1 or reduce the percentage specified in the definition of
Required Banks, Required U.S. Banks or Required Canadian Banks, or consent to
the assignment or transfer by either Facility Borrower of any of its rights and
obligations under this Agreement, in each case without the written consent of
each Bank directly affected thereby, (b) release Chrysler from its obligations
under the guarantee contained in Section 12 without the prior written consent
of each C$ Bank and each Bank party to a Foreign Currency Subfacility or (c)
amend, modify or waive any provision of Section 10 without the written consent
of each Agent directly affected thereby. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Banks
and shall be binding upon each Facility Borrower, the Banks and each Agent. In
the case of any waiver, each Facility Borrower, the Banks and each Agent shall
be restored to their former position and rights hereunder, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon. The Administrative Agent
shall give the Canadian Administrative Agent prompt written notice of any
waiver, amendment, supplement or modification entered into pursuant to this
subsection 13.1.
13.2 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing, by
telecopy or, in the case of any E-Mail Bank, by electronic mail, and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand or when deposited in the mail, first class or air
postage prepaid, or, in the case of telecopied notice, when telecopied, receipt
acknowledged, or, in the case of electronic mail, when sent, electronic
confirmation of receipt received; addressed as follows in the case of the
Facility Borrowers, the Canadian Administrative Agent and the Administrative
Agent, and as set forth in an administrative questionnaire delivered to the
Administrative Agent in the case of each Bank, or to such address or other
address as may be hereafter notified by the respective parties hereto:
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55
Chrysler: Chrysler Corporation
1000 Chrysler Drive
Auburn Hills, Michigan 48326-2766
Attention: Treasurer's Office
Telecopy: (810) 512-1766
Chrysler Canada: Chrysler Canada Ltd.
2450 Chrysler Center
Windsor, Ontario
Canada N9A4H6
Attention: Treasurer
Telecopy: (519) 973-4310
The Administrative
Agent: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Andris Kalnins
Telecopy: (212) 270-5127
With a copies to: The Chase Manhattan Bank Loan
and Agency Services Group
One Chase Manhattan Plaza
New York, New York 10081
Attention: Sandra Miklave, Account Manager
Telecopy: (212) 622-0002
The Canadian
Administrative
Agent: Royal Bank of Canada
Loan Structuring and Syndications
Royal Bank Plaza, South Tower
200 Bay Street
Toronto, Ontario
Canada M5J 2J5
Attention: Manager, Business Operations
Telecopy: (416) 974-2407
provided that any notice, request or demand to or upon an Agent pursuant to
subsection 2.2, 2.3, 2.5, 3.2, 3.3, 3.4, 4.5 or 4.6 shall not be effective
until received.
13.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of either Agent or any Bank,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
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56
13.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement.
13.5 Payment of Expenses and Taxes. Each of Chrysler and,
as applicable, Chrysler Canada, agrees:
(a) to pay or reimburse the Administrative Agent for all
reasonable out-of-pocket costs and expenses incurred in connection
with the preparation and execution of, and any amendment, supplement
or modification to, this Agreement, and any other documents prepared
in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including, without
limitation, the reasonable fees and disbursements of Simpson Thacher &
Bartlett, special counsel to the Administrative Agent;
(b) to pay or reimburse each Bank and each Agent for all
reasonable costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, and
any such other documents, including, without limitation, the
reasonable fees and disbursements of one firm of special counsel in
each of the United States and Canada to the Agents and the Banks; and
(c) to pay and reimburse (i) each Bank for any payments made
by such Bank to either Agent pursuant to the provisions of subsection
10.7 and (ii) each Agent for any and all liabilities, expenses or
disbursements incurred by it which pursuant to the provisions of
subsection 10.7 are the subject of indemnification payments from the
Banks to the extent that such Agent, for whatever reason, did not
receive such indemnification payments from any Bank or Banks.
The agreements in this subsection 13.5 shall survive
termination of this Agreement, termination of the Commitments and the payment
of the Loans and all other amounts payable hereunder.
13.6 Successors and Assigns; Participations and
Assignments. (a) This Agreement shall be binding upon and inure to the
benefit of the Facility Borrowers, the Banks, the Agents, and their respective
successors and assigns, except that no Facility Borrower may assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of each Bank (in the case of Chrysler) or all of the C$ Banks (in the
case of Chrysler Canada).
(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more Commercial Banks ("Participants") participating interests in any Loan
owing to such Bank, any Commitment of such Bank or any other interest of such
Bank hereunder. In the event of any such sale by a Bank of a participating
interest to a Participant, such Bank's obligations under this Agreement to the
other parties to this Agreement shall remain unchanged, such Bank shall remain
solely responsible for the performance thereof, such Bank shall remain the
holder of any such Loan for all purposes under this Agreement, and Chrysler and
the Administrative Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this
Agreement, provided, that the terms of any participation agreement or
certificate relating to any such participation shall prohibit any
subparticipations by such
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Participant and provided, further any such participation agreement or
certificate shall permit the Bank granting such participations the right to
consent to waivers, amendments or supplements to this Agreement without the
consent of such Participant except in the case of (a) waivers of any Default or
Event of Default described in Section 9(a), and (b) any amendment or
modification extending the maturity of any Loan, or reducing the rate or
extending the time of payment of interest thereon, or reducing the principal
amount thereof or reducing the rate of payment of the Facility Fee payable
hereunder, in each case to the extent such Participant is directly affected
thereby. Chrysler agrees that if amounts outstanding under this Agreement are
due or unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall, to the
extent permitted by applicable law and with the consent of the Required Banks,
have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Banks the proceeds
thereof as provided in subsection 13.8 as fully as if it were a Bank hereunder.
Chrysler also agrees that each Participant shall be entitled to the benefits of
subsections 4.9 and 4.11 with respect to its participation in the Commitments
and the Loans outstanding from time to time as if it were a Bank; provided
that, no Participant shall be entitled to receive any greater amount pursuant
to subsections 4.9 and 4.11 than the transferor Bank would have been entitled
to receive in respect of the amount of the participation transferred by such
transferor Bank to such Participant had no such transfer occurred.
(c) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time and from
time to time assign to any Bank or any affiliate thereof or, with the consent
of Chrysler and the Administrative Agent (which shall not be unreasonably
withheld by either Chrysler or the Administrative Agent, as the case may be),
to an additional Commercial Bank (an "Assignee") all or any part of its rights
and obligations under this Agreement pursuant to an Assignment and Acceptance
(each, an "Assignment and Acceptance"), substantially in the form of Exhibit
E-1, executed by such Assignee, such assigning Bank (and, in the case of an
Assignee that is not then a Bank or an affiliate thereof, by Chrysler and the
Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the relevant Register; provided, however, that a
Bank may not assign its rights or obligations under this Agreement unless and
until (i) if such assigning Bank is not assigning all of its rights and
obligations under this Agreement, the aggregate principal amount of such Bank's
obligations (which may constitute U.S. Commitments and/or Canadian Commitments)
hereunder so assigned shall be in an aggregate amount of $10,000,000 or greater
(unless, at Chrysler's discretion, a lesser amount is mutually agreed upon
between Chrysler and such Bank); (ii) if such assigning Bank is not assigning
all of its rights and obligations (which may constitute U.S. Commitments and/or
Canadian Commitments) under this Agreement, after giving effect to the
assignment, the aggregate principal amount of such assigning Bank's obligations
hereunder shall be in an aggregate amount of $25,000,000 or greater (unless, at
Chrysler's discretion, a lesser amount is mutually agreed upon between Chrysler
and such Bank) and (iii) after giving effect to any such assignment by a US$
Bank, (x) the Aggregate U.S./Foreign Extensions of Credit of such Bank shall
not exceed its U.S. Commitment and (y) the aggregate of all Foreign Currency
Subfacility Maximum Borrowing Amounts in respect of such Bank shall not exceed
such Bank's U.S. Commitment. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder, and (y) the assigning Bank thereunder
shall, to the
<PAGE> 62
58
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Bank's rights
and obligations under this Agreement, such assigning Bank shall cease to be a
party hereto).
(d) (i) The Administrative Agent shall maintain at its
address referred to in subsection 13.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "U.S. Register") for the recordation of the
names and addresses of the US$ Banks and the U.S. Commitment of, and principal
amount of the U.S. Loans and the Types of such loans owing to, each US$ Bank
from time to time. The entries in the U.S. Register shall be conclusive, in
the absence of clearly demonstrable error, and Chrysler, the Administrative
Agent and the Banks may treat each Person whose name is recorded in the U.S.
Register as the owner of the Loans recorded therein for all purposes of this
Agreement. The U.S. Register shall be available for inspection by Chrysler or
any U.S. Bank at any reasonable time and from time to time upon reasonable
prior notice. The Administrative Agent shall give prompt written notice to
Chrysler of the making of any entry in the U.S. Register or any change in any
such entry.
(ii) The Canadian Administrative Agent shall maintain at its
address referred to in subsection 13.2 a register (the "Canadian Register") for
the recordation of the names and addresses of the C$ Banks, the Canadian
Commitments of such Banks, and the principal amount of each category of C$ Loan
owing to each such Bank from time to time. The entries in the Canadian
Register shall be conclusive, in the absence of clearly demonstrable error, and
Chrysler Canada, the Canadian Administrative Agent and the Banks may treat each
Person whose name is recorded in the Canadian Register as the owner of the C$
Loans recorded therein for all purposes of this Agreement. The Canadian
Register shall be available for inspection by Chrysler, Chrysler Canada or any
C$ Bank at any reasonable time and from time to time upon reasonable prior
notice. The Canadian Administrative Agent shall give prompt written notice to
Chrysler Canada of the making of any entry in the Canadian Register or any
change in any such entry.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Bank and an Assignee (and, in the case of an Assignee that is
not then a Bank or an affiliate thereof, by Chrysler and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $2,500 (which shall not be payable by either Borrower), the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the relevant Register and give notice of such
acceptance and recordation to the relevant Banks and Chrysler.
(f) Chrysler authorizes each US$ Bank (in the case of U.S.
Loans) and each C$ Bank (in the case of C$ Loans) to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information in such Bank's possession concerning Chrysler
and its affiliates which has been delivered to such Bank by or on behalf of
Chrysler pursuant to this Agreement or which has been delivered to such Bank by
or on behalf of Chrysler in connection with such Bank's credit evaluation of
Chrysler and its affiliates prior to becoming a party to this Agreement.
(g) Nothing herein shall prohibit any US$ Bank from pledging
or assigning all or any portion of its U.S. Loans to any Federal Reserve Bank
in accordance with applicable law. In order to facilitate such pledge or
assignment, Chrysler hereby agrees that, upon request of any US$ Bank at any
<PAGE> 63
59
time and from time to time after Chrysler has made its initial borrowing
hereunder, Chrysler shall provide to such Bank, at Chrysler's own expense, a
promissory note, substantially in the form of Exhibit H, evidencing the U.S.
Loans owing to such Bank.
13.7 Right of Set-off. Upon the occurrence and during the
continuance of an Event of Default, subject to receipt of the consent of the
Required Banks, each Bank is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank (including, without
limitation, its branches) to or for the credit or the account of either
Facility Borrower against any and all of the obligations of such Facility
Borrower then due and owing. Each Bank agrees promptly to notify such Facility
Borrower and the Administrative Agent after any such set-off and application
made by such Bank, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Bank
under this subsection are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Bank may have.
13.8 Adjustments. If any Bank (a "benefitted Bank") shall
at any time, except in connection with any termination, replacement or
assignment of or by such Bank pursuant to this Agreement, receive any payment
of all or part of its U.S. Loans or C$ Loans, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature referred to in clause
(g) of Section 9, or otherwise) in a greater proportion than any such payment
to, or any collateral received by, any other Bank, if any, in respect of such
other Bank's U.S. Loans or C$ Loans, as the case may be, or interest thereon,
such benefitted Bank shall purchase for cash from the other US$ Banks or C$
Banks, as the case may be, such portion of each such other Bank's U.S. Loans or
C$ Loans, as the case may be, or shall provide such other relevant Banks with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Bank to share the excess payment or benefits
of such collateral or proceeds ratably with each of the other relevant Banks;
provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Bank, such purchase shall
be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest. Each Facility Borrower agrees that each
Bank so purchasing a portion of another Bank's U.S. Loans or C$ Loans, as the
case may be, may exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if such Bank were
the direct holder of such portion.
13.9 New Banks; Commitment Increases; Commitment
Reallocations. (a) With the consent of Chrysler and upon notification to the
Administrative Agent, one or more additional Commercial Banks may become a
party to this Agreement by executing a New Bank Supplement with Chrysler and
the Administrative Agent, substantially in the form of Exhibit A, whereupon
such Commercial Bank (herein called a "New Bank") shall become a Bank for all
purposes and to the same extent as if originally a party hereto and shall be
bound by and entitled to the benefits of this Agreement, and Schedule I hereto
shall be deemed to be amended to add the name and reflect the Commitment of
such New Bank. Each New Bank shall be designated as a US$ Bank with a U.S.
Commitment and/or a C$ Bank with a Canadian Commitment, as specified in such
New Bank Supplement.
<PAGE> 64
60
(b) With the consent of Chrysler and upon notification to the
Administrative Agent, any Bank may increase the amount of its Commitment by
executing a Commitment Increase Supplement with Chrysler and the Administrative
Agent, substantially in the form of Exhibit B, whereupon such Bank shall be
bound by and entitled to the benefits of this Agreement with respect to the
full amount of its Commitment as so increased (which increase shall be
allocated to its U.S. Commitment and/or its Canadian Commitment, as specified
in such Commitment Increase Supplement), and Schedule I hereto shall be deemed
to be amended to reflect the increased Commitment of such Bank.
(c) With the consent of the Administrative Agent (which shall
not be unreasonably withheld), so long as no Default or Event of Default shall
have occurred and be continuing, Chrysler may reallocate all or any portion of
the Canadian Commitment of any C$ Bank to the U.S. Commitment of such C$ Bank's
Related US$ Bank or reallocate all or any portion of the U.S. Commitment of any
US$ Bank to the Canadian Commitment of such US$ Bank's Related C$ Bank by
executing a Commitment Reallocation Supplement hereto with the Administrative
Agent, substantially in the form of Exhibit E-2, whereupon the affected US$
Bank and C$ Bank shall be bound by and entitled to the benefits of this
Agreement with respect to the full amount of the U.S. Commitment or Canadian
Commitment of such Bank after giving effect to such reallocation, and Schedule
I hereto shall be deemed to be amended to reflect such reallocation. Each
reallocation pursuant to this subsection 13.9(c) shall be subject to the prior
written consent of the affected US$ Bank and C$ Bank, provided, that each C$
Bank and its Related US$ Bank confirm that, as of the date hereof, such C$ Bank
and its Related US$ Bank are willing to consider any reallocation of such
Related US$ Bank's U.S. Commitment to such C$ Bank's Canadian Commitment which
does not increase such C$ Bank's Canadian Commitment above its Initial Offered
Canadian Commitment Amount.
(d) (i) If on the date upon which a Commercial Bank becomes
a New Bank (designated as a US$ Bank), upon which a Bank obtains a U.S.
Commitment or upon which a US$ Bank's U.S. Commitment is changed pursuant to
this subsection 13.9, there is an unpaid principal amount of U.S. Loans,
Chrysler shall borrow U.S. Loans from, or prepay U.S. Loans of, such Bank, as
applicable, in an amount such that, after giving effect thereto, the quotient
of (x) the U.S. Loans of such Bank of each Type (and, in the case of Eurodollar
Loans, of each Eurodollar Tranche) and (y) such Bank's U.S. Commitment is equal
to the comparable quotient of each other US$ Bank; provided, that after the
first Foreign Currency Subfacility becomes effective hereunder, the amount of
such borrowing or prepayment shall instead be determined by reference to the
amount of each Type of U.S. Loan (and, in the case of Eurodollar Loans, of each
Eurodollar Tranche) which would have been outstanding from such Bank if (1)
each such Type or tranche had been borrowed on the date of the relevant change
in such Bank's U.S. Commitment after giving effect to such change and (2) the
aggregate amount of each such Type or tranche requested to be so borrowed had
been increased or decreased, as the case may be, to the extent necessary to
give effect, with respect to such Bank, to the first sentence of subsection
4.8(a). Any Eurodollar Loan borrowed pursuant to the preceding sentence shall
bear interest at a rate equal to such rate as shall be mutually agreed upon
between Chrysler and the relevant Bank reflecting current market conditions.
(ii) If on the date upon which a Commercial Bank becomes a
New Bank (designated as a C$ Bank), upon which a Bank obtains a Canadian
Commitment or upon which a C$ Bank's Canadian Commitment is changed pursuant to
subsection 13.9, there is an unpaid principal amount of C$ Loans, Chrysler
Canada shall borrow C$ Loans from, or prepay or Defease (in the case of
Bankers'
<PAGE> 65
61
Acceptances) C$ Loans of, such Bank, as applicable, in an amount such that,
after giving effect thereto, the quotient of (x) the C$ Loans of such Bank of
each category (and, in the case of Bankers' Acceptances, of each maturity) and
(y) such Bank's Canadian Commitment is equal to the comparable quotient of each
other C$ Bank. Any Bankers' Acceptance borrowed pursuant to the preceding
sentence shall yield an Acceptance Fee at a rate equal to such rate as shall be
mutually agreed upon between Chrysler and the relevant Bank reflecting current
market conditions.
(e) The Administrative Agent shall advise the Canadian
Administrative Agent and the Banks of each addition of a New Bank and of each
change in a Bank's U.S. Commitment or Canadian Commitment pursuant to this
subsection 13.9 and of the amount of any borrowing or prepayment required to be
made from or to any such Bank pursuant to this subsection 13.9 upon such
addition or change.
13.10 Counterparts. This Agreement may be executed by one or
more of the parties hereto on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with each of Chrysler and the Administrative Agent.
13.11 Judgments Relating to Chrysler Canada. (a) If, for
the purpose of obtaining judgment in any court, it is necessary to convert a
sum owing hereunder by Chrysler Canada in one currency into another currency,
Chrysler Canada agrees, to the fullest extent that it may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures in the relevant jurisdiction the relevant Bank could
purchase the first currency with such other currency for the first currency on
the Banking Day immediately preceding the day on which final judgment is given.
(b) The obligations of Chrysler Canada in respect of any sum
due in C$ to any party hereto or any holder of the obligations owing hereunder
(the "Applicable Creditor") shall, notwithstanding any judgment in a currency
(the "Judgment Currency") other than C$, be discharged only to the extent that,
on the Banking Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
C$ with the Judgment Currency; if the amount of C$ so purchased is less than
the sum originally due to the Applicable Creditor in C$, Chrysler Canada
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Applicable Creditor against such loss, provided, that if the
amount of C$ so purchased exceeds the sum originally due to the Applicable
Creditor, the Applicable Creditor agrees to remit such excess to Chrysler
Canada. The obligations of Chrysler Canada contained in this subsection 13.11
shall survive the termination of this Agreement and the payment of all other
amounts owing hereunder.
13.12 WAIVERS OF JURY TRIAL. THE FACILITY BORROWERS, THE
ADMINISTRATIVE AGENT, THE CANADIAN ADMINISTRATIVE AGENT AND THE BANKS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
13.13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
<PAGE> 66
62
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF
LAW.
<PAGE> 67
63
13.14 Integration. This Agreement represents the agreement
of each party with respect to the subject matter hereof, and there are no
promises or representations by either Agent or any Bank relative to the subject
matter hereof not reflected herein.
13.15 Information. Each Bank is hereby authorized to divulge
any information pertaining to this Agreement, the transactions contemplated
hereby and the records maintained by such Bank when required by any
Governmental Authority.
<PAGE> 68
64
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
CHRYSLER CORPORATION
By: ____________________________________
Title:
CHRYSLER CANADA LTD.
