EXHIBIT (d)(1)
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AGREEMENT AND PLAN OF MERGER
among
DAIMLERCHRYSLER NORTH AMERICA HOLDING CORPORATION,
DIESEL PROJECT DEVELOPMENT, INC.
and
DETROIT DIESEL CORPORATION
Dated as of July 20, 2000
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TABLE OF CONTENTS
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ARTICLE I
Section 1.1 The Offer ................................................. 2
Section 1.2 Company Actions ........................................... 4
Section 1.3 Directors of the Company .................................. 6
ARTICLE II
THE MERGER
Section 2.1 The Merger ................................................ 7
Section 2.2 Closing ................................................... 7
Section 2.3 Effective Time ............................................ 7
Section 2.4 Effects of the Merger ..................................... 8
Section 2.5 Certificate of Incorporation; By-laws ..................... 8
Section 2.6 Directors; Officers of Surviving Corporation .............. 8
Section 2.7 Conversion of Securities .................................. 8
Section 2.8 Exchange of Certificates .................................. 9
Section 2.9 Appraisal Rights .......................................... 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Qualification, Etc. ......................... 12
Section 3.2 Capital Stock ............................................. 13
Section 3.3 Corporate Authority Relative to this Agreement;
No Violation .............................................. 14
Section 3.4 Reports and Financial Statements .......................... 16
Section 3.5 No Undisclosed Liabilities ................................ 17
Section 3.6 No Violation of Law ....................................... 17
Section 3.7 Environmental Matters ..................................... 18
Section 3.8 Employee Benefit Plans; ERISA ............................. 20
Section 3.9 Absence of Certain Changes or Events ...................... 22
Section 3.10 Litigation ................................................ 22
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Section 3.11 Schedule 14D-9; Offer Documents; and Proxy Statement ...... 23
Section 3.12 Intellectual Property ..................................... 23
Section 3.13 Tax Matters ............................................... 24
Section 3.14 Opinion of Financial Advisor .............................. 26
Section 3.15 Required Vote of the Company Stockholders ................. 26
Section 3.16 Employment Matters ........................................ 26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DCNA AND THE PURCHASER
Section 4.1 Organization, Qualification, Etc........................... 27
Section 4.2 Corporate Authority Relative to this Agreement;
No Violation .............................................. 27
Section 4.3 Offer Documents; Proxy Statement; Schedule 14D-9 .......... 28
Section 4.4 Financing ................................................. 29
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business Prior to the Effective Time ........... 29
Section 5.2 Access; Confidentiality ................................... 33
Section 5.3 Special Meeting; Proxy Statement .......................... 33
Section 5.4 Reasonable Best Efforts; Further Assurances ............... 34
Section 5.5 Employee Stock Options and Other Employee Benefits ........ 36
Section 5.6 Takeover Statute .......................................... 37
Section 5.7 No Solicitation by the Company ............................ 38
Section 5.8 Public Announcements ...................................... 40
Section 5.9 Indemnification; Insurance ................................ 40
Section 5.10 Disclosure Schedule Supplements ........................... 42
Section 5.11 Shared Corporate Services ................................. 42
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger .................................................... 43
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ARTICLE VII
TERMINATION
Section 7.1 Termination ............................................... 44
Section 7.2 Effect of Termination ..................................... 45
Section 7.3 Termination Fee ........................................... 45
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties ............. 46
Section 8.2 Expenses .................................................. 46
Section 8.3 Counterparts; Effectiveness ............................... 46
Section 8.4 Governing Law ............................................. 46
Section 8.5 Notices ................................................... 46
Section 8.6 Assignment; Binding Effect ................................ 48
Section 8.7 Severability .............................................. 48
Section 8.8 Enforcement of Agreement .................................. 48
Section 8.9 Entire Agreement; No Third-Party Beneficiaries ............ 49
Section 8.10 Headings .................................................. 49
Section 8.11 Definitions ............................................... 49
Section 8.12 Finders or Brokers ........................................ 49
Section 8.13 Amendment or Supplement ................................... 50
Section 8.14 Extension of Time, Waiver, Etc. ........................... 50
Annex A Conditions to the Offer ................................... A-i
Exhibit I Stock Put Option Agreement ................................ I-1
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INDEX OF DEFINED TERMS
Defined Term Page
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100% of the Shares .................................................. 39
Acquisition Agreement ............................................... 39
Acquisition Proposal ............................................ 38, 39
Action .............................................................. 40
affiliates .......................................................... 49
Agreement ........................................................... 1
Asset Transaction ................................................... 38
Business Combination Transaction .................................... 38
CERCLA .............................................................. 18
Certificate of Merger ................................................ 7
Certificate of Ownership and Merger .................................. 7
Certificates ......................................................... 9
Closing .............................................................. 7
Closing Date ......................................................... 7
Code ................................................................ 11
Company .............................................................. 1
Company Affiliated Group ............................................ 24
Company Agreements .................................................. 15
Company Common Stock ................................................. 1
Company Disclosure Schedule ......................................... 12
Company Employee .................................................... 37
Company Option Plans ................................................ 36
Company Plans ....................................................... 20
Company Preferred Stock ............................................. 13
Company Representatives ............................................. 38
Company SEC Reports ................................................. 16
Company Stockholder Approval ........................................ 26
Company Title IV Plan ............................................... 20
Computer Software ................................................... 24
Confidentiality Agreement ........................................... 33
control ............................................................. 49
Copyrights .......................................................... 24
DCAG ................................................................ 1
DCNA ................................................................ 1
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Defined Term Page
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DCNA and Purchaser Agreements ....................................... 28
DCNA Disclosure Schedule ............................................ 27
DDC Holdings ........................................................ 2
Deferred Compensation Plans ......................................... 36
DGCL ................................................................ 2
Disclosure Schedule ................................................. 27
Dissenting Shares ................................................... 11
Dissenting Stockholders ............................................. 11
Drop Dead Date ...................................................... 44
Effective Time ...................................................... 7
Employee Stock Options .............................................. 36
Environmental Claim ................................................. 19
Environmental Law ................................................... 19
Environmental Permits ............................................... 18
ERISA ............................................................... 20
ERISA Affiliate ..................................................... 20
Exchange Act ........................................................ 2
Exchange Agent ...................................................... 9
GAAP ................................................................ 17
Governmental Entity ................................................. 15
Hazardous Materials ................................................. 19
HSR Act ............................................................. 15
Incipient Superior Proposal ......................................... 38
Including ........................................................... 49
Indemnified Parties ................................................. 40
Independent Director Approval ....................................... 7
Intellectual Property ............................................... 24
IRS ................................................................. 20
Lien ................................................................ 13
Losses .............................................................. 40
Material Adverse Effect ............................................. 12
Merger .............................................................. 1
Merger Consideration ................................................ 9
Minimum Condition ................................................... 3
Offer ............................................................... 1
Offer Documents ..................................................... 4
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Defined Term Page
------------ ----
Offer Price ......................................................... 1
Offer to Purchase ................................................... 4
Patents ............................................................. 24
Penske .............................................................. 1
Person .............................................................. 49
Proxy Statement ..................................................... 34
Purchase Date ....................................................... 36
Purchaser ........................................................... 1
Regulatory Condition ................................................ A-i
Schedule 14D-9 ...................................................... 5
Schedule TO ......................................................... 4
SEC ................................................................. 3
Securities Act ...................................................... 16
Shares .............................................................. 1
shares of any class of equity securities of the Company ............. 39
Significant Subsidiaries ............................................ 49
Special Committee ................................................... 1
Special Meeting ..................................................... 34
Stock Purchase Agreement ............................................ 2
Subsidiaries ........................................................ 49
Superior Proposal ................................................... 39
Surviving Corporation ............................................... 7
Tax Return .......................................................... 26
Taxes ............................................................... 26
Termination Date .................................................... 29
Termination Fee ..................................................... 45
Trademarks .......................................................... 24
VM Put Option ....................................................... 2
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AGREEMENT AND PLAN OF MERGER, dated as of July 20, 2000 (the
"Agreement"), among DAIMLERCHRYSLER NORTH AMERICA HOLDING CORPORATION, a
Delaware corporation ("DCNA"), which is wholly owned by DaimlerChrysler AG, a
German Aktiengesellschaft ("DCAG"), DIESEL PROJECT DEVELOPMENT, INC., a Delaware
corporation (the "Purchaser"), which is wholly owned by DCNA, and DETROIT DIESEL
CORPORATION, a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of DCNA, the Purchaser and the
Company deem it advisable and in the best interests of their respective
stockholders that DCNA acquire the Company upon the terms and subject to the
conditions provided for in this Agreement;
WHEREAS, in furtherance thereof it is proposed that the acquisition
be accomplished by the Purchaser's commencing a cash tender offer (as it may be
amended from time to time in accordance with this Agreement, the "Offer") to
purchase all the issued and outstanding shares of common stock, par value $0.01
per share (the "Company Common Stock"), of the Company (the shares of Company
Common Stock being referred to herein as the "Shares"), for $23.00 per Share
(such amount or any greater amount per Share paid pursuant to the Offer being
hereinafter referred to as the "Offer Price"), subject to applicable withholding
Taxes, net to the seller in cash, upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, a special committee (the "Special Committee") of the
Company's Board of Directors consisting of independent directors unaffiliated
with DCAG, DCNA, the Purchaser or Penske Corporation, a Delaware corporation and
an indirect stockholder of the Company ("Penske"), has reviewed and considered
the Offer, the Merger and the terms of this Agreement and has unanimously
recommended that the Company's Board of Directors approve this Agreement and the
transactions contem plated hereby, including the Offer and the merger of the
Purchaser with and into the Company (the "Merger");
WHEREAS, in accordance with such recommendation the Board of
Directors of the Company has approved this Agreement and the transactions contem
plated hereby, including the Offer and the Merger, and resolved to recommend
that holders of Shares tender their Shares pursuant to the Offer and adopt this
Agreement;
WHEREAS, the Boards of Directors of DCNA (on its own behalf and as
the sole stockholder of the Purchaser) and the Purchaser have each approved this
Agreement and
the transactions contemplated hereby, including the Offer and the Merger, in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL") and upon the terms and conditions set forth in this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to the willingness of DCNA and the
Purchaser to enter into this Agreement, DCNA and DDC Holdings, Inc., a Delaware
corporation indirectly wholly owned by Penske ("DDC Holdings"), which owns
11,240,000 outstanding Shares, have entered into a Stock Purchase Agreement,
dated as of the date hereof, pursuant to which DCNA and the Purchaser will
purchase such Shares owned by DDC Holdings as provided therein (the "Stock
Purchase Agreement");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of DCNA and the
Purchaser to enter into this Agreement, Penske has entered into a Stock Put
Option Agreement, dated as of the date hereof, with the Company, granting the
Company an irrevocable put option to sell to Penske 51% of the outstanding
capital stock of VM Holdings, Inc., a Delaware corporation, all as set forth in
the form of Stock Put Option Agreement attached hereto as Exhibit I (the "VM Put
Option");
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, DCNA, the Purchaser and the Company agree as follows:
ARTICLE I
Section 1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 7.1 and none of the events set forth in
paragraphs (a) through (i) of Annex A hereto shall have occurred or be existing
(and shall not have been waived by the Purchaser), the Purchaser shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) the Offer as promptly as reasonably practicable
but in no event later than the seventh business day after the date hereof. The
obligation of the Purchaser to accept for payment and pay for Shares tendered
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pursuant to the Offer shall be subject only to the satisfaction of the condition
that there be validly tendered and not withdrawn prior to the expiration of the
Offer that number of Shares which, when added to the number of Shares currently
owned by DCNA, represents at least a majority of the then outstanding Shares on
a fully diluted basis (the "Minimum Condition") and to the satisfaction or
earlier waiver by the Purchaser of the other conditions set forth in Annex A
hereto. The Company agrees that no Shares held by the Company or any of its
Subsidiaries will be tendered to the Purchaser pursuant to the Offer. The
Purchaser expressly reserves the right to waive any of such conditions (other
than the Minimum Condition), to increase the price per Share payable in the
Offer and to make any other changes in the terms of the Offer; PROVIDED,
HOWEVER, that no change may be made without the prior written consent of the
Company which decreases the price per Share payable in the Offer, reduces the
maximum number of Shares to be purchased in the Offer, changes the form of
consideration to be paid in the Offer, modifies or amends any of the conditions
set forth in Annex A hereto, imposes conditions to the Offer in addition to the
conditions set forth in Annex A hereto, waives the Minimum Condition or makes
other changes in the terms and conditions of the Offer that are in any manner
adverse to the holders of Shares or, except as provided below, extends the
Offer. Subject to the terms of the Offer and this Agreement and the satisfaction
or earlier waiver of all the conditions of the Offer set forth in Annex A hereto
as of any expiration date of the Offer, the Purchaser will accept for payment
and pay for all Shares validly tendered and not withdrawn pursuant to the Offer
as soon as it is permitted to do so under applicable law. Notwithstanding the
foregoing, the Purchaser may, without the consent of the Company, (i) extend the
Offer beyond the scheduled expiration date, which shall be 20 business days
following the date of commencement of the Offer, if, at the scheduled expiration
of the Offer, any of the conditions to the Purchaser's obligation to accept for
payment and to pay for the Shares shall not be satisfied or, to the extent
permitted by this Agreement, earlier waived or (ii) extend the Offer for any
period required by any rule, regulation or interpretation of the Securities and
Exchange Commission (the "SEC") or the staff thereof applicable to the Offer.
