1
EXHIBIT 2
CONFORMED COPY
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
Page
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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
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
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PAGE
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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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PAGE
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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
-----------------
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
DCNA and Purchaser Agreements......................................28
DCNA Disclosure Schedule...........................................27
DDC Holdings........................................................2
Deferred Compensation Plans........................................36
DGCL................................................................2
Disclosure Schedule................................................27
Dissenting Shares..................................................11
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Page
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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
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-.......................................................................95
Schedule TO..........................................................................4
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Page
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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 contemplated 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
contemplated 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
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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
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
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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 "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
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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 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
12
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 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
13
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 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").
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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 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
15
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.
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,
16
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.
(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
17
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.
(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
Consideration 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
18
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 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
19
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 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
20
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 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
21
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 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
22
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 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
23
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 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
24
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.
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,
circumstances, 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
25
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, 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
Environmental 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
26
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 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
27
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 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 employee (or his beneficiary).
28
(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 which, individually or in
the aggregate, will have a
29
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
30
the Company's best knowledge, after due 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 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,
31
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 Company or any Subsidiary of the Company.
(c) For purposes of this Agreement: (i) "Taxes" means
any
32
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.
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
33
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
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
34
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 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
35
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 Consideration 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 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;
36
(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% 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 Subsidiaries 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
37
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 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
38
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 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
39
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:
(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
40
comments made by the SEC with respect to the preliminary proxy or
information 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, 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
41
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.
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
42
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, 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 Corporation) 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
43
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 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
44
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 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 stockholders 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
45
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 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
46
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 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
47
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 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
48
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 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
49
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.
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
50
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 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
51
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 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:
52
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
copy to:
Penske Corporation
13400 Outer Drive West
53
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.
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.
54
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.
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
55
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.
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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
57
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) 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,
58
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;
(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
59
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 circumstances 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.