By:_____________________________________
Title:
By: ____________________________________
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent
By: ____________________________________
Title:
ROYAL BANK OF CANADA, as Canadian
Administrative Agent
By: ____________________________________
Title:
<PAGE> 69
SCHEDULE I TO
REVOLVING CREDIT AGREEMENT
<TABLE>
<CAPTION>
INITIAL OFFERED
CANADIAN COMBINED CANADIAN
BANKS U.S. COMMITMENT COMMITMENT COMMITMENT COMMITMENT AMOUNT
----- ------------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C>
The Chase Manhattan Bank (1) . . . . . . . . . . $145,000,000 $ 30,000,000 175,000,000 $ 35,000,000
Royal Bank of Canada . . . . . . . . . . . . . . 80,000,000 45,000,000 125,000,000 130,000,000
ABN AMRO Bank N.V. - Chicago Branch (2) . . . . . 80,000,000 20,000,000 100,000,000 20,000,000
Bank of America NT & SA (3) . . . . . . . . . . 80,000,000 20,000,000 100,000,000 20,000,000
The Bank of New York . . . . . . . . . . . . . . 100,000,000 -- 100,000,000 --
The Bank of Nova Scotia . . . . . . . . . . . . . 65,000,000 35,000,000 100,000,000 35,000,000
Banque Nationale de Paris . . . . . . . . . . . . 100,000,000 -- 100,000,000 --
Canadian Imperial Bank of Commerce . . . . . . . 65,000,000 35,000,000 100,000,000 75,000,000
Comerica Bank . . . . . . . . . . . . . . . . . . 100,000,000 -- 100,000,000 --
Commerzbank Aktiengesellschaft Chicago Branch . . 100,000,000 -- 100,000,000 --
NBD Bank . . . . . . . . . . . . . . . . . . . . 100,000,000 -- 100,000,000 --
The LTCB Trust Company . . . . . . . . . . . . 100,000,000 -- 100,000,000 --
Morgan Guaranty Trust Company of New York (4) . . 80,000,000 20,000,000 100,000,000 20,000,000
NationsBank, N.A . . . . . . . . . . . . . . . . 100,000,000 -- 100,000,000 --
Societe Generale, Chicago Branch . . . . . . . . 100,000,000 -- 100,000,000 --
The Toronto-Dominion Bank . . . . . . . . . . . 65,000,000 35,000,000 100,000,000 100,000,000
Arab Banking Corporation . . . . . . . . . . . . 50,000,000 -- 50,000,000 --
Banca Nazionale Del Lavoro S.p.A. New York
Branch . . . . . . . . . . . . . . . . . . . . 50,000,000 -- 50,000,000 --
Bankers Trust Company . . . . . . . . . . . . . . 50,000,000 -- 50,000,000 --
Bank of Montreal . . . . . . . . . . . . . . . . 30,000,000 20,000,000 50,000,000 20,000,000
Barclays Bank PLC . . . . . . . . . . . . . . . . 50,000,000 -- 50,000,000 --
CARIPLO - Cassa di Risparmio delle Provincie
Lombarde SpA. . . . . . . . . . . . . . . . . . 50,000,000 -- 50,000,000 --
Credit Lyonnais Chicago Branch (5) . . . . . . . 30,000,000 20,000,000 50,000,000 20,000,000
Credit Suisse First Boston . . . . . . . . . . . 50,000,000 -- 50,000,000 --
The Dai-Ichi Kangyo Bank, Ltd. . . . . . . . . . 50,000,000 -- 50,000,000 --
The Fuji Bank, Limited Chicago Branch . . . . . . 50,000,000 -- 50,000,000 --
Istituto Bancario San Paolo di Torino SpA. . . . 50,000,000 -- 50,000,000 --
Mellon Bank N.A. . . . . . . . . . . . . . . . . 50,000,000 -- 50,000,000 --
National Bank of Canada . . . . . . . . . . . . . 30,000,000 20,000,000 50,000,000 20,000,000
The Sanwa Bank, Limited, Chicago Branch . . . . . 50,000,000 -- 50,000,000 --
Swiss Bank Corporation, New York Branch . . . . . 50,000,000 -- 50,000,000 --
Union Bank of Switzerland New York Branch . . . . 50,000,000 -- 50,000,000 --
The Yasuda Trust and Banking Company, Limited. . 50,000,000 -- 50,000,000 --
Total 2,250,000,000 300,000,000 2,550,000,000 495,000,000
</TABLE>
(1) Related C$ Bank: The Chase Manhattan Bank of Canada
(2) Related C$ Bank: ABN AMRO Bank Canada
(3) Related C$ Bank: Bank of America Canada
(4) Related C$ Bank: J.P. Morgan Canada
(5) Related C$ Bank: Credit Lyonnais Canada
<PAGE> 70
SCHEDULE II TO
REVOLVING CREDIT AGREEMENT
LIENS PERMITTED UNDER SUBSECTION 8.2(a)
Secured stand-by letter of credit in the amount of $200,000,000 used to ensure
vacation payment to UAW employees
<PAGE> 71
EXHIBIT A TO
REVOLVING CREDIT AGREEMENT
[FORM OF NEW BANK SUPPLEMENT]
SUPPLEMENT, dated _________________, to the Revolving Credit
Agreement, dated as of April 24, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among CHRYSLER CORPORATION
("Chrysler"), CHRYSLER CANADA LTD., the Banks parties thereto, ROYAL BANK OF
CANADA, as Canadian Administrative Agent, and THE CHASE MANHATTAN BANK, as
Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Credit Agreement provides in subsection 13.9(a) thereof
that any Commercial Bank, although not originally a party thereto, may become a
party to the Credit Agreement with the consent of Chrysler by executing and
delivering to Chrysler and the Administrative Agent a supplement to the Credit
Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned was not an original party to the Credit
Agreement but now desires to become a party thereto;
NOW, THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees to be bound by the provisions of the Credit
Agreement, and agrees that it shall, on the date this Supplement is
accepted by Chrysler and the Administrative Agent, become a Bank for all
purposes of the Credit Agreement to the same extent as if originally a
party thereto.
2. [The undersigned shall be a US$ Bank and the amount of its U.S.
Commitment shall be $___________________.] [The undersigned shall be a C$
Bank and amount of its Canadian Commitment shall be $_______________.]
3. The undersigned's address for notices for the purposes of the
Credit Agreement is as follows:
4. Terms defined in the Credit Agreement shall have their defined
meanings when used herein.
<PAGE> 72
2
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.
[INSERT NAME OF BANK]
By________________________________
Title:
Accepted this _____ day of
______________, 199_.
CHRYSLER CORPORATION
By____________________________
Title:
Accepted this ____ day of
______________, 199_.
THE CHASE MANHATTAN BANK, as Administrative Agent
By____________________________
Title:
<PAGE> 73
EXHIBIT B TO
REVOLVING CREDIT AGREEMENT
[FORM OF COMMITMENT INCREASE SUPPLEMENT]
SUPPLEMENT, dated _________________, to the Revolving Credit
Agreement, dated as of April 24, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among CHRYSLER CORPORATION
("Chrysler"), CHRYSLER CANADA LTD. ("Chrysler Canada"), the Banks parties
thereto, ROYAL BANK OF CANADA, as Canadian Administrative Agent, and THE CHASE
MANHATTAN BANK, as Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Credit Agreement provides in subsection 13.9(b) thereof
that any Bank with the consent of Chrysler may increase the amount of its
Commitment by executing and delivering to Chrysler and the Administrative Agent
a supplement to the Credit Agreement in substantially the form of this
Supplement; and
WHEREAS, the undersigned now desires to increase the amount of its
Commitment under the Credit Agreement;
NOW THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees, subject to the terms and conditions of the
Credit Agreement, that on the date this Supplement is accepted by Chrysler
and the Administrative Agent it [shall have its U.S. Commitment to Chrysler
increased by $______________] [shall have its Canadian Commitment to
Chrysler Canada increased by $______________], thereby making the amount of
its [U.S.] [Canadian] Commitment $______________].
2. Terms defined in the Credit Agreement shall have their defined
meanings when used herein.
<PAGE> 74
2
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.
[INSERT NAME OF BANK]
By________________________________
Title:
Accepted this _____ day of
______________, 199_.
CHRYSLER CORPORATION
By____________________________
Title:
Accepted this ____ day of
______________, 199_.
THE CHASE MANHATTAN BANK, as Administrative Agent
By____________________________
Title:
<PAGE> 75
EXHIBIT C TO
REVOLVING CREDIT AGREEMENT
[FORM OF OPINION OF SIMPSON THACHER & BARTLETT]
April 24, 1997
To: The Chase Manhattan Bank, as
administrative agent under the
Revolving Credit Agreement referred
to below
270 Park Avenue
New York, New York 10017
The Banks listed on Schedule I hereto
Re: The Revolving Credit Agreement, dated as of April 24, 1997
(the "Credit Agreement"), among Chrysler Corporation, a
Delaware corporation ("Chrysler"), Chrysler Canada Ltd., a
Canadian corporation ("Chrysler Canada"; together with Chrysler,
the "Facility Borrowers"), the Banks parties thereto, Royal
Bank of Canada, as Canadian Administrative Agent, and The Chase
Manhattan Bank, as Administrative Agent.
Ladies and Gentlemen:
We have acted as counsel to the Administrative Agent in connection
with the execution and delivery of the Credit Agreement.
This opinion is delivered to you pursuant to subsection 6.1(e)(i) of
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
In arriving at the opinion expressed below, we have examined (a) a
counterpart of the Credit Agreement, signed by Chrysler, Chrysler Canada, the
Canadian Administrative Agent and the Administrative Agent and (b) such
documents as we have deemed necessary or appropriate for the purposes of this
opinion.
In such examination, we have assumed the genuineness of all
signatures, the authenticity, regularity and completeness of all documents
submitted to us as originals, the completeness of all documents submitted to us
as certified, conformed or photostatic copies and the conformity of such
documents to the original documents.
We have also assumed that the Credit Agreement has been duly
authorized, executed and delivered by each Facility Borrower; that each Facility
Borrower is duly incorporated and validly existing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to
execute, deliver and perform its obligations under the Credit Agreement; that
neither Facility Borrower is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended; that the execution, delivery and
performance by each Facility Borrower of the Credit Agreement has
<PAGE> 76
2
been duly authorized BY all necessary corporate action on the part of each
Facility Borrower, does not contravene the certificate of incorporation,
by-laws or similar organizational documents of either Facility Borrower, does
not violate, or require any consent not obtained under, any applicable law or
regulation or any order, writ, injunction or decree of any court or other
Governmental Authority binding upon either Facility Borrower and does not
violate, or require any consent not obtained under, any contractual obligation
applicable to or binding upon either Facility Borrower; and that the Credit
Agreement constitutes a valid and legally binding obligation of the Canadian
Administrative Agent and the Banks.
Based upon the foregoing, and subject to the qualifications and
comments set forth below, we are of the opinion that, insofar as the law of the
State of New York is concerned, the Credit Agreement constitutes a valid and
legally binding obligation of each Facility Borrower, enforceable against each
Facility Borrower in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing, except that we express
no opinion as to (a) any indemnification obligations of the Facility Borrowers
under the Credit Agreement to the extent such obligations might be deemed to be
inconsistent with public policy; (b) any provision of the Credit Agreement that
purports to establish an evidentiary standard for determinations by the Banks or
either Agent; (c) any setoff right contained in subsection 13.7 or 13.8 of the
Credit Agreement authorizing any Bank to set off and apply deposits at any time
held, and any other indebtedness at any time owing, by such Bank to or for the
account of any party against any participation transferred to or by such Bank;
(d) subsections 12.7 and 13.11 of the Credit Agreement; or (e) any Foreign
Currency Subfacility.
We note that (i) a New York statute provides that with respect to a
foreign currency obligation, a court of the State of New York shall render a
judgment or decree in such foreign currency and such judgment or decree shall be
converted into currency of the United States at the rate of exchange prevailing
on the date of entry of such judgment or decree and (ii) with respect to a
foreign currency obligation, a United States Federal court in New York may award
judgment in United States dollars, provided that we express no opinion as to the
rate of exchange such court would apply.
We are members of the Bar of the State of New York and we do not
express any opinion herein concerning any law other than the law of the State of
New York.
This opinion has been rendered solely for your benefit in connection
with the Credit Agreement and the transactions contemplated thereby and may not
be relied upon by you for any other purpose, or relied upon by any other person,
firm or corporation without our prior written consent or furnished to any other
person, firm or corporation other than any assignee or participant under the
Credit Agreement or any bank examiner or other regulatory authority without our
prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
<PAGE> 77
SCHEDULE I
THE BANKS
<PAGE> 78
EXHIBIT D-1 TO
REVOLVING CREDIT AGREEMENT
[FORM OF OPINION OF GENERAL COUNSEL TO CHRYSLER]
April 24, 1997
To: The Chase Manhattan Bank, as Administrative Agent
The commercial banks (the "Banks") from time to time parties to the
Revolving Credit Agreement dated as of April 24, 1997 among Chrysler
Corporation, Chrysler Canada Ltd., the Banks, Royal Bank of Canada, as
Canadian Administrative Agent, and The Chase Manhattan Bank, as
Administrative Agent
Dear Sirs:
I am General Counsel to Chrysler Corporation, a Delaware corporation
("Chrysler"), and have acted as such in connection with the execution and
delivery of the Revolving Credit Agreement dated as of April 24, 1997 (the
"Revolving Credit Agreement") among Chrysler, Chrysler Canada Ltd. ("Chrysler
Canada"), the Banks, Royal Bank of Canada, as Canadian Administrative Agent, and
The Chase Manhattan Bank, as Administrative Agent. This opinion is delivered to
you pursuant to subsection 6.1(e)(ii) of the Revolving Credit Agreement. As
used herein, the term "Facility Borrowers" refers to Chrysler and Chrysler
Canada. Terms used herein which are defined in the Revolving Credit Agreement
shall have the respective meanings set forth in the Revolving Credit Agreement,
unless otherwise defined herein.
In connection with this opinion, I or members of my staff have
examined executed copies of each of the Revolving Credit Agreement and such
corporate documents and records of Chrysler and certificates of public officials
and officers of Chrysler, and such other documents, as I have deemed necessary
or appropriate for the purposes of this opinion. For the purposes of this
opinion, I have assumed (i) the genuineness of all signatures of, and the
authority of, Persons signing the Revolving Credit Agreement on behalf of
parties thereto other than Chrysler, (ii) the authenticity of all documents
submitted to me as originals, (iii) the conformity to authentic original
documents of all documents submitted to me as certified, conformed or
photostatic copies and (iv) the due authorization, execution and delivery of the
Revolving Credit Agreement by the parties thereto other than Chrysler. For the
purposes of my opinions set forth in paragraphs 4 and 7 below, I have relied on
an opinion letter of even date herewith issued by Fasken Campbell Godfrey,
special Canadian counsel to Chrysler Canada, to the extent that matters relevant
to the opinions set forth in such paragraphs are covered by such opinion letter.
Based upon the foregoing, I am of the opinion that:
1. Chrysler and each of its Significant Subsidiaries is duly
incorporated, validly existing and, where applicable, in good
standing under the laws of the jurisdiction of its incorporation
and duly qualified as a foreign corporation to do business and,
where applicable, in good standing under the laws of each
<PAGE> 79
2
jurisdiction where its ownership, lease or operation of property
or the conduct of its business requires such qualification except
where the failure to be so qualified would not have a material
adverse effect on the business, operations, property or financial
or other condition of Chrysler and its Subsidiaries taken as a
whole.
2. The execution, delivery and performance by Chrysler of the
Revolving Credit Agreement are within Chrysler's corporate powers
and have been duly authorized by all necessary corporate action.
3. The execution, delivery and performance by each Facility Borrower
of the Revolving Credit Agreement do not contravene (a) any
Requirement of Law of the United States of America, the State of
New York or the State of Michigan or (b) any provision of the
General Corporation Law of the State of Delaware.
4. The execution, delivery and performance by each Facility Borrower
of the Revolving Credit Agreement do not contravene, to the best
of my knowledge after due inquiry, any Contractual Obligation of
Chrysler or any of its Subsidiaries.
5. No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority of the United States of
America, the State of New York or the State of Michigan is
required to be obtained or made by either Facility Borrower for
the due execution, delivery and performance by each Facility
Borrower of the Revolving Credit Agreement.
6. The Revolving Credit Agreement has been duly executed and
delivered on behalf of Chrysler.
7. The Revolving Credit Agreement constitutes a legal, valid and
binding obligation of each Facility Borrower enforceable against
each Facility Borrower in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general
principles of equity.
8. No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best of
my knowledge after due inquiry, threatened by or against Chrysler
or against any of its Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to the
Revolving Credit Agreement or any of the transactions contemplated
thereby, or (b) which might reasonably be expected to have a
material adverse effect on the business, operations, property or
financial or other condition of Chrysler and its Subsidiaries
taken as a whole.
I express no opinion as to (a) any indemnification obligations of the
Facility Borrowers under the Revolving Credit Agreement to the extent such
obligations might be deemed to be inconsistent with public policy; (b) any
provision of the Revolving Credit Agreement that purports to establish an
evidentiary standard for determinations by the Banks or either Agent; (c) any
setoff right contained in subsection 13.7 or 13.8 of the Revolving Credit
Agreement authorizing any Bank to set off
<PAGE> 80
3
and apply deposits at any time held, and any other indebtedness at any time
owing, by such Bank to or for the account of any party against any
participation transferred to or by such Bank; (d) subsection 12.7 or 13.11 of
the Revolving Credit Agreement; or (e) any Foreign Currency Subfacility.
I note that (i) a New York statute provides that with respect to a
foreign currency obligation, a court of the State of New York shall render a
judgment or decree in such foreign currency and such judgment or decree shall be
converted into currency of the United States at the rate of exchange prevailing
on the date of entry of such judgment or decree and (ii) with respect to a
foreign currency obligation, a United States Federal court in New York may award
judgment in United States dollars, provided that I express no opinion as to the
rate of exchange such court would apply.
I am a member of the bar of the States of Michigan and New York, and
the foregoing opinion may not be taken as extending to matters arising under
laws other than the laws of the States of Michigan and New York, the corporate
laws of the State of Delaware and the federal laws of the United States of
America.
Very truly yours,
<PAGE> 81
EXHIBIT D-2 TO
REVOLVING CREDIT AGREEMENT
[FORM OF OPINION OF
FASKEN CAMPBELL GODFREY]
April 24, 1997
The Chase Manhattan Bank, as Administrative Agent
270 Park Avenue
New York, New York 10017
The Banks parties to the Credit Agreement referred to below
Dear Sirs:
We have acted as special Canadian counsel to Chrysler Canada Ltd., a
Canadian corporation ("Chrysler Canada") in connection with the execution and
delivery of the Revolving Credit Agreement, dated as of April 24, 1997 (the
"Credit Agreement"), among Chrysler Corporation, Chrysler Canada, the Banks
parties thereto, Royal Bank of Canada, as Canadian Administrative Agent, and The
Chase Manhattan Bank, as Administrative Agent. This opinion is delivered to you
pursuant to subsection 6.1(e)(iii) of the Credit Agreement. Terms used herein
which are defined in the Credit Agreement shall have the respective meanings set
forth in the Credit Agreement, unless otherwise defined herein.
In connection with this opinion, we have examined executed copies (or
facsimile transmitted signature pages) of the Credit Agreement and such
corporate documents and records of Chrysler Canada, and certificates of public
officials and officers of Chrysler Canada, and such other documents as we have
deemed necessary or appropriate for purposes of this opinion. For the purposes
of this opinion, we have assumed (i) the genuineness of all signatures of, and
the authority of, Persons signing the Credit Agreement on behalf of parties
thereto other than Chrysler Canada, (ii) the
<PAGE> 82
The Chase Manhattan Bank,
as Administrative Agent -2- April 24, 1997
authenticity of all documents submitted to us as originals, (iii) the
conformity to authentic original documents of all documents submitted to us as
certified, conformed, facsimile or photostatic copies, (iv) the due
authorization, execution and delivery of the Credit Agreement by the parties
thereto other than Chrysler Canada and (v) the enforceability of the Credit
Agreement against the parties thereto other than Chrysler Canada.
The opinions expressed herein are limited to the laws of general
application of the Province of Ontario and the laws of general application of
Canada applicable therein (the "Specified Laws"), and we do not express any
opinion herein concerning any other law (including, without limitation, any law
of any political subdivision of the Province of Ontario).
For purposes of the opinion set forth in paragraph 1 below, we have
relied upon a Certificate of Compliance dated April __, 1997 issued by the
Department of Industry and Science Canada and have assumed that a like
certificate bearing today's date would be available if requested.
Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that:
1. Chrysler Canada is a corporation continued under the Canada Business
Corporations Act and has not been discontinued or dissolved under that
Act.
2. The Credit Agreement has been duly executed on behalf of Chrysler
Canada. The execution, delivery and performance by Chrysler Canada of
the Credit Agreement (a) are within the corporate powers of Chrysler
Canada, (b) have been duly authorized by all necessary corporate
action on the part of Chrysler Canada, and (c) do not contravene (i)
the articles or by-laws of Chrysler Canada, (ii) any statutory law,
rule, or regulation under the Specified Laws presently in effect which
affects or binds Chrysler Canada or, to our actual knowledge, any
order, writ, judgment, injunction, determination or award presently in
effect which affects or binds Chrysler Canada or any of its properties
or (iii) to our actual knowledge, any Contractual Obligation to which
Chrysler Canada is a party.
3. No authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority under the Specified Laws is
required to be obtained or made by either Facility Borrower for the
due execution, delivery and performance by such Facility Borrower of
the Credit Agreement.
<PAGE> 83
The Chase Manhattan Bank,
as Administrative Agent -3- April 24, 1997
4. To our actual knowledge, no litigation or proceeding of or before any
arbitrator or Governmental Authority of Canada or the Province of
Ontario is pending by or against Chrysler Canada or against any of its
properties or revenues (a) with respect to the Credit Agreement or (b)
which would, if adversely determined, have a material adverse effect
on the business, operations, property or financial condition of
Chrysler and its Subsidiaries taken as a whole.
5. None of the Canadian Administrative Agent or the C$ Banks will be
liable for, and Chrysler Canada will not be required to deduct or
withhold, any Canadian Withholding Tax (as defined below) on or from
any amounts paid or credited to a C$ Bank that is a resident of Canada
for purposes of the Income Tax Act (Canada) by Chrysler Canada on
account of C$ Loans (including interest and Acceptance Fees) or
Canadian Facility Fees under the Credit Agreement. None of the
Administrative Agent or the Banks (other than the C$ Banks) will be
subject to any Taxes (as defined below) on amounts paid or credited to
a C$ Bank by Chrysler Canada on account of C$ Loans (including
interest and Acceptance Fees) or Canadian Facility Fees under the
Credit Agreement.
The term "Taxes" shall mean all taxes, charges, fees, levies, imposts
and other assessments, including all income, sales, use, goods and
services, value added, capital, capital gains, alternative, net worth,
transfer, profits, withholding, payroll, employer health, excise, real
property and personal property taxes, and any other taxes, customs
duties, fees, assessments or other similar charges in the nature of a
tax together with any installments with respect thereto and any
interest, fines and penalties, imposed by any Governmental Authority
of Canada or of the Province of Ontario.
The term "Canadian Withholding Tax" shall mean all taxes imposed under
Part XIII of the Income Tax Act (Canada) and any similar taxes imposed
under the Corporations Tax Act (Ontario).
6. In any action or proceeding arising out of or relating to the Credit
Agreement in any court of competent jurisdiction in the Province of
Ontario, such court would recognize and give effect to the provisions
of subsection 13.13 of the Credit Agreement wherein the respective
parties thereto agree that the Credit Agreement shall be governed by,
and construed and interpreted in accordance with, the internal laws of
the State of New York provided that such choice of laws is bona fide
(in the sense that it was not made with a view to avoiding the
consequences of the laws of any other jurisdiction) and is not
contrary to "public policy", as such term is understood under the
Specified Laws and, to the extent specifically pleaded and proved as a
fact by expert evidence, such court would apply the laws of the State
of New York to all issues which under conflict of laws rules in effect
in the Province of Ontario are characterized to be contract issues,
except that any such court (i) will apply those laws of the Province
of Ontario which such court characterizes as procedural and will not
apply those laws of the State of New York which such court
characterizes as procedural; (ii) will not apply those laws of the
State of New York which such court would characterize as revenue,
expropriatory, penal or similar laws; and (iii) will not apply those
laws of the State of New York the application of which such court
would characterize as inconsistent with "public policy", as such term
is understood under the Specified Laws.