Unless the Company advises the Purchaser that it does not wish the Purchaser to
extend the Offer, the Purchaser shall extend the Offer from time to time until
the earlier of (A) the date that is 30 days after the date on which the
Regulatory Condition (as defined in Annex A) is satisfied or (B) the Drop Dead
Date, in the event that, at the then-scheduled expiration date, all of the
conditions of the Offer set forth in Annex A hereto have not been satisfied or
earlier waived as permitted by this Agreement. Any extension of the Offer
pursuant to the preceding sentence or clause (i) of the second preceding
sentence or this Section 1.1 shall not exceed the lesser of ten business days or
such fewer number of days that the Purchaser reasonably believes are necessary
to cause the conditions of the Offer set forth in Annex A hereto to be
satisfied. The Purchaser shall provide a
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"subsequent offering period" (as contemplated by Rule 14d-11 under the Exchange
Act) of not less than three business days following its acceptance for payment
of Shares in the Offer. On or prior to the dates that the Purchaser becomes
obligated to accept for payment and pay for Shares pursuant to the Offer, DCNA
shall provide or cause to be provided to the Purchaser the funds necessary to
pay for all Shares that the Purchaser becomes so obligated to accept for payment
and pay for pursuant to the Offer. The Offer Price shall, subject to any
required withholding of Taxes, be net to the seller in cash, upon the terms and
subject to the conditions of the Offer.
(b) As promptly as practicable on the date of
commencement of the Offer, the Purchaser shall file with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the "Schedule TO") with respect to the Offer. The Schedule TO shall contain or
incorporate by reference an offer to purchase (the "Offer to Purchase") and
forms of the related letter of transmittal and all other ancillary Offer
documents (collectively, together with all amendments and supplements thereto,
the "Offer Documents"). DCNA and the Purchaser shall cause the Offer Documents
to be disseminated to the holders of the Shares as and to the extent required by
applicable federal securities laws. DCNA and the Purchaser, on the one hand, and
the Company, on the other hand, will promptly correct any information provided
by it for use in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect, and the Purchaser will cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment upon the Schedule
TO before it is filed with the SEC. In addition, DCNA and the Purchaser agree to
provide the Company and its counsel with any comments, whether written or oral,
that DCNA or the Purchaser or their counsel may receive from time to time from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments and to consult with the Company and its counsel prior
to responding to any such comments.
Section 1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the
Offer and represents and warrants that the Company's Board of Directors, at a
meeting duly called and held, has (i) determined that the terms of the Offer and
the Merger are fair to and in the best interests of the stockholders of the
Company, (ii) approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, and (iii) resolved to
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recommend that the stockholders of the Company accept the Offer, tender their
Shares to the Purchaser thereunder and adopt this Agreement. Subject to Section
5.7, the Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board described in the immediately preceding sentence.
(b) On the date of commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") which shall contain the recommendation referred to in clause
(iii) of Section 1.2(a) hereof. The Company shall cause the Schedule 14D-9 to be
disseminated to holders of the Shares as and to the extent required by
applicable federal securities laws. The Company, on the one hand, and each of
DCNA and the Purchaser, on the other hand, will promptly correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect, and the Company will
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. DCNA and its counsel shall be
given a reasonable opportunity to review and comment upon the Schedule 14D-9
before it is filed with the SEC. In addition, the Company agrees to provide
DCNA, the Purchaser and their counsel with any comments, whether written or
oral, that the Company or its counsel may receive from time to time from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments and to consult with DCNA, the Purchaser and their counsel prior to
responding to any such comments.
(c) The Company shall promptly furnish the Purchaser
with mailing labels containing the names and addresses of all record holders of
Shares and with security position listings of Shares held in stock depositories,
each as of a recent date, together with all other available listings and
computer files containing names, addresses and security position listings of
record holders and non-objecting beneficial owners of Shares. The Company shall
furnish the Purchaser with such additional information, including, without
limitation, updated listings and computer files of stockholders, mailing labels
and security position listings, and such other assistance as DCNA, the Purchaser
or their agents may reasonably require in communicating the Offer to the record
and beneficial holders of Shares. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer or the Merger, DCNA
and the Purchaser shall hold in confidence the information contained in such
labels, listings and files, shall use such information solely in connection with
the Offer and the Merger, and, if this Agreement is terminated in accordance
with Section 7.1
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or if the Offer is otherwise terminated, shall promptly deliver or cause to be
delivered to the Company all copies of such information, labels, listings and
files then in their possession or in the possession of their agents or
representatives.
Section 1.3 DIRECTORS OF THE COMPANY.
(a) Promptly upon the purchase of and payment for Shares
by the Purchaser or any of its affiliates pursuant to the Offer, DCNA shall be
entitled to designate such additional number of directors, rounded up to the
next whole number, on the Board of Directors of the Company as is equal to the
product obtained by multiplying the total number of directors on such Board
(giving effect to the directors to be designated by DCNA pursuant to this
sentence) by the percentage that the number of Shares so purchased and paid for
bears to the total number of Shares then outstanding. In furtherance thereof,
the Company shall, upon request of the Purchaser, promptly increase the size of
its Board of Directors or exercise its best efforts to secure the resignations
of such number of directors, or both, as is necessary to enable DCNA's designees
to be so elected to the Company's Board and, subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, shall cause DCNA's designees
to be so elected. At such time, the Company shall, if requested by DCNA, also
cause directors designated by DCNA to constitute at least the same percentage
(rounded up to the next whole number) as is on the Company's Board of Directors
of each committee of the Company's Board of Directors. Notwithstanding the
foregoing, if Shares are purchased pursuant to the Offer, there shall be until
the Effective Time at least two members of the Company's Board of Directors who
are directors on the date hereof and are members of the Special Committee.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under Section 1.3(a), including
mailing to stockholders together with the Schedule 14D-9 the information
required by such Section 14(f) and Rule 14f-1 as is necessary to enable DCNA's
designees to be elected to the Company's Board of Directors. DCNA and the
Purchaser will supply the Company and be solely responsible for any information
with respect to them and their nominees, officers, directors and affiliates
required by such Section 14(f) and Rule 14f-1.
(c) Following the election of DCNA's designees to the
Company's Board of Directors pursuant to this Section 1.3, prior to the
Effective Time (i) any amendment or termination of this Agreement by the
Company, (ii) any extension or waiver by
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the Company of the time for the performance of any of the obligations or other
acts of DCNA or the Purchaser under this Agreement, or (iii) any waiver of any
of the Company's rights hereunder shall, in any such case, require the
concurrence of a majority of the remaining directors who were members of the
Special Committee (the "Independent Director Approval").
ARTICLE II
THE MERGER
Section 2.1 THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, at the
Effective Time the Purchaser shall merge with and into the Company, and the
separate corporate existence of the Purchaser shall thereupon cease, and the
Company shall be the surviving corporation in the Merger (the "Surviving
Corporation"). The Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public as well as of a private nature and
shall be subject to all of the restrictions, disabilities, duties, debts and
obligations of the Company and the Purchaser, all as provided in the DGCL.
Section 2.2 CLOSING. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties (the
"Closing Date"), which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VI (other than
those to be satisfied at Closing), unless another time or date, or both, are
agreed to in writing by the parties hereto. The Closing will be held at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New
York, New York, unless another place is agreed to by the parties hereto.
Section 2.3 EFFECTIVE TIME. Subject to the provisions of this
Agreement, on the Closing Date the parties shall file with the Secretary of
State of the State of Delaware a certificate of merger in accordance with
Section 251 of the DGCL (the "Certificate of Merger") or a certificate of
ownership and merger (the "Certificate of Ownership and Merger") in accordance
with Section 253 of the DGCL, as applicable, executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL in order to effect the Merger. The Merger shall become
effective upon the filing of the Certificate of Merger or Certificate of
Ownership and Merger or at such other time as is agreed by the parties hereto
and specified in the Certificate of
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Merger or Certificate of Ownership and Merger (the time at which the Merger
becomes fully effective being hereinafter referred to as the "Effective Time").
Section 2.4 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL.
Section 2.5 CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) At the Effective Time, the Certificate of
Incorporation of the Purchaser, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation;
PROVIDED, HOWEVER, that Article FIRST of the Certificate of Incorporation of the
Surviving Corporation shall be amended to read in its entirety as follows:
"FIRST: The name of the corporation is Detroit Diesel Corporation" and as so
amended shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by the DGCL and such Certificate of
Incorporation.
(b) At the Effective Time, the By-laws of the Purchaser,
as in effect immediately prior to the Effective Time, shall be the By-laws of
the Surviving Corporation until thereafter amended as provided by the DGCL, the
Certificate of Incorporation of the Surviving Corporation and such By-laws.
Section 2.6 DIRECTORS; OFFICERS OF SURVIVING CORPORATION.
(a) The directors of the Purchaser at the Effective Time
shall be the directors of the Surviving Corporation until their respective
successors are duly elected and qualified or their earlier death, resignation or
removal in accordance with the Certificate of Incorporation and By-laws of the
Surviving Corporation.
(b) The officers of the Company at the Effective Time
shall be the officers of the Surviving Corporation until their respective
successors are duly elected and qualified or their earlier death, resignation or
removal in accordance with the Certificate of Incorporation and By-laws of the
Surviving Corporation.
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Section 2.7 CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
securities of the Purchaser or the Company:
(a) Each Share that is owned by DCNA, the Purchaser, any
of their respective Subsidiaries, the Company or any Subsidiary of the Company
shall automatically be cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Each issued and outstanding Share, other than Shares
to be cancelled in accordance with Section 2.7(a) and Dissenting Shares, shall
automatically be converted into the right to receive the Offer Price in cash
(the "Merger Consideration"), payable, without interest, to the holder of such
Share, upon surrender, in the manner provided in Section 2.8, of the certificate
that formerly evidenced such Share. All such Shares, when so converted, shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration therefor upon the surrender of such certificate in
accordance with Section 2.8.
(c) Each issued and outstanding share of common stock,
par value $0.01 per share, of the Purchaser shall be converted into one validly
issued, fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
Section 2.8 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, DCNA
shall designate a bank or trust company reasonably acceptable to the Company to
act as agent for the holders of the Shares (other than Shares held by DCNA and
its Subsidiaries, the Company and its Subsidiaries, and Dissenting Shares) in
connection with the Merger (the "Exchange Agent") to receive in trust, the
aggregate Merger Consideration to which holders of Shares shall become entitled
pursuant to Section 2.7(b). DCNA shall deposit such aggregate Merger
Consideration with the Exchange Agent promptly following the Effective Time.
Such aggregate Merger Consideration shall be invested by the Exchange Agent as
directed by DCNA or the Surviving Corporation.
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(b) EXCHANGE PROCEDURES. Promptly after the Effective
Time, DCNA and the Surviving Corporation shall cause to be mailed to each holder
of record, as of the Effective Time, of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding Shares (the
"Certificates"), whose Shares were converted pursuant to Section 2.7(b) into the
right to receive the Merger Consideration, a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as DCNA
may reasonably specify) and instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by DCNA, together with such letter of transmittal,
properly completed and duly executed in accordance with the instructions
thereto, the holder of such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration for each Share formerly represented by such
Certificate, and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment of the Merger Consideration is to be made to a Person
other than the Person in whose name the surrendered Certificate is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that the
Person requesting such payment shall have paid all transfer and other Taxes
required by reason of the issuance to a Person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such Tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.8, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration for each Share in cash as
contemplated by this Section 2.8.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN THE
SHARES. At the Effective Time, the stock transfer books of the Company shall be
closed, and thereafter there shall be no further registration of transfers of
the Shares on the records of the Company. From and after the Effective Time, the
holders of Certificates evidencing ownership of the Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided for herein or by applicable
law. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in
this Article II.
10
(d) TERMINATION OF FUND; NO LIABILITY. At any time
following the 180th calendar day of the Effective Time, the Surviving
Corporation shall be entitled to require the Exchange Agent to deliver to it any
funds (including any interest received with respect thereto) which had been made
available to the Exchange Agent, and holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat or other similar
laws) only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a Certificate for Merger
Consider ation delivered to a public official pursuant to any applicable
abandoned property, escheat or other similar law.
