EXHIBIT 3
Tracinda Corporation
0000 Xxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Xxxx Xxxxxxxxx
c/o Tracinda Corporation
0000 Xxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
February 8, 1996
Chrysler Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000-0000
Standstill Agreement
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Dear Sirs:
Tracinda Corporation, a Nevada corporation wholly owned by Xxxx
Xxxxxxxxx ("Kerkorian"; Kerkorian and Tracinda Corporation, together with all
of their current and future affiliates and associates, are hereinafter
referred to as "Tracinda"), has filed with the Securities and Exchange
Commission a statement of beneficial ownership on Schedule 13D reporting that
Tracinda is the Beneficial Owner (such term as used in this Agreement being as
defined in the Company's Rights Agreement, as amended as of the date of this
Agreement) of 51,900,000 shares of Common Stock, par value $1.00 per share
("Common Stock"), of Chrysler Corporation (the "Company"), constituting 13.75%
of the outstanding Voting Securities (as defined in Section 3) of the Company
(such shares, together with all Voting Securities subsequently acquired by
Tracinda, the "Tracinda Shares").
Tracinda and the Company are entering into this Agreement to define
the future relationship between Tracinda and the Company in consideration of
the mutual covenants contained herein.
1. Tracinda's Representations and Warranties. Tracinda represents
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and warrants to the Company that: (a) Tracinda is duly authorized to execute,
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deliver and perform this Agreement; (b) this Agreement has been duly executed
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by Tracinda, is a valid and binding agreement of Tracinda, and is enforceable
against Tracinda in accordance with its terms; (c) the execution, delivery and
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performance by Tracinda of this Agreement does not violate or conflict with or
result in a breach of or constitute (or with notice or lapse of time or both
constitute) a default under Tracinda's Certificate of Incorporation, By-laws,
or any agreement to which Tracinda is a party; (d) the Tracinda Shares
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beneficially owned by Tracinda have been acquired for Tracinda's own account;
and (e) Tracinda is the beneficial owner of 51,900,000 shares of Common Stock,
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which represent all of the Voting Securities beneficially owned by Tracinda on
the date hereof.
2. Company's Representations and Warranties. The Company represents
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and warrants to Tracinda that: (a) the Company had outstanding as of January
31, 1996 377,955,453 shares of Common Stock, and since such date has
repurchased fewer than 508,000 shares of Common Stock and has issued 37,255
shares of Common Stock upon exercise of options; (b) the Common Stock is the
Company's only outstanding class of Voting Securities; (c) the Company is duly
authorized to execute, deliver and perform this Agreement; (d) this Agreement
has been duly executed by the Company, is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms; and (e)
the execution, delivery and performance by the Company of this Agreement does
not violate or conflict with or result in a breach of or constitute (or with
notice of or lapse of time or both constitute) a default under the Company's
Certificate of Incorporation or By-Laws or under any agreement to which the
Company is a party.
3. Restrictions on Transfers; Registration Rights.
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(a) Restrictions on Transfers. Tracinda agrees that, prior to
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December 31, 1997, it will not, directly or indirectly, sell, transfer or
otherwise dispose of any interest in the Tracinda Shares without the prior
written consent of the Company, provided, that Tracinda may transfer Tracinda
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Shares (i) to any corporation, partnership or other entity wholly-owned by
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Tracinda,
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(ii) to any trust the sole beneficiaries of which are Kerkorian and/or
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Kerkorian's family members or any charitable trust or charitable foundation
established by Tracinda, Kerkorian and/or Kerkorian's family members, provided
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that such trust, charitable trust or charitable foundation either (y) enters
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into a standstill agreement with the Company containing terms and conditions
substantially equivalent to those in this Agreement or (z) is and remains
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during the term of this Agreement an affiliate of Kerkorian; (iii) to any
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person who Tracinda believes, after due inquiry, would Beneficially Own
immediately after any such sale or transfer less than 5% of the outstanding
Voting Securities, (iv) to any person who Tracinda believes, after due
--
inquiry, would be entitled to report Beneficial Ownership of Voting Securities
on Schedule 13G under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (v) in a registered broad-distribution underwritten public
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offering, (vi) to the Company, (vii) pursuant to any tender offer or exchange
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offer which is recommended by the Board of Directors of the Company, or (viii)
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to any other person who enters into a standstill agreement with the Company on
terms and conditions substantially equivalent to those in this Agreement. For
purposes of this Agreement, the term "Voting Securities" shall mean securities
of the Company with the power to vote with respect to the election of
directors generally.