<PAGE> 84
The Chase Manhattan Bank,
as Administrative Agent -4- April 24, 1997
7. The laws of the Province of Ontario permit an action to be brought on
a final, non-appealable, conclusive and subsisting judgment in
personam of the courts of the State of New York or the courts of the
United States of America for the Southern District of New York, which
is not impeachable as void or voidable under the internal laws of the
State of New York, for a sum certain if (i) the court rendering such
judgment had jurisdiction over the judgment debtor, as recognized by
the courts of the Province of Ontario; (ii) such judgment debtor was
duly served with the process of the courts of State of New York or the
courts of the United States of America for the Southern District of
New York or appeared to such process, (iii) such judgment was not
obtained by fraud or in a manner contrary to natural justice and the
enforcement thereof would not be inconsistent with "public policy", as
such term is understood under the Specified Laws or contrary to any
order made by the Attorney General of Canada under the Foreign
Extraterritorial Measures Act (Canada); (iv) the enforcement of such
judgment does not constitute, directly or indirectly, the enforcement
of foreign revenue, expropriatory, penal or similar laws; (v) there
has been compliance with the Limitations Act (Ontario), which
specifies a period within which an action to enforce a foreign
judgment must be commenced; and (vi) prior to the rendering of
judgment by the court in the Province of Ontario, the judgment debtor
does not avail itself of any right or defense based on either law or
admissible fact which has accrued to such judgment debtor subsequent
to the entering of such judgment of the courts of the State of New
York or the courts of the United States of America for the Southern
District of New York. Pursuant to the Currency Act (Canada), a
judgment in money rendered by a court of the Province of Ontario must
be awarded in Canadian currency and such judgment may be based on a
rate of exchange in effect on a day other than the day of payment of
the judgment.
8. Our review of the Credit Agreement pertaining to Chrysler Canada
disclosed nothing which would indicate that the transactions
contemplated by the Credit Agreement are inconsistent with "public
policy" as such term is understood under the Specified Laws.
Opinions expressed above based upon our "actual knowledge" refer
solely to the conscious awareness of facts or other information by the lawyer
who has signed this opinion and any lawyer who has had active involvement in
negotiating the Credit Agreement or in preparing this opinion.
This opinion is given as of the date hereof and we undertake no
obligation to notify you of any changes in law or fact occurring after the date
hereof. This opinion is furnished to you solely in connection with the execution
and delivery of the Credit Agreement, may not be furnished to any other person,
firm or corporation, other than any assignee or participant under the Credit
Agreement or any bank examiner or other regulatory authority, without our prior
written consent, and may not be relied upon by anyone other than you and the
other counsel providing legal opinions to you pursuant to
<PAGE> 85
The Chase Manhattan Bank,
as Administrative Agent -5- April 24, 1997
subsection 6.1(f) of the Credit Agreement, and then by you and such other
counsel only in connection with the execution and delivery of the Credit
Agreement.
Yours very truly,
<PAGE> 86
EXHIBIT E-1 TO
REVOLVING CREDIT AGREEMENT
[FORM OF ASSIGNMENT AND ACCEPTANCE]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Revolving Credit Agreement, dated as of April 24,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among CHRYSLER CORPORATION ("Chrysler"), CHRYSLER CANADA
LTD. ("Chrysler Canada"), the Banks parties thereto, ROYAL BANK OF CANADA, as
Canadian Administrative Agent, and THE CHASE MANHATTAN BANK, as Administrative
Agent. Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
The assignor listed on SCHEDULE 1 (the "Assignor") and the assignee listed
on SCHEDULE 1 (the "Assignee") agree as follows:
I. The Assignor hereby irrevocably sells and assigns to the Assignee without
recourse to the Assignor, and the Assignee hereby irrevocably purchases and
assumes from the Assignor without recourse to the Assignor, as of the Effective
Date (as defined below), an interest (the "Assigned Interest"), as described on
SCHEDULE 1, in and to the Assignor's rights and obligations under the Credit
Agreement with respect to those credit facilities contained in the Credit
Agreement as set forth on SCHEDULE 1 (individually, an "Assigned Facility";
collectively, the "Assigned Facilities"), in a principal amount for each
Assigned Facility as set forth on SCHEDULE 1.
II. The Assignor A. makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any instrument or document
furnished pursuant thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, or any instrument or
document furnished pursuant thereto, other than that it has not created any
adverse claim upon the interest being assigned by it hereunder and that such
interest is free and clear of any such adverse claim, and B. makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Chrysler, Chrysler Canada, any Subsidiaries or any other
obligor or the performance or observance by Chrysler, Chrysler Canada, any
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any instrument or document furnished pursuant hereto or
thereto.
III. The Assignee A. represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; B. confirms that it has received a
copy of the Credit Agreement, together with such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; C. agrees that it has made and will,
independently and without reliance upon the Assignor, either Agent or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement or any instrument or document furnished
pursuant hereto or thereto; D. appoints and authorizes the Administrative Agent
to
<PAGE> 87
The Chase Manhattan Bank,
as Administrative Agent -2- April 24, 1997
take such action as administrative agent on its behalf and to exercise such
powers and discretion under the Credit Agreement or any instrument or document
furnished pursuant hereto or thereto as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are incidental
thereto; E. in the case of each C$ Bank, appoints and authorizes the Canadian
Administrative Agent to take such action as Canadian administrative agent on
its behalf and to exercise such powers and discretion under the Credit
Agreement or any instrument or document furnished pursuant hereto or thereto as
are delegated to the Canadian Administrative Agent by the terms thereof,
together with such powers as are incidental thereto; and F. agrees that it will
be bound by the provisions of the Credit Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Bank.
IV. The effective date of this Assignment and Acceptance shall be the date
specified on SCHEDULE 1 (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the relevant Agent for
recording by such Agent pursuant to subsection 13.6(d) of the Credit Agreement,
effective as of the Effective Date (which shall not, unless otherwise agreed to
by the Administrative Agent, be earlier than five Business Days after the date
of such recording by the relevant Agent).
V. Upon such recording, from and after the Effective Date, the relevant
Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) which accrue subsequent
to the Effective Date to the Assignee. The Assignor and the Assignee shall make
all appropriate adjustments in payments by the relevant Agent for periods prior
to the Effective Date or with respect to the making of this assignment directly
between themselves.
VI. From and after the Effective Date, A. the Assignee shall be a party to
the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and shall be
bound by the provisions thereof and B. the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
VII. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
<PAGE> 88
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE REVOLVING CREDIT AGREEMENT, DATED AS OF APRIL 24, 1997
AMONG CHRYSLER CORPORATION, CHRYSLER CANADA LTD., THE BANKS PARTIES THERETO,
ROYAL BANK OF CANADA, AS CANADIAN ADMINISTRATIVE AGENT
AND THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE AGENT
- --------------------------------------------------------------------------------
Name and Address of Assignor:
Name and Address of Assignee:
Effective Date of Assignment:
Credit Principal
Facility Assigned Amount Assigned
----------------------- ----------------------
$
---------------
[Name of Assignee] [Name of Assignor]
By By
------------------------- ---------------------
Name: Name:
Title: Title:
<PAGE> 89
2
Consented To:
CHRYSLER CORPORATION
By: ______________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent
By: _____________________
Name:
Title:
[Consents required only to the
extent expressly provided in
subsection 13.6(c) of the Credit
Agreement.]
Receipt Acknowledged for Purposes of Recordation
in the relevant Register:
[THE CHASE MANHATTAN BANK, as Administrative Agent
By:_____________________
Name:
Title:]
[ROYAL BANK OF CANADA, as Canadian
Administrative Agent
By:____________________
Name:
Title:]
<PAGE> 90
EXHIBIT E-2 TO
REVOLVING CREDIT AGREEMENT
[FORM OF COMMITMENT REALLOCATION SUPPLEMENT]
SUPPLEMENT, dated _________________, to the Revolving Credit
Agreement, dated as of April 24, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among CHRYSLER CORPORATION
("Chrysler"), CHRYSLER CANADA LTD., the Banks parties thereto, ROYAL BANK OF
CANADA, as Canadian Administrative Agent, and THE CHASE MANHATTAN BANK, as
Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Credit Agreement provides in subsection 13.9(c) thereof
that Chrysler, with the consent of the affected Bank(s) and the Administrative
Agent, may reallocate all or any portion of the Canadian Commitment of any C$
Bank to the U.S. Commitment of such C$ Bank's Related US$ Bank or reallocate all
or any portion of the U.S. Commitment of any US$ Bank to the Canadian Commitment
of such US$ Bank's Related C$ Bank by executing and delivering to the
Administrative Agent a supplement to the Credit Agreement in substantially the
form of this Supplement;
WHEREAS, Chrysler now desires to reallocate the [Canadian][U.S.]
Commitment of [insert name of Bank] to the [U.S.][Canadian] Commitment of its
Related [US$][C$] Bank (the "Affected Bank(s)") under the Credit Agreement; and
WHEREAS, each of the Affected Bank(s) and the Administrative Agent has
consented to such reallocation;
NOW THEREFORE, each party hereto hereby agrees as follows:
1. Each party hereto agrees, subject to the terms and conditions of
the Credit Agreement, that on the date this Supplement has been consented
to by each of the Affected Bank(s) and the Administrative Agent, [insert
name of Bank] shall have $__________ of its [Canadian][U.S.] Commitment
reallocated to the [U.S.][Canadian] Commitment of its Related [US$][C$]
Bank, thereby making the amount of its [Canadian][U.S.] Commitment
$________ and the amount of its Related [US$][C$] Bank's [U.S.][Canadian]
Commitment $_________.
2. Terms defined in the Credit Agreement shall have their defined
meanings when used herein.
<PAGE> 91
2
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.
CHRYSLER CORPORATION
By___________________________
Title:
Consented to this ____ day of
______________, 199_.
[NAME(S) OF BANK(S)]
By__________________________
Title:
Consented to this ____ day of
______________, 199_.
THE CHASE MANHATTAN BANK, as Administrative Agent
By__________________________
Title:
<PAGE> 92
EXHIBIT F-1 TO
REVOLVING CREDIT AGREEMENT
[FORM OF ADDENDUM]
ADDENDUM TO REVOLVING CREDIT AGREEMENT
The undersigned Bank (a) agrees to all of the provisions of the
Revolving Credit Agreement dated as of April 24, 1997 among Chrysler Corporation
("Chrysler"), Chrysler Canada Ltd. ("Chrysler Canada"), the Banks parties
thereto, Royal Bank of Canada, as Canadian Administrative Agent, and The Chase
Manhattan Bank, as Administrative Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
and (b) becomes a party thereto, as a Bank and, in each case to the extent
indicated on Schedule I to the Credit Agreement, a US$ Bank and a C$ Bank, with
an obligation (i) in the case of a US$ Bank, to make U.S. Loans to Chrysler and
(ii) in the case of a C$ Bank, to make C$ Prime Loans to and accept Bankers'
Acceptances from Chrysler Canada, provided, that, after giving effect thereto,
as applicable, (x) the aggregate principal amount of a US$ Bank's U.S. Loans
shall not exceed such US$ Bank's U.S. Commitment as set forth opposite the
undersigned Bank's name on said Schedule I (or, if less, its U.S. Net
Commitment) and (y) the aggregate principal amount (US$ Equivalent) of a C$
Bank's C$ Prime Loans and Bankers' Acceptances shall not exceed such C$ Bank's
Canadian Commitment as set forth opposite the undersigned Bank's name on said
Schedule I, in each case as the amount of such U.S. Commitment or Canadian
Commitment, as applicable, may be changed from time to time as provided in the
Credit Agreement. Capitalized terms defined in the Credit Agreement shall have
their respective defined meanings herein.
________________________________
(NAME OF BANK)
By_______________________________
Title:
As of April 24, 1997
<PAGE> 93
EXHIBIT F-2 TO
REVOLVING CREDIT AGREEMENT
[FORM OF FOREIGN CURRENCY SUBFACILITY ADDENDUM]
FOREIGN CURRENCY SUBFACILITY ADDENDUM
To: The Chase Manhattan Bank, as Administrative Agent
From: Chrysler Corporation
[Insert name[s] of Foreign Subsidiary Borrower[s]]
1. This Foreign Currency Subfacility Addendum is being delivered to you
pursuant to subsection 11.1(a) of the Revolving Credit Agreement, dated as of
April 24, 1997, among Chrysler Corporation ("Chrysler"), Chrysler Canada Ltd.,
the Banks parties thereto, Royal Bank of Canada, as Canadian Administrative
Agent, and The Chase Manhattan Bank, as Administrative Agent (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement and used herein shall have
the meanings given to them in the Credit Agreement.
2. The effective date (the "Addendum Effective Date") of this Foreign
Currency Subfacility Addendum will be ______________________ __, 19__.
3. Please be advised that, as of the Addendum Effective Date, the
credit facility described below is hereby designated as a "Foreign Currency
Subfacility" for the purposes of the Credit Agreement.
TYPE OF SUBFACILITY:*/
FOREIGN CURRENC[Y][IES]:
FOREIGN CURRENCY SUBFACILITY Foreign Currency Subfacility
MAXIMUM BORROWING AMOUNTS: Name of Bank Maximum Borrowing Amount
------------ ----------------------------
$
__________________________________
*/ Insert short description of terms of Foreign Currency Subfacility, and state
whether it is designated as a Foreign Committed Subfacility or a Foreign
Uncommitted Subfacility.
2
<PAGE> 94
3
4. Chrysler hereby represents and warrants that (i) the documentation
complies in all respects with the requirements of Section 11 of the Credit
Agreement and (ii) ______________ of ______________**/ contains an express
acknowledgement that such Foreign Currency Subfacility shall be subject to the
provisions of Section 11 of the Credit Agreement.
CHRYSLER CORPORATION
By ___________________________
Title:
[INSERT NAME OF FOREIGN SUBSIDIARY
BORROWER]
By ___________________________
Title:
[NAME OF BANK]***/
By ___________________________
Title:
Acknowledged:
THE CHASE MANHATTAN BANK, as Administrative Agent
By__________________________
Title:
____________________
**/ Provide citation to relevant provision from the documentation and attach
page containing such provision.
***/ In lieu of executing Foreign Currency Subfacility Addendum, Bank(s) may
instead attach such Addendum as an Exhibit to the relevant Foreign
Currency Subfacility documentation.
<PAGE> 95
EXHIBIT G TO
REVOLVING CREDIT AGREEMENT
[FORM OF CLOSING CERTIFICATE]
CLOSING CERTIFICATE
Pursuant to subsections 6.1(b), (c) and (d) of the Revolving Credit
Agreement dated as of April 24, 1997 (the "Credit Agreement"; unless otherwise
defined herein, terms defined in the Credit Agreement and used herein shall have
the meanings given to them in the Credit Agreement) among CHRYSLER CORPORATION
("Chrysler"), CHRYSLER CANADA LTD. ("Chrysler Canada"), the Banks parties
thereto, ROYAL BANK OF CANADA, as Canadian Administrative Agent, and THE CHASE
MANHATTAN BANK, as Administrative Agent, the undersigned ________ of [Chrysler]
[Chrysler Canada] hereby certifies as follows:
1. The representations and warranties of [Chrysler] [Chrysler Canada] contained
in the Credit Agreement or in any certificate, document or financial or other
statement furnished by or on behalf of [Chrysler] [Chrysler Canada] pursuant to
or in connection with the Credit Agreement are true and correct in all material
respects on and as of the date hereof with the same effect as if made on the
date hereof except for representations and warranties stated to relate to a
specific earlier date, in which case such representations and warranties were
true and correct in all material respects as of such earlier date;
2. No Default or Event of Default has occurred and is continuing as
of the date hereof or after giving effect to any Loans to be made on the
date hereof; and
3. ____________________ is and at all times since ______________
19__, has been the duly elected and qualified [Assistant] Secretary of
[Chrysler] [Chrysler Canada] and the signature set forth on the signature
line for such officer below is such officer's true and genuine signature;
and the undersigned [Assistant] Secretary of [Chrysler] [Chrysler Canada] hereby
certifies as follows:
4. There are no liquidation or dissolution proceedings pending or to
my knowledge threatened against [Chrysler] [Chrysler Canada], nor to my
knowledge has any other event occurred affecting or threatening the
corporate existence of [Chrysler] [Chrysler Canada];
5. [Chrysler] [Chrysler Canada] is a corporation duly organized,
validly existing and in good standing under the laws of [Delaware]
[Canada];
6. Attached hereto as Exhibit A is a complete and correct copy of
resolutions duly adopted by the Board of Directors (or a duly authorized
committee thereof) of [Chrysler] [Chrysler Canada] on _________, 19__; such
resolutions have not in any way been amended, modified, revoked or
rescinded and have been in full force and effect since their adoption to
and including the date hereof and are now in full force and effect; such
resolutions are the only corporate proceedings of [Chrysler] [Chrysler
Canada] now in force relating to or affecting the matters referred to
therein;
<PAGE> 96
2
7. Attached hereto as Exhibit B is a complete and correct copy of the
by-laws of [Chrysler] [Chrysler Canada] as in effect at all times since
_________________, 19__ to and including the date hereof; and attached
hereto as Exhibit C is a true and complete copy of the certificate of
incorporation of [Chrysler] [Chrysler Canada] as in effect at all times
since ___________________, 19__ to and including the date hereof; and
8. The following persons are now duly elected and qualified officers
of [Chrysler] [Chrysler Canada] holding the offices indicated next to their
respective names below, and such officers have held such offices with
[Chrysler] [Chrysler Canada] at all times since ________________, 19__ to
and including the date hereof, and the signatures appearing opposite their
respective names below are the true and genuine signatures of such
officers, and each of such officers is duly authorized to execute and
deliver on behalf of [Chrysler] [Chrysler Canada] the Credit Agreement and
any certificate or other document to be delivered by [Chrysler] [Chrysler
Canada] pursuant to the Credit Agreement:
Name Office Signature
---- ------ ---------
__________ [________] _________________
__________ [Assistant] Secretary _________________
IN WITNESS WHEREOF, the undersigned have hereto set our names.
________ _______________
Title: [________] Title: [Assistant] Secretary
Date: April 24, 1997
<PAGE> 97
EXHIBIT H TO
REVOLVING CREDIT AGREEMENT
[FORM OF U.S. LOAN PROMISSORY NOTE]
U.S. LOAN PROMISSORY NOTE
$___________
New York, New York
___________, 199_
FOR VALUE RECEIVED, the undersigned, Chrysler Corporation, a Delaware
corporation ("Chrysler"), hereby unconditionally promises to pay to the order of
[NAME OF BANK] (the "Bank") at the office of The Chase Manhattan Bank, located
at 270 Park Avenue, New York, New York 10017, in lawful money of the United
States of America and in immediately available funds, on the Termination Date
the principal amount of (a) [AMOUNT IN WORDS] DOLLARS ($__________), or, if
less, (b) the aggregate unpaid principal amount of all U.S. Loans made by the
Bank to Chrysler pursuant to subsection 2.1 of the Credit Agreement, as
hereinafter defined. Chrysler further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time outstanding
at the rates and on the dates specified in subsection 4.2 of such Credit
Agreement.
The holder of this promissory note is authorized to endorse on the
schedules annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof, the date, Type and amount
of each U.S. Loan made pursuant to the Credit Agreement and the date and amount
of each payment or prepayment of principal thereof, each continuation thereof,
each conversion of all or a portion thereof to another Type and, in the case of
Eurodollar Loans, the length of each Interest Period with respect thereto. Each
such endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement or any error in
such endorsement shall not affect the obligations of Chrysler in respect of any
U.S. Loan.
This promissory note (a) has been issued pursuant to subsection 13.6(g) of
the Revolving Credit Agreement dated as of April 24, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Chrysler, Chrysler Canada Ltd., a Canadian corporation, the Banks from
time to time parties thereto, Royal Bank of Canada, as Canadian Administrative
Agent, and The Chase Manhattan Bank, as Administrative Agent, (b) is subject to
the provisions of the Credit Agreement and (c) is subject to prepayment in whole
or in part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this promissory
note shall become, or may be declared to be, immediately due and payable, all as
provided in the Credit Agreement.
All parties now and hereafter liable with respect to this promissory note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
<PAGE> 98
2
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
CHRYSLER CORPORATION
By: ________________________
Title:
<PAGE> 99
Schedule A
to U.S. Loan Promissory Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<TABLE>
<CAPTION>
Amount Amount of Base Rate
Amount of Base Rate Converted to Amount of Principal of Loans Converted to Unpaid Principal Balance Notation
Date Loans Base Rate Loans Base Rate Loans Repaid Eurodollar Loans of Base Rate Loans Made By
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
Schedule B
to U.S. Loan Promissory Note
<PAGE> 100
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
Interest Period Amount of Amount of
Amount Converted and Eurodollar Principal of Eurodollar Loans Unpaid Principal
Amount of to Eurodollar Rate with Respect Eurodollar Loans Converted to Base Balance of Notation
Date Eurodollar Loans Loans Thereto Repaid Rate Loans Eurodollar Loans Made By
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 1
EXHIBIT 10-A-12
CHRYSLER CORPORATION
1991 STOCK COMPENSATION PLAN
EFFECTIVE MAY 16, 1991
AS AMENDED THROUGH MAY 15, 1997
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
The name of the plan is the Chrysler Corporation 1991 Stock Compensation
Plan (the "Plan"). The purpose of the Plan is to enable the Company (as
hereinafter defined) and its Subsidiaries (as hereinafter defined) to obtain and
retain competent personnel who will contribute to the Company's success by their
ability, ingenuity and industry and to provide incentives to the participating
officers, key salaried employees and nonemployee directors which are related to
increases in stockholder value and will therefore inure to the benefit of all
stockholders of the Company.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Award" means any grant under the Plan in the form of Stock
Options, Stock Appreciation Rights, Limited Stock Appreciation Rights,
Performance Stock Units, Restricted Stock Units or any combination of the
foregoing.
(b) "Board" means the Board of Directors of the Company.
(c) "Change in Control" has the meaning given in Section 14 of the
Plan.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto.