(e) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event
any Certificates for Shares shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate(s)
to be lost, stolen or destroyed and, if required by DCNA, the posting by such
Person of a bond in such sum as DCNA may reasonably direct as indemnity against
any claim that may be made against it or the Surviving Corporation with respect
to such Certificate(s), the Exchange Agent will issue the Merger Consideration
pursuant to Section 2.8(b) deliverable in respect of the Shares represented by
such lost, stolen or destroyed Certificates.
(f) WITHHOLDING TAXES. DCNA and the Purchaser shall be
entitled to deduct and withhold, or cause the Exchange Agent to deduct and
withhold, from the Offer Price or the Merger Consideration payable to a holder
of Shares pursuant to the Offer or the Merger any such amounts as are required
under the Internal Revenue Code of 1986, as amended (the "Code"), or any
applicable provision of state, local or foreign Tax law. To the extent that
amounts are so withheld by DCNA or the Purchaser, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by DCNA
or the Purchaser.
Section 2.9 APPRAISAL RIGHTS. Notwithstanding anything in this
Agreement to the contrary, Shares (the "Dissenting Shares") that are issued and
outstanding immediately prior to the Effective Time and which are held by
stockholders who did not vote in favor of the Merger and who comply with all of
the relevant provisions of Section 262 of the DGCL (the "Dissenting
Stockholders") shall not be converted into or be exchangeable for the right to
receive the Merger Consideration, unless and until the holder or holders thereof
shall have failed to perfect or shall have effectively withdrawn or lost their
rights to appraisal under the
11
DGCL. If any Dissenting Stockholder shall have failed to perfect or shall have
effectively withdrawn or lost such right, such holder's Shares shall thereupon
be converted into and become exchangeable for the right to receive, as of the
Effective Time, the Merger Consideration for each Share without any interest
thereon. The Company shall give DCNA (i) prompt notice of any written demands
for appraisal of any Shares, attempted withdrawals of such demands and any other
instruments served pursuant to the DGCL and received by the Company relating to
stockholders' rights of appraisal, and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. Neither the Company nor the Surviving Corporation shall, except with the
prior written consent of DCNA, voluntarily make any payment with respect to, or
settle or offer to settle, any such demand for payment. If any Dissenting
Stockholder shall fail to perfect or shall have effectively withdrawn or lost
the right to dissent, the Shares held by such Dissenting Stockholder shall
thereupon be treated as though such Shares had been converted into the right to
receive the Merger Consideration pursuant to Section 2.7(b).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the schedule delivered by the Company to DCNA
prior to the execution and delivery of this Agreement (the "Company Disclosure
Schedule"), the Company represents and warrants to DCNA and the Purchaser as set
forth below:
Section 3.1 ORGANIZATION, QUALIFICATION, ETC.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has the
corporate power and authority required for it to own its properties and assets
and to carry on its business as it is now being conducted. The Company is duly
qualified to do business and is in good standing in each jurisdiction in which
the ownership of its properties or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to be so qualified
or in good standing would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. As used in this Agreement, any reference to any
state of facts, event, change or effect having a "Material Adverse Effect" on or
with respect to the Company or DCNA, as the case may be, means such state of
facts, event, change or effect that is not disclosed in Section 3.1 of the
Company Disclosure Schedule and that has had, or would reasonably be
12
expected to have, a material adverse effect on the business, results of
operations, assets or financial condition of the Company and its Subsidiaries,
taken as a whole, or DCNA and its Subsidiaries, taken as a whole, as the case
may be. The Company has delivered or made available to DCNA copies of the
certificate of incorporation and by-laws of the Company. Such certificate of
incorporation and by-laws are complete and correct and in full force and effect,
and the Company is not in violation of any of the provisions of its certificate
of incorporation or by-laws.
(b) Each of the Company's Subsidiaries is a corporation
or other business entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization. Each of the
Company's Subsidiaries (i) has the corporate or other organizational power and
authority required for it to own its properties and assets and to carry on its
business as it is now being conducted and (ii) is duly qualified to do business
and is in good standing in each jurisdiction in which the ownership of its
properties or the conduct of its business requires such qualification, except
for jurisdictions in which the failure to be so qualified or in good standing
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. All the outstanding shares of capital stock of, or other ownership
interests in, the Company's Subsidiaries are duly authorized, validly issued,
fully paid and non-assessable and, with respect to such shares or ownership
interests that are owned by the Company or its Subsidiaries, are free and clear
of all liens, claims, mortgages, encumbrances, pledges, security interests,
equities or charges of any kind (each, a "Lien"). Except as set forth in Section
3.1(b) of the Company Disclosure Schedule, all the outstanding shares of capital
stock of, or other ownership interests in, the Company's Subsidiaries are wholly
owned by the Company, directly or indirectly. Other than the Subsidiaries listed
in Section 3.1 of the Company Disclosure Schedule, there are no Persons in which
the Company owns, of record or beneficially, any direct or indirect equity or
similar interest or any right (contingent or otherwise) to acquire the same.
Section 3.2 CAPITAL STOCK.
(a) The authorized capital stock of the Company consists
of 40,000,000 shares of Company Common Stock and 10,000,000 shares of Preferred
Stock, par value $0.01 per share (the "Company Preferred Stock"). As of the date
hereof, (i) 23,120,291 shares of Company Common Stock are issued and
outstanding; (ii) 1,203,375 shares of Company Common Stock are subject to
outstanding options issued, and 102,560 shares of Company Stock have been
granted as deferred stock awards, under the Company's 1993 Stock Incentive Plan
or 1998 Stock Incentive Plan; (iii) 1,585,900 shares of Company
13
Common Stock are issued and held in the treasury of the Company; and (v) no
shares of Company Preferred Stock are issued, outstanding or reserved for
issuance. Section 3.2(a) of the Company Disclosure Schedule sets forth a
complete and correct list, as of the date hereof, of all holders of options,
deferred stock awards, directors' restricted stock or other rights to purchase
or receive capital stock of the Company under a stock option or other stock
based employee or non-employee director benefit plan of the Company or any of
its Subsidiaries, including such person's name, the number of options (vested,
unvested and total) or other rights held by such person, the date of grant and
the exercise price for each such option or right.
(b) All the outstanding Shares are duly authorized,
validly issued, fully paid and non-assessable. Except as set forth in paragraph
(a) above, and except for the transactions contemplated by this Agreement, (i)
there are no shares of capital stock of the Company authorized, issued or
outstanding, (ii) there are no authorized or outstanding options, warrants,
calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character obligating the Company or any of
its Subsidiaries to issue, transfer or sell or cause to be issued, transferred
or sold any Shares or other capital stock or other equity interest in the
Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment, and
(iii) there are no outstanding contractual obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any Shares or other
capital stock or other equity interests of the Company or any of its
Subsidiaries or to provide funds to make any investment (in the form of a loan,
capital contribution or otherwise) in any Subsidiary (other than a Subsidiary
that is wholly owned, directly or indirectly, by the entity obligated to provide
such funds) or other entity.
Section 3.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT;
NO VIOLATION.
(a) The Company has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Company and, except for obtaining the Company
Stockholder Approval and the filing of the Certificate of Merger or the
Certificate of Ownership and Merger, as applicable, no other corporate
proceedings on the part of the Company are necessary to authorize the
consummation of the transactions contemplated hereby. The Board of Directors of
the Company approved for purposes of
14
Section 203 of the DGCL the execution and delivery by DCNA, the Purchaser and
the Company of this Agreement and the Stock Purchase Agreement by DCNA and
DDC Holdings and the consummation of the transactions contemplated hereby and
thereby and has taken all appropriate action so that Section 203 of the DGCL,
with respect to the Company, will not be applicable to DCNA and the Purchaser
by virtue of such actions or otherwise. This Agreement has been duly and
validly executed and delivered by the Company and, assuming this Agreement
constitutes a valid and binding agreement of DCNA and the Purchaser,
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws of general application affecting enforcement of creditors'
rights generally and the availability of equitable relief.
(b) Except for the filings, permits, authorizations,
consents and approvals set forth in Section 3.3(b)(i) of the Company Disclosure
Schedule, the Exchange Act, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), state securities or blue sky laws, the rules
and regulations of the New York Stock Exchange or the anti-competition laws or
regulations of the European Union or any other foreign jurisdiction in which the
Company or DCAG (directly or through Subsidiaries, in each case ) has material
assets or conducts material operations, and the filing of the Certificate of
Merger or Certificate of Ownership and Merger, as applicable, under the DGCL,
none of the execution, delivery or performance of this Agreement by the Company,
the consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the certificate of
incorporation, by-laws or similar organizational documents of the Company or any
of its Subsidiaries, (ii) require any filing by the Company or any of its
Subsidiaries with, or permit, authorization, consent or approval of, any
federal, regional, state or local court, arbitrator, tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency, whether U.S. or foreign (a "Governmental Entity"), (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound (the "Company Agreements"), or (iv) violate any order, writ, injunction,
decree, judgment, permit, license, ordinance, law, statute, rule or regulation
applicable to the Company, any of its Subsidiaries or any of their properties or
assets, excluding from the
15
foregoing clauses (ii), (iii) and (iv) such filings, permits, authorizations,
consents, approvals, violations, breaches or defaults which will not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or prevent or substantially delay the consummation of the transactions
contemplated hereby.
Section 3.4 REPORTS AND FINANCIAL STATEMENTS. The Company has
previously furnished or otherwise made available (by electronic filing or
otherwise) to DCNA true and complete copies of:
(a) the Annual Report on Form 10-K filed by the Company
with the SEC for the fiscal year ended December 31, 1999;
(b) the Quarterly Report on Form 10-Q filed by the
Company with the SEC for the quarter ended March 31, 2000;
(c) each definitive proxy statement filed by the Company
with the SEC since December 31, 1998;
(d) each final prospectus filed by the Company with the
SEC since December 31, 1998; and
(e) all Current Reports on Form 8-K filed by the Company
with the SEC since January 1, 1999.
As of their respective dates, such reports, proxy statements and prospectuses
filed by the Company (collectively with, and giving effect to, any amendments,
supplements and exhibits thereto, the "Company SEC Reports") (i) complied as to
form in all material respects with the applicable requirements of the Securities
Act of 1933, as amended (the "Securities Act"), the Exchange Act and the rules
and regulations promulgated thereunder in effect as of the date of filing, and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
16
misleading. Except to the extent that information contained in any Company SEC
Report was amended or was superseded by a later filed Company SEC Report, none
of the Company SEC Reports contained, as of the date the Company SEC Report was
filed with the SEC, any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. None of the Company's Subsidiaries is required to file any
forms, reports or other documents with the SEC. The audited consolidated
financial statements and unaudited consolidated interim financial statements
included in the Company SEC Reports (including any related notes and schedules)
fairly present in all material respects the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and the
results of operations and cash flows for the periods or as of the dates then
ended (subject, in the case of the unaudited interim financial statements, to
normal recurring year-end adjustments), and in each case were prepared in
accordance with generally accepted accounting principles in the United States
("GAAP") consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto). Since January 1, 1999, the Company has timely
filed all reports, registration statements and other filings required to be
filed by it with the SEC under the rules and regulations of the SEC. As of the
respective dates thereof, all reports of the type referred to in this Section
3.4 which the Company files with the SEC on or after the date hereof, will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and the unaudited consolidated interim
financial statements included in such reports (including any related notes and
schedules) will fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the results of operations and cash flows or other information
included therein for the periods or as of the date then ended (subject, in the
case of the interim financial statements, to normal, recurring year- end
adjustments), and will be prepared in each case in accordance with GAAP
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto).
Section 3.5 NO UNDISCLOSED LIABILITIES. Neither the Company nor
any of its Subsidiaries has any liabilities or obligations of any nature
required to be set forth in a consolidated balance sheet of the Company and its
consolidated Subsidiaries under GAAP, whether or not accrued, contingent or
otherwise, and there is no existing condition, situation or set of circumstances
which could be expected to result in such a liability or obligation, except
liabilities or obligations (a) reflected in the Company SEC Reports or (b)
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Company.
17
Section 3.6 NO VIOLATION OF LAW. The businesses of the Company
and its Subsidiaries are not being conducted in violation of any order, writ,
injunction, decree, judgment, permit, license, ordinance, law, statute, rule or
regulation of any Governmental Entity (PROVIDED that no representation or
warranty is made in this Section 3.6 with respect to Environmental Laws), except
(a) as described in the Company SEC Reports, and (b) for violations or possible
violations which, individually or in the aggregate, would not have a Material
Adverse Effect on the Company.
Section 3.7 ENVIRONMENTAL MATTERS.