(b) Registration rights. (i) Required Registration. At any time
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after the date hereof, when Tracinda Beneficially Owns more than 5% of the
outstanding shares of Voting Securities, Tracinda shall have the right, by
written notice (the "Registration Notice") to the Company, to require the
Company to use reasonable efforts to register (the "Required Registration")
under the Securities Act of 1933 as amended (the "Securities Act") all or any
portion (representing at least 3% of the Voting Securities then outstanding)
of the Tracinda Shares then owned by Tracinda (the "Registrable Securities"),
for sale in an underwritten public offering; provided that the Company shall
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be obligated to register such Registrable Securities pursuant to this Section
3(b) on only two occasions. The Company shall be entitled to sell shares of
Voting Securities (to be newly issued or from shares held in treasury)
pursuant to such Required Registration unless the managing underwriters of
such Required Registration believe that such inclusion would adversely affect
the success of the proposed offering by Tracinda.
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The investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Company; provided that the lead
managing underwriter(s) shall be reasonably acceptable to Tracinda.
Upon receipt of such Registration Notice, the Company will, as
promptly as practicable, prepare and file with the Securities and Exchange
Commission (the "SEC") and use its reasonable efforts to cause to become
effective promptly, and in any event within 90 days from its receipt of the
Registration Notice a registration statement under the Securities Act for
public sale in an underwritten public offering of the number of Registrable
Securities specified in the Registration Notice; provided, however, that the
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Company shall be entitled to defer any such filing (y) which would result in
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an effective registration statement within six months of an underwritten
offering by the Company of its equity securities for its own account or (z)
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for a period of up to 180 days upon a determination by the Company's Board of
Directors that the filing of a registration statement at such time would be
detrimental to the Company due to the pendency of a material acquisition or
financing or for other reasonable cause.
(ii) Incidental Registration Rights. In addition to the provisions
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contained in Section 3(b)(i), if the Company shall at any time after the date
hereof seek to register under the Securities Act for sale to the public in an
underwritten offering any of its equity securities and if the form of
registration statement proposed to be used may be used for the registration of
Registrable Securities, on each such occasion it shall promptly furnish
Tracinda with prior written notice thereof. At the written request of
Tracinda, given (y) at a time when Tracinda Beneficially Owns more than 5% of
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the outstanding Voting Securities and (z) within 5 days after the receipt of
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such notice, to register any of Tracinda's Registrable Securities, the Company
will cause such Registrable Securities, for which registration shall have been
requested, to be included in such registration statement in an amount so as to
permit the sale or other disposition by Tracinda as part of such underwritten
public offering of such Registrable Securities as are registered, provided,
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that if the managing underwriter shall advise the Company in writing that, in
its opinion, the number of securities requested and otherwise proposed to be
included in such offering exceeds the number which
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can be sold without adversely affecting the marketability of the offering, the
Company will include in such registration to the extent of the number which
the Company is so advised can be sold in such offering, first, the securities
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the Company proposes to sell for its own account in such registration and
second, the Registrable Securities of Tracinda that Tracinda requested to be
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included in such registration.
(c) Expenses. All expenses incurred by the Company in complying with
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Section 3(b) hereof, excluding all registration and filing fees but including
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees of the National Association of Securities
Dealers, Inc., listing or quotation fees and fees of transfer agents and
registrars, shall be borne in full by the Company. Tracinda shall be
responsible for all registration and filing fees, underwriting commissions,
transfer taxes, discounts and fees with respect to Registrable Securities and
the fees and expenses of counsel and accountants for Tracinda.
