EXHIBIT 2
Chrysler Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000-0000
February 8, 1996
Mr. Xxxx Xxxxxxxxx
c/o Tracinda Corporation
0000 Xxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
STANDSTILL AND SETTLEMENT AGREEMENTS
Dear Xx. Xxxxxxxxx:
Chrysler Corporation ("Chrysler" or the "Company") has advised you as
follows (references herein to the Kerkorian Group being to yourself, Tracinda
Corporation, ("Tracinda") your and Tracinda's affiliates, Xxx X. Xxxxxxx
("Xxxxxxx") and Xxxxxx Xxxxx (together, the "Kerkorian Group"):
(a) Chrysler's Board of Directors is electing Xxxxx X. Xxxxxx as a
director of Chrysler at the February 8, 1996 meeting of its Board Directors,
it being understood that Xx. Xxxxxx will abide by the standards of conduct and
loyalty applicable to all Chrysler directors;
(b) Chrysler is announcing an increase in its share repurchase
program for 1996 to a total of $2.0 billion and a share repurchase program for
1997 of $1.0 billion, such repurchases in all cases to be subject to market
and general economic conditions;
(c) The Chrysler Board has reaffirmed its policy of returning to
shareholders, through share repurchases or dividends, cash which is generated
by the Company's operations or realized from sales of non-automotive and other
assets noted below and is in excess of the Company's cash reserve target and
is not to be utilized in its core automotive business;
(d) The Chrysler Board also has indicated that it will continue to
review periodically Chrysler's current long-term cash reserve target of $7.5
billion and
its cash reserve policy in light of changing business and economic conditions
and the objective of keeping the Company globally competitive, especially
during cyclical downturns;
(e) Chrysler has also indicated that it will also continue to pursue
the sale of non-automotive assets, including its defense and rental car
subsidiaries and non-essential assets at Chrysler Financial Corporation,
subject to the exercise by the respective Boards of Directors of Chrysler and
its subsidiaries of their fiduciary duties; and
(f) The Chrysler Board is adopting today by-laws reflecting existing
Board policies restricting the issuance of blank check preferred stock (as
previously agreed with CREF) and restricting greenmail, in the forms attached
hereto as Exhibits A and B. A copy of Chrysler's press release with respect to
the foregoing matters is attached as Exhibit C.
In light of the foregoing and the consideration reflected below,
Chrysler, on the one hand, and Tracinda and you, on the other hand, agree as
follows:
(a) DISENGAGEMENT OF KERKORIAN ADVISORS. Tracinda will terminate,
within 30 days from the date of this agreement, except for the continuance of
monetary and indemnification obligations of Tracinda in accordance with the
terms of such arrangements summarized in the Kerkorian Group's Schedule 13D,
all of its arrangements, as the same relate to Chrysler, with its financial,
corporate governance, and proxy solicitation advisors, such terminations to be
solely at Kerkorian's cost and expense;
(b) STANDSTILL AGREEMENT. Chrysler, you and the Tracinda are
entering into the Standstill Agreement attached hereto as Exhibit D;
(c) LITIGATION SETTLEMENT AGREEMENT. Chrysler, you, Tracinda and
Xxxxxxx are entering into the Litigation Settlement Agreement attached hereto
as Exhibit E, under which, among other things, Xxxxxxx is releasing his stock
option and stock appreciation rights claims against Chrysler, is withdrawing
from the Kerkorian Group, is terminating all his agreements with Tracinda and
is entering into a standstill agreement with Chrysler, and for Chrysler to
make a payment of $21.0
2
million, less applicable withholding tax, to Xxxxxxx, and
(d) PUBLIC ANNOUNCEMENTS. Chrysler and you are issuing statements
regarding the matters outlined herein in the forms attached hereto as Exhibit
F. The statement by you expresses your support of Chrysler's management and
business strategy. Neither Chrysler nor Tracinda or you will make any public
statements that disparage the other.
If the foregoing correctly sets forth our understanding, please
execute the enclosed copy of this letter and return the same to the
undersigned.
Very truly yours,
CHRYSLER CORPORATION
By _______________
Agreed on February __, 1996
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XXXX XXXXXXXXX
TRACINDA CORPORATION
By
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