(a) Each of the Company and its Subsidiaries has
obtained all licenses, permits, authorizations, approvals and consents from
Governmental Entities which are required under any applicable Environmental Law
and necessary for its operations as now conducted ("Environmental Permits"),
except for such failures to have Environmental Permits which, individually or in
the aggregate, would not have a Material Adverse Effect on the Company. Each of
such Environmental Permits is in full force and effect, and each of the Company
and its Subsidiaries is in compliance with the terms and conditions of all such
Environmental Permits and with all applicable Environmental Laws, except for
such failures to be in full force and effect or in compliance which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
(b) There are no Environmental Claims pending or, to the
best knowledge of the Company, threatened against the Company or any of its
Subsidiaries, or, to the best knowledge of the Company, for which the Company or
any of its Subsidiaries is liable, that, individually or in the aggregate, would
have a Material Adverse Effect on the Company.
(c) There are no past or present actions, activities,
circum stances, conditions, events or incidents, including, without limitation,
the release, threatened release or presence of any Hazardous Material, that
would form the basis of any Environmental Claim against the Company or any of
its Subsidiaries, or for which the Company or any of its Subsidiaries is liable,
except for such Environmental Claims which, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
(d) No site or facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries is listed or
proposed for listing on the National Priorities List promulgated pursuant to the
Comprehensive Environmental Response,
18
Compensation and Liability Act of 1980, as amended, and the rules and
regulations thereunder ("CERCLA"), except for those sites or facilities listed
in Section 3.7 of the Company Disclosure Schedule.
(e) No Liens have arisen under or pursuant to any
Environ mental Law on any site or facility owned by the Company or any of its
Subsidiaries, except for such Liens which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and no action of any
Governmental Entity has been taken or, to the knowledge of the Company, is in
process which will subject any of such properties to such Liens, except for any
such action which, individually or in the aggregate, would not have a Material
Adverse Effect on the Company.
(f) Notwithstanding any other representation and
warranty in this Article III, the representations and warranties contained in
this Section 3.7 constitute the sole representations and warranties of the
Company with respect to any Environmental Law, Environmental Permit or Hazardous
Material.
(g) As used in this Agreement:
(i) "Environmental Claim" means any claim, action,
lawsuit or proceeding by any Person which seeks to impose liability
(including, without limitation, liability for investigatory costs,
cleanup costs, governmental response costs, natural resources,
damages, property damages, personal injuries or penalties) arising
out of, based on or resulting from (A) the presence, or release or
threatened release, of any Hazardous Materials at any location,
whether or not owned or operated by the Company or any of its
Subsidiaries, or (B) circumstances which would give rise to any
violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Law" means any law or order of
any Governmental Entity relating to (A) the generation, treatment,
storage, disposal, use, handling, manufacturing, transportation or
shipment of Hazardous Materials or (B) the protection of the
environment or to emissions, discharges, releases or threatened
releases of Hazardous Material into the environment.
(iii) "Hazardous Materials" means (A) any petroleum
or petroleum products, radioactive materials or friable asbestos;
(B) any chemicals or other materials or substances which are now
defined as or included in the definition
19
of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "pollutants,"
contaminants," "infectious wastes," "hazardous chemicals" or
"hazardous pollutants," under any Environmental Law; and (C)
pesticides.
Section 3.8 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 3.8(a) of the Company Disclosure Schedule
contains a true and complete list of each material deferred compensation,
incentive compensation or equity compensation plan; "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or program
(within the meaning of section 3(2) of ERISA); each material employment,
consulting, termination or severance agreement; and each other material employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA, or to which the Company or an
ERISA Affiliate is party, for the benefit of any employee or former employee of
the Company or any Subsidiary (the "Company Plans"). The Company shall deliver a
true and complete list of Company Plans that are maintained outside of the
United States primarily for the benefit of persons who are not citizens or
residents of the United States "(Foreign Plans") to Purchaser as soon as
practicable after the date hereof. The Company and its Subsidiaries do not have
any material liabilities or obligations with respect to Foreign Plans (whether
or not accrued, contingent or otherwise) which are not reflected in the Company
SEC Reports to the extent required to be so reflected.
(b) With respect to each Company Plan, the Company has
heretofore delivered or made available to DCNA true and complete copies of the
Company Plans and any amendments thereto, any related trust or other funding
vehicle, the most recent reports or summaries required under ERISA or the Code
and the most recent determination letter received from the Internal Revenue
Service (the "IRS") with respect to each Company Plan intended to qualify under
Section 401 of the Code.
(c) No liability under Title IV or section 302 of ERISA
has been incurred by the Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to the
Company or any ERISA Affiliate of incurring any such liability, other than
liability for premiums due the Pension Benefit Guaranty
20
Corporation (which premiums have been paid when due), except as would not have a
Material Adverse Effect on the Company.
(d) No Company Plan that is subject to Title IV (a
"Company Title IV Plan") is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any Company Title IV Plan a plan described in
section 4063(a) of ERISA.
(e) Except as disclosed on Section 3.8(e) of the Company
Disclosure Schedule, with respect to each Company Title IV Plan, the present
value of all "benefit liabilities" within the meaning of section 4001(a)(16) of
ERISA under such plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan's actuary
with respect to such plan did not exceed, as of its latest valuation date, the
then current value of the assets of such plan allocable to such accrued
benefits.
(f) All contributions required to be made with respect
to any Company Plan on or prior to the Closing Date have been timely made. Since
January 1, 2000, there has been no amendment to, written interpretation of or
announcement (whether or not written) by the Company or any Subsidiary relating
to, or change in employee participation or coverage under, any Company Plan that
would increase materially the expense of maintaining such Company Plan above the
level or expense incurred in respect thereof for the most recent fiscal year
ended prior to the date hereof.
(g) Each Company Plan has been operated and administered
in accordance with its terms and applicable law, including but not limited to
ERISA and the Code, except as would not have a Material Adverse Effect on the
Company, and each Company Plan intended to be "qualified" within the meaning of
section 401(a) of the Code is so qualified and the trusts maintained thereunder
are exempt from taxation under section 501(a) of the Code, except for failures
to so qualify or be exempt that would reasonably be expected to be curable
without a Material Adverse Effect on the Company.
(h) Except as set forth in Section 3.8(h) of the Company
Disclosure Schedule, no Company Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any Subsidiary for periods
extending beyond their retirement or other termination of service, other than
(i) coverage mandated by applicable law, (ii) death benefits under any "pension
plan," or (iii) benefits the full cost of which is borne by the current or
former
21
employee (or his beneficiary).
(i) Section 3.8(i)(i) of the Company Disclosure Schedule
sets forth each Company Plan under which payments may be made that could
constitute "excess parachute payments" within the meaning of Section 280G of the
Code. The aggregate amount of such excess parachute payments (exclusive of
"gross-up payments" for excise tax) shall not exceed the amount set forth in
Section 3.8(i)(ii) of the Company Disclosure Schedule.
(j) Section 3.8(j) of the Company Disclosure Schedule
sets forth each Company Plan under which, as a result of the consummation of the
Offer or the Merger, either alone or in combination with another event, (A) any
current or former employee or officer of the Company or any ERISA Affiliate may
become entitled to severance pay or any other payment, except as expressly
provided in this Agreement, or (B) compensation due any such employee or officer
may become vested or increased or the time of payment accelerated.
(k) There are no pending or, to the best knowledge of
the Company, threatened claims by or on behalf of any employee or beneficiary
covered under any such Company Plan, or otherwise involving any such Company
Plan (other than routine claims for benefits), except as would not have a
Material Adverse Effect on the Company.
(l) There are no pending or scheduled audits of any
Company Plan by any Governmental Entity or any pending nor, to the best
knowledge of the Company, threatened claims or penalties resulting from any such
audit, except as would not have a Material Adverse Effect on the Company.
Section 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Company SEC Reports, since December 31, 1999 (a) the businesses
of the Company and its Subsidiaries have been conducted in all material respects
in the ordinary course, and (b) there has not been any event, occurrence,
development or state of circumstances or facts that has had, or would have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Section 3.10 LITIGATION. Except as disclosed in the Company SEC
Reports and in Section 3.10 of the Company Disclosure Schedule, there are no
claims, actions, suits, proceedings, arbitrations or investigations pending (or,
to the best knowledge of the Company, threatened) against or affecting the
Company or its Subsidiaries or any of their respective properties or assets at
law or in equity, by or before any Governmental Entity
22
which, individually or in the aggregate, will have a Material Adverse Effect on
the Company or would prevent or substantially delay the Offer or the Merger.
Section 3.11 SCHEDULE 14D-9; OFFER DOCUMENTS; AND PROXY
STATEMENT. Neither the Schedule 14D-9 nor any information supplied by the
Company for inclusion in the Offer Documents will, at the respective times the
Schedule 14D-9, the Offer Documents or any amendments or supplements thereto are
filed with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. The Proxy Statement will not, on the
date the Proxy Statement (or any amendment or supplement thereto) is first
mailed to stockholders of the Company, contain any untrue statement of a
material fact, or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading or will, at the time of
the Special Meeting, omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Special Meeting which shall have become false or misleading in
any material respect. The Schedule 14D-9 and the Proxy Statement will, when
filed by the Company with the SEC, comply as to form in all material respects
with the applicable provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to information supplied by or on behalf of DCNA or the
Purchaser which is contained in any of the foregoing documents.
Section 3.12 INTELLECTUAL PROPERTY.
(a) Except as set forth in Section 3.12 of the Company
Disclosure Schedule, the Company and its Subsidiaries own or have valid rights
to use all items of Intellectual Property utilized in the conduct of the
business of the Company and its Subsidiaries as presently conducted free and
clear of all Liens with such exceptions as, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
(b) Except as set forth in Section 3.12 of the Company
Disclosure Schedule or as, individually or in the aggregate, would not have a
Material Adverse Effect on the Company, (i) neither the Company nor any
Subsidiary of the Company is in default (or with the giving of notice or lapse
of time or both, would be in default) under any license or other grant to use
such Intellectual Property, (ii) to the Company's best knowledge, after due
23
inquiry, such Intellectual Property is not being infringed by any third party,
(iii) neither the Company nor any Subsidiary is infringing any Intellectual
Property of any third party, and (iv) in the last three years neither the
Company nor any Subsidiary has received any written claim or notice of
infringement from any third party.
(c) As used in this Agreement, "Intellectual Property"
means all of the following: (i) U.S. and foreign registered and unregistered
trademarks and pending trademark applications, trade dress, service marks,
logos, trade names, brand names, corporate names, assumed names and business
names and all registrations and applications to register the same (the
"Trademarks"), (ii) issued U.S. and foreign patents and pending patent
applications, invention disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, continuing patent applications, reexaminations,
and extensions thereof, any counterparts claiming priority therefrom, utility
models, patents of importation/confirmation, certificates of invention,
certificates of registration and like statutory rights (the "Patents"), (iii)
U.S. and foreign copyrights (including, but not limited to, those in computer
software and databases), rights of publicity, and all registrations and
applications to register the same (the "Copyrights"), (iv) all categories of
trade secrets as defined in the Uniform Trade Secrets Act and under
corresponding foreign statutory and common law, including, but not limited to,
business, technical and know-how information, (v) all licenses and agreements
pursuant to which the Company or any Subsidiary has acquired rights in or to any
Trademarks, Patents, trade secrets, technology, know-how, Computer Software,
rights of publicity or Copyrights, or licenses and agreements pursuant to which
the Company has licensed or transferred the right to use any of the foregoing,
and (vi) all computer software, data files, source and object codes, user
interfaces, manuals and other specifications and documentation and all know-how
relating thereto (collectively, "Computer Software").
Section 3.13 TAX MATTERS.
(a) All federal, state, local and foreign Tax Returns
required to be filed by or on behalf of the Company, each of its Subsidiaries
and each affiliated, combined, consolidated or unitary group of which the
Company or any of its Subsidiaries is a member (a "Company Affiliated Group")
have been timely filed or requests for extensions have been timely filed and any
such extension has been granted and has not expired, and all such filed Tax
Returns are complete and accurate except to the extent any failure to file or
any inaccuracies in filed Tax Returns would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. All Taxes shown to be
due on such Tax Returns, or Taxes due and owing for which a Tax Return is not
required, by the Company, any Subsidiary of the
24
Company or any Company Affiliated Group have been or will be timely paid, or
adequately reserved for, except to the extent any failure to pay or reserve for
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. There is no audit, examination, deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any Taxes due and
owing by the Company, any Subsidiary of the Company or any Company Affiliated
Group which if determined adversely would, individually or in the aggregate,
have a Material Adverse Effect on the Company. All assessments for Taxes due and
owing by the Company, any Subsidiary of the Company or any Company Affiliated
Group with respect to completed and settled examinations or concluded litigation
have been paid, except to the extent any failures to pay would not individually
or in the aggregate have a Material Adverse Effect on the Company. Section
3.13(a) of the Company Disclosure Schedule sets forth (i) the taxable years of
the Company for which the statutes of limitations with respect to U.S. federal
income Taxes have not expired, and (ii) with respect to federal income Taxes for
such years, those years for which examinations have been completed, those years
for which examinations are presently being conducted, and those years for which
examinations have not yet been initiated. Neither the Company nor any of its
Subsidiaries has any liability under Treasury Regulation Section 1.1502-6 for
U.S. federal income Taxes of any Person other than the Company and its
Subsidiaries except to the extent of any liabilities that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The Company and each of its Subsidiaries have complied in all material respects
with all rules and regulations relating to the withholding of Taxes, except to
the extent any such failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(b) Neither the Company nor any Subsidiary of the
Company has (i) entered into a closing agreement or other similar agreement with
a taxing authority relating to Taxes of the Company or any Subsidiary of the
Company with respect to a taxable period for which the statute of limitations is
still open, or (ii) with respect to U.S. federal income Taxes, granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any income Tax, in either case, that is still
outstanding. There are no Liens relating to material Taxes upon the assets of
the Company or any Subsidiary of the Company other than Liens relating to Taxes
not yet due or Liens for which adequate reserves have been established. Neither
the Company nor any Subsidiary of the Company is a party to or is bound by any
Tax sharing agreement, Tax indemnity obligation or similar agreement or practice
in respect of Taxes (other than with respect to agreements solely between or
among members of the consolidated group of which the Company is the common
parent). No consent under Section 341(f) of the Code has been filed with respect
to the
25
Company or any Subsidiary of the Company.