4. Voting. Tracinda agrees that, during the term of this Agreement,
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for so long as Tracinda Beneficially Owns any Voting Securities, Tracinda will
(a) be present, in person or represented by proxy, at all shareholder meetings
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of the Company so that all Voting Securities Beneficially Owned by Tracinda
may be counted for the purpose of determining the presence of a quorum at such
meetings and (b) vote or consent, or cause to be voted or a consent to be
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given, with respect to all Voting Securities Beneficially Owned by Tracinda on
all matters submitted to shareholders for a vote or consent in the same
proportion as Voting Securities are voted by holders unaffiliated with
Tracinda.
5. Standstill Provisions. Tracinda agrees that it will not propose
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the adoption at the Company's 1996 annual meeting of shareholders of any of
the proposals contained in the proxy materials Tracinda has filed with the
Securities and Exchange Commission (the "Commission")and that, on the date of
this Agreement, it is notifying the Commission that it will not solicit
proxies at such annual meeting. Tracinda further agrees that, during the term
of this Agreement, without the Company's prior written consent, Tracinda will
not:
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(a) acquire, announce an intention to acquire, offer or propose to
acquire, or agree to acquire, directly or indirectly, by purchase or
otherwise, Beneficial Ownership of any Voting Securities, or direct or
indirect rights to options to acquire (through purchase, exchange,
conversion or otherwise) any Voting Securities, if, immediately after any
such acquisition, Tracinda would Beneficially Own, in the aggregate, Voting
Securities representing more than 13.75% of the outstanding Voting
Securities;
(b) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" (as such terms are defined in Rule 14a-1 under
the Securities Exchange Act of 1934, as amended (the "1934 Act")) to vote
any Voting Securities, seek to advise, encourage or influence any person or
entity with respect to the voting of any Voting Securities, initiate or
propose any shareholder proposal or induce or attempt to induce any other
person to initiate any shareholder proposal;
(c) make any statement or proposal, whether written or oral, to the
Board of Directors of the Company, or to any director, officer or agent of
the Company, or make any public announcement or proposal whatsoever with
respect to a merger or other business combination, sale or transfer of
assets, recapitalization, dividend, share repurchase, liquidation or other
extraordinary corporate transaction with the Company or any other
transaction which could result in a change of control, or solicit or
encourage any other person to make any such statement or proposal;
(d) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the 0000 Xxx) with respect to any securities
of the Company, other than a group which Tracinda is a member of as of the
date hereof;
(e) deposit any Voting Securities into a voting trust or subject any
Voting Securities to any arrangement or agreement with respect to the
voting of any Voting Securities other than this Agreement and any agreement
with any trust or charitable trust or charitable foundation to which any
Tracinda Shares are transferred in compliance with the provisions of this
Agreement;
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(f) execute any written consent with respect to the Company, except in
accordance with Section 4;
(g) otherwise act, alone or in concert with others, to seek to exercise
any control over the management, Board of Directors or policies of the
Company;
(h) make a public request to the Company (or its directors, officers,
shareholders, employees or agents) to amend or waive any provisions of this
Agreement, the Certificate of Incorporation or By-Laws of the Company or
the Rights Agreement of the Company, including without limitation any
public request to permit Tracinda or any other person to take any action in
respect of the matters referred to in this Section 5;
(i) take any action which might require the Company to make a public
announcement regarding the possibility of any transaction referred to in
paragraph (c) above or similar transaction or, advise, assist or encourage
any other persons in connection with the foregoing; or
(j) disclose any intention, plan or arrangement inconsistent with the
foregoing;
provided that nothing in this Section 5 shall prohibit any person who is
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serving as a director of the Company as contemplated by Section 8 of this
Agreement from, solely in his or her capacity as such director, (a) taking
any action or making any statement at any meeting of the Board of Directors
or of any committee thereof; (b) making any statement to any director,
officer or agent of the Company, or (c) making any statement or disclosure
required under the federal securities laws or other applicable laws; and
provided, further, that nothing in this Section 5 shall restrict any
private communications between Tracinda and any person designated by
Tracinda as a director, provided that all such communications by such
person remain subject to the fiduciary duties of such person as a director.