(e) "Committee" means the Stock Option Committee, or any other
committee the Board may subsequently appoint to administer the Plan. The
Committee shall be composed entirely of Directors who meet the
qualifications referred to in Section 2 of the Plan.
(f) "Company" means Chrysler Corporation, a corporation incorporated
under the laws of the State of Delaware (or any successor corporation).
(g) "Director" means any member of the Board, whether or not such
member is a Nonemployee Director, and "Nonemployee Director" means a
Director who is not an employee of the Company, any Subsidiary or any
Related Entity.
(h) "Disability" means being permanently and totally disabled under
any insurance program of the Company, any Subsidiary or any Related Entity,
except that, in the case of a Nonemployee Director, Disability shall mean a
permanent and total disability within the meaning of Section 22(e) of the
Code.
(i) "Eligible Employee" means an employee of the Company, any
Subsidiary or any Related Entity as described in Section 4 of the Plan.
(j) "Fair Market Value" means, as of any given date, with respect to
any Awards granted hereunder, the mean of the high and low trading price of
the Stock on such date as reported on the New York Stock Exchange or, if
the Stock is not then traded on the New York Stock Exchange, on such other
national securities exchange on which the Stock is admitted to trade or, if
none, on the National Association of Securities Dealers Automated Quotation
System if the Stock is admitted for quotation thereon; provided, however,
that if any such exchange or quotation system is closed on any day on which
Fair Market Value is to be determined, Fair Market Value shall be
determined as of the first day immediately preceding such day on which such
exchange or quotation system was open for trading.
(k) "Incentive Stock Option" means any Stock Option intended to
qualify as an "incentive stock option" within the meaning of Section 422 of
the Code.
<PAGE> 2
(l) "Limited Stock Appreciation Right" means a Stock Appreciation
Right that can be exercised only in the event of a Change in Control.
(m) "Nonqualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(n) "Optionee" means a Participant granted a Stock Option pursuant to
Section 5 of the Plan which remains outstanding.
(o) "Participant" means any Eligible Employee selected by the
Committee, pursuant to the Committee's authority in Section 2 of the Plan,
to receive Awards and, solely to the extent provided by Sections 9, 10, and
11 of the Plan, Nonemployee Directors of the Company.
(p) "Performance Stock Unit" means the right to receive one share of
Stock as set forth in an Award granted pursuant to Section 8 of the Plan,
the vesting of which is subject to restrictions that will lapse upon the
attainment of performance objectives.
(q) "Related Entity" means any corporation, joint venture or other
entity, domestic or foreign, other than a Subsidiary, in which the Company
owns, directly or indirectly, a substantial equity interest.
(r) "Restricted Stock Unit" means the right to receive one share of
Stock as set forth in an Award granted pursuant to Section 8 of the Plan,
the vesting of which is subject to restrictions that will lapse with the
passage of time; except that, in the case of a Nonemployee Director,
Restricted Stock Unit shall mean the right to receive one share of Stock as
set forth in Section 10 of the Plan.
(s) "Retirement" means (i) retirement from active employment under a
pension plan of the Company, any Subsidiary or Related Entity or under an
employment contract with any of them or (ii) termination of employment at
or after age 55 under circumstances which the Committee, in its sole
discretion, deems equivalent to retirement; except that, in the case of a
Nonemployee Director, Retirement shall mean termination of service as a
Director after attaining age 72 (or such other age as the Board may
establish from time to time by resolution) for purposes of Section 10 of
the Plan.
(t) "Stock" means the common stock of the Company.
(u) "Stock Appreciation Right" means the right pursuant to an Award
granted under Section 6 of the Plan, (i) in the case of a Related Stock
Appreciation Right (as defined in Section 6 of the Plan), to surrender to
the Company all or a portion of the related Stock Option and receive an
amount equal to the excess of the Fair Market Value of one share of Stock
as of the date such Stock Option or portion thereof is surrendered over the
option price per share specified in such Stock Option, multiplied by the
number of shares of Stock in respect of which such Stock Option is being
surrendered, and (ii) in the case of a Freestanding Stock Appreciation
Right (as defined in Section 6 of the Plan), to exercise such Freestanding
Stock Appreciation Right and receive an amount equal to the excess of the
Fair Market Value of one share of Stock as of the date of exercise over the
price per share specified in such Freestanding Stock Appreciation Right,
multiplied by the number of shares of Stock in respect of which such
Freestanding Stock Appreciation Right is being exercised.
(v) "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5 of the Plan, including any Reload Option (as
defined in Section 5 of the Plan).
(w) "Subsidiary" means any corporation in an unbroken chain of
corporations, beginning with the Company, if each of the corporations
(other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Committee, composed of not less than
two Nonemployee Directors, each of whom shall be a "Non-Employee Director"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended from time to time (the "Exchange Act"), or meet any other
2
<PAGE> 3
applicable standard for administrators under that or any similar rule which may
be in effect from time to time. Each member of the Committee shall be appointed
by the Board and serve at the pleasure of the Board.
The Committee shall have the power and authority in its sole discretion to
grant Awards to Eligible Employees pursuant to the terms and provisions of the
Plan.
In particular, the Committee shall have full authority, not inconsistent
with the Plan:
(a) to select Participants from among the Eligible Employees;
(b) to determine whether and to what extent Awards are to be granted
to Eligible Employees hereunder;
(c) to determine the number of shares of Stock to be covered by each
such Award granted hereunder, but in no case shall the aggregate of all
shares of Stock issued under the Plan be greater than that allowed under
the Plan, and in no case shall the number of shares of Stock to be covered
by all such Awards (excluding grants of Restricted Stock Units) made to the
same Eligible Employee during the five year period beginning January 1,
1997 and ending December 31, 2001 exceed ten percent of the total number of
shares of Stock approved by the stockholders of the Company for issuance
under the Plan (as such number may be increased from time to time in
accordance with Section 12 hereof, and as such number may be adjusted from
time to time in accordance with Section 3 hereof for changes in corporate
structure or capitalization affecting the Stock);
(d) to determine the terms and conditions of any Award granted
hereunder (including, without limitation, (i) the restricted periods
applicable to Restricted Stock Unit Awards and (ii) the performance
objectives and periods applicable to Performance Stock Unit Awards);
(e) to waive compliance by a Participant with any obligation to be
performed by him or her under any Award and to waive any term or condition
of any such Award (provided, however, that no such waiver shall
detrimentally affect the rights of a Participant without such Participant's
consent); and
(f) to determine the terms and conditions which shall govern all
written agreements evidencing the Awards.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the provisions of the Plan and
the terms and conditions of any Award issued, expired, terminated, cancelled or
surrendered under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan
and as to the terms and conditions of any Award (and any agreements relating
thereto) shall be final and binding on all persons, including the Company and
the Participants.
Notwithstanding anything else contained in this Plan to the contrary, if
any award of Performance Stock Units is intended at the time of grant to be
other performance based compensation within the meaning of Section 162(m)(4)(C)
of the Code, to the extent required to so qualify any award hereunder, the
Committee shall not be entitled to exercise any discretion otherwise authorized
under this Plan with respect to such award if the ability to exercise such
discretion (as opposed to the exercise of such discretion) would cause such
award to fail to qualify as other performance based compensation.
SECTION 3. NUMBER OF SHARES OF STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for issuance
under the Plan shall be eighty-six (86) million shares as constituted at the
time of the annual meeting of stockholders on May 15, 1997, inclusive of the 56
million shares previously reserved for issuance under the Plan. Such shares of
Stock may consist, in whole or in part, of authorized and unissued shares of
Stock or issued shares of Stock reacquired by the Company at any time, as the
Board may determine.
3
<PAGE> 4
To the extent that (a) a Stock Option expires or is otherwise terminated,
cancelled or surrendered without being exercised (including, without limitation,
in connection with the grant of a replacement option) or (b) any Restricted
Stock Unit Award or Performance Stock Unit Award granted hereunder expires or is
otherwise terminated or is cancelled, the shares of Stock underlying such Stock
Option or subject to such Restricted Stock Unit Award or Performance Stock Unit
Award shall again be available for issuance in connection with future Awards
under the Plan.
Upon the exercise of a Related Stock Appreciation Right or Related Limited
Stock Appreciation Right (as defined in Section 7 of the Plan), the Stock
Option, or the part thereof to which such Related Stock Appreciation Right or
Related Limited Stock Appreciation Right is related, shall be deemed to have
been exercised for the purpose of the limitation on the number of shares of
Stock to be issued under the Plan, but only to the extent of the number of
shares of Stock in respect of which the Related Stock Appreciation Right or
Related Limited Stock Appreciation Right was exercised.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure or
capitalization affecting the Stock, the Committee in its sole discretion may
make an adjustment or substitution in the number and class of shares reserved
for issuance under the Plan, the number and class of shares covered by
outstanding Awards and the option price per share of Stock Options or the
applicable price per share specified in Stock Appreciation Rights or Limited
Stock Appreciation Rights to reflect the effect of such change in corporate
structure or capitalization on the Stock; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated; provided, further,
however, that if by reason of any such change in corporate structure or
capitalization a Participant holding a Restricted Stock Unit Award or
Performance Stock Unit Award shall be entitled, subject to the terms and
conditions of such Award, to additional or different shares of any security, the
issuance of such additional or different shares shall thereupon be subject to
all of the terms and conditions (including restrictions and performance
criteria) which were applicable to such Award prior to such change in corporate
structure or capitalization; and, provided, further, however, that unless the
Committee in its sole discretion determines otherwise, any issuance by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class shall not affect, and no such adjustment or substitution by
reason thereof shall be made with respect to, the number or class of shares
reserved for issuance under the Plan, the number or class of shares covered by
outstanding Awards or any option price or applicable price.
SECTION 4. ELIGIBILITY.
Officers and other key salaried employees of the Company, its Subsidiaries
and its Related Entities who are responsible for or contribute to the
management, growth or profitability of the business of the Company, its
Subsidiaries or its Related Entities shall be eligible to be granted Awards and
any former officers and key salaried employees of the Company, its Subsidiaries
and its Related Entities shall be eligible to be granted Reload Options with
respect to Stock Options granted to them while they were employees; provided,
however, with respect to an employee of a Related Entity, that such person was
an employee of the Company, a Subsidiary or, if originally an employee of the
Company or a Subsidiary, or another Related Entity immediately prior to becoming
employed by such Related Entity and accepted employment with such Related Entity
at the request of the Company or a Subsidiary. The Participants under the Plan
shall be selected, from time to time, by the Committee, in its sole discretion,
from among those Eligible Employees.
SECTION 5. STOCK OPTIONS.
(a) Grant and Exercise. Stock Options may be granted either alone or in
addition to other Awards granted under the Plan. Any Stock Option granted under
the Plan shall be in such form as the Committee may, from time to time, approve,
and the terms and conditions of Stock Option Awards need not be the same with
respect to each Optionee. Optionees shall enter into a Stock Option agreement
("Stock Option Agreement") with the Company, in such form as the Committee shall
determine, which agreement shall set
4
<PAGE> 5
forth, among other things, the option price of the option, the term of the
option and conditions regarding exercisability of the option granted thereunder.
(i) Nature of Options. The Committee shall have the authority to grant
any Participant either Incentive Stock Options, Nonqualified Stock Options
or both types of Stock Options (in each case with or without Stock
Appreciation Rights or Limited Stock Appreciation Rights), except that the
Committee shall not grant any Incentive Stock Options to an employee of a
Related Entity. Any Stock Option which does not qualify as an Incentive
Stock Option, or the terms of which at the time of its grant provide that
it shall not be treated as an Incentive Stock Option, shall constitute a
Nonqualified Stock Option.
(ii) Exercisability. Subject to such terms and conditions as shall be
determined by the Committee in its sole discretion at or after the time of
grant, Stock Options shall be exercisable from time to time to the extent
of 40% of the number of shares of Stock covered by the Stock Option on and
after the first anniversary and before the second anniversary of the date
of grant of the Stock Option, to the extent of 70% of the number of shares
of Stock covered by the Stock Option on and after the second anniversary
and before the third anniversary of the date of grant of the Stock Option
and to the extent of 100% of the number of shares of Stock covered by the
Stock Option on and after the third anniversary of the date of grant of the
Stock Option and before the expiration of the stated term of the Stock
Option (or to such lesser extent as the Committee in its sole discretion
shall determine at the time of grant or to such greater extent as the
Committee in its sole discretion shall determine at or after the time of
grant).
(iii) Method of Exercise. Stock Options may be exercised by giving
written notice of exercise delivered in person or by mail as required by
the terms of any Stock Option Agreement at the Company's principal
executive office, specifying the number of shares of Stock with respect to
which the Stock Option is being exercised, accompanied by payment in full
of the option price in cash or its equivalent as determined by the
Committee in its sole discretion. If requested by the Committee, the
Optionee shall deliver to the Company the Stock Option Agreement evidencing
the Stock Option being exercised for notation thereon of such exercise and
return thereafter of such agreement to the Optionee. As determined by the
Committee in its sole discretion at or after the time of grant, payment of
the option price in full or in part may also be made in the form of shares
of unrestricted Stock already owned by the Optionee (based on the Fair
Market Value of the Stock on the date the Stock Option is exercised);
provided, however, that in the case of an Incentive Stock Option, the right
to make payment of the option price in the form of already owned shares of
Stock may be authorized only at the time of grant. An Optionee shall
generally have the rights to dividends or other rights of a stockholder
with respect to shares of Stock subject to the Stock Option when the
Optionee has given written notice of exercise, has paid in full for such
shares of Stock, and, if requested, has made the representations described
in Section 13(a) of the Plan.
(iv) Reload Options. The Committee shall have the authority to
specify, at the time of grant or, with respect to Nonqualified Stock
Options, at or after the time of grant, that an Optionee shall be granted a
Nonqualified Stock Option (a "Reload Option") in the event such Optionee
exercises all or a part of a Stock Option (an "Original Option") by
surrendering in accordance with Section 5(a)(iii) of the Plan already owned
shares of unrestricted Stock in full or partial payment of the option price
under such Original Option, subject to the availability of shares of Stock
under the Plan at the time of such exercise. Each Reload Option shall cover
a number of shares of Stock equal to the number of shares of Stock
surrendered in payment of the option price under such Original Option,
shall have an option price per share of Stock equal to the Fair Market
Value of the Stock on the date of grant of such Reload Option and shall
expire on the stated expiration date of the Original Option. A Reload
Option shall be exercisable at any time and from time to time from and
after the date of grant of such Reload Option (or, as the Committee in its
sole discretion shall determine at or after the time of grant, at such time
or times as shall be specified in the Reload Option). Any Reload Option may
provide for the grant, when exercised, of subsequent Reload Options to the
extent and upon such terms and conditions, consistent with this Section
5(a)(iv), as the Committee in its sole discretion shall specify at or after
the time of grant of such Reload Option. A Reload Option shall contain such
other terms and conditions, which may include a restriction on the
transferability of the shares of Stock received upon exercise of the
Original
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Option representing at least the after-tax profit received upon exercise of
the Original Option, as the Committee in its sole discretion shall deem
desirable and which may be set forth in rules or guidelines adopted by the
Committee or in the Stock Option Agreements evidencing the Reload Options.
(b) Terms and Conditions. Stock Options granted under the Plan shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable.
(i) Option Price. The option price per share of Stock purchasable
under a Stock Option (other than a Reload Option) shall be determined by
the Committee at the time of grant, but shall be not less than 100% of the
Fair Market Value of the Stock on the date of the grant; provided, however,
that if any Participant owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any
Subsidiary when an Incentive Stock Option is granted to such Participant,
the option price of such Incentive Stock Option (to the extent required by
the Code at the time of grant) shall be not less than 110% of the Fair
Market Value of the Stock on the date such Incentive Stock Option is
granted.
(ii) Option Term. The term of each Stock Option shall be fixed by the
Committee at the time of grant, but no Stock Option shall be exercisable
more than ten years after the date such Stock Option is granted; provided,
however, that if any Participant owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any
Subsidiary when an Incentive Stock Option is granted to such Participant,
such Stock Option (to the extent required by the Code at time of grant)
shall not be exercisable more than five years from the date such Incentive
Stock Option is granted.
(iii) Transferability of Options. No Stock Options shall be
transferable by the Optionee otherwise than by will or by the laws of
descent and distribution and all Stock Options shall be exercisable, during
the Optionee's lifetime, only by the Optionee.
(iv) Option Exercise After Termination by Reason of Disability or
Retirement. If an Optionee's employment with the Company, any Subsidiary or
any Related Entity terminates by reason of Disability or Retirement, any
Stock Option held by such Optionee may thereafter be exercised for a period
of five years (or such shorter period as the Committee in its sole
discretion shall specify at or after the time of grant) from the date of
such termination or until the expiration of the stated term of such Stock
Option, whichever period is shorter, to the extent to which the Optionee
would on the date of exercise have been entitled to exercise the Stock
Option if such Optionee had continued to be employed by the Company, such
Subsidiary or such Related Entity (or to such greater or lesser extent as
the Committee in its sole discretion shall determine at or after the time
of grant). In the event of a termination of employment by reason of
Disability or Retirement, if an Incentive Stock Option is exercised after
the expiration of the exercise period that applies for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as a
Nonqualified Stock Option.
(v) Option Exercise After Termination by Consent. If an Optionee's
employment with the Company or any Subsidiary is terminated by the Company
or such Subsidiary under mutually satisfactory conditions or if an
Optionee's employment with a Related Entity is terminated under conditions
mutually satisfactory to such Related Entity and the Optionee, the
Committee, in its sole discretion, may permit the Optionee to exercise any
Stock Option held by such Optionee for a period of one year (or such
shorter period as the Committee in its sole discretion shall specify at or
after the time of grant) from the date of such termination or until the
expiration of the stated term of such Stock Option, whichever period is
shorter, to the extent to which the Optionee would on the date of exercise
have been entitled to exercise the Stock Option if such Optionee had
continued to be employed by the Company, such Subsidiary or such Related
Entity (or to such greater or lesser extent as the Committee in its sole
discretion shall determine at or after the time of grant). If an Optionee's
employment with the Company or any Subsidiary is terminated in connection
with such Optionee's acceptance of employment, at the request of the
Company or a Subsidiary, with a Related Entity (or an Optionee's employment
with one Related Entity is terminated in connection with such Optionee's
acceptance of employment, at the
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request of the Company or a Subsidiary, with another Related Entity), the
Committee in its sole discretion may permit the Optionee to exercise any
Stock Option held by such Optionee after the date of such termination at
any time until the expiration of the stated term of such Stock Option (or
such shorter period as the Committee in its sole discretion shall specify
at or after the time of grant), to the extent that the Optionee would on
the date of exercise have been entitled to exercise such Stock Option if
such Optionee had continued to be employed by the Company or such
Subsidiary (or such initial Related Entity), provided that the Optionee has
been in continuous employ with the Related Entity to which such Optionee
has moved from the date of acceptance of employment therewith until the
date of exercise. In the event of a termination of employment by the
Company, any Subsidiary or any Related Entity under mutually satisfactory
conditions, if an Incentive Stock Option is exercised after the expiration
of the exercise period that applies for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a Nonqualified Stock
Option.
(vi) Option Exercise After Termination by Death. If (x) an Optionee's
employment with the Company, any Subsidiary or any Related Entity
terminates by reason of death, (y) an Optionee dies within the five year
period (or such shorter period as the Committee shall have specified for
exercise in accordance with Section 5(a)(iv) of the Plan) following
termination by reason of Disability or Retirement as set forth in Section
5(a)(iv) of the Plan or (z) an Optionee dies within the one year period (or
such shorter period as the Committee shall have specified for exercise in
accordance with Section 5(a)(v) of the Plan) following termination under
mutually satisfactory conditions as set forth in the first sentence of
Section 5(a)(v) of the Plan, any Stock Option held by such Optionee may
thereafter be exercised by the legal representative of the estate or by the
legatee of the Optionee under the will of the Optionee for a period of one
year (or such shorter period as the Committee in its sole discretion shall
specify at or after the time of grant) from the date of such death or until
the expiration of the stated term of such Stock Option, whichever period is
shorter, to the extent to which the Optionee would on the date of exercise
have been entitled to exercise the Stock Option if such Optionee had
continued to be employed by the Company, such Subsidiary or such Related
Entity (or to such greater or lesser extent as the Committee in its sole
discretion shall determine at or after the time of grant).
(vii) Restriction on Exercise After Termination. Notwithstanding the
provisions of this Section 5, but subject to the provisions of Section 14
of the Plan, the exercise of any Stock Option after termination of
employment shall be subject to satisfaction of the conditions precedent
that the Optionee neither, (x) takes other employment or renders services
to others without the written consent of the Company, nor (y) conducts
himself in a manner adversely affecting the Company.
(viii) Other Termination. Except as otherwise provided in this Section
5 or Section 14 of the Plan, or as determined by the Committee in its sole
discretion, if an Optionee's employment with the Company, any Subsidiary or
any Related Entity terminates, all Stock Options held by the Optionee will
terminate.
(ix) Annual Limit on Incentive Stock Options. To the extent required
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the shares of Stock with respect to which Incentive
Stock Options granted under the Plan and all other option plans of the
Company or any Subsidiary become exercisable for the first time by an
Optionee during any calendar year shall not exceed $100,000; provided,
however, that if the aggregate Fair Market Value (so determined) of the
shares of Stock covered by such options exceeds $100,000 during any year in
which they become exercisable, such options with a Fair Market Value in
excess of $100,000 will be Nonqualified Stock Options.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted either in
conjunction with all or part of any Stock Option granted under the Plan
("Related Stock Appreciation Rights") or alone ("Freestanding Stock Appreciation
Rights") and, in either case, in addition to other Awards granted under the
Plan.
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Participants shall enter into a Stock Appreciation Rights agreement with the
Company if requested by the Committee, in such form as the Committee shall
determine.
(i) Time of Grant. Related Stock Appreciation Rights related to a
Nonqualified Stock Option may be granted either at or after the time of the
grant of such Nonqualified Stock Option. Related Stock Appreciation Rights
related to an Incentive Stock Option may be granted only at the time of the
grant of such Incentive Stock Option. Freestanding Stock Appreciation
Rights may be granted at any time.