(c) For purposes of this Agreement: (i) "Taxes" means
any and all federal, state, local, foreign or other taxes of any kind (together
with any and all interest, penalties, additions to tax and additional amounts
imposed with respect thereto) imposed by any taxing authority, including,
without limitation, taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth, and taxes or other charges in the nature
of excise, withholding, ad valorem or value added, and (ii) "Tax Return" means
any return, report or similar statement (including the attached schedules)
required to be filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
Section 3.14 OPINION OF FINANCIAL ADVISOR. The Special Committee
of the Board of Directors of the Company has received the opinion of Morgan
Stanley Dean Witter & Co. Incorporated, dated the date of this Agreement,
substantially to the effect that the Offer Price and Merger Consideration to be
received by the holders of Shares (other than DDC Holdings, DCNA and Penske)
pursuant to this Agreement are fair to such stockholders from a financial point
of view.
Section 3.15 REQUIRED VOTE OF THE COMPANY STOCKHOLDERS. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock (the "Company Stockholder Approval") is the only vote of
the holders of any class or series of the Company's capital stock which is
necessary to approve and adopt this Agreement.
Section 3.16 EMPLOYMENT MATTERS. Neither the Company nor any of
its Subsidiaries has experienced any work stoppages, strikes, collective labor
grievances, other collective bargaining disputes or claims of unfair labor
practices in the last year which would, individually or in the aggregate, have a
Material Adverse Effect on the Company. Except as set forth in Section 3.16 of
the Company Disclosure Schedule, there is no organizational effort presently
being made or, to the best knowledge of the Company, threatened by or on behalf
of any labor union with respect to employees of the Company or any of its
Subsidiaries, except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF DCNA AND THE PURCHASER
Except as set forth on the schedule delivered by DCNA to the Company
prior to the execution of this Agreement (the "DCNA Disclosure Schedule," and
together with the Company Disclosure Schedule, the "Disclosure Schedules"), DCNA
and the Purchaser jointly and severally represent and warrant to the Company as
set forth below:
Section 4.1 ORGANIZATION, QUALIFICATION, ETC. Each of DCNA and
the Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority and all governmental approvals required for it to
own its properties and assets and to carry on its business as it is now being
conducted or presently proposed to be conducted. Each of DCNA and the Purchaser
is duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its properties or the conduct of its business requires
such qualification, except for jurisdictions in which the failure to be so
qualified and in good standing would not, individually or in the aggregate, have
a Material Adverse Effect on DCNA. The Purchaser is a wholly owned Subsidiary of
DCNA.
Section 4.2 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) Each of DCNA and the Purchaser has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of each of DCNA and the Purchaser. DCNA, as
the sole stockholder of the Purchaser, has duly and validly approved and adopted
this Agreement. Other than the filing of the Certificate of Merger or the
Certificate of Ownership and Merger, as applicable, no other corporate
proceedings on the part of DCNA or the Purchaser (including their respective
stockholders) are necessary to authorize the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by DCNA and the Purchaser and, assuming this Agreement constitutes a
valid and binding agreement of the Company, constitutes a valid and binding
agreement of each of DCNA and the Purchaser, enforceable against each of DCNA
and the Purchaser in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
27
other similar laws of general application affecting enforcement of creditors'
rights generally and the availability of equitable relief.
(b) Except for the filings, permits, authorizations,
consents and approvals as may be required under the Exchange Act, the HSR
Act, or the anti-competition laws or regulations of the European Union or any
other foreign jurisdiction in which the Company or DCNA (directly or through
Subsidiaries, in each case) has material assets or conducts material
operations and the filing of the Certificate of Merger or the Certificate of
Ownership and Merger, as applicable, under the DGCL, none of the execution,
delivery or performance of this Agreement by DCNA or the Purchaser, the
consummation by DCNA or the Purchaser of the transactions contemplated hereby
or compliance by DCNA or the Purchaser with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the articles of
incorporation or by-laws of DCNA or the certificate of incorporation, by-laws
or similar organizational documents of any of its Subsidiaries, including the
Purchaser, (ii) require any filing by DCNA or the Purchaser with, or permit,
authorization, consent or approval of, any Governmental Entity, (iii) result
in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which DCNA or any of
its Subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound (the "DCNA and Purchaser
Agreements"), or (iv) violate any order, writ, injunction, decree, judgment,
permit, license, ordinance, law, statute, rule or regulation applicable to
DCNA, any of its Subsidiaries or any of their respective properties or
assets, excluding from the foregoing clauses (ii), (iii) and (iv) such
violations, breaches or defaults which will not, individually or in the
aggregate, have a Material Adverse Effect on DCNA or prevent or substantially
delay the consummation of the transactions contemplated hereby.
Section 4.3 OFFER DOCUMENTS; PROXY STATEMENT; SCHEDULE 14D-9.
Neither the Offer Documents nor any information supplied by DCNA or the
Purchaser for inclusion in the Schedule 14D-9 will, at the respective times the
Offer Documents, the Schedule 14D-9, or any amendments or supplements thereto,
are filed with the SEC or are first published, sent or given to stockholders of
the Company, as the case may be, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. The information supplied by
28
DCNA for inclusion in the Proxy Statement will not, on the date the Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading, or shall, at the time of the Special
Meeting, omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of proxies for the
Special Meeting which shall have become false or misleading. The Offer Documents
(including the Schedule TO) will, when filed by DCNA and the Purchaser with the
SEC, comply as to form in all material respects with the applicable provisions
of the Exchange Act and the rules and regulations thereunder. Notwithstanding
the foregoing, DCNA and the Purchaser make no representation or warranty with
respect to any information supplied by or on behalf of the Company which is
contained in any of the Offer Documents, the Proxy Statement or any amendment or
supplement thereto. The Offer Documents shall comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder.
Section 4.4 FINANCING. At or prior to each date that the
Purchaser becomes obligated to accept for payment and pay for Shares pursuant to
the Offer, and at the Effective Time, DCNA and the Purchaser will have
sufficient cash resources available to pay for the Shares that the Purchaser
becomes so obligated to accept for payment and pay for pursuant to the Offer and
to pay the aggregate Merger Consider ation pursuant to the Merger.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. (a)
The Company agrees that, from and after the date hereof and prior to the
Effective Time or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 7.1 (the "Termination Date"), and except as may
be agreed in writing by DCNA, which agreement shall not be unreasonably withheld
or delayed, as may be expressly permitted pursuant to this Agreement, the
Company:
(i) shall, and shall cause each of its Subsidiaries
to, conduct its operations in all material respects according to their
ordinary course of business in
29
substantially the same manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and
cause each of its Subsidiaries to use its reasonable best efforts, to
preserve intact its business organization and goodwill, keep available the
services of its current officers and other key employees and preserve its
current relationships with those Persons having significant business
dealings with the Company and its Subsidiaries;
(iii) shall notify DCNA of any emergency or other
substantial change in the normal course of its or its Subsidiaries'
respective businesses or in the operation of its or its Subsidiaries'
respective properties and of any complaints of or hearings (or written
communications indicating that the same are threatened) of which the
Company has knowledge before any Governmental Entity if such emergency,
change, complaint, investigation or hearing would have a Material Adverse
Effect on the Company;
(iv) shall not, and shall not permit any of its
Subsidiaries that is not incorporated or organized in the United States or
not wholly owned to, repatriate funds, authorize or pay any dividends on
or make any distribution with respect to its outstanding shares of capital
stock (other than dividends or distributions by wholly owned Subsidiaries
of the Company);
(v) shall not, and shall not permit any of its
Subsidiaries to establish, enter into or amend any severance plan,
agreement or arrangement or any Company Plan or materially increase the
compensation payable or to become payable or the benefits provided to its
officers or employees, except as may be required by applicable law or a
contract in existence on the date hereof, and except for increases for
nonofficer employees in the normal course of business consistent with past
practice and except as set forth in Section 5.1(a)(v) of the Company
Disclosure Schedule;
(vi) shall not, and shall not permit any of its
Subsidiaries to, authorize or announce an intention to authorize, or enter
into an agreement with respect to, any merger, consolidation or business
combination (other than the Merger), any acquisition of any assets or
securities, or any disposition of any assets or securities, except in an
amount that is not material to the Company and its Subsidiaries taken as a
whole and except for the disposition of the Company's 50%
30
ownership interest in DeAngelo Marine Exhaust, Inc.;
(vii) shall not, and shall not permit any of its
Subsidiaries to, propose or adopt any amendments to its certificate of
incorporation or by- laws (or other similar organizational documents);
(viii) shall not, and shall not permit any of its
Subsidiar ies to, issue or authorize the issuance of, or agree to issue or
sell any shares of capital stock of any class (whether through the
issuance or granting of options, warrants, commitments, convertible
securities, subscriptions, rights to purchase or otherwise) except for the
disposition of the Company's 50% ownership interest in DeAngelo Marine
Exhaust, Inc., or take any action to cause to be exercisable any
unexercisable option under any existing option plan, except for the
issuance of shares of Company Common Stock pursuant to options and grants
outstanding as of the date of this Agreement which were issued or made, as
the case may be, pursuant to the Company's 1993 Stock Incentive Plan and
1998 Stock Incentive Plan and each of which is set forth in Section 3.2(a)
of the Company Disclosure Schedule;
(ix) shall not, and shall not permit any of its
Subsidiaries to, reclassify, combine, split, purchase or redeem any shares
of its capital stock or purchase or redeem any rights, warrants or options
to acquire any such shares (other than as contemplated by the Company
Plans);
(x) shall not, and shall not permit any of its
Subsidiaries to, (A) incur, assume or prepay any indebtedness or any other
liabilities for borrowed money or issue any debt securities other than
incurrences and repayments of indebtedness under the Company's or its
Subsidiaries' credit facilities in existence on the date of this Agreement
in the ordinary course of business consistent with past practice or (B)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other Person (other than wholly owned Subsidiaries), except for guarantees
by Subsidiaries of the Company of indebtedness permitted under the
preceding clause (A);
(xi) shall not, and shall not permit any of its
Subsidiaries to (or consent to any proposal by any Person in which the
Company has an investment to), make or forgive any loans, advances or
capital contributions to, or investments in, any other Person other than
the Company or any wholly- owned Subsidiary of the
31
Company (including any intercompany loans, advances or capital
contributions to, or investments in, any affiliate) other than advances to
employees in the ordinary course of business in accordance with the
Company's or its Subsidiaries' established policies;
(xii) shall not, and shall not permit any of its
Subsidiaries to, (A) enter into any material lease or license or otherwise
subject to any material Lien any of its properties or assets (including
securitizations), other than in the ordinary course of business consistent
with past practice; (B) modify or amend in any material respect, or
terminate, any of its material contracts (except in the ordinary course of
business); (C) waive, release or assign any rights that are material to
the Company and its Subsidiaries taken as a whole; or (D) permit any
insurance policy naming it as a beneficiary or a loss payable payee to
lapse, be cancelled or expire unless a new policy with substantially
identical coverage is in effect as of the date of lapse, cancellation or
expiration;
(xiii) shall not, and shall not permit any of its
Subsidiaries to change any of the financial accounting methods used by it
unless required by generally accepted accounting principles of the
applicable country or change in applicable law;
(xiv) shall not, and shall not permit any of its
Subsidiaries to, file with, or submit to, any Governmental Entity
(including the SEC) any registration statement, prospectus or other
similar document, or any amendment or supplement thereto, relating to the
issuance of any securities of the Company or any Subsidiary of the
Company, other than a registration statement of the Company on Form S-8
(including any final prospectus thereon) or any amendment or supplement
thereto, filed with the SEC in connection with the Company's 1993 Stock
Incentive Plan and 1998 Stock Incentive Plan in each case, in the ordinary
course of business consistent with past practice;
(xv) shall not, and shall not permit any of its
Subsidiaries to, agree, in writing or otherwise, to take any of the
foregoing actions or take any action which would (y) make any
representation or warranty in Article III hereof untrue or incorrect in
any material respect, or (z) result in any of the conditions to the Offer
set forth in Annex A hereto or any of the conditions to the Merger set
forth in Article VI hereof not being satisfied;
(b) DCNA agrees that, from and after the date hereof and
prior
32
to the earlier of the Effective Time and the Termination Date, and except as may
be agreed in writing by the Company or as may be expressly permitted pursuant to
this Agreement, DCNA shall not, and shall not permit any of its Subsidiaries to
(i) agree, in writing or otherwise, to take any action which would result in any
of the conditions to the Offer set forth in Annex A hereto or any of the
conditions to the Merger set forth in Article VI hereof not being satisfied or
(ii) delay the consummation of the Offer.