6. Sales by Tracinda of Excess Shares. The Company will
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periodically, and in any event within ten business days after the end of each
calendar quarter, advise Tracinda of the number of shares of Voting Securities
that are outstanding. If at the end of any such quarter Tracinda shall
Beneficially Own more than 13.75% of such Voting Securities, Tracinda shall
sell,
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transfer or otherwise dispose, to unaffiliated third parties during the
immediately subsequent quarter (the "Subsequent Quarter"), and in a manner
consistent with the provisions of Section 3 of this Agreement, its Beneficial
Ownership of the number of Tracinda Shares by which its Beneficial Ownership
position exceeded 13.75% of the outstanding Voting Securities, provided that
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Tracinda may instead, on one or more occasions, upon written notice to the
Company, delivered to the Company not less than one-half hour before the close
of trading on the largest principal national securities exchange on which such
Voting Securities are listed for trading, sell up to such number of shares to
the Company during the Subsequent Quarter, such sale to be effected on the
date of such notice at a price per share in cash equal to the closing price
reported on the date of such sale on the largest principal national securities
exchange on which such Voting Securities are listed for trading, such purchase
and provided, further, that Tracinda may, upon written notice to the Company,
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defer such sales for the minimum period of time and as to the minimum number
of Tracinda Shares necessary so that Tracinda shall not have any liability to
the Company under Section 16(b) of the Exchange Act.
7. Notification as to Certain Matters. Tracinda shall notify the
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Company of any change in Tracinda's Beneficial Ownership involving in the
aggregate not less than 100,000 shares of Voting Securities not later than
two business days after such change and from time to time, upon request, shall
notify the Company of the number of shares of Voting Securities Beneficially
Owned by Tracinda and of the names and addresses of all persons included in
the definition of Tracinda hereunder, including, without limitation,
affiliates to whom Tracinda Shares shall have been transferred in accordance
with Section 3. The Company shall notify Tracinda from time to time, upon
request, of the number of Voting Securities outstanding.
8. Board Representation. (a) Xx. Xxxxx X. Xxxxxx is today being
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elected as a director of the Company and will be proposed by the Company's
Governance Committee for election as a director at the 1996 Annual Meeting of
Shareholders of the Company. Subject to its fiduciary duties, Chrysler's
Board of Directors will nominate Xx. Xxxxxx (or, if Xx. Xxxxxx is unable or
unwilling to serve, a successor as contemplated by this Section 8) for
election at each meeting (or in each
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action by written consent in lieu of a meeting) of stockholders of the Company
for the election of directors during the term of this Agreement so long as
Tracinda Beneficially Owns more than 5% of the outstanding shares of Voting
Securities.
(b) If Xx. Xxxxxx (or such a successor) is no longer a director of the
Company as contemplated by paragraph (a) of this Section 8, Tracinda may
propose to the Company as a nominee for election as a director of the Company
a person who (i) has recognized standing in the business community, (ii) is
not a former director, officer or employee of the Company and (iii) does not
have a conflict of interest with the Company, in which event, with the
Company's consent (such consent not to be unreasonably withheld), such person
will be proposed to the Governance Committee; it being understood that the
Company agrees that Mr. Xxxx Xxxxxxxxx would be an acceptable Tracinda
designee.
(c) The Company will use its best efforts to cause Xx. Xxxxxx or any
such successor nominated as provided in this Section 8 to be elected by the
stockholders of the Company and will solicit proxies in favor of Xx. Xxxxxx or
any such successor at each meeting (or in each action by written consent in
lieu of a meeting) of stockholders of the Company.
(d) If the Company does not accept a Tracinda designee as provided in
paragraph (b) of this Section 8, the process set forth therein shall be
repeated so long as reasonably appropriate to find a successor candidate
acceptable to both Tracinda and the Company.