(ii) Exercisability. Related Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Stock
Options to which they relate shall be exercisable in accordance with the
provisions of Section 5(a)(ii) of the Plan and Freestanding Stock
Appreciation Rights shall be exercisable, subject to such terms and
conditions as shall be determined by the Committee in its sole discretion
at or after the time of grant, from time to time, to the extent that Stock
Options are exercisable in accordance with the provisions of Section
5(a)(ii) of the Plan. A Related Stock Appreciation Right granted in
connection with an Incentive Stock Option may be exercised only if and when
the Fair Market Value of the Stock subject to the Incentive Stock Option
exceeds the option price of such Stock Option.
(iii) Method of Exercise. Stock Appreciation Rights shall be exercised
by a Participant by giving written notice of exercise delivered in person
or by mail as required by the terms of any agreement evidencing the Stock
Appreciation Right at the Company's principal executive office, specifying
the number of shares of Stock in respect of which the Stock Appreciation
Right is being exercised. If requested by the Committee, the Participant
shall deliver to the Company the agreement evidencing the Stock
Appreciation Right being exercised and, in the case of a Related Stock
Appreciation Right, the Stock Option Agreement evidencing any related Stock
Option, for notation thereon of such exercise and return thereafter of such
agreements to the Participant.
(iv) Amount Payable. Upon the exercise of a Related Stock Appreciation
Right, an Optionee shall be entitled to receive an amount in cash or shares
of Stock equal in value to the excess of the Fair Market Value of one share
of Stock on the date of exercise over the option price per share specified
in the related Stock Option, multiplied by the number of shares of Stock in
respect of which the Related Stock Appreciation Right shall have been
exercised, with the Committee having in its sole discretion the right to
determine the form of payment.
Upon the exercise of a Freestanding Stock Appreciation Right, a Participant
shall be entitled to receive an amount in cash or shares of Stock equal in
value to the excess of the Fair Market Value of one share of Stock on the
date of exercise over the price per share specified in the Freestanding
Stock Appreciation Right, which shall be not less than 100% of the Fair
Market Value of the Stock on the date of grant, multiplied by the number of
shares of Stock in respect of which the Freestanding Stock Appreciation
Right shall have been exercised, with the Committee having in its sole
discretion the right to determine the form of payment.
(b) Terms and Conditions. Stock Appreciation Rights granted under the Plan
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable.
(i) Term of Stock Appreciation Rights. The term of a Related Stock
Appreciation Right shall be the same as the term of the related Stock
Option. A Related Stock Appreciation Right or applicable portion thereof
shall terminate and no longer be exercisable upon the exercise,
termination, cancellation or surrender of the related Stock Option, except
that, unless otherwise provided by the Committee in its sole discretion at
or after the time of grant, a Related Stock Appreciation Right granted with
respect to less than the full number of shares of Stock covered by a
related Stock Option shall terminate and no longer be exercisable if and to
the extent that the number of shares of Stock covered by the exercise,
termination, cancellation or surrender of the related Stock Option exceeds
the number of shares of Stock not covered by the Related Stock Appreciation
Right.
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The term of each Freestanding Stock Appreciation Right shall be fixed by
the Committee, but no Freestanding Stock Appreciation Right shall be
exercisable more than ten years after the date such right is granted.
(ii) Transferability of Stock Appreciation Rights. Stock Appreciation
Rights shall be transferable only when and to the extent that a Stock
Option would be transferable under Section 5(b) (iii) of the Plan.
(iii) Termination of Employment. In the event of the termination of
employment of an Optionee holding a Related Stock Appreciation Right, such
right shall be exercisable to the same extent that the related Stock Option
is exercisable after such termination.
In the event of the termination of employment of the holder of a
Freestanding Stock Appreciation Right, such right shall be exercisable to
the same extent that a Stock Option with the same terms and conditions as
such Freestanding Stock Appreciation Right would have been exercisable in
the event of the termination of employment of the holder of such Stock
Option.
SECTION 7. LIMITED STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Limited Stock Appreciation Rights may be granted
either in conjunction with all or part of any Stock Option granted under the
Plan ("Related Limited Stock Appreciation Rights") or alone ("Freestanding
Limited Stock Appreciation Rights") and, in either case, in addition to other
Awards granted under the Plan. Participants shall enter into a Limited Stock
Appreciation Rights agreement with the Company if requested by the Committee, in
such form as the Committee shall determine.
(i) Time of Grant. Related Limited Stock Appreciation Rights related
to a Nonqualified Stock Option may be granted either at or after the time
of the grant of such Nonqualified Stock Option. Related Limited Stock
Appreciation Rights related to an Incentive Stock Option may be granted
only at the time of the grant of such Incentive Stock Option. Freestanding
Limited Stock Appreciation Rights may be granted at any time.
(ii) Exercisability. Limited Stock Appreciation Rights can only be
exercised within the sixty-day period following a Change in Control.
(iii) Amount Payable. Upon the exercise of a Limited Stock
Appreciation Right, a Participant shall be entitled to receive an amount in
cash equal to the Change in Control Stock Appreciation (as defined in
Section 14 of the Plan) of one share of Stock on the date of exercise,
multiplied by the number of shares of Stock in respect of which the Limited
Stock Appreciation Right shall have been exercised.
(b) Other Provisions. The other provisions of Section 6 of the Plan shall
apply to Limited Stock Appreciation Rights to the extent not inconsistent with
the provisions of this Section 7.
SECTION 8. RESTRICTED STOCK UNITS AND PERFORMANCE STOCK UNITS.
(a) Grant. Awards of Restricted Stock Units or Performance Stock Units may
be granted either alone or in addition to other Awards granted under the Plan.
Each Restricted Stock Unit or Performance Stock Unit represents the right to
receive, subject to the terms and provisions of the Plan and any agreements
evidencing such Awards, one share of Stock. If the Committee in its sole
discretion so determines at the time of grant, a Participant to whom a
Restricted Stock Unit Award or Performance Stock Unit Award has been granted may
be credited with an amount equivalent to all cash dividends ("Dividend
Equivalents") that would have been paid to the holder of such Restricted Stock
Unit Award or Performance Stock Unit Award if one share of Stock for every
Restricted Stock Unit or Performance Stock Unit awarded had been issued to the
holder on the date of grant of such Restricted Stock Unit Award or Performance
Stock Unit Award. The Committee shall determine the terms and conditions of each
Restricted Stock Unit Award and Performance Stock Unit Award including, without
limitation, the number of Restricted Stock Units or Performance Stock Units to
be covered by such Award, the restricted period applicable to Restricted Stock
Unit Awards and the performance objectives applicable to Performance Stock Unit
Awards. The Committee in its sole discretion may prescribe
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terms and conditions applicable to the vesting of such Restricted Stock Unit
Awards or Performance Stock Unit Awards in addition to those provided in the
Plan. The Committee shall establish such rules and guidelines governing the
crediting of Dividend Equivalents, including the timing, form of payment and
payment contingencies of Dividend Equivalents, as it may deem desirable. The
Committee in its sole discretion may at any time accelerate the time at which
the restrictions on all or any part of a Restricted Stock Unit Award lapse or
determine the performance objectives with respect to all or any part of a
Performance Stock Unit Award to have been attained; provided, however, that the
Committee shall not be entitled to exercise such discretion to the extent that
the ability to exercise such discretion would cause the Performance Stock Unit
Award to fail to qualify as other performance based compensation under Section
162(m) of the Code. Restricted Stock Unit Awards and Performance Stock Unit
Awards shall not be transferable otherwise than by will or by the laws of
descent and distribution. Shares of Stock shall be deliverable upon the vesting
of Restricted Stock Unit Awards and Performance Stock Unit Awards for no
consideration other than services rendered or, in the Committee's sole
discretion, the minimum amount of consideration other than services (such as the
par value per share of Stock) required to be received by the Company in order to
assure compliance with applicable state law, which amount shall not exceed 10%
of the Fair Market Value of such shares of Stock on the date of issuance. Each
such Award may be evidenced by a Restricted Stock Unit Award agreement
("Restricted Stock Unit Award Agreement") or Performance Stock Unit Award
agreement ("Performance Stock Unit Award Agreement").
(b) Terms and Conditions. Unless otherwise determined by the Committee in
its sole discretion:
(i) a breach of any term or condition provided in the Plan, the
Restricted Stock Unit Award Agreement or the Performance Stock Unit Award
Agreement or established by the Committee with respect to such Restricted
Stock Unit Award or Performance Stock Unit Award will cause a cancellation
of the unvested portion of such Restricted Stock Unit Award or Performance
Stock Unit Award (including any unvested Dividend Equivalents credited in
respect thereof) and the Participant shall not be entitled to receive any
consideration in respect of such cancellation; and
(ii) subject to Section 14 of the Plan, termination of such holder's
employment with the Company, any Subsidiary or any Related Entity prior to
the lapsing of the applicable restriction period or attainment of
applicable performance objectives will cause a cancellation of the unvested
portion of such Restricted Stock Unit Award or Performance Stock Unit Award
(including any Dividend Equivalents credited in respect thereof) and the
Participant shall not be entitled to receive any consideration in respect
of such cancellation.
(c) Completion of Restriction Period and Attainment of Performance
Objectives. To the extent that restrictions with respect to any Restricted Stock
Unit Award lapse or performance objectives with respect to any Performance Stock
Unit Award are attained and provided that other applicable terms and conditions
have then been satisfied:
(i) such of the Restricted Stock Units or Performance Stock Units as
to which restrictions have lapsed or performance objectives have been
attained shall become vested and the Committee shall cause to be issued and
delivered to the Participant a stock certificate representing a number of
shares of Stock equal to such number of Restricted Stock Units or
Performance Stock Units, free of all restrictions, except as provided in
Section 15(a) of the Plan; and
(ii) any Dividend Equivalents credited in respect of such Restricted
Stock Units or Performance Stock Units shall become vested to the extent
that such Restricted Stock Units or Performance Stock Units shall have
become vested and the Committee shall cause such Dividend Equivalents to be
delivered to the Participant.
Any such Restricted Stock Unit Award or Performance Stock Unit Award
(including any Dividend Equivalents credited in respect thereof) that shall not
have become vested at the end of the applicable restricted period or the period
given for the attainment of performance objectives shall expire, terminate and
be cancelled and the Participant shall not thereafter have any rights with
respect to the Restricted Stock Units or Performance Stock Units (or any
Dividend Equivalents credited in respect thereof) covered thereby.
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SECTION 9. GRANT OF STOCK OPTIONS, STOCK APPRECIATION RIGHTS AND LIMITED STOCK
APPRECIATION RIGHTS TO NONEMPLOYEE DIRECTORS.
Each Nonemployee Director who is elected or reelected as a Director on or
after May 16, 1991 at any annual or special meeting of stockholders of the
Company, shall as of the date of each such election or reelection automatically
be granted an Award consisting of (a) a Stock Option to purchase 1,500 shares of
Stock (as constituted at the time of the annual meeting of stockholders on May
16, 1991) for an option price equal to 100% of the Fair Market Value of the
Stock on the date of such election or reelection and, (b) with respect to such
number of shares of Stock, (i) a Related Stock Appreciation Right, the stock
appreciation on which shall be payable all in cash, and (ii) a Limited Stock
Appreciation Right, subject, in each case, to applicable law. The action of the
stockholders in electing or reelecting a Nonemployee Director shall constitute
the granting of the Award and the date on which the stockholders shall take such
action shall be the date of granting of such Award. All such Stock Options shall
be designated as Nonqualified Stock Options. Unless the Board shall otherwise
determine and subject to Section 14 of the Plan, a Nonemployee Director must
serve continuously as a Nonemployee Director of the Company for a period of
twelve consecutive months from the date such Award is granted before he or she
can exercise any part of such Award. Thereafter, unless the Board shall
establish a different schedule as to all, any or any class of Nonemployee
Directors, on and after the first anniversary of the date of granting the Award
and before the second anniversary, the Nonemployee Director may exercise the
Award with respect to not more than 40% of the number of shares of Stock covered
thereby, on and after the second anniversary and before the third anniversary,
the Nonemployee Director may exercise the Award with respect to not more than
70% of the number of shares of Stock covered thereby, and on and after the third
anniversary and before the expiration of the stated term of the Award, which
shall be ten years from the date of its granting, the Nonemployee Director may
at any time or from time to time exercise the Award with respect to all or any
portion of the shares of Stock covered thereby. The Related Limited Stock
Appreciation Right component of the Award shall be exercisable only as set forth
in Section 7(a)(ii) of the Plan. If a Nonemployee Director's service with the
Company terminates by reason of permanent and total disability or retirement
from active service as a Director of the Company, any Award held by such
Nonemployee Director may be exercised for a period of five years from the date
of such termination or until the expiration of the Award, whichever is shorter,
to the extent to which the individual would on the date of exercise have been
entitled to exercise the Award if such individual had continued to serve as a
Nonemployee Director. If a Nonemployee Director's service with the Company
terminates by reason of death or under mutually satisfactory conditions, or if a
Nonemployee Director dies within the five-year period following termination by
reason of permanent and total disability or retirement from active service as a
director of the Company or within the one-year period following termination
under mutually satisfactory conditions, any Award held by such Nonemployee
Director may be exercised for a period of one year from the date of such
termination or post-termination death, as the case may be, or until the
expiration of the stated term of the Award, whichever is shorter, to the extent
to which the individual would on the date of exercise have been entitled to
exercise the Award if such individual had continued to serve as a Nonemployee
Director. All applicable provisions of the Plan not inconsistent with this
Section 9 shall apply to Awards granted to Nonemployee Directors.
SECTION 10. GRANT OF RESTRICTED STOCK UNITS TO NONEMPLOYEE DIRECTORS.
(a) Unit Awards. Each Nonemployee Director who is first elected to the
Board after December 31, 1995 shall be awarded 3,000 Restricted Stock Units on
the date of his or her initial election.
(b) Delivery of Stock. Subject to satisfaction of the applicable vesting
requirements set forth in (c) below and except as otherwise provided in Section
14, a number of shares of Stock corresponding to the number of Restricted Stock
Units awarded to a Nonemployee Director (including those credited under Section
10(e) below) shall be delivered to such Nonemployee Director and transferred on
the books of the Company on the first business day of the month immediately
following the termination of such Nonemployee Director's service as a Director;
provided that any fractional shares of Stock shall be paid in cash based upon
the Fair Market Value on the date such shares would otherwise have been
delivered to the Nonemployee Director or the Nonemployee Director's beneficiary.
Alternatively, in lieu of such Stock the Nonemployee
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Director may elect, on or before the date of his or her termination of service,
to receive an amount in cash equal to (i) the Fair Market Value of a share of
Stock on such date, multiplied by (ii) the number of Restricted Stock Units
awarded and credited to him or her. Upon the delivery of a share of Stock (or
cash with respect to a fractional share) or the equivalent amount in cash, as
such Nonemployee Director may elect, the corresponding Restricted Stock Unit (or
fraction thereof) shall be canceled and be of no further force or effect.
(c) Vesting. Except as otherwise provided by action of the Board in this
Section or Section 14, if the service of a Nonemployee Director terminates prior
to the completion of five consecutive Years of Service as a Director following
his or her initial election, all Restricted Stock Units awarded and credited to
such Nonemployee Director pursuant to this Section 10 shall be immediately
forfeited. As used in this Section 10, 'Year of Service as a Director' means the
period of service as a Director measured from the date of one annual meeting of
the Company's stockholders to the next annual meeting of stockholders.
Notwithstanding the foregoing, if the Nonemployee Director's service terminates
by reason of his/her death, Disability or Retirement prior to the completion of
five Years of Service as a Director following his or her initial election, the
rights of the Nonemployee Director in respect of his or her Restricted Stock
Units shall become fully and immediately vested in connection with such
Director's termination of service. In the event of the death of a Nonemployee
Director, the shares of Stock corresponding to such Director's outstanding
Restricted Stock Units, if any, shall be delivered to the beneficiary designated
by the Nonemployee Director on a form provided by the Company, or, in the
absence of such designation, to the Nonemployee Director's estate.
(d) Nontransferability. Restricted Stock Units may not be assigned or
transferred, in whole or in part, either directly or by operation of law (except
in the event of a Nonemployee Director's death by will or applicable laws of
descent and distribution), including, but not by way of limitation, by
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, and no such right or interest of any Nonemployee Director in the Plan
shall be subject to any obligation or liability of such Nonemployee Director.
(e) Dividend Equivalents. A Nonemployee Director shall have no rights as a
stockholder of the Company with respect to any Restricted Stock Units until
shares of Stock are delivered to the Director pursuant to this Section 10. On or
as soon as practicable after each date on which dividends are paid to
stockholders with respect to Stock, the account of each Nonemployee Director
shall be credited with an additional number of Restricted Stock Units computed
pursuant to the following formula. With respect to dividends paid in cash or
property other than Stock, the number of Restricted Stock Units to be credited
to each Nonemployee Director's account shall be determined by dividing (i) the
product of (x) the amount of any cash dividend (or the value of any other
property) payable per share of Stock for the applicable dividend payment date
and (y) the number of Restricted Stock Units in such Nonemployee Director's
account on the record date for the payment of such dividend by (ii) the Fair
Market Value of a share of Stock on such record date. With respect to any stock
dividend declared, each Nonemployee Director's account shall be credited with a
number of Restricted Stock Units equal to the product of (i) the number of
Restricted Stock Units in such Nonemployee Director's account on the record date
for the payment of such dividend and (ii) any stock dividend declared on a share
of Stock.
SECTION 11. PAYMENT OF ANNUAL RETAINER FEE TO NONEMPLOYEE DIRECTORS.
(a) Fees Payable in Stock. Effective with respect to services rendered
after the Company's 1996 Annual Meeting of Stockholders, the annual retainer fee
payable to a Nonemployee Director for service as a Director, for service as a
member of a committee of the Board, and for service as chairperson of such a
committee during a given year (collectively, the "Annual Retainer Fee"), will be
paid in shares of the Company's Common Stock pursuant to the formula set forth
below. In the case of a Nonemployee Director first elected to the Board
following any annual meeting of shareholders, the portion of the Annual Retainer
Fee otherwise payable from the date of such election to the next annual meeting
will be paid in Stock. Fees payable to a Nonemployee Director for attendance at
meetings of the Board or any of its committees will not be paid in Common Stock.
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(b) Calculation of Shares Issuable. The number of whole shares of Stock
issuable in respect of a Nonemployee Director's Annual Retainer Fee for a given
year will be equal to the remainder of (i) the number of shares of Stock
determined by dividing the aggregate dollar amount of the Annual Retainer Fee by
the Fair Market Value of a share of Stock on the date of the annual meeting of
shareholders in such year (or, in the case of a Director first elected to the
Board following the annual meeting of shareholders for a given year, at the date
of such election) minus (ii) the greatest number of whole shares of Stock equal
to, but not in excess of, each Nonemployee Director's hypothetical income and
employment tax liability with respect to the Annual Retainer Fee payable
assuming that each Nonemployee Director pays Federal income tax at the highest
marginal rate in effect at such time, State and local income taxes at the
highest marginal rate in effect at such time for the locale in which the
Nonemployee Director resides and Medicare taxes at the rate in effect at such
time under Section 3101(b) of the Code. Any fractional shares resulting from the
above calculation will be settled in cash.
SECTION 12. AMENDMENT AND TERMINATION.
The Board or the Committee may amend, alter, or discontinue the Plan, in
its sole discretion, but no amendment, alteration, or discontinuation shall be
made which would impair the rights of a Participant under any Award theretofore
granted without such Participant's consent, or which, without the approval of
the stockholders of the Company (where such approval is necessary to satisfy
applicable state law), would:
(a) except as provided in Section 3 of the Plan, increase the total
number of shares of Stock which may be issued under the Plan;
(b) except as provided in Section 3 of the Plan, decrease the option
price of any Stock Option to less than 100% of the Fair Market Value on the
date of the grant of the option;
(c) change the class of employees eligible to participate in the Plan;
or
(d) extend (i) the period during which Stock Options may be granted or
(ii) the maximum period of any Award under Sections 5(b)(ii) or 6(b)(i) of
the Plan.
Except as restricted herein, the Committee may amend or alter the terms and
conditions of any Award theretofore granted, and of any agreement evidencing
such Award, prospectively or retroactively, but no such amendment or alteration
shall impair the rights of any Participant under such Award or agreement without
such Participant's consent.
SECTION 13. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan. With respect to any
payments not yet made and due to a Participant by the Company, nothing contained
herein shall give any such Participant any rights that are greater than those of
a general unsecured creditor of the Company.
SECTION 14. CHANGE IN CONTROL.
The following acceleration and valuation provisions shall apply in the
event of a Change in Control notwithstanding other provisions of the Plan or any
provisions of any applicable agreement to the contrary:
(a) In the event of a Change in Control:
(i) any Stock Appreciation Right and any Stock Option awarded under
the Plan not previously exercisable in full shall become fully
exercisable;
(ii) the restriction period applicable to any Restricted Stock Unit
Award shall lapse, the performance objectives applicable to any
Performance Stock Unit Award shall be deemed attained, and any other
restrictions or conditions applicable to any Restricted Stock Unit Award
or Performance Stock Unit Award shall be waived and the shares of Stock
covered thereby and all unrestricted Dividend Equivalents credited in
respect thereof shall be deemed fully vested;
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<PAGE> 14
(iii) (A) any Restricted Stock Unit Award and any Performance Stock
Unit Award granted under the Plan that has become fully vested and
freely transferable or has not been paid in full prior to the Change in
Control shall be cancelled in exchange for an immediate cash payment
equal to the product of (x) the number of shares of Stock covered by
such Restricted Stock Unit Award or Performance Stock Unit Award,
whichever is applicable, multiplied by (y) the amount determined in
accordance with clause (y) of subsection (e) of this Section 14, and (B)
Dividends Equivalents credited in respect of any such Restricted Stock
Unit Award or Performance Stock Unit Award shall be deemed fully vested
and payable immediately upon such Change in Control; and
(iv) any Participant holding an Award who is terminated by the
Company or any Subsidiary for any reason within the two year period
immediately following a Change in Control shall be permitted to exercise
any Stock Option, Stock Appreciation Right or Limited Stock Appreciation
Right after such termination of employment at any time (x) within the
three month period commencing on the later of the date of termination of
his or her employment or the date on which such Award would first be
exercisable in accordance with the terms of the Plan had such
termination not occurred or (y) until the expiration of the stated term
of such Award, whichever period is shorter.