Section 5.2 ACCESS; CONFIDENTIALITY.
(a) Except for competitively sensitive information or
government "classified" information or as limited by applicable law (including,
without limitation, antitrust laws) or the terms of any confidentiality
agreement or provision in effect on the date of this Agreement, the Company
shall (and shall cause each of its Subsidiaries to) afford to the officers,
employees, accountants, counsel and other authorized representatives of DCNA
reasonable access during normal business hours upon reasonable notice,
throughout the period prior to the earlier of the Effective Time or the
Termination Date, to its properties, offices, facilities, employees, contracts,
commitments, books and records (including but not limited to Tax Returns and
supporting work papers) and any report, schedule or other document filed or
received by it pursuant to the requirements of federal or state securities laws
and shall (and shall cause each of its Subsidiaries to) furnish to DCNA such
additional financial and operating data and Tax and other information as to its
and its Subsidiaries' respective businesses and properties as DCNA may from time
to time reasonably request. DCNA and the Purchaser will use their best efforts
to minimize any disruption to the businesses of the Company and its Subsidiaries
which may result from the requests for data and information hereunder. No
investigation pursuant to this Section 5.2(a) shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto.
(b) DCNA will hold any information provided under this
Section 5.2 that is non-public in confidence to the extent required by, and in
accordance with, the provisions of the letter dated July 7, 2000, among Penske,
the Company and DCAG (the "Confidentiality Agreement").
Section 5.3 SPECIAL MEETING; PROXY STATEMENT.
(a) Following the purchase of Shares pursuant to the
Offer, if required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
33
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") for the
purposes of considering and taking action upon the approval and adoption
of this Agreement; and
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this Agreement
and obtain and furnish the information required to be included by the SEC
in the Proxy Statement and, after consultation with DCNA, respond promptly
to any comments made by the SEC with respect to the preliminary proxy or
informa tion statement and cause a definitive proxy or information
statement, including any amendments or supplements thereto (the "Proxy
Statement") to be mailed to its stockholders at the earliest practicable
date, PROVIDED that no amendments or supplements to the Proxy Statement
will be made by the Company without consultation with DCNA and its
counsel.
(b) DCNA shall vote, or cause to be voted, all of the
Shares acquired in the Offer or otherwise then owned by it, the Purchaser or any
of DCAG's other Subsidiaries in favor of the approval and adoption of this
Agreement.
(c) Notwithstanding the provisions of paragraphs (a) and
(b) above, in the event that DCNA, the Purchaser and any other Subsidiaries of
DCNA shall acquire in the aggregate at least 90% of the outstanding shares of
each class of capital stock of the Company pursuant to the Offer or otherwise,
the parties hereto shall, subject to Article VI hereof, take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
Section 5.4 REASONABLE BEST EFFORTS; FURTHER ASSURANCES.
(a) Subject to the terms and conditions of this
Agreement and applicable law, each of the parties shall act in good faith and
use reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement as soon as
practicable. Without limiting the foregoing, the parties shall (and shall cause
their respective Subsidiaries, and use reasonable best efforts to cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives,
34
to) (i) consult and cooperate with and provide assistance to each other in the
preparation and filing with the SEC of the Offer Documents, the Schedule 14D-9,
the preliminary Proxy Statement and the Proxy Statement and all necessary
amendments or supplements thereto; (ii) obtain all consents, approvals, waivers,
licenses, permits, authorizations, registrations, qualifications or other
permissions or actions by, and give all necessary notices to, and make all
filings with and applications and submissions to, any Governmental Entity or
other Person necessary in connection with the consummation of the transactions
contemplated by this Agreement as soon as reasonably practicable; (iii) provide
all such information concerning such party, its Subsidiaries and its officers,
directors, employees, partners and affiliates as may be necessary or reasonably
requested in connection with any of the foregoing; (iv) avoid the entry of, or
have vacated or terminated, any decree, order, or judgment that would restrain,
prevent, or delay the consummation of the Offer or the Merger, including but not
limited to defending through litigation on the merits any claim asserted in any
court by any Person; and (v) take any and all reasonable steps necessary to
avoid or eliminate every impediment under any antitrust, competition, or trade
regulation law that is asserted by any Governmental Entity with respect to the
Offer or the Merger so as to enable the consummation of the Offer or the Merger
to occur as expeditiously as possible; PROVIDED, HOWEVER, that DCNA shall not be
required to take any actions in connection with, or agree to, any hold separate
order, sale, divestiture, or disposition of plants, assets and businesses of
DCNA or any of its Subsidiaries or of the Company or any of its Subsidiaries.
Prior to making any application to or filing with a Governmental Entity or other
entity in connection with this Agreement (other than filing under the HSR Act
and the European Union merger control regulations), each party shall provide the
other party with drafts thereof and afford the other party a reasonable
opportunity to comment on such drafts.
(b) The Company, and DCNA shall each keep the other
reasonably apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the other with
copies of notices or other communications received by DCNA, the Purchaser or the
Company, as the case may be, or any of their respective Subsidiaries, from any
third party and/or any Governmental Entity with respect to the transactions
contemplated by this Agreement.
35
Section 5.5 EMPLOYEE STOCK OPTIONS AND OTHER EMPLOYEE BENEFITS.
(a) The Company shall use its reasonable best efforts to
cause each outstanding option to purchase shares of Company Common Stock
(including any related alternative rights) granted under any stock option or
compensation plan or arrangement of the Company or its Subsidiaries
(collectively, the "Company Option Plans") (including those granted to current
or former employees and directors of the Company or any of its Subsidiaries)
(the "Employee Stock Options") to become exercisable, and each share of
restricted Company Common Stock and each deferred stock award granted under the
Company Option Plans, to vest in full and become fully transferable and free of
restrictions, either prior to the purchase of the Shares pursuant to the Offer
or immediately prior to the Effective Time, as permitted pursuant to the terms
and conditions of the applicable Company Option Plan. Immediately prior to the
Effective Time, each outstanding Employee Stock Option granted pursuant to the
Company Option Plans, shall be cancelled and each holder thereof shall be
entitled to receive an amount in cash equal to the product obtained by
multiplying (x) the difference between the Offer Price and the per share
exercise price of such Employee Stock Option, and (y) the number of shares of
Company Common Stock covered by such Employee Stock Option. The Company shall
give an explicit notice of the cancellation of the Employee Stock Options at the
Effective Time to each holder thereof at least seven days prior to the Effective
Time. All payments in respect of such Employee Stock Options shall be made as
promptly as practicable after the earlier of the purchase of Shares pursuant to
the Offer and the purchase of Shares pursuant to the Stock Purchase Agreement
(the "Purchase Date"), subject to the collection of all applicable withholding
Taxes required by law to be collected by the Company. Prior to the Purchase
Date, the Company and DCNA shall take all action as may be necessary to carry
out the terms of this Section 5.5.
(b) Immediately prior to the Effective Time, units
credited to deferred compensation accounts, maintained under the Deferred
Compensation Plan for Directors and the Deferred Compensation Plan for Senior
Management (the "Deferred Compensation Plans") which are deemed invested in
shares of Company Common Stock shall be deemed settled for a cash amount equal
to the product obtained by multiplying (x) the Offer Price and (y) the number of
units of Company Common Stock credited to each such account. Any such amount
(and any other cash amounts credited to accounts under the Deferred Compensation
Plans), shall continue to be governed by the terms of the applicable plan, as
may be amended from time to time.
(c) For the period from the Purchase Date through
December 31,
36
2001, DCNA shall, or shall cause the Company or the Surviving Corporation to,
maintain employee benefit plans, programs and arrangements which are, in the
aggregate, for the employees who were employees of the Company or any Subsidiary
of the Company immediately prior to the Purchase Date and continue to be
employees of DCNA, the Surviving Corporation or any other Subsidiary of DCNA, no
less favorable than those provided by the Company and its Subsidiaries as of the
Purchase Date; and more specifically DCNA agrees to continue to use the current
methodology for determining the lump sum payout of benefits to former General
Motors salaried employees under the Company's defined benefit pension plan. Each
person who is an employee or former employee of the Company or its Subsidiaries
immediately prior to the Purchase Date (a "Company Employee") shall, without
duplication of benefits, be given credit for all service with the Company or any
of its Subsidiaries (and service credited by the Company or any of its
Subsidiaries) prior to the Purchase Date, using the same methodology utilized by
the Company as of immediately before the Purchase Date for crediting service and
determining levels of benefits, under (i) all employee benefit plans, programs
and arrangements maintained by or contributed to by DCNA and its Subsidiaries
(including, without limitation, the Company and the Surviving Corpora tion) in
which such Company Employees become participants for purposes of eligibility to
participate, vesting and determination of level of benefits (excluding, however,
benefit accrual under any defined benefit plans), and (ii) severance plans for
purposes of calculating the amount of each Company Employee's severance
benefits. DCNA, the Company and the Surviving Company shall (x) waive all
limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Company
Employees under any welfare benefit plans that such Company Employees may be
eligible to participate in after the Purchase Date, other than limitations or
waiting periods that are already in effect with respect to such employees and
that have not been satisfied as of the Purchase Date under any welfare benefit
plan maintained for the Company Employees immediately prior to the Purchase
Date, and (y) provide each Company Employee with credit for any co-payments and
deductibles paid prior to the Purchase Date in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
Company Employees are eligible to participate in after the Purchase Date.
Section 5.6 TAKEOVER STATUTE. If any "fair price," "moratorium,"
"control share acquisition" or other form of anti-takeover statute or regulation
shall become applicable to the transactions contemplated hereby, each of the
Company, DCNA and the Purchaser and the members of their respective Boards of
Directors shall grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise
37
act to eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
Section 5.7 NO SOLICITATION BY THE COMPANY.
(a) Neither the Company nor any of its Subsidiaries
nor any of the officers and directors of any of them shall, and the Company
shall direct and use its reasonable best efforts to cause its and its
Subsidiaries' employees, agents and representatives, including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries (the
Company, its Subsidiaries and their respective officers, directors,
employees, agents and representatives being the "Company Representatives")
not to, directly or indirectly through another Person, (i) initiate, solicit,
encourage or otherwise knowingly facilitate any inquiries (by way of
furnishing information or otherwise) or the making of any inquiry, proposal
or offer from any Person which constitutes an Acquisition Proposal (or would
reasonably be expected to lead to an Acquisition Proposal) or (ii)
participate in any discussions or negotiations regarding an Acquisition
Proposal; PROVIDED, HOWEVER, that the Company's Board of Directors may, or
may authorize the Company Representatives to, in response to an Acquisition
Proposal that the Board of Directors of the Company concludes in good faith
is an Incipient Superior Proposal, (x) furnish information with respect to
the Company and its Subsidiaries to any Person making such Acquisition
Proposal pursuant to a customary confidentiality agreement and (y)
participate in discussions or negotiations regarding such Acquisition
Proposal, provided that, prior to taking any such action, the Company
provides reasonable advance notice to DCNA that it is taking such action. For
purposes of this Agreement "Acquisition Proposal" means any direct or
indirect inquiry, proposal or offer (or any improvement, restatement,
amendment, renewal or reiteration thereof) relating to the acquisition or
purchase of a business or shares of any class of equity securities of the
Company or any of its Subsidiaries, any tender offer or exchange offer that,
if consummated, would result in any Person beneficially owning shares of any
class of equity securities of the Company or any of its Subsidiaries, or any
merger, reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction (a
"Business Combination Transaction") involving the Company or any of its
Subsidiaries, or any purchase or sale of a substantial portion of the
consolidated assets (including without limitation stock of Subsidiaries owned
directly or indirectly by the Company) of the Company or any of its
Subsidiaries (an "Asset Transaction"), other than the transactions
contemplated by this Agreement or as permitted by Section 5.1 of this
Agreement. For purposes of this Agreement, (A) "Incipient Superior Proposal"
shall mean an unsolicited bona fide written Acquisition Proposal that the
Board of Directors of the
38
Company concludes in good faith (after consultation with the Company's
financial advisor) would, if consummated, provide greater aggregate value to
the Company's stockholders from a financial point of view than the
transactions contemplated by this Agreement; PROVIDED that for purposes of
this definition the term "Acquisition Proposal" shall have the meaning set
forth above, except that (x) references to "shares of any class of equity
securities of the Company" shall be deemed to be references to "100% of the
outstanding Shares" and (y) an "Acquisition Proposal" shall be deemed to
refer only to a Business Combination Transaction involving the Company or,
with respect to an Asset Transaction, such transaction must involve the
assets of the Company and its Subsidiaries, taken as a whole, and not any
Subsidiary of the Company alone and (B) "Superior Proposal" shall mean an
Incipient Superior Proposal for which any required financing is committed or
which, in the good faith judgment of the Board of Directors in the Company
(after consultation with its financial advisor), is capable of being financed
by the Person making the Acquisition Proposal.