(e) This Agreement shall terminate if one year elapses after Xx.
Xxxxxx or a successor is not a director of the Company (unless this occurs at
a time when Tracinda Beneficially Owns less than 5% of Chrysler's outstanding
Voting Securities), provided that (i) such period shall be six months if Mr.
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Xxxxxx or a successor is not a director after June 1, 2000 and (ii) this
Agreement shall not terminate if the absence of a successor on the Company's
Board of Directors results from Tracinda's failure to designate a potential
successor as contemplated by this Section 8.
9. Specific Performance. Each of Tracinda and the Company
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acknowledges that the other party would not have an adequate remedy at law for
money damages if any
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of the covenants or agreements of the other party in this Agreement were not
performed in accordance with its terms and therefore agrees that the other
party shall be entitled to specific enforcement of such covenants or
agreements and to injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
10. Notification of Restrictions. Tracinda represents that all of the
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Tracinda Shares that are in certificated form have been pledged to financial
institutions. Tracinda will, upon the signing of this Agreement, notify all
such financial institutions and the appropriate custodians of all of the
Tracinda Shares that are uncertificated of the transfer restrictions provided
for in this Agreement. If in the future any Tracinda shares that are
certificated are not pledged to financial institutions who have received
notice of such transfer restrictions, the certificates for such shares shall
be promptly delivered to the Company and the Company shall place the following
legend thereon, which legend shall remain until such time as the securities
represented by such certificates are transferred in accordance with the
provisions of this Agreement:
THESE SECURITIES ARE SUBJECT TO THE PROVISIONS OF AN AGREEMENT DATED
FEBRUARY 8, 1996, BY AND AMONG THE ISSUER, TRACINDA CORPORATION AND
XXXX XXXXXXXXX, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
ACCORDANCE THEREWITH.
11. Survival of Representations and Warranties. The representations,
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warranties, covenants and agreements contained in this Agreement shall survive
the execution of this Agreement and any investigation at any time by Tracinda,
the Company, or on behalf of either thereof.
12. Entire Agreement. This Agreement, together with the other
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agreements of the parties of even date herewith, contains the entire
understandings of the parties with respect to the subject matter of such
agreements. This Agreement may not be amended except by a writing signed by
the parties. Except as specifically provided herein, this Agreement is not
assignable by either of the parties. This Agreement shall be binding upon the
respective successors of the parties and upon transferees of Voting Securities
who are affiliates or associates of Tracinda.
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13. Severability. If any terms, provision, covenant or restriction
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of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restriction of this Agreement shall remain in full force and effect, unless
such action would substantially impair the benefits to either party of the
remaining provisions of this Agreement.
14. Notices. Any notices and other communications required to be
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given pursuant to this Agreement shall be delivered by hand, by registered or
certified mail, postage prepaid, return receipt requested, by private courier,
by facsimile or by telex, as follows:
If to the Company:
Chrysler Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Telecopier: (000) 000-0000
with copies to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
If to Tracinda Corporation or Xxxx Xxxxxxxxx:
Tracinda Corporation
0000 Xxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Secretary
Telecopier: (000) 000-0000
with copies to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telecopier: (000) 000-0000
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16. Term. This Agreement shall expire on the earlier of (i) the
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fifth anniversary of the date hereof and (ii) the date provided in Section 8
hereof.
16. Governing Law, etc. This Agreement shall be governed by and
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construed in accordance with the laws of the State of Delaware. This
Agreement may be executed in one or more counterparts, which together will
constitute a single agreement.
If you are in agreement with the foregoing, please sign the
accompanying copy of this letter and return it to the Company, whereupon this
letter shall be a binding agreement between you and the Company.
Very truly yours,
TRACINDA CORPORATION
By:_________________________
Name:
Title:
XXXX XXXXXXXXX
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Accepted and agreed as of
the date first written above:
CHRYSLER CORPORATION
By:___________________________
Name:
Title:
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