(b) For purposes of the Plan, "Change in Control" shall mean a Change
in Control of the Company, which shall be deemed to have occurred if:
(i) any Person (as defined in this Section 14) is or becomes the
Beneficial Owner (as defined in this Section 14) of securities of the
Company representing 20% or more of the combined voting power of the
Company's then outstanding securities (unless the event causing the 20%
threshold to be crossed is an acquisition of securities directly from
the Company);
(ii) during any period of two consecutive years beginning after May
16, 1991, individuals who at the beginning of such period constitute the
Board and any new director (other than a director designated by a person
who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of this Change in
Control definition) whose election or nomination for election was
approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute a majority of the Board;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation (other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the entity surviving such merger or consolidation),
in combination with voting securities of the Company or such surviving
entity held by a trustee or other fiduciary pursuant to any employee
benefit plan of the Company or such surviving entity or of any
Subsidiary of the Company or such surviving entity, at least 80% of the
combined voting power of the securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation); or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
(c) For purposes of the definition of Change in Control, "Person"
shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act as supplemented by Section 13(d)(3) of the Exchange Act;
provided, however, that Person shall not include (i) the Company, any
Subsidiary or any other Person controlled by the Company, (ii) any trustee
or other fiduciary holding securities under any employee benefit plan of
the Company or of any Subsidiary, or (iii) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of securities of the Company.
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<PAGE> 15
(d) For purposes of the definition of Change in Control, a Person
shall be deemed the "Beneficial Owner" of any securities which such Person,
directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" (within the meaning of Rule 13d-3 under the Exchange
Act) of, including pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that: (i) a Person shall
not be deemed the Beneficial Owner of any security as a result of an
agreement, arrangement or understanding to vote such security (x) arising
solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
Exchange Act and the applicable rules and regulations thereunder or (y)
made in connection with, or to otherwise participate in, a proxy or consent
solicitation made, or to be made, pursuant to, and in accordance with, the
applicable provisions of the Exchange Act and the applicable rules and
regulations thereunder; in either case described in clause (x) or clause
(y) above, whether or not such agreement, arrangement or understanding is
also then reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report); and (ii) a Person engaged in
business as an underwriter of securities shall not be deemed to be the
Beneficial Owner of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
(e) For purposes of this Section 14, "Change in Control Stock
Appreciation" with respect to any share of Stock shall mean an amount equal
to the excess, if any, of
(i) the higher of (x) the Fair Market Value of such share on the
date the Limited Stock Appreciation Right is exercised or (y) (A) in the
case of transactions described in clauses (i) or (iii) of the Change in
Control definition, the highest per share price paid (below called the
"Highest Price") for shares of Stock in the transaction constituting the
Change in Control, (B) in the case of a transaction described in clause
(ii) of the Change in Control definition which occurs in connection with
a transaction described in clauses (i), (iii), or (iv) of the Change in
Control definition, the Highest Price, (C) in the case of a transaction
described in clause (ii) of the Change in Control definition which does
not occur in connection with a transaction described in clauses (i),
(iii) or (iv) of the Change in Control definition, the average of the
daily closing prices per share of Stock of the Company on the New York
Stock Exchange, if such shares are traded thereon, or, if not, such
other national securities exchange on which such shares are admitted to
trade or, if none, the National Association of Securities Dealers
Automated Quotation System if such shares are admitted for quotation
thereon, on the thirty consecutive trading days immediately preceding
the Change in Control or (D) in the case of a transaction described in
clause (iv) of the Change in Control definition, the equivalent of the
Highest Price as determined by the Committee, over
(ii) in the case of a Related Limited Stock Appreciation Right, the
option price specified in the related Stock Option and, in the case of a
Freestanding Limited Stock Appreciation Right, the price per share
specified therein, which shall not be less than 100% of the Fair Market
Value of the Stock on the date of grant; provided, however, that with
respect to a Related Limited Stock Appreciation Right associated with a
Stock Option which is an Incentive Stock Option immediately prior to the
exercise of such Limited Related Stock Appreciation Right, the Change in
Control Stock Appreciation thereon shall not exceed the maximum amount
which will permit such Stock Option to continue to qualify as an
Incentive Stock Option.
SECTION 15. GENERAL PROVISIONS.
(a) The Committee may require each Optionee purchasing shares of Stock
pursuant to a Stock Option to represent to and agree with the Company in writing
that such Optionee is acquiring the shares of Stock without a view to
distribution thereof.
All certificates for shares of Stock delivered under the Plan and, to the
extent applicable, all evidences of ownership with respect to Dividend
Equivalents delivered under the Plan, shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is
15
<PAGE> 16
then listed or quotation system on which the Stock is admitted for trading and
any applicable federal or state securities law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(b) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required, and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan shall
not confer upon any employee of the Company, any Subsidiary or any Related
Entity any right to continued employment with the Company, any Subsidiary or any
Related Entity, as the case may be, nor shall it interfere in any way with the
right of the Company, any Subsidiary or any Related Entity to terminate the
employment of any of its employees at any time.
(c) Each Participant shall be deemed to have been granted any Award on the
date the Committee took action to grant such Award under the Plan or such later
date as the Committee in its sole discretion shall determine at the time such
grant is authorized; provided, however, that a Reload Option shall be deemed to
have been granted on the date on which is exercised the Original Option in
respect of the exercise of which such Reload Option is granted or such later
date as the Committee in its sole discretion shall determine prior to the date
on which such exercise occurs.
(d) Unless the Committee otherwise determines, each Participant shall, no
later than the date as of which the value of an Award first becomes includible
in the gross income of the Participant for federal income tax purposes, pay to
the Company, or make arrangements satisfactory to the Committee regarding
payment of, any federal, state or local taxes of any kind required by law to be
withheld with respect to the Award. The obligations of the Company under the
Plan shall be conditional on such payment or arrangements and the Company (and,
where applicable, its Subsidiaries and its Related Entities) shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Participant.
A Participant (other than a Nonemployee Director) may elect to have such
tax withholding obligation satisfied, in whole or in part, by (i) authorizing
the Company to withhold from shares of Stock to be issued upon the exercise of a
Stock Option or Stock Appreciation Right or upon the vesting of any Restricted
Stock Unit Award or Performance Stock Unit Award a number of shares of Stock
with an aggregate Fair Market Value that would satisfy the withholding amount
due, or (ii) transferring to the Company shares of Stock owned by the
Participant with an aggregate Fair Market Value that would satisfy the
withholding amount due.
(e) No member of the Board or the Committee, nor any officer or employee of
the Company acting on behalf of the Board or the Committee, shall be personally
liable for any action, failure to act, determination or interpretation taken or
made in good faith with respect to the Plan, and all members of the Board or the
Committee and each and any officer or employee of the Company acting on their
behalf shall, to the extent permitted by law, be fully indemnified and protected
by the Company in respect of any such action, failure to act, determination or
interpretation.
(f) The Plan is intended to satisfy the conditions of Rule 16b-3, and all
interpretations of the Plan shall, to the extent permitted by law, regulations
and rulings, be made in a manner consistent with and so as to satisfy the
conditions of Rule 16b-3. Any provision of the Plan or the application of any
provision of the Plan inconsistent with Rule 16b-3 shall be inoperative and
shall not affect the validity of the Plan.
In interpreting and applying the provisions of the Plan, any Stock Option
granted as an Incentive Stock Option pursuant to the Plan shall to the extent
permitted by law, regulations and rulings be construed as, and any ambiguity
shall be resolved in favor of preserving its status as, an "incentive stock
option" within the meaning of Section 422 of the Code. Once an Incentive Stock
Option has been granted, no action by the Committee that would cause such Stock
Option to lose its status under the Code as an "incentive stock option" shall be
effective as to such Incentive Stock Option unless taken at the request of or
with the consent of the Optionee.
Notwithstanding any provision to the contrary in the Plan or in any
Incentive Stock Option granted pursuant to the Plan, if any change in law or any
regulation or ruling of the Internal Revenue Service shall have the effect of
disqualifying any Stock Option granted under the Plan which is intended to be an
"incentive
16
<PAGE> 17
stock option" within the meaning of Section 422 of the Code, the Stock Option
granted shall nevertheless continue to be outstanding as and shall be deemed to
be a Nonqualified Stock Option under the Plan.
(g) A Participant may elect, on or after the date of grant of any Award, to
defer receipt of all or any portion of the proceeds of such Award or any
Dividend Equivalents in connection therewith, whether in the form of cash or
shares of Stock, deliverable to such Participant upon the exercise, vesting or
payment of any such Award or Dividend Equivalents, in each case to the extent
permitted by and subject to the terms and conditions set forth in any deferral
or similar plan or arrangement enacted by the Board or the Committee in its sole
discretion.
(h) Nothing in this Plan shall be interpreted to preclude the Corporation
from granting Awards under, or paying compensation outside the parameters of,
the Plan including, without limitation, base salaries, awards under any other
plan of the Corporation or its Subsidiaries (whether or not approved by
stockholders), incentive compensation (whether or not based on the attainment of
pre-established performance objectives) or retention or other special payments,
that is not deductible for Federal, State or local income tax purposes by reason
of Section 162(m) of the Code or otherwise, should the Board or any committee
thereof (including the Committee), whichever is applicable, determine that such
action is in the best interests of the Corporation and its stockholders.
(i) This Plan shall not impose any obligations on the Company to retain any
Nonemployee Director as a Director nor shall it impose any obligation on the
part of any Nonemployee Director to remain as a Director of the Company,
provided that each Nonemployee Director, by accepting each award under the Plan,
shall represent to the Company that it is his or her good faith intention to
continue to serve as a Director of the Company until its next annual meeting of
stockholders and that he or she agrees to do so unless a change in circumstances
arises.
SECTION 16. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is approved by the affirmative
vote of the holders of a majority of the shares of Stock of the Company present
in person or by proxy at the Annual Meeting of Stockholders on May 16, 1991.
SECTION 17. TERM OF PLAN.
No Award shall be granted under the Plan on or after the tenth anniversary
of the date the Plan is approved by the Company's stockholders, provided,
however, that Awards granted prior to such tenth anniversary may extend beyond
that date; and provided, further, however, that Reload Options may be granted on
or after such tenth anniversary, but no Reload Option shall be exercisable after
any date which is later than the date on which a Stock Option granted prior to
such tenth anniversary could be exercised.
17
<PAGE> 1
EXHIBIT 10-B-6
CHRYSLER CORPORATION
INCENTIVE COMPENSATION PLAN
Effective January 1, 1970
(As Amended Through May 15, 1997)
1. PURPOSE
The purpose of the Chrysler Corporation Incentive Compensation Plan (below
called the Plan or this Plan) is to encourage the continued and energetic
efforts of officers and key salaried employees (below called collectively
Employees) of Chrysler Corporation (below called Chrysler) and its subsidiaries
(Chrysler and its subsidiaries collectively below called the Corporation) on
behalf of the Corporation by enabling them to share in the profits of the
Corporation, in accordance with the resolution adopted by the Stockholders of
Chrysler at their Annual Meeting on April 16, 1929, as they amended it at their
Annual Meeting on April 17, 1956, and at their Special Meeting on April 16,
1963, and at their Annual Meetings on April 15, 1969, April 18, 1972, June 7,
1984, May 20, 1993 and May 19, 1994, and as it may be further amended from time
to time (below called the Stockholders' Resolution).
2. INCENTIVE COMPENSATION COMMITTEE
The Board of Directors of Chrysler (below called the Board) shall appoint
not less than three Directors of Chrysler, none of whom shall be entitled to
receive funds or securities pursuant to any Incentive Plan (as defined in the
Stockholders' Resolution) of Chrysler, to be an Incentive Compensation Committee
(below called the Committee) to administer this Plan. Each member of the
Committee shall be a "Non-Employee Director" (which term as used herein shall
have the meaning ascribed to it in Rule 16b-3 under the Securities Exchange Act
of 1934, or in any amendment thereof in effect at the relevant time). The
Committee may designate a Secretary, one or more Assistant Secretaries and an
Administrator, none of whom need be Directors of Chrysler. Subject to the
provisions of this Plan, the Committee shall have authority, in its discretion,
to prescribe, amend, and rescind rules and regulations relating to this Plan.
3. INCENTIVE COMPENSATION FUND
For each fiscal year the Board shall authorize and approve the amount to be
provided out of the earnings of the Corporation for such fiscal year for
purposes of this Plan and the Chrysler Corporation Long-Term Incentive Plan
(below called the Long-Term Plan, this Plan and the Long-Term Plan collectively
below called the Plans), not to exceed the amount permitted by the Stockholders'
Resolution, and shall authorize and direct the proper officers of the
Corporation (a) to set aside such amount and to add to it (b) any amount
authorized and approved by the Board for any prior fiscal year but not
previously awarded and (c) any amount awarded for any prior fiscal year that has
been forfeited. The sum of all such amounts (or such part thereof as the Board
may determine should be made available for awards for any fiscal year) shall be
the Incentive Compensation Fund for that fiscal year (below called the Fund).
Any part of such sum that the Board determines shall not be made available for
awards for any fiscal year shall be carried forward and may be awarded in a
subsequent fiscal year.
4. ELIGIBILITY
The Committee, in its sole and absolute discretion, shall have full power
to determine by salary, salary grade, salary band, classification, or otherwise,
the Employees (including those who have retired or died or have been granted a
leave of absence or were laid off during the year) who shall be eligible for
consideration to participate in the Plans in any year, except that the Committee
may not determine as eligible for consideration to participate in the Plans any
Employee who was eligible at any time in that year to participate in any other
Incentive Plan of the Corporation as defined in the Stockholders' Resolution.
Employees shall not be ineligible for consideration to participate in the Plans
by reason of their eligibility to participate in any Performance
<PAGE> 2
Award Plan or in any Savings and Investment Plan, both as defined in the
Stockholders' Resolution, or in any Stock Option Plan, or any Performance Award
Plan adopted under any Stock Option Plan, of Chrysler or any of its subsidiaries
or in any successor plan or programs adopted to replace any such plan or
programs.
5. SELECTING PARTICIPANTS AND DETERMINING AWARDS
Each year the Committee, in accordance with such rules as it may prescribe,
shall:
(a) select from the Employees eligible for consideration to
participate in the Plans those Employees who are to participate for that
year;
(b) award under this Plan to certain of the Employees so selected
(below called Participant) such share of the Fund as the Committee shall
determine (below called an Award); provided, however, that the maximum
amount of such share that may be awarded to a Participant for a given
fiscal year shall not exceed a dollar amount equal to 0.15% of the
Corporation's consolidated net earnings for such year as determined in
accordance with the Stockholders' Resolution; and
(c) award under the Long-Term Plan to certain of the Employees so
selected, in accordance with the terms of the Long-Term Plan, such share of
the Fund as the Committee shall determine.
An Employee may receive an Award under this Plan and an award under the
Long-Term Plan in the same year.
The Committee shall have full and final authority in performing these
duties, but shall report to the Board the share of the Fund awarded to each
Employee under this Plan and under the Long-Term Plan, expressed in dollar
amounts and/or percentage of base salary or performance share awards or award
units or otherwise, as the Committee shall determine.
Notwithstanding anything else contained in this Plan to the contrary, if
any Award is intended at the time of grant to be other performance based
compensation within the meaning of Section 162(m)(4)(C) of the Internal Revenue
Code of 1986, as the same may be amended from time to time (the "Code"), to the
extent required to so qualify any Award hereunder, the Committee shall not be
entitled to exercise any discretion otherwise authorized under this Plan with
respect to such Award if the ability to exercise such discretion (as opposed to
the exercise of such discretion) would cause such Award to fail to qualify as
other performance based compensation.
6. CORPORATE PERFORMANCE GOALS
The Committee may establish one or more corporate performance goals
("Performance Goals") each year relating to: quality, customer satisfaction,
profitability, net margin as a percentage of revenue, return on sales, return on
capital, breakeven, productivity, and/or debt to capitalization. A Performance
Goal may consist of such criteria, terms and conditions as the Committee may
designate. The Committee shall have the discretion to add additional goals and
to modify any objectives or performance levels designated in relation to
previously established goals. If an Award for a given year is intended to be
qualified performance-based compensation under Section 162(m) of the Code, then
the related Performance Goal and Award levels shall be established, as described
below, no later than the 90th day of such year.
7. AWARDS
At the time it establishes a Performance Goal, the Committee shall
determine that the attainment of specified levels of performance in respect of
such Performance Goal shall correspond to specified Award levels, subject to
reduction as described below. Awards shall be expressed as a percentage of a
Participant's base salary (or the average base salary or midpoint of the salary
range of a class of Employees) in effect at the time the Performance Goal is
established. In no event, however, may an Award exceed the maximum amount
referenced in Section 5(b) above. An Employee who first becomes eligible for
an Award, and is selected as a Participant, after the beginning of a given year
may receive an Award established on a pro rata basis for the number of months
he or she is eligible during such year.
8. CORPORATE PERFORMANCE EVALUATION
The Committee shall confirm the performance level attained by the
Corporation in respect of the Performance Goal established for a given year and
the corresponding Awards to be paid in respect of such performance; provided,
however, that the Committee, in its sole discretion, may reduce the amount of
any Award otherwise payable in respect of such performance.
2
<PAGE> 3
9. PAYING AND EARNING OUT OF AWARDS UNDER THIS PLAN
Awards under this Plan shall be paid to Participants in one lump sum,
unless the Committee, in its discretion, determines that an Award shall be paid
in installments.
A Participant will have earned out under this Plan an Award payable in one
lump sum, or the first installment of an Award payable in installments, if his
or her employment with the Corporation has been continuous (a) up to the date of
payment of the Award payable in one lump sum, or of the first installment of the
Award payable in installments, as the case may be, or (b) up to the date of the
Participant's retirement or death if he or she should retire or die before the
date of such payment, or (c) up to the date the Participant was granted a leave
of absence if such leave of absence was granted before the date of such payment,
or (d) up to the date the Participant was laid off if he was laid off before the
date of such payment. A Participant will have earned out a subsequent
installment if his or her employment with the Corporation has been continuous up
to and including (a) the December 31 immediately preceding the date the
installment is payable, or (b) the date of the Participant's death if he or she
should die before such December 31, or (c) such date as the Corporation may
determine under all other circumstances.
A Participant whose employment with the Corporation is terminated other
than by death will not thereafter earn out under this Plan any installment of an
Award payable in installments unless the Corporation expressly consents in
writing to waive the condition of continuous employment with the Corporation,
and the Participant thereafter will earn out each installment only if up to and
including the December 31 immediately preceding the date the installment is
payable the Participant neither (a) takes other employment or renders services
to others without the written consent of the Corporation, nor (b) conducts
himself or herself in a manner adversely affecting the Corporation, the
determination by the Committee that a Participant has so conducted himself or
herself to be final and conclusive.
Any installment which a Participant fails to earn out under this Plan shall
be forfeited and included in the Fund for a subsequent year as provided in
paragraph 3.
Nothing in this Plan shall prevent the Corporation from discharging or
requesting the resignation of any Participant.
An Award payable in one lump sum, or the first installment of an Award
payable in installments, shall be paid to the Participant on such date as the
Committee shall determine, and if the Participant complies with the conditions
for earning out a subsequent installment, it shall be paid to him or her on such
date in the year in which it is payable as the Committee shall determine.
Any lump sum payment or installment earned out under this Plan and payable
to a Participant who is deceased shall be paid to his or her legal
representative in such manner and at such time as it would have been paid to the
Participant were he or she then alive and in the employ of the Corporation.
10. FORM OF PAYMENTS UNDER THIS PLAN
The Committee in its sole and absolute discretion shall determine for any
year whether under this Plan the lump sum payment or the installment of any
Awards payable in that year shall be paid in cash or in shares of Chrysler
stock, or partly in cash and partly in shares of Chrysler stock, the shares to
be shares held by the Corporation in its treasury or purchased by the
Corporation in the market for distributing in place of cash, the shares to be
valued for this purpose in accordance with the Stockholders' Resolution, with
cash in place of fractional shares.
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<PAGE> 4
11. DEFERRAL OF PAYMENT
A Participant may voluntarily elect to defer receipt of payment under this
Plan of all or any part of an Award payable in one lump sum or of any
installment of an Award payable in installments upon such terms and conditions
as the Committee may prescribe.
12. COSTS
All costs of administering the Plans shall be borne by the Corporation and
shall not be charged against the Fund.
13. PAYMENTS UPON A CHANGE IN CONTROL
Notwithstanding any other provisions hereof, if a "Change in Control" (as
defined in paragraph 13(D) hereof) of Chrysler shall occur, the following shall
be paid, in cash, no later than the tenth day following such Change in Control:
(a) all unpaid installments of an Award payable in installments pursuant to
paragraph 9 of this Plan, (b) all voluntary deferrals made by a Participant
pursuant to paragraph 11 of this Plan (other than deferrals made into the
Chrysler Corporation Salaried Employees Savings Plan and the Chrysler
Corporation Salaried Employees Supplemental Savings Plan, which deferrals will
be governed by the terms of such plans), (c) all unpaid Awards made (including
any made pursuant to paragraph 13(C) hereof) for any completed fiscal year which
preceded the Change in Control, and (d) "Change in Control Awards" (as
determined pursuant to paragraph 13(A) hereof).
A. CHANGE IN CONTROL AWARDS. Upon a Change in Control of Chrysler, each
Employee (below called a "Change in Control Participant") eligible pursuant to
paragraph 4 hereof for consideration to participate in the Plans for the fiscal
year in which the Change in Control occurs (the "Change in Control Year") shall
be paid a cash award, in a lump sum (the "Change in Control Award").