(b) Except as expressly permitted by this Section 5.7,
neither the Company's Board of Directors nor any committee thereof shall (i)
withdraw, modify or change, or propose publicly to withdraw, modify or change,
in a manner adverse to DCNA, the recommendation by such Board of Directors or
such committee of the Offer, the Merger or this Agreement unless the Board of
Directors of the Company shall have determined in good faith, after consultation
with its financial advisor, that the Offer, the Merger or this Agreement is no
longer in the best interests of the Company's stockhold ers and that such
withdrawal, modification or change is, therefore, required in order to satisfy
its fiduciary duties to the Company's stockholders under applicable law, (ii)
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal, or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
(each, an "Acquisition Agreement") related to any Acquisition Proposal.
Notwithstanding the foregoing, the Company may, in response to a Superior
Proposal, (x) take any of the actions described in clauses (i) or (ii) above or
(y) subject to this paragraph (b), terminate this Agreement (and concurrently
with or after such termination, if it so chooses, cause the Company to enter
into any Acquisition Agreement with respect to any Acquisition Proposal) but
only after the third business day following DCNA's receipt of written notice
advising DCNA that the Company's Board of Directors is prepared to accept an
Acquisition Proposal, and attaching the most current version of any such
Acquisition Proposal or any draft of an Acquisition Agreement; PROVIDED, the
Company is not in breach of any of its obligations under this Section 5.7.
(c) In addition to the obligations of the Company set
forth in
39
paragraphs (a) and (b) of this Section 5.7, the Company shall promptly (but in
any event within one business day) notify DCNA orally and in writing of any
Acquisition Proposal or any inquiry regarding the making of any Acquisition
Proposal, indicating, in connection with such notice, the name of such Person
making such Acquisition Proposal or inquiry and the substance of any such
Acquisition Proposal or inquiry. The Company thereafter shall keep DCNA
reasonably informed of the status and terms (including amendments or proposed
amendments) of any such Acquisition Proposals or inquiries and the status of any
discussions or negotiations relating thereto.
(d) Nothing contained in this Section 5.7 shall prohibit
the Company or its Board of Directors from at any time taking and disclosing to
its stockholders a position contemplated by Rule 14e-2 promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders
required by applicable law.
Section 5.8 PUBLIC ANNOUNCEMENTS. DCNA and the Company agree
that neither one of them will issue any press release or otherwise make any
public statement with respect to this Agreement or the transactions contemplated
hereby without the prior approval of the other party (which approval will not be
unreasonably withheld or delayed), except as may be required by applicable law
or the rules of any stock exchange on which such party's securities are listed.
Section 5.9 INDEMNIFICATION; INSURANCE. (a) From and after
the Purchase Date, DCNA will indemnify and hold harmless each present and
former director and officer of the Company and its Subsidiaries (the
"Indemnified Parties"), against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts
paid in settlement (collectively, "Losses") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative (an "Action"), by reason of the fact that
such individual is or was a director, officer, employee or agent of the
Company or any of its Subsidiaries, or is or was serving at the request of
the Company or any of its Subsidiaries as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, arising out of or pertaining to or incurred in connection with
acts or omissions, or alleged acts or omissions, by any of them in their
capacity as such whether commenced, asserted or claimed before or after the
purchase of Shares in the Offer and including, without limitation, any Losses
incurred by any Indemnified Party in any way arising out of or relating to
this Agreement or any transactions contemplated hereby, to the fullest extent
permitted under applicable law, and DCNA shall also advance fees and expenses
(including attorneys' fees) as incurred to the fullest extent
40
permitted under applicable law. DCNA shall be entitled to control the defense
of any Action with counsel of its own choosing reasonably acceptable to the
Indemnified Party, and the Indemnified Party shall cooperate in the defense
thereof; PROVIDED, HOWEVER, that DCNA shall not settle or compromise any
Action without the Indemnified Party's written consent (which consent shall
not be unreasonably withheld or delayed).
(b) The Certificate of Incorporation of the Company
shall, from and after the Purchase Date, and the Certificate of Incorporation of
the Surviving Corporation shall, from and after the Effective Time, contain
provisions no less favorable with respect to indemnification than are set forth
as of the date of this Agreement in Section 6 of the Certificate of
Incorporation of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Purchase Date in any
manner that would adversely affect the rights thereunder of individuals who at
the Purchase Date were directors, officers or employees of the Company; PROVIDED
that nothing contained herein shall limit DCNA's ability to merge the Company
into DCNA or any of its Subsidiaries or otherwise eliminate the Company's
corporate existence; and provided further that in the event of a merger in which
the Company is not the Surviving Corporation, the certificate of incorporation
of the Surviving Corporation shall contain indemnity provisions substantially
identical to Section 6 of the Certificate of Incorporation of the Company.
(c) Nothing in this Agreement is intended to, shall be
construed to, or shall release, waive or impair any rights to directors' and
officers' insurance claims under any policy that is or has been in existence
with respect to the Company or any of its Subsidiaries or any of their
respective officers, directors or employees, it being understood and agreed that
the indemnification provided for in this Section 5.9 is not prior to or in
substitution for any such claims under such policies.
(d) For six years from the Effective Time, DCNA shall
maintain in effect the Company's and its Subsidiaries' current directors' and
officers' liability insurance policy (the "Policies") covering those persons who
are currently covered by the Policies; PROVIDED, HOWEVER, that in no event shall
DCNA be required to expend in any one year an amount in excess of 200% of the
annual premiums currently paid by the Company and its Subsidiaries for such
insurance, and, PROVIDED, FURTHER, that if the annual premiums of such insurance
coverage exceed such amount, DCNA shall be obligated to obtain policies with the
greatest coverage available for a cost not exceeding such amount; and PROVIDED,
FURTHER, that DCNA may meet its obligations under this paragraph by covering the
above persons under either DCAG's or DCNA's insurance policy on the terms
described above that expressly
41
provided coverage for any acts which are covered by the existing policies of the
Company and its Subsidiaries.
(e) The rights of each Indemnified Party hereunder shall
be in addition to any other rights such Indemnified Party may have under the
Certificate of Incorporation or By-Laws of the Company or any Subsidiary, under
the DGCL or otherwise. Notwithstanding anything to the contrary contained in
this Agreement or otherwise, the provisions of this Section 5.9 shall survive
the consummation of the transactions contemplated by this Agreement, and each
Indemnified Party shall, for all purposes, be a third party beneficiary of the
covenants and agreements of the Company contained in this Section 5.9 and,
accordingly, shall be treated as a party to this Agreement for purposes of the
rights and remedies relating to enforcement of such covenants and agreements and
shall be entitled to enforce any such rights and exercise any such remedies
directly.
Section 5.10 DISCLOSURE SCHEDULE SUPPLEMENTS. From time to time
after the date of this Agreement and prior to the Effective Time, the Company
will promptly supplement or amend the Company Disclosure Schedule with respect
to any matter hereafter arising which, if existing or occurring at or prior to
the date of this Agreement, would have been required to be set forth or
described in the Company Disclosure Schedule or which is necessary to correct
any information in a schedule or in any representation and warranty of the
Company which has been rendered inaccurate thereby in any material respect.
Notwithstanding the foregoing the Company shall not supplement or amend Section
5.1(a)(v) of the Company Disclosure Schedule. For purposes of determining the
accuracy of the representations and warranties of the Company contained in this
Agreement in order to determine the fulfillment of the conditions set forth in
clause (e) of Annex A, the Company Disclosure Schedule shall be deemed to
include only that information contained therein on the date of this Agreement
and shall be deemed to exclude any information contained in any subsequent
supplement or amendment thereto.
Section 5.11 SHARED CORPORATE SERVICES. The Company shall not
amend the terms of the Management Services Agreement, dated the date of this
Agreement, between the Company and Penske. Except as expressly provided in the
Management Services Agreement, within 90 days following the Effective Time the
Company shall cease using services provided by or procured by Penske or DDC
Holdings and shall cease to be obligated to compensate either such party for
such services, and to the extent that Penske or DDC Holdings use services
provided by the Company, such services shall also cease and Penske and DDC
Holdings shall no longer be obligated to accept or pay for such services
42
within 90 days following the Effective Time. Prior to the Effective Time the
Company, the Purchaser and DCNA shall use reasonable best efforts to develop and
implement plans that will permit the separation of the Company from Penske and
DDC Holdings and will permit separation of corporate services currently shared
by such parties, particularly those such as insurance, MIS, public accounting
and other similar services provided by third party suppliers, on an expeditious,
cost-efficient and harmonious basis, including through the provision of services
by one party to the other for an appropriate and mutually agreeable transition
period on an arm's-length basis. Following the Effective Time the parties will
use their reasonable best efforts to implement such plan.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The Company Stockholder Approval shall have been
obtained, if required by applicable law.
(b) No statute, rule, regulation, executive or court
order, decree, ruling or permanent injunction shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits the
consummation of the Merger substantially on the terms contemplated hereby or has
the effect of making the acquisition of Shares by DCNA or the Purchaser or any
affiliate of either of them illegal.
(c) DCNA or the Purchaser or any affiliate of either of
them shall have purchased Shares pursuant to the Offer or pursuant to the Stock
Purchase Agreement, except that this condition shall not be a condition to
DCNA's and the Purchaser's obligation to effect the Merger if DCNA, the
Purchaser or such affiliate shall have failed to purchase Shares pursuant to the
Offer in breach of their obligations under this Agreement.
(d) The applicable waiting period under the HSR Act
shall have expired or been terminated, and the applicable waiting period under
the European Union merger control regulations shall have expired.
43
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION. This Agreement may be terminated and
the other transactions contemplated herein abandoned at any time prior to the
Effective Time, whether before or after obtaining the Company Stockholder
Approval:
(a) by the mutual written consent of the Company
(including, if applicable, the Independent Director Approval contemplated by
Section 1.3(c)), DCNA and the Purchaser;
(b) by either DCNA if it simultaneously terminates the
Stock Purchase Agreement without having bought any Shares thereunder or the
Company if (i) (1) the Offer shall have expired in accordance with the terms of
this Agreement and without any Shares being purchased pursuant thereto, or (2)
the Offer has not been consummated on or before December 31, 2000 (the "Drop
Dead Date"); PROVIDED, HOWEVER, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to either party whose
failure (or, in the case of DCNA, the failure of the Purchaser) to fulfill any
obligation under this Agreement or the Offer has been the cause of, or resulted
in, the failure of the Shares to have been purchased pursuant to the Offer; (ii)
a statute, rule, regulation or executive or court order shall have been enacted,
entered, promulgated or enforced prohibiting the consummation of the Offer or
the Merger substantially on the terms contemplated hereby or otherwise making
the acquisition of Shares by DCNA or the Purchaser or any affiliate of either of
them illegal; or (iii) an order, decree, ruling or injunction shall have been
entered permanently restraining, enjoining or otherwise prohibiting the
consummation of the Offer or the Merger substantially on the terms contemplated
hereby and such order, decree, ruling or injunction shall have become final and
non-appealable; PROVIDED, that the party seeking to terminate this Agreement
pursuant to this Section 7.1(b)(iii) shall have used its reasonable best efforts
to remove such order, decree, ruling or injunction and shall not be in violation
of Section 5.4;
(c) by DCNA if it simultaneously terminates the Stock
Purchase Agreement without having bought any Shares thereunder, if due to an
occurrence or circumstance, other than as a result of a breach by DCNA or the
Purchaser of its obligations
44
hereunder or under the Offer, resulting in a failure to satisfy any condition
set forth in Annex A hereto, the Purchaser shall have (i) failed to commence the
Offer within 20 days following the date of this Agreement, or (ii) terminated
the Offer without having accepted any Shares for payment thereunder;
(d) by the Company, if due to an occurrence or
circumstance, other than as a result of a breach by the Company of its
obligations hereunder, resulting in a failure to satisfy any condition set forth
in Annex A hereto, the Purchaser shall have (i) failed to commence the Offer
within 20 days following the date of this Agreement, or (ii) terminated the
Offer without having accepted any Shares for payment thereunder;
(e) by the Company, in accordance with Section 5.7(b);
PROVIDED, that such termination shall not be effective unless and until the
Company shall have paid to DCNA the fee described in Section 7.3 hereof and
shall have complied with the provisions of Sections 5.7(b) and (c).
