Daimler AG on Monday reached an agreement with Chrysler, the U.S. automaker's owner Cerberus Capital Management and the U.S. Pension Benefit Guaranty Corp to exit its 19.9 percent stake in the company.

Daimler had sold an 80.1 percent stake in the U.S. automaker to private equity firm Cerberus in 2007, ending a stormy decade long relationship with the struggling U.S. carmaker that is operating under U.S. government aid.

Daimler said the remaining stake in Chrysler would be redeemed and it would forgive the repayment of loans it had extended to Chrysler that it already has written off in its 2008 financial statements.

The German automaker had loaned Chrysler $1.5 billion in 2008 that is a second-lien secured loan, junior to a nearly $6.9 billion of loans now under negotiations between the U.S. Treasury and other Chrysler creditors.

Daimler said it agreed to pay $200 million to Chrysler's pension plans on the date of the execution of the deal and in each of the next two years.

That will reduce an existing pension guarantee of $1 billion to $200 million and that will remain in place to August 2012, Daimler said.

(Reporting by Poornima Gupta; writing by David Bailey; Editing Bernard Orr)

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