The tentative Change in Control Award of each Change in Control Participant
to whom an Award was made for the last fiscal year immediately preceding the
Change in Control for which Awards (including Awards, if any, made pursuant to
paragraph 13(C) hereof) were made generally (the "Base Year") shall be
determined by multiplying the "Change in Control Fund" (calculated in accordance
with paragraph 13(B) hereof) by a fraction, the numerator of which shall be the
amount of the Award of such Change in Control Participant for the Base Year, and
the denominator of which shall be the aggregate amount of Awards made for the
Base Year. A tentative Change in Control Award for each Change in Control
Participant to whom an Award was not made for the Base Year shall also be
determined and shall be comparable to the tentative Change in Control Awards of
similarly situated (in terms of the criteria employed by the Committee to
determine participation under paragraph 4 hereof, such as salary, salary grade
or classification) Change in Control Participants to whom Awards were made for
the Base Year.
The actual Change in Control Award of each Change in Control Participant
shall then be determined by multiplying the Change in Control Fund by a
fraction, the numerator of which shall be his tentative Change in Control Award
and the denominator of which shall be the aggregate tentative Change in Control
Awards.
B. CHANGE IN CONTROL FUND. The Change in Control Fund shall be the sum of
the amounts described in (i) and (ii) below, adjusted by the amount described in
(iii):
(i) the sum (measured immediately prior to a Change in Control) of (x)
any amount authorized and approved by the Board for any fiscal year
completed prior to the Change in Control but not previously awarded from,
or charged against, the Incentive Compensation Fund pursuant to this or any
other plan of the Corporation and (y) any amount awarded from, or charged
against, the Incentive Compensation Fund for any fiscal year completed
prior to the Change in Control that has been forfeited;
(ii) the aggregate amount calculated for the fiscal year in which the
Change in Control occurs, from its inception up to and including the date
of the Change in Control, in the ordinary course of business and based on
the Stockholders' Resolution. The determination (made prior to the Change
in Control) of the Corporation's internal accountants in making any such
calculation shall be conclusive;
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(iii) the "applicable amount" (the sum of (i) and (ii) above) shall be
adjusted as follows: (a) if an additional charge is made against the
Incentive Compensation Fund with respect to Performance Shares under the
Long-Term Plan upon the occurrence of a Change in Control, the "applicable
amount" shall be reduced by such charge; and (b) if any amount previously
charged against the Incentive Compensation Fund for Performance Shares is
not earned and delivered upon the occurrence of a Change in Control and is
returned to the Incentive Compensation Fund, the "applicable amount" shall
be increased by such returned amount.
C. MAKING AWARDS FOR COMPLETED YEARS. Upon the occurrence of a "Potential
Change in Control" (as defined in paragraph 13(E) hereof), if there is any
completed fiscal year of the Corporation for which the audited financial
statements of the Corporation are available and for which the Board has not yet
determined the Incentive Compensation Fund and/or for which the Committee has
not yet determined the Awards, such determinations and the payments of any
Awards so determined shall be made as soon as reasonably possible.
D. CHANGE IN CONTROL DEFINITION. "Change in Control" shall mean a change in
control of Chrysler, which shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been satisfied:
(i) any Person (as defined below) is or becomes the Beneficial Owner
(as defined below) of securities of Chrysler representing 20% or more of
the combined voting power of Chrysler's then outstanding securities (unless
the event causing the 20% threshold to be crossed is an acquisition of
securities directly from Chrysler); or
(ii) during any period of two consecutive years beginning after June
7, 1990, individuals who at the beginning of such period constitute the
Board and any new Director (other than a Director designated by a Person
who has entered into an agreement with Chrysler to effect a transaction
described in paragraph (i), (iii) or (iv) of this Change in Control
definition) whose election or nomination for election was approved by a
vote of at least two-thirds (2/3) of the Directors then still in office who
either were Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; or
(iii) the stockholders of Chrysler approve a merger or consolidation
of Chrysler with any other corporation (other than a merger or
consolidation which would result in the voting securities of Chrysler
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
entity surviving such merger or consolidation), in combination with voting
securities of Chrysler or such surviving entity held by a trustee or other
fiduciary pursuant to any employee benefit plan of Chrysler or such
surviving entity or any subsidiary of Chrysler or such surviving entity, at
least 80% of the combined voting power of the voting securities of Chrysler
or such surviving entity outstanding immediately after such merger or
consolidation); or
(iv) the stockholders of Chrysler approve a plan of complete
liquidation or dissolution of Chrysler or an agreement for the sale or
disposition by Chrysler of all or substantially all Chrysler's assets.
For purposes of the definition of Change in Control in this paragraph
13(D): (a) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as supplemented by Section 13(d)(3) of the Exchange Act, provided,
however, that Person shall not include (i) Chrysler, any subsidiary of
Chrysler or any other Person controlled by Chrysler, (ii) any trustee or
other fiduciary holding securities under any employee benefit plan of
Chrysler or any subsidiary of Chrysler, or (iii) a corporation owned,
directly or indirectly, by the stockholders of Chrysler in substantially
the same proportions as their ownership of securities of Chrysler; and (b)
a Person shall be deemed the "Beneficial Owner" of any securities which
such Person, directly or indirectly, has the right to vote or dispose of or
otherwise has "beneficial ownership" of (within the meaning of Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement
or understanding (whether or not in writing); provided, however, that (i) a
Person shall not be deemed the Beneficial Owner of any security as a result
of an agreement, arrangement or understanding to vote such securities (x)
arising solely from a revocable proxy or consent given in response to a
public proxy or
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consent solicitation made pursuant to, and in accordance with, the Exchange
Act and the applicable rules and regulations thereunder or (y) made in
connection with, or to otherwise participate in, a proxy or consent
solicitation made, or to be made, pursuant to, and in accordance with, the
applicable provisions of the Exchange Act and the applicable rules and
regulations thereunder, in either case described in clause (x) or clause
(y) above, whether or not such agreement, arrangement or understanding is
also then reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report), and (ii) a Person engaged in
business as an underwriter of securities shall not be deemed to be the
Beneficial Owner of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
E. POTENTIAL CHANGE IN CONTROL DEFINITION. A "Potential Change in Control"
shall be deemed to have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(i) Chrysler enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control;
(ii) Chrysler or any Person (as defined in paragraph 13(D) hereof)
publicly announces an intention to take or to consider taking actions
which, if consummated, would constitute a Change in Control;
(iii) any Person who is or becomes the Beneficial Owner (as defined in
paragraph 13(D) hereof), directly or indirectly, of securities of Chrysler
representing 10% or more of the combined voting power of Chrysler's then
outstanding securities, increases such Person's beneficial ownership of
such securities by 5% or more over the percentage so owned by such Person
on the date hereof; or
(iv) the Board adopts a resolution to the effect that, for purposes of
this Plan, a Potential Change in Control has occurred.
14. INTERPRETATION
The Board shall have full power and authority to interpret and construe
this Plan and its interpreting and construing of this Plan and acts pursuant to
this Plan in good faith shall be final and conclusive. The Board may correct any
defect or supply any omission or reconcile any inconsistency in such a manner
and to such an extent as it shall find expedient to carry this Plan into effect,
and it shall be the sole and final judge of the expediency. If any such
interpreting or construing shall involve a question of law, the Board may rely
and act upon the opinion of counsel (who may be counsel to Chrysler) on the
question of law.
15. EFFECTIVE PERIOD
The Plan shall become effective, upon approval by the Board, beginning
January 1, 1970, and shall remain in effect until terminated as provided in
Paragraph 16.
16. AMENDMENT AND TERMINATION
At any time the Board may amend, alter or terminate this Plan (consistent
with the Stockholders' Resolution) as the Board shall deem advisable; provided,
however, that the Board may not: (a) without the approval of the holders of a
majority of the shares of Common Stock of Chrysler voting on the matter,
increase the total amount that under the Stockholders' Resolution may be
provided out of the earnings of the Corporation for incentive compensation and
(b) without the approval of the holders of a majority of the shares of Common
Stock of Chrysler issued and outstanding, issue shares of Chrysler stock for
distributing in place of cash; and provided further, however, that terminating
or amending this Plan shall not terminate the right of any Participant to earn
out and thereby become entitled to receive, in the same manner as if this Plan
had not been terminated or amended, any unpaid installment of an Award made to
him under this Plan prior to the terminating or amending of this Plan or any
Retirement Benefit he would become eligible to receive under the Supplemental
Plan by complying with the terms thereof.
Nothing in this Plan shall be interpreted to preclude Chrysler from
granting awards under, or paying compensation outside the parameters of, the
Plan including, without limitation, base salaries, awards under
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any other plan of Chrysler (whether or not approved by stockholders), incentive
compensation (whether or not based on the attainment of pre-established
performance objectives) or retention or other special payments, that is not
deductible for Federal, State or local income tax purposes by reason of Section
162(m) of the Code or otherwise, should the Board or any committee thereof
(including the Committee), whichever is applicable, determine that such action
is in the best interests of Chrysler and its stockholders.
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EXHIBIT 10-B-7
CHRYSLER CORPORATION
LONG-TERM PERFORMANCE PLAN
(BEING THE TERMS AND CONDITIONS OF THE PERFORMANCE STOCK UNIT PROVISIONS
OF THE CHRYSLER CORPORATION 1991 STOCK COMPENSATION PLAN)
EFFECTIVE MAY 16, 1991
(AS AMENDED THROUGH MAY 15, 1997)
1. PURPOSE
The purpose of the Chrysler Corporation Long-Term Performance Plan (below
called the Plan) is to provide an incentive to the officers and other key
salaried employees (below called collectively Employees) of Chrysler Corporation
(below called Chrysler), its subsidiaries and its Related Entities (as defined
in the Stock Compensation Plan) (Chrysler, its subsidiaries and Related Entities
collectively below called the Corporation) by enabling them to earn shares of
common stock of Chrysler (below called the Chrysler Common Stock) as a reward
for the achievement of long-term goals and objectives of the Corporation. The
Plan sets forth the terms and conditions of performance stock unit awards
granted by the Committee (as defined below) under the Stock Compensation Plan
(as defined below). All capitalized terms used below shall have the meanings
ascribed to them in Section 2 below.
2. DEFINITIONS
"Board" -- means the Board of Directors of Chrysler.
"Change in Control" -- has the meaning set forth in the Stock Compensation
Plan.
"Committee" -- means the Stock Option Committee of the Board, being the
committee appointed by the Board to administer the performance stock unit
provisions of the Stock Compensation Plan.
"Fair Market Value" -- means for purposes of Performance Shares, the mean
of the high and low trading prices of Chrysler Common Stock on the date on which
it is to be valued hereunder, as reported on the New York Stock Exchange, or if
the Exchange is closed on such day, the next preceding day on which the Exchange
was open for trading.
"Participant" -- means an Employee who is selected by the Committee to
receive an award of Performance Shares under the Stock Compensation Plan.
"Performance Cycle" or "Cycle" -- means the period of years determined by
the Committee during which the performance of the Corporation is measured for
the purpose of determining the extent to which an award of Performance Shares
has been earned.
"Performance Goals" -- means one or more corporate objectives established
by the Committee for a Performance Cycle, for the purpose of determining the
extent to which Performance Shares which have been contingently awarded for such
Cycle are earned. Such objectives shall relate to: quality, customer
satisfaction, profitability, net margin as a percentage of revenue, return on
sales, return on capital, breakeven, productivity, and/or debt to
capitalization.
"Performance Share" -- means an award expressed as one share of Chrysler
Common Stock contingently awarded under the Stock Compensation Plan (also
termed, under the Stock Compensation Plan, a Performance Stock Unit), the terms
and conditions of which award are governed by this Plan.
"Stock Compensation Plan" -- means the Chrysler Corporation 1991 Stock
Compensation Plan.
<PAGE> 2
3. STOCK OPTION COMMITTEE
The Plan shall be administered by the Committee, composed of not less than
two nonemployee directors, each of whom shall be a "Non-Employee Director"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended from time to time (the "Exchange Act"), or meet any other applicable
standard for administrators under that or any similar rule which may be in
effect from time to time. Each member of the Committee shall be appointed by
the Board and serve at the pleasure of the Board. The Committee shall have
authority, in its discretion, to amend the terms of this Plan and to prescribe,
amend, and rescind rules and regulations relating to this Plan.
4. ELIGIBILITY
All Eligible Employees (as defined in the Stock Compensation Plan) are
eligible to be Participants under this Plan.
5. PERFORMANCE CYCLES
During 1991 the Committee shall establish Performance Cycles for the years
1991 through 1993. During each of the years 1992 and thereafter the Committee
may, but shall not be required to, establish a new Performance Cycle with
respect to a future period, which shall not be less than two nor more than five
years. The Committee shall have sole and complete authority to determine the
duration of each Performance Cycle. More than one Performance Cycle may be in
effect at any one time, and the duration of one Performance Cycle may differ
from another.
6. PERFORMANCE GOALS
The Committee shall establish one or more Performance Goals for each
Performance Cycle consisting of such criteria and for the accomplishment of such
corporate objectives as the Committee may designate. If a Performance Share
award for a given Performance Cycle is intended to be qualified
performance-based compensation under Section 162(m) of the Internal Revenue
Code, then the related Performance Goal shall be established no later than the
90th day of the first year of such Performance Cycle. During any Cycle, the
Committee may adjust the Performance Goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the Corporation or
changes in applicable tax laws or accounting principles.
7. PERFORMANCE AWARDS
At the commencement of each Performance Cycle the Committee shall (a) award
to each Participant the number of Performance Shares that would be deliverable
to the Participant if the Performance Goals for that Cycle are fully achieved at
a 100% level of performance, which number shall be determined by dividing an
amount (expressed as a percentage -- not to exceed 150% -- of the Participant's
base salary, or the average base salary or midpoint of the salary range of a
class of Participants, at the time of the award), by the then fair market price
of Chrysler Common Stock and (b) establish a range within which greater or
lesser percentages (including a minimum and maximum percentage) of the number of
shares awarded as Performance Shares would be earned based on the actual
performance level attained. The maximum of such range shall not exceed 150% of
the number of shares awarded as Performance Shares.
When a person becomes employed by the Corporation in, or is promoted by the
Corporation to, a position that constitutes him an Employee eligible to
participate in the Plan, the Committee may, in its sole discretion, award to
such person Performance Shares for one or more Performance Cycles commenced and
then in progress.
Except as otherwise provided in Section 13 below, the Committee may, in its
sole discretion, supplement any award previously made to any Participant,
provided that such award has not yet been earned out and paid.
8. PAYMENT OF PERFORMANCE SHARES
The Committee shall determine the percentage of the Performance Shares
which were earned by each Participant with respect to each Performance Cycle.
Such determination shall be made by considering the Corporation's performance in
relation to the Performance Goals established for that Performance Cycle and
deriving therefrom a percentage of attainment of the Performance Goals. Such
percentage (but not more than 150%) multiplied by the number of shares awarded
as Performance Shares to each Participant shall be the
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number of shares of Chrysler Common Stock earned and to be delivered to such
Participant. Such shares shall be shares held by the Corporation in its
treasury.
A Participant may elect, on or after the date of grant of any award and
before the year in which such award is to be paid, to defer receipt of all or
any portion of the Performance Shares deliverable to such Participant upon
earning such award, subject to the terms and conditions contained in any
applicable deferral or similar plan or arrangement.
9. DIVIDEND EQUIVALENTS
Participants shall be entitled to receive cash payments equivalent to the
dividend payments, if any, made to the owners of Chrysler Common Stock during
the Performance Cycle, on the dates such dividend payments are made. Such
payments are payable from and after the date Performance Shares are awarded
(i.e., during the relevant Performance Cycle) without regard to the attainment
of Performance Goals.
10. TERMINATION OF EMPLOYMENT
A Participant must be an Employee at the end of a Performance Cycle in
order to be entitled to payment of Performance Shares in respect of such Cycle;
provided, however, that in the event a Participant ceases to be an Employee
prior to the end of that Cycle (a) by reason of death, disability under any
disability plan of the Corporation, or retirement at or after age 65 under a
pension plan of the Corporation, he (or the legal representative of his estate
or his legatees) shall continue to earn, as if he had not ceased to be an
Employee, any Performance Shares awarded to him for that Cycle, or (b) by reason
of layoff, or by reason of retirement before age 65 under a pension plan of the
Corporation, the Committee, in its discretion and after taking into
consideration the performance of such Participant and the performance of the
Corporation during the Cycle, may authorize payment to such Participant with
respect to some or all of the Performance Shares awarded to him for that Cycle.
No award of Performance Shares shall confer upon any Employee any right to
continued employment with the Corporation nor shall it interfere with the right
of the Corporation to terminate the employment of any Employee at any time.
11. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure or
capitalization affecting the Chrysler Common Stock, outstanding awards of
Performance Shares shall be adjusted as and to the extent provided in Section 3
of the Stock Compensation Plan.
12. CHANGE IN CONTROL
A Change in Control shall have the effects set forth in Section 12 of the
Stock Compensation Plan.
13. INTERPRETATION
The Committee shall have full power and authority to interpret and construe
this Plan and its interpreting and construing of this Plan and acts and
determinations pursuant to this Plan in good faith shall be final and
conclusive, and binding upon the Participants. This Plan sets forth the terms
and conditions of awards of Performance Shares under the Stock Compensation
Plan; the provisions of the Stock Compensation Plan and the interpretations
thereof, to the extent applicable, shall govern in the event of any conflict
with the provisions of this Plan and the interpretations thereof.
Notwithstanding anything else contained in this Plan to the contrary, if
any award of Performance Shares is intended at the time of grant to be other
performance based compensation within the meaning of Section 162(m)(4)(C) of the
Code, to the extent required to so qualify any award hereunder, the Committee
shall not be entitled to exercise any discretion otherwise authorized under this
Plan with respect to such award if the ability to exercise such discretion (as
opposed to the exercise of such discretion) would cause such award to fail to
qualify as other performance based compensation.
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Nothing in this Plan shall be interpreted to preclude Chrysler from
granting awards under, or paying compensation outside the parameters of, the
Plan including, without limitation, base salaries, awards under any other plan
of Chrysler (whether or not approved by stockholders), incentive compensation
(whether or not based on the attainment of pre-established performance
objectives) or retention or other special payments, that is not deductible for
Federal, State or local income tax purposes by reason of Section 162(m) of the
Code or otherwise, should the Board or any committee thereof (including the
Committee), whichever is applicable, determine that such action is in the best
interests of Chrysler and its stockholders.
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<PAGE> 1
EXHIBIT 10-B-8
CHRYSLER CORPORATION
LONG-TERM INCENTIVE PLAN
EFFECTIVE JUNE 11, 1987
(AS AMENDED THROUGH MAY 15, 1997)
1. PURPOSE
The purpose of the Chrysler Corporation Long-Term Incentive Plan (below
called the Plan) is to provide an incentive to the officers and other key
salaried employees (below called collectively Employees) of Chrysler Corporation
(below called Chrysler) and its subsidiaries (Chrysler and its subsidiaries
collectively below called the Corporation) by enabling them to earn shares of
common stock of Chrysler (below called the Chrysler Common Stock) as a reward
for the achievement of long-term goals and objectives of the Corporation, in
accordance with the resolution most recently adopted by the stockholders of
Chrysler at their Annual Meeting on May 19, 1994, amending a resolution
originally adopted on April 16, 1929, as it has been and may be further amended
from time to time (below called the Stockholders' Resolution). All capitalized
terms used below shall have the meanings ascribed to them in Section 3 below.
2. INTEGRATION WITH INCENTIVE COMPENSATION PLAN
This Plan shall be fully integrated with the Incentive Compensation Plan.
The funds for the purchase of Chrysler Common Stock to be awarded as Performance
Shares under this Plan shall be provided out of the earnings of the Corporation
available for incentive compensation under the Incentive Compensation Plan, as
the Board from time to time shall determine. Awards made hereunder shall
complement awards made under the Incentive Compensation Plan as the Committee
shall determine in its sole discretion. An amount equal to 150% of the total
Fair Market Value of Performance Shares granted, on the day they were granted,
shall be charged against the Incentive Compensation Fund (as that term is
defined in the Incentive Compensation Plan). Any amount charged against the
Incentive Compensation Fund for any Performance Shares not earned and delivered
shall be returned to the funds available for incentive compensation under the
Incentive Compensation Plan, and shall be carried forward and may be awarded in
a subsequent fiscal year.
3. DEFINITIONS
"Beneficial Owner" -- with respect to any securities, shall mean any Person
who, directly or indirectly, has the right to vote or dispose of such securities
or otherwise has "beneficial ownership" of such securities (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), including pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that (i) a Person
shall not be deemed the Beneficial Owner of any security as a result of an
agreement, arrangement or understanding to vote such security (x) arising solely
from a revocable proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and the
applicable rules and regulations thereunder or (y) made in connection with, or
to otherwise participate in, a proxy or consent solicitation made, or to be
made, pursuant to, and in accordance with, the applicable provisions of the
Exchange Act and the applicable rules and regulations thereunder, in either case
described in clause (x) or clause (y) above, whether or not such agreement,
arrangement or understanding is also then reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or successor report), and (ii) a
Person engaged in business as an underwriter of securities shall not be deemed
to be the Beneficial Owner of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition."
"Board" means the Board of Directors of Chrysler.
<PAGE> 2
"Change in Control" -- means a change in control of Chrysler, which shall
be deemed to have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(a) any Person shall become the Beneficial Owner of securities of
Chrysler representing 20% or more of the combined voting power of
Chrysler's then outstanding securities (unless the event causing the 20%
threshold to be crossed is an acquisition of securities directly from
Chrysler);
(b) during any period of two consecutive years beginning after June
7, 1990, individuals who at the beginning of such period constitute the
Board of Directors and any new director (other than a director designated
by a Person who has entered into an agreement with Chrysler to effect a
transaction described in paragraph (a), (c) or (d) of this Change in
Control definition) whose election or nomination for election was approved
by a vote of at least two-thirds (2/3) of the Directors then still in
office who either were Directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute a majority of the Board; or
(c) the stockholders of Chrysler approve a merger or consolidation of
Chrysler with any other corporation (other than a merger or consolidation
which would result in the voting securities of Chrysler outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the entity
surviving such merger or consolidation), in combination with voting
securities of Chrysler or such surviving entity held by a trustee or other
fiduciary pursuant to any employee benefit plan of Chrysler or such
surviving entity or any subsidiary of Chrysler or such surviving entity, at
least 80% of the combined voting power of the voting securities of Chrysler
or such surviving entity outstanding immediately after such merger or
consolidation); or
(d) the stockholders of Chrysler approve a plan of complete
liquidation or dissolution of Chrysler or an agreement for the sale or
disposition by Chrysler of all or substantially all Chrysler's assets.
"Change in Control Fund" -- with respect to any Performance Cycle, means
the outstanding amount charged against the Fund with respect to such Performance
Cycle immediately prior to the occurrence of a Change in Control, increased by
the sum of the amounts described in "(i)" and "(ii)" below:
(i) the sum of (x) any amount authorized and approved by the Board for
any fiscal year completed prior to the Change in Control but not previously
awarded from, or charged against, the Incentive Compensation Fund pursuant
to this or any other plan of the Corporation, and (y) any amount awarded
from, or charged against, the Incentive Compensation Fund for any fiscal
year completed prior to the Change in Control that has been forfeited;
(ii) the aggregate amount calculated for the fiscal year in which
Change in Control occurs, from its inception up to and including the date
of the Change in Control, in the ordinary course of business and based on
the Stockholders' Resolution. The determinations (made prior to the Change
in Control) of the Corporation's internal accountants in making any such
calculation shall be conclusive.
"Change in Control Value" -- means, with respect to the Performance Shares,
the higher of (i) the Fair Market Value of a share of Chrysler Common Stock on
the relevant valuation date or (ii) the value of a share of Chrysler Common
Stock, determined as follows:
(w) in the case of transactions described in paragraphs (a) or (c) of
the Change in Control definition, the highest per share price paid (the
"Transaction Value") for shares of Chrysler Common Stock in the transaction
constituting the Change in Control,
(x) in the case of a transaction described in paragraph (b) of the
Change in Control definition which occurs in connection with a transaction
described in paragraph (a), (c) or (d) of the Change in Control definition,
the Transaction Value,
(y) in the case of a Change in Control described in paragraph (b) of
the Change in Control definition which does not occur in connection with a
transaction described in paragraph (a), (c) or (d) of the Change in Control
definition, the average of the daily closing prices per share of Chrysler
Common Stock on the New York Stock Exchange, if such shares are traded
thereon, or, if not, such other national
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securities exchange on which such shares are admitted to trade, or, if
none, the National Association of Securities Dealers Automated Quotation
System if such shares are admitted for quotation thereon, during the thirty
(30) consecutive trading days immediately preceding the Change in Control,
or
(z) in the case of a transaction described in paragraph (d) of the
Change in Control definition, the equivalent of the Transaction Value as
determined by the Committee.
"Committee" -- means the Incentive Compensation Committee of the Board.
"Fair Market Value" -- means for purposes of Performance Shares, the mean
of the high and low trading prices of Chrysler Common Stock on the date on which
it is to be valued hereunder, as reported on the New York Stock Exchange, or if
the Exchange is closed on such day, the next preceding day on which the Exchange
was open for trading.
"Incentive Compensation Plan" -- means the Chrysler Corporation Incentive
Compensation Plan adopted in accordance with the Stockholders' Resolution.
"Participant" -- means an Employee who is selected by the Committee to
receive an award of Performance Shares under the Plan.
"Performance Cycle" or "Cycle" -- means the period of years determined by
the Committee during which the performance of the Corporation is measured for
the purpose of determining the extent to which an award of Performance Shares
has been earned.
"Performance Goals" -- means one or more corporate objectives established
by the Committee for a Performance Cycle, for the purpose of determining the
extent to which Performance Shares which have been contingently awarded for such
Cycle are earned. Such objectives shall relate to: quality, customer
satisfaction, profitability, net margin as a percentage of revenue, return on
sales, return on capital, breakeven, productivity, and/or debt to
capitalization.
"Performance Share" -- means an award expressed as a share of Chrysler
Common Stock contingently awarded under this Plan.
"Person" -- shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act, as supplemented by Section 13(d)(3) of the Exchange Act,
provided, however, that Person shall not include (i) Chrysler, any subsidiary of
Chrysler or any other Person controlled by Chrysler, (ii) any trustee or other
fiduciary holding securities under any employee benefit plan of Chrysler or any
subsidiary of Chrysler, or (iii) a corporation owned, directly or indirectly, by
the stockholders of Chrysler in substantially the same proportions as their
ownership of securities of Chrysler.
4. INCENTIVE COMPENSATION COMMITTEE
The Plan shall be administered by the Committee, composed of not less than
two nonemployee directors, each of whom shall be a "Non-Employee Director"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended from time to time (the "Exchange Act"), or meet any other applicable
standard for administrators under that or any similar rule which may be in
effect from time to time. Each member of the Committee shall be appointed by
the Board and serve at the pleasure of the Board. Subject to the provisions of
this Plan, the Committee shall have authority, in its discretion, to
prescribe, amend, and rescind rules and regulations relating to this Plan.
5. ELIGIBILITY
All Employees who are eligible to participate in the Incentive Compensation
Plan, as determined by the Committee, are eligible to be Participants in this
Plan. The Committee shall have sole and complete authority to determine the
Employees who shall be awarded Performance Shares under this Plan.
6. PERFORMANCE CYCLES
During 1987 the Committee shall establish Performance Cycles for the years
1987, 1987 through 1988 and 1987 through 1989. During each of the years 1988 and
thereafter the Committee may, but shall not be required to, establish a new
Performance Cycle with respect to a future period, which shall not be less than
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two nor more than five years. The Committee shall have sole and complete
authority to determine the duration of each Performance Cycle. More than one
Performance Cycle may be in effect at any one time, and the duration of one
Performance Cycle may differ from another.
7. PERFORMANCE GOALS
The Committee shall establish one or more Performance Goals for each
Performance Cycle consisting of such criteria and for the accomplishment of such
corporate objectives as the Committee may designate. If a Performance Share
award for a given Performance Cycle is intended to be qualified
performance-based compensation under Section 162(m) of the Internal Revenue
Code, then the related Performance Goal shall be established no later than the
90th day of the first year of such Performance Cycle. During any Cycle, the
Committee may adjust the Performance Goals for such Cycle as it deems
equitable in recognition of unusual or non-recurring events affecting the
Corporation or changes in applicable tax laws or accounting principles.
8. PERFORMANCE AWARDS
At the commencement of each Performance Cycle the Committee shall (a) award
to each Participant the number of Performance Shares that would be deliverable
to the Participant if the Performance Goals for that Cycle are fully achieved at
a 100% level of performance, which number shall be determined by dividing an
amount (expressed as a percentage -- not to exceed 150% -- of the Participant's
base salary, or the average base salary or midpoint of the salary range of a
class of Participants, at the time of the award) by the then fair market price
of Chrysler Common Stock and (b) establish a range within which greater or
lesser percentages (including a minimum and maximum percentage) of the number of
shares awarded as Performance Shares would be earned based on the actual
performance level attained. The maximum of such range shall not exceed 150% of
the number of shares awarded as Performance Shares.
When a person becomes employed by the Corporation in, or is promoted by the
Corporation to, a position that constitutes him an Employee eligible to
participate in the Plan, the Committee may, in its sole discretion, award to
such person Performance Shares for one or more Performance Cycles commenced and
then in progress.
The Committee may, in its sole discretion, supplement any award previously
made to any Participant, provided that such award has not yet been earned out
and paid; and provided further, that the Committee may not exercise such
discretion to the extent that the ability to exercise such discretion would
cause the Performance Share award to fail to qualify as other performance based
compensation under Section 162(m) of the Internal Revenue Code.
9. PAYMENT OF PERFORMANCE SHARES
The Committee shall determine the percentage of the Performance Shares
which were earned by each Participant with respect to each Performance Cycle.
Such determination shall be made by considering the Corporation's performance in
relation to the Performance Goals established for that Performance Cycle and
deriving therefrom a percentage of attainment of the Performance Goals. Such
percentage (but not more than 150%) multiplied by the number of shares awarded
as Performance Shares to each Participant shall be the number of shares of
Chrysler Common Stock earned and to be delivered to such Participant. Such
shares shall be shares held by the Corporation in its treasury.
A Participant may elect, on or after the date of grant of any award and
before the year in which such award is to be paid, to defer receipt of all or
any portion of the Performance Shares deliverable to such Participant upon
earning such award, subject to the terms and conditions contained in any
applicable deferral or similar plan or arrangement.
10. DIVIDEND EQUIVALENTS
Participants shall be entitled to receive cash payments equivalent to the
dividend payments, if any, made to the owners of Chrysler Common Stock during
the Performance Cycle, on the dates such dividend payments are made. Such
payments are payable from and after the date Performance Shares are awarded
(i.e., during
4
<PAGE> 5
the relevant Performance Cycle) without regard to the attainment of Performance
Goals. Such cash payments equivalent to dividends shall not be charged against
the funds available for incentive compensation.
11. TERMINATION OF EMPLOYMENT
A Participant must be an Employee at the end of a Performance Cycle in
order to be entitled to payment of Performance Shares in respect of such Cycle;
provided, however, that in the event a Participant ceases to be an Employee
prior to the end of that Cycle (a) by reason of death, disability under any
disability plan of the Corporation, or retirement at or after age 65 under a
pension plan of the Corporation, he (or the legal representative of his estate
or his legatees) shall continue to earn, as if he had not ceased to be an
Employee, any Performance Shares awarded to him for that Cycle, or (b) by reason
of layoff, or by reason of retirement before age 65 under a pension plan of the
Corporation, the Committee, in its discretion and after taking into
consideration the performance of such Participant and the performance of the
Corporation during the Cycle, may authorize payment to such Participant with
respect to some or all of the Performance Shares awarded to him for that Cycle.
No award of Performance Shares shall confer upon any Employee any right to
continued employment with the Corporation nor shall it interfere with the right
of the Corporation to terminate the employment of any Employee at any time.
12. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
Notwithstanding any other provision of this Plan, in the event of any
change in the outstanding Chrysler Common Stock by reason of a stock dividend,
recapitalization, merger, consolidation, split-up, combination or exchange of
shares, and the like, the number and class of shares subject to each outstanding
award of Performance Shares shall be appropriately adjusted by the Board, whose
determination shall be conclusive.
13. CHANGE IN CONTROL
(A) First, subject to Section 13(D) hereof, upon the occurrence of a Change
in Control, any Performance Shares for a completed Performance Cycle which the
Committee has previously determined that a Participant has earned (but with
respect to which no delivery of Chrysler Common Stock has been made) shall be
paid no later than the tenth day following such Change in Control to such
Participant, in cash, in an amount equal to the Change in Control Value of each
such Performance Share multiplied by the number of such Performance Shares
(together with dividend equivalents on such shares calculated pursuant to
Section 10 hereof).
(B) Second, subject to Section 13(D) hereof, upon the occurrence of a
Change in Control, any Performance Shares for a completed Performance Cycle
previously awarded to a Participant who was an Employee (or otherwise entitled
to payment under Section 11 hereof) at the end of such Performance Cycle (but as
to which the Committee has made no determination with respect to the number of
such shares earned by such Participant) shall be deemed earned out, at the
higher of a 100% level of performance or at the highest level of performance
attained in any of the three most recently completed previous Performance
Cycles. The Performance Shares so earned out shall be paid immediately to each
such Participant, in cash, in an amount equal to the Change in Control Value of
each Performance Share multiplied by the number of such shares deemed to have
been earned out (together with dividend equivalents on such shares calculated
pursuant to Section 10 hereof).
(C) Third, subject to Section 13(D) hereof, upon the occurrence of a Change
in Control, a pro rata percentage (determined as provided below) of all
Performance Shares for each outstanding Performance Cycle previously awarded to
a Participant who is an Employee on the date immediately preceding the date of
the Change in Control which have not yet been earned out shall be deemed earned
out, at the higher of a 100% level of performance or at the highest level of
performance attained in any of the three most recently completed Performance
Cycles. The Performance Shares so earned out shall be paid immediately to each
such Participant in cash, in an amount equal to the Change in Control Value of
each Performance Share multiplied by the number of such shares deemed to have
been earned out (together with dividend equivalents on such shares calculated
pursuant to Section 10 hereof).
5
<PAGE> 6
The number of Performance Shares deemed to have been earned out by a
Participant with respect to each outstanding Performance Cycle, upon a Change in
Control, shall be determined by first multiplying the total Performance Shares
awarded to the Participant for such Performance Cycle by a fraction, the
numerator of which shall be the number of complete months in such Performance
Cycle which have elapsed at the date of the Change in Control and the
denominator of which shall be the total number of months in such Performance
Cycle. Next, the number of Performance Shares determined in the first step shall
be multiplied by the applicable percentage level of performance for such
Performance Cycle.
(D) Notwithstanding Sections 13(A), (B) and (C) hereof, the aggregate
amount payable with respect to any Performance Cycle pursuant to this Section 13
shall not exceed such Performance Cycle's Change in Control Fund and, if
necessary, the individual amounts otherwise payable with respect to a particular
Performance Cycle shall be reduced proportionally until the aggregate amount
equals such Performance Cycle's Change in Control Fund.
14. ADMINISTRATIVE COSTS
All costs of administering this Plan shall be borne by the Corporation and
shall not be charged against the funds available for incentive compensation.
15. INTERPRETATION
The Board shall have full power and authority to interpret and construe
this Plan and its interpreting and construing of this Plan and acts pursuant to
this Plan in good faith shall be final and conclusive. The Board may correct any
defect or supply any omission or reconcile any inconsistency in such a manner
and to such an extent as it shall find expedient to carry this Plan into effect,
and it shall be the sole and final judge of expediency. If any such interpreting
or construing shall involve a question of law, the Board may rely and act upon
the opinion of counsel (who may be counsel to Chrysler) on the question of law.
Notwithstanding anything else contained in this Plan to the contrary, if
any award of Performance Shares is intended at the time of grant to be other
performance based compensation within the meaning of Section 162(m)(4)(C) of the
Code, to the extent required to so qualify any award hereunder, the Committee
shall not be entitled to exercise any discretion otherwise authorized under this
Plan with respect to such award if the ability to exercise such discretion (as
opposed to the exercise of such discretion) would cause such award to fail to
qualify as other performance based compensation.
16. EFFECTIVE PERIOD
This Plan shall become effective beginning June 11, 1987, and shall remain
in effect until terminated as provided in Paragraph 17.
17. AMENDMENT AND TERMINATION
At any time the Board may terminate this Plan or make such changes in it
and additions to it (consistent with the Stockholders' Resolution) as the Board
shall deem advisable; provided, however, that the Board may not: (a) without the
approval of the holders of a majority of the shares of Common Stock of Chrysler
voting on the matter, increase the total amount that under the Stockholders'
Resolution may be provided out of the earnings of the Corporation for incentive
compensation and (b) without the approval of the holders of a majority of the
shares of Common Stock of Chrysler issued and outstanding, issue shares of
Chrysler Common Stock for purposes of this Plan; and provided further, however,
that terminating or amending this Plan shall not terminate the right of any
Participant to earn and thereby become entitled to receive, in the same manner
as if this Plan had not been terminated or amended, any unearned Performance
Shares awarded to him under this Plan prior to the terminating or amending of
this Plan.
Nothing in this Plan shall be interpreted to preclude Chrysler from
granting awards under, or paying compensation outside the parameters of, the
Plan including, without limitation, base salaries, awards under any other plan
of Chrysler (whether or not approved by stockholders), incentive compensation
(whether or
6
<PAGE> 7
not based on the attainment of pre-established performance objectives) or
retention or other special payments, that is not deductible for Federal, State
or local income tax purposes by reason of Section 162(m) of the Internal Revenue
Code or otherwise, should the Board or any committee thereof (including the
Committee), whichever is applicable, determine that such action is in the best
interests of Chrysler and its stockholders.
7
<PAGE> 1
EXHIBIT 11
CHRYSLER CORPORATION AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER COMMON SHARE DATA
APB OPINION NO.15 CALCULATION
<TABLE>
<CAPTION>
Period Ended June 30,
---------------------------------------------------
Three Months Ended Six Months Ended
----------------------- --------------------------
1997 1996 1997 1996
--------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
(In millions of dollars and shares)
PRIMARY:
Net earnings $ 483 $1,037 $1,512 $2,042
Preferred stock dividend declared (1) (1) (1) (2)
-------- ----------- ----------- -----------
Earnings attributable to common stock $ 482 $1,036 $1,511 $2,040
======== =========== =========== ===========
Weighted average shares outstanding 678.9 738.7 688.3 745.6
Shares issued on exercise of dilutive options 25.6 22.4 26.1 24.1
Shares purchased with proceeds of options (19.7) (14.4) (19.4) (16.2)
Shares contingently issuable 0.9 1.0 0.8 0.9
-------- ----------- ----------- -----------
Shares applicable to primary earnings 685.7 747.7 695.8 754.4
======== =========== =========== ===========
FULLY DILUTED:
Net earnings $ 483 $1,037 $1,512 $2,042
======== =========== =========== ===========
Weighted average shares outstanding 678.9 738.7 688.3 745.6
Shares issued on exercise of dilutive options 25.8 22.4 26.2 24.1
Shares purchased with proceeds of options (19.0) (14.4) (19.0) (15.6)
Shares applicable to convertible preferred stock 1.5 4.5 1.7 5.8
Shares contingently issuable 1.8 1.8 1.6 1.7
-------- ----------- ----------- -----------
Shares applicable to fully diluted earnings 689.0 753.0 698.8 761.6
======== =========== =========== ===========
PER COMMON SHARE DATA: (In dollars)
Primary:
Net earnings per common share $ 0.70 $ 1.39 $ 2.17 $ 2.70
======== =========== =========== ===========
Fully Diluted:
Net earnings per common share $ 0.70 $ 1.38 $ 2.16 $ 2.68
======== =========== =========== ===========
</TABLE>
NOTE:
Primary earnings per common share amounts were computed by dividing earnings
after deduction of preferred stock dividends by the average number of common
and dilutive equivalent shares outstanding. Computations of primary earnings
per common share exclude the effect of common stock equivalents and shares
contingently issuable for any period in which their inclusion would have the
effect of increasing the earnings per common share amount otherwise computed.
Fully diluted per common share amounts assume conversion of the convertible
preferred stock, the elimination of the related preferred stock dividend
requirement, and the issuance of common stock for all other potentially
dilutive equivalent shares outstanding.
<PAGE> 1
EXHIBIT 15A
[DELOITTE & TOUCHE LLP LOGO LETTERHEAD]
SUITE 900
600 RENAISSANCE CENTER
DETROIT, MICHIGAN 48243-1704
INDEPENDENT ACCOUNTANTS' REPORT
Shareholders and Board of Directors
Chrysler Corporation
Auburn Hills, Michigan
We have reviewed the accompanying condensed consolidated balance sheet of
Chrysler Corporation and consolidated subsidiaries as of June 30, 1997 and 1996
and the related condensed consolidated statements of earnings and cash flows
for the three-month and six-month periods ended June 30, 1997 and 1996. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Chrysler Corporation and
consolidated subsidiaries as of December 31, 1996, and the related consolidated
statements of earnings and cash flows for the year then ended (not presented
herein); and in our report dated January 21, 1997, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1996 is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
Deloitte & Touche LLP Signature
July 11, 1997
Deloitte Touche Tohmatsu International
<PAGE> 1
EXHIBIT 15B
[DELOITTE & TOUCHE LLP LOGO LETTERHEAD]
SUITE 900
600 RENAISSANCE CENTER
DETROIT, MICHIGAN 48243-1704
July 11, 1997
Chrysler Corporation
1000 Chrysler Drive
Auburn Hills, Michigan
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Chrysler Corporation and consolidated subsidiaries for the
periods ended June 30, 1997 and 1996, as indicated in our report dated July 11,
1997. Because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, is
incorporated by reference in the following Registration Statements:
<TABLE>
<CAPTION>
REGISTRATION
FORM STATEMENT NO. DESCRIPTION
<S> <C> <C>
S-8 33-5588 Chrysler Salaried Employees' Savings Plan
S-8 33-6117 Chrysler Corporation Stock Option Plan
S-3 33-13739 Chrysler Corporation Common Stock deliverable to
Selling stockholder named therein
S-3 33-15716 Chrysler Corporation Common Stock deliverable to
Selling stockholders named therein
S-8 33-15544 Chrysler Corporation Common Stock
(Post-Effective deliverable pursuant to the 1972 and 1980
Amendment No. 1) American Motors Corporation Stock Option Plans
S-3 33-15849 Chrysler Corporation Debt Securities
S-3 33-22233 Chrysler Corporation Common Stock deliverable to
Selling stockholders named therein
S-3 33-39688 Chrysler Corporation Common Stock deliverable to
Selling stockholders named therein
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
REGISTRATION
FORM STATEMENT NO. DESCRIPTION
<S> <C> <C>
S-8 33-47986 Chrysler Corporation 1991 Stock Compensation Plan
S-3 33-59294 Chrysler Corporation Common Stock deliverable to
Selling stockholder named therein
S-8 33-55817 Chrysler Corporation 1991 Stock Compensation Plan
S-3 33-21589 Chrysler Corporation Debt Securities
S-4 333-21849 Chrysler Corporation Debt Securities
</TABLE>
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
Deloitte & Touche LLP Signature
Deloitte Touche Tohmatsu International
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,623
<SECURITIES> 2,412
<RECEIVABLES> 2,021
<ALLOWANCES> 47
<INVENTORY> 6,079
<CURRENT-ASSETS> 0
<PP&E> 24,746
<DEPRECIATION> 8,686
<TOTAL-ASSETS> 61,028
<CURRENT-LIABILITIES> 0
<BONDS> 9,367
0
0<F2>
<COMMON> 823
<OTHER-SE> 10,737
<TOTAL-LIABILITY-AND-EQUITY> 61,028
<SALES> 28,549
<TOTAL-REVENUES> 30,504
<CGS> 23,060<F1>
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10
<INTEREST-EXPENSE> 488
<INCOME-PRETAX> 2,515
<INCOME-TAX> 1,003
<INCOME-CONTINUING> 1,512
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,512
<EPS-PRIMARY> 2.17
<EPS-DILUTED> 2.16
<FN>
<F1>EXCLUDES DEPRECIATION AND SPECIAL TOOLS AMORTIZATION AND EMPLOYEE RETIREMENT
BENEFITS
<F2>LESS THAN $1 MILLION
</FN>
</TABLE>