Section 7.2 EFFECT OF TERMINATION. In the event of termination
of this Agreement pursuant to Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall terminate
and be of no further force and effect (except for the provisions of Sections
5.2, 7.3 and 8.2 in the case of termination of this Agreement at any time, and
Section 5.5 in the case of a termination following the purchase of Shares
pursuant to the Offer), and there shall be no other liability on the part of
DCNA, the Purchaser or the Company or their respective officers or directors
except liability arising out of a willful breach of this Agreement. In the event
of termination of this Agreement pursuant to Section 7.1 prior to the expiration
of the Offer, DCNA and the Purchaser will promptly terminate the Offer upon such
termination of this Agreement without the purchase of Shares thereunder.
Section 7.3 TERMINATION FEE. In the event that this Agreement
shall have been terminated pursuant to Section 7.1(c) as a result of the failure
of the condition of the Offer set forth in paragraph (d) of Annex A hereto or
Section 7.1(e), the Company shall immediately pay DCNA a fee equal to $3 million
(the "Termination Fee"), payable by wire transfer of immediately available
funds, the receipt of which by DCNA in the case of termination pursuant to
Section 7.1(e), shall be a condition to the effectiveness of such termination.
The Company acknowledges that the agreements contained in this Section 7.3 are
an integral part of the transactions contemplated by this Agreement, and that,
without these agreements, DCNA and the Purchaser would not enter into this
Agreement; accordingly, if
45
the Company fails to pay the amount due pursuant to this Section 7.3, and, in
order to obtain such payment, DCNA commences a suit which results in a judgment
against the Company for the fee set forth in this Section 7.3, the Company shall
pay to DCNA its costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the fee at
the prime rate of Citibank N.A. in effect on the date such payment was required
to be made.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Purchase Date.
Section 8.2 EXPENSES. Except as otherwise expressly contemplated
by this Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
Section 8.3 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more separate counterparts, each of which shall be deemed to
be an original but all of which shall constitute one and the same agreement.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by each of the other parties hereto.
Section 8.4 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of laws thereof.
Section 8.5 NOTICES. All notices and other communications
hereunder shall be in writing (including telecopy or similar writing) and shall
be effective (a) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 8.5 and the appropriate telecopy
confirmation is received or (b) if given by any other means, when delivered at
the address specified in this Section 8.5:
46
To DCNA or the Purchaser:
DaimlerChrysler North America Holding Corporation
100 Chrysler Drive
Auburn Hills, Michigan 48326
USA
Attention: President
copy to
DaimlerChrysler AG
70546 Stuttgart
Germany
Attention: Arne Anderson
Telecopy: 011-49-711-17-58190
copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Attention: J. Michael Schell, Esq.
Margaret L. Wolff, Esq.
Telecopy: (212) 735-2000
To the Company:
Detroit Diesel Corporation
13400 Outer Drive West
Detroit, Michigan 48239-4001
Attention: John F. Farmer
Telecopy: 313-592-7664
47
copy to:
Penske Corporation
13400 Outer Drive West
Detroit, Michigan 48239-4001
Attention: Robert Kurnick, Jr.
Telecopy: 313-592-7124
Section 8.6 ASSIGNMENT; BINDING EFFECT. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties, except that the Purchaser may
assign, in its sole discretion, all or any of its rights and interests hereunder
to DCNA or to any direct or indirect wholly owned Subsidiary of DCNA, provided
that no such assignment shall relieve the Purchaser of its obligations hereunder
if such assignee does not perform such obligations. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns. Any
assignment not permitted under this Section 8.6 shall be null and void.
Section 8.7 SEVERABILITY. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 8.8 ENFORCEMENT OF AGREEMENT. The parties hereto agree
that money damages or other remedy at law would not be sufficient or adequate
remedy for any breach or violation of, or a default under, this Agreement by
them and that in addition to all other remedies available to them, each of them
shall be entitled to the fullest extent permitted by law to an injunction
restraining such breach, violation or default or threatened breach, violation or
default and to any other equitable relief, including, without limitation,
specific performance, without bond or other security being required.
48
Section 8.9 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement together with the Disclosure Schedules and exhibits hereto and the
Confidentiality Agreement constitute the entire agreement, and supersede all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and thereof
and except for the provisions of Section 5.9 hereof, is not intended to and
shall not confer upon any Person other than the parties hereto any rights or
remedies hereunder.
Section 8.10 HEADINGS. Headings of the Articles and Sections of
this Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 8.11 DEFINITIONS. References in this Agreement to (a)
"Subsidiaries" of the Company or DCNA shall mean any corporation or other form
of legal entity of which more than 50% of the outstanding voting securities are
on the date hereof directly or indirectly owned by the Company or DCNA or in
which the Company or DCNA has the right to elect a majority of the members of
the board of directors or other similar governing body; (b) "Significant
Subsidiaries" shall mean Subsidiaries which constitute "significant
subsidiaries" under Rule 405 promulgated by the SEC under the Securities Act;
(c) "affiliates" shall mean, as to any Person, any other Person which, directly
or indirectly, controls, or is controlled by, or is under common control with,
such Person; (d) "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including, without limitation, a Governmental Entity. As used in the definition
of "affiliates," "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a Person, whether through the ownership of securities
or partnership or other ownership interests, by contract or otherwise.
"Including," as used herein, shall mean "including, without limitation."
Section 8.12 FINDERS OR BROKERS. Except for Morgan Stanley Dean
Witter & Co. Incorporated, a copy of whose engagement agreement has been
provided to DCNA, with respect to the Company, and J.P. Morgan & Co.
Incorporated. with respect to DCNA, neither the Company nor DCNA nor any of
their respective Subsidiaries has employed any investment banker, broker, finder
or intermediary in connection with the transactions contemplated hereby who
would be entitled to any fee or any commission in connection with or upon
consummation of the Offer or the Merger.
49
Section 8.13 AMENDMENT OR SUPPLEMENT. At any time prior to the
Effective Time, this Agreement may be amended or supplemented in any and all
respects, whether before or after the Company Stockholder Approval, by written
agreement of the parties hereto, by action taken by their respective Boards of
Directors (which in the case of the Company shall include the Independent
Director Approval contemplated in Section 1.3(c)), with respect to any of the
terms contained in this Agreement; PROVIDED, HOWEVER that following the Company
Stockholder Approval there shall be no amendment or change to the provisions
hereof which would reduce the amount or change the type of consideration into
which each Share shall be converted upon consummation of the Merger or other
change requiring stockholder approval without further approval by the
stockholders of the Company.
Section 8.14 EXTENSION OF TIME, WAIVER, ETC. At any time prior to
the Effective Time, any party may (a) extend the time for the performance of any
of the obligations or acts of any other party hereto; (b) at any time prior to
the Purchase Date waive any inaccuracies in the representations and warranties
of any other party hereto contained herein or in any document delivered pursuant
hereto; or (c) subject to the proviso of Section 8.13 waive compliance with any
of the agreements or conditions of any other party hereto contained herein;
PROVIDED, HOWEVER, in the case of the Company following the acceptance of Shares
for payment in the Offer, the Independent Director Approval contemplated in
Section 1.3(c) is obtained. Notwithstanding the foregoing no failure or delay by
the Company, DCNA or the Purchaser in exercising any right hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right hereunder. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
DAIMLERCHRYSLER NORTH AMERICA
HOLDING CORPORATION.
By: /s/ T.P. Capo
------------------------------
Name: T.P. Capo
Title: President
DIESEL PROJECT DEVELOPMENT, INC.
By: /s/ T.P. Capo
------------------------------
Name: T.P. Capo
Title: President
DETROIT DIESEL CORPORATION
By: /s/ Charles G. McClure
------------------------------
Name: Charles G. McClure
Title: President and Chief
Executive Officer
ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A have the meanings set
forth in the Agreement to which this Annex A is attached, except that the term
"the Agreement" shall be deemed to refer to the attached Agreement.
Notwithstanding any other provision of the Offer, the Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and may postpone the acceptance for payment of and payment for Shares tendered,
and, except as set forth in the Agreement, terminate the Offer as to any Shares
not then paid for if (i) the Minimum Condition shall not have been satisfied at
the scheduled expiration date of the Offer, (ii) any applicable waiting period
under the HSR Act shall not have expired or been terminated, the notification of
and approval by the European Commission under the EU Council Regulation 4064/89,
as amended, shall not have been received, in each case to the extent applicable
to the purchase of Shares in the Offer (the "Regulatory Condition"), prior to
the expiration of the Offer, or (iii) immediately prior to the expiration of the
Offer, any of the following conditions shall exist:
(a) there shall have been entered, enforced or issued by
any Governmental Entity, any judgment, order, injunction or decree (i) which
makes illegal, restrains or prohibits the acceptance for payment of, or payment
for, any Shares by DCNA, the Purchaser or any other affiliate of DCNA, or the
consummation of the Merger transaction; (ii) which prohibits or limits
materially the ownership or operation by the Company, DCNA or any of their
Subsidiaries of all or any material portion of the business or assets of the
Company, DCNA or any of their Subsidiaries, or compels the Company, DCNA or any
of their Subsidiaries to dispose of or hold separate all or any portion of the
business or assets of the Company, DCNA or any of their Subsidiaries; (iii)
which imposes or confirms limitations on the ability of DCNA, the Purchaser or
any other affiliate of DCNA to exercise full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired by the
Purchaser pursuant to the Offer or otherwise on all matters properly presented
to the Company's stockholders, including, without limitation, the approval and
adoption of this Agreement and the transactions contemplated by this Agreement;
(iv) which requires divestiture by DCNA, the Purchaser or any other affiliate of
DCNA of any Shares; or (v)
A-i
which otherwise would have a Material Adverse Effect on the Company to the
extent that it relates to or arises out of the transactions contemplated by this
Agreement or DCNA;
(b) there shall have been any statute, rule, regulation,
legislation or interpretation enacted, enforced, promulgated, amended or issued
by any Governmental Entity or deemed by any Governmental Entity applicable to
(i) DCNA, the Company or any Subsidiary or affiliate of DCNA or the Company or
(ii) any transaction contemplated by this Agreement, other than the HSR Act and
the EU Council Regulation 4064/89, as amended, which is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any changes, conditions,
events or developments that would have, or be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company;
(d) the Board of Directors of the Company or any
committee thereof shall have (i) withdrawn, modified or changed, in a manner
adverse to DCNA or the Purchaser, the recommendation by such Board of Directors
or such committee of the Offer, the Merger or this Agreement, (ii) approved or
recommended, or proposed publicly to approve or recommend, an Acquisition
Proposal, (iii) caused the Company to enter into any Acquisition Agreement
relating to any Acquisition Proposal, or (iv) resolved to do any of the
foregoing;
(e) the representations or warranties of the Company set
forth in the Agreement that are qualified by materiality or Material Adverse
Effect shall not be true and correct, or the representations and warranties of
the Company set forth in the Agreement that are not so qualified shall not be
true and correct in all material respects, in each case, as if such
representations or warranties were made as of such time on or after the date of
the Agreement (except to the extent such representations and warranties speak as
of a specific date or as of the date of the Agreement, in which case such
representations and warranties shall not be so true and correct or true and
correct in all material respects, as the case may be, as of such specific date
or as of the date of the Agreement, respectively);
(f) the Company shall have failed to perform in any
material respect any material obligation or to comply in any material respect
with any material agreement or covenant of the Company to be performed or
complied with by it under the Agreement;
A-ii
(g) The VM Put Option shall not be in full force and
effect, or shall have been amended or otherwise modified;
(h) the Agreement shall have been terminated in
accordance with its terms; or
(i) the Purchaser and the Company shall have agreed that
the Purchaser shall terminate the Offer;
which, in the reasonable good faith judgment of the Purchaser in any such case,
and regardless of the circumstances (including any action or inaction by DCNA or
any of its affiliates) giving rise to any such condition makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the benefit of the Purchaser and
DCNA and, subject to applicable provisions of the Agreement, may be asserted by
the Purchaser or DCNA regardless of the circumstances giving rise to any such
condition or may be waived by the Purchaser or DCNA in whole or in part at any
time and from time to time in their reasonable discretion. The failure by DCNA
or the Purchaser at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right; the waiver of any such right with respect
to particular facts and other circum stances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
